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COMMERCE BANCSHARES INC /MO/

CBSH
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Business Summary

Commerce Bancshares, Inc. operates as a super-community bank, offering a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. The Company is one of the nation’s top 50 bank holding companies based on asset size, with consolidated assets of $32.9 billion at December 31, 2025. Its principal markets are served by 140 branch facilities located primarily throughout Missouri, Kansas, central Illinois, Oklahoma, and Colorado, with its two largest markets being St. Louis and Kansas City. The Company also has offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples that support customers in its commercial and/or wealth segments, and operates a commercial payments business with sales representatives covering the continental United States. The economy in its markets is well-diversified, with major industries including construction, logistics, automobile, technology, financial services, aerospace, manufacturing, health care, service industries, and agribusiness.

The Company operates in the highly competitive financial services industry, facing competition from banks, credit unions, brokerage companies, mortgage companies, insurance companies, trust companies, private equity firms, leasing companies, securities brokers and dealers, financial technology companies, e-commerce companies, and investment management companies. Some competitors are significantly larger, with greater economies of scale and financial resources. The Company competes by providing a broad offering of products and services matched with a strong commitment to customer service, and also competes based on quality, innovation, convenience, reputation, industry knowledge, and price. In its two largest markets, the Company has approximately 10% of the deposit market share in Kansas City and approximately 7% of the deposit market share in St. Louis .

The Company generates revenue primarily through net interest income, which represented 63% of total revenue for the year ended December 31, 2025 , and non-interest income. Net interest income results from lending, investing, borrowing, and deposit gathering activities. Non-interest income includes trust fees, bank card transaction fees, deposit account charges, consumer brokerage services, capital market fees, and loan fees and sales. The Company operates under a super-community banking format, incorporating large bank product offerings with deep local market knowledge, and focuses on relationship banking and high-touch service. The Company's goal is to be the preferred provider of financial services in its communities, based on strong customer relationships, a strong risk management culture, and a strong balance sheet with strong capital levels.

The Company is managed in three operating segments: Commercial, Retail Banking, and Wealth. The Commercial segment provides corporate lending, merchant and commercial bank card products, payment solutions, leasing, international services, and business and government deposit, investment, institutional brokerage, and cash management services. In 2025, the Commercial segment contributed 48% of total segment pre-tax income . The Retail Banking segment includes the retail branch network, consumer installment lending, personal mortgage banking, and consumer debit and credit bank card activities, contributing 28% of total segment pre-tax income . The Wealth segment provides traditional trust and estate planning services, consumer brokerage services, and advisory and discretionary investment portfolio management services to personal and institutional corporate customers, contributing 24% of total segment pre-tax income . At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets, and also provides investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets.

On January 1, 2026, the Company completed its acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of the Company's common stock. FineMark has 13 banking offices in Florida, Arizona, and South Carolina. At December 31, 2025, FineMark had total loans of $2.7 billion , total deposits of $3.1 billion , and $8.7 billion in assets under administration. During January 2026, the Company liquidated FineMark's held-to-maturity and available for sale debt securities portfolios generating total proceeds of $543.0 million , paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off balance sheet. During 2025, the Company purchased 3,608,530 shares of its common stock. The Company paid cash dividends of $1.05 per share on its common stock in 2025, representing an increase of 6.9% over the previous year, and issued its 32nd consecutive annual 5% common stock dividend.

Net income attributable to Commerce Bancshares, Inc. during 2025 was $566.3 million , an increase of 7.6% compared to $526.3 million in 2024. Diluted earnings per share increased 9.5% to $4.04 in 2025 from $3.69 in 2024. Total revenue in 2025 increased $108.3 million, or 6.5%, from 2024, as net interest income grew $71.6 million and non-interest income increased $36.7 million . The return on average assets was 1.79% in 2025, and the return on average common equity was 15.76% . The efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024. Net loan charge-offs totaled $40.7 million in 2025, averaging .23% of loans, and total non-performing assets amounted to $17.0 million at December 31, 2025, representing .10% of loans outstanding.

Business Outlook

A primary growth vector is the expansion into new high-growth markets through the acquisition of FineMark Holdings, Inc., which added 13 banking offices in Florida, Arizona, and South Carolina, strengthening the Company's presence in Florida and adding new markets to its wealth segment. At December 31, 2025, FineMark had $8.7 billion in assets under administration, and the Company expects to realize benefits from this acquisition. The Company also continues to evaluate the potential acquisition of various financial institutions, seeking merger or acquisition partners that are culturally similar, have experienced management, and either possess significant market presence or have potential for improved profitability.

Another growth vector is the Company's focus on core revenue growth through strategies that expand new and existing customer relationships, offer opportunities for controlled expansion in additional markets, utilize improved technology, and enhance customer satisfaction. The Company targets core revenue growth to enhance shareholder value. The Company also operates a commercial payments business with sales representatives covering the continental United States, which represents a nationwide growth opportunity. Additionally, the Company's wealth segment continues to grow, with trust fee income increasing 8.5% in 2025, driven by higher private client trust fees, and the market value of total customer trust assets totaling $81.6 billion at year end 2025, an increase of 9.1% over year end 2024 balances.

The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024, indicating ongoing margin improvement. Non-interest expense increased 3.0% in 2025, mainly due to higher salaries and employee benefits expense and professional and other services expense, partially offset by lower deposit insurance expense. The Company's net yield on interest earning assets (tax equivalent basis) increased to 3.63% in 2025 from 3.47% in 2024. The Company continues to manage its cost structure, with the efficiency ratio calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.

The Company employed 4,577 persons on a full-time basis and 160 persons on a part-time basis at December 31, 2025 . The Company focuses on attracting and retaining talented team members through a comprehensive Total Rewards program, including a company-matching 401(k) plan, health savings accounts, educational and adoption assistance programs, and various wellness and career development programs. The Company continues to invest in technology, with data processing and software expense increasing 5.2% in 2025, primarily due to increased costs for service providers and higher software expense. The Company regularly upgrades or replaces technological systems to increase efficiency, enhance product and service capabilities, and reduce costs.

The Company maintains a strong capital allocation strategy. During 2025, the Company purchased 3,608,530 shares for $207.6 million under its treasury stock buyback program. At December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization from October 2025 of 5,000,000 shares . The Company paid cash dividends of $1.05 per share in 2025, an increase of 6.9% over the previous year, and in February 2026, the Board of Directors authorized an increase of 5.0% in the common cash dividend . The Company has a long history of paying dividends, with 2025 marking the 57th consecutive year of growth in the regular common dividend. The Company also distributed its 32nd consecutive annual 5% common stock dividend in December 2025. The Company did not make any contributions to its defined benefit pension plan in 2025, 2024, or 2023, and does not expect to make a contribution in 2026.

The Company faces several headwinds and constraints. The U.S. economy experienced positive but uneven growth in 2025, with moderating but persistently elevated inflation, a solid but slowing labor market, and uncertainties about tariff policies and international trade. Looking ahead to 2026, inflationary pressures have eased but elevated living costs are still a concern for consumers, and uncertainty remains around tariffs, monetary policy, and unemployment. The Company's success is heavily influenced by the general economic conditions of the specific markets in which it operates, primarily in the lower Midwest, and a prolonged economic downturn in these markets could have a material adverse effect. The Company also faces intense competition, including from larger regional and national banks with substantial capital, technology, and marketing resources that may lower fees to grow market share.

The Company faces significant regulatory and compliance risks. It is subject to extensive federal and state regulation and supervision, and changes to statutes, regulations, or regulatory policies could affect the Company in substantial and unpredictable ways. The Company's deposit insurance expense was $10.0 million for the year ended December 31, 2025, compared to $33.2 million in 2023, which was largely impacted by the FDIC's special assessment to recover losses from the closures of Silicon Valley Bank and Signature Bank. The Company also faces risks related to integrating FineMark, which may be more difficult, costly, or time consuming than expected, and the anticipated benefits and cost savings of the Merger may not be realized. Additionally, the Company is subject to interest rate risk, as net interest income is the largest source of overall revenue, and changes in monetary policy could significantly impact net interest income.

Risk Factors

The Company's performance is heavily dependent on the economic conditions of its specific markets, primarily in Missouri, Kansas, central Illinois, Oklahoma, and Colorado, and a prolonged economic downturn in these areas could have a material adverse effect. The Company faces intense competition from larger regional and national banks with greater capital and technology resources, which may lower fees to grow market share and adversely affect the Company's ability to compete. The Company is subject to extensive government regulation, and changes in laws or policies could subject it to additional costs, limit its activities, or restrict dividend payments. The Company's net interest income, representing 63% of total revenue , is exposed to interest rate risk; changes in monetary policy could significantly impact net interest income, and the Company's available for sale debt securities portfolio had a net unrealized loss of $646.8 million at December 31, 2025. The Company relies on dividends from its subsidiary bank for most of its revenue, and these dividends are limited by various federal and state regulations. The Company's allowance for credit losses may be insufficient if actual credit losses exceed estimates, and the Company's investment portfolio values may be adversely impacted by credit deterioration in underlying collateral. The Company also faces risks related to the successful integration of FineMark, which may be more difficult, costly, or time consuming than expected, and the anticipated benefits and cost savings of the Merger may not be realized.

Management Priorities

Management's message emphasizes the Company's goal of being the preferred provider of financial services in its communities, based on strong customer relationships, a strong risk management culture, and a strong balance sheet with strong capital levels. Key themes include the successful completion of the FineMark acquisition on January 1, 2026, which added 13 banking offices in high-growth markets, and the Company's focus on core revenue growth through expanding customer relationships, controlled expansion, improved technology, and enhanced customer satisfaction. Management highlights the Company's 57th consecutive year of growth in the regular common dividend and the 32nd consecutive annual 5% common stock dividend. The Company's strategic priorities for the period ahead include successfully integrating FineMark to realize anticipated benefits and cost savings, continuing to target core revenue growth, and maintaining strong capital levels and asset quality.

View Source Annual Report on SEC.gov ↗

References

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  4. [4] Item 7, MD&A — Risk Factors
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  8. [8] Item 7, MD&A — Operating Segments
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  10. [10] Item 7, MD&A — Operating Segments
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  19. [19] Item 7, MD&A — Overview
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  21. [21] Item 7, MD&A — Results of Operations
  22. [22] Item 7, MD&A — Results of Operations
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  27. [27] Item 7, MD&A — Key Ratios
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  30. [30] Item 7, MD&A — Key Ratios
  31. [31] Item 7, MD&A — Overview
  32. [32] Item 7, MD&A — Overview
  33. [33] Item 1, Business
  34. [34] Item 7, MD&A — Non-Interest Income
  35. [35] Item 7, MD&A — Key Ratios
  36. [36] Item 7, MD&A — Key Ratios
  37. [37] Item 7, MD&A — Key Ratios
  38. [38] Item 7, MD&A — Key Ratios
  39. [39] Item 1, Business
  40. [40] Item 7, MD&A — Overview
  41. [41] Item 7, MD&A — Liquidity and Capital Resources
  42. [42] Item 5, Market for Registrant’s Common Equity
  43. [43] Item 5, Market for Registrant’s Common Equity
  44. [44] Item 7, MD&A — Overview
  45. [45] Item 7, MD&A — Capital Management
  46. [46] Item 7, MD&A — Non-Interest Expense
  47. [47] Item 1a, Risk Factors
  48. [48] Item 1a, Risk Factors
  49. [49] Item 7, MD&A — Investment Securities Analysis
  50. [50] Item 7, MD&A — Results of Operations
  51. [51] Item 7, MD&A — Results of Operations
  52. [52] Item 7, MD&A — Results of Operations
  53. [53] Item 7, MD&A — Results of Operations
  54. [54] Item 7, MD&A — Non-Interest Income
  55. [55] Item 7, MD&A — Non-Interest Income
  56. [56] Item 7, MD&A — Results of Operations
  57. [57] Item 7, MD&A — Results of Operations
  58. [58] Item 7, MD&A — Results of Operations
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  60. [60] Item 7, MD&A — Results of Operations
  61. [61] Item 7, MD&A — Results of Operations
  62. [62] Item 7, MD&A — Non-Interest Expense
  63. [63] Item 7, MD&A — Non-Interest Expense
  64. [64] Item 7, MD&A — Key Ratios
  65. [65] Item 7, MD&A — Key Ratios
  66. [66] Item 7, MD&A — Key Ratios
  67. [67] Item 7, MD&A — Key Ratios
  68. [68] Item 7, MD&A — Investment Securities Gains (Losses), Net
  69. [69] Item 7, MD&A — Investment Securities Gains (Losses), Net
  70. [70] Item 7, MD&A — Income Taxes
  71. [71] Item 7, MD&A — Income Taxes
  72. [72] Item 7, MD&A — Capital Management
  73. [73] Item 7, MD&A — Capital Management
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  75. [75] Item 7, MD&A — Capital Management
  76. [76] Item 7, MD&A — Capital Management
  77. [77] Item 7, MD&A — Capital Management
  78. [78] Item 7, MD&A — Investment Securities Analysis
  79. [79] Item 7, MD&A — Investment Securities Analysis
  80. [80] Item 7, MD&A — Allowance for Credit Losses on Loans
  81. [81] Item 7, MD&A — Allowance for Credit Losses on Loans
  82. [82] Item 7, MD&A — Allowance for Credit Losses on Loans
  83. [83] Item 7, MD&A — Allowance for Credit Losses on Loans
  84. [84] Item 1, Business
  85. [85] Item 7, MD&A — Financial Condition
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  87. [87] Item 7, MD&A — Loan Portfolio Analysis
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  89. [89] Item 7, MD&A — Deposits and Borrowings
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  91. [91] Item 7, MD&A — Key Ratios

Analysis on 6/21/2026