Commerce Bancshares, Inc. Reports Second Quarter Earnings Per Share of $1.14

KANSAS CITY, Mo.--(BUSINESS WIRE)-- Commerce Bancshares, Inc. announced earnings of $1.14 per share for the three months ended June 30, 2025, compared to $1.03 per share in the same quarter last year and $.98 per share in the first quarter of 2025. Net income for the second quarter of 2025 amounted to $152.5 million, compared to $139.6 million in the second quarter of 2024 and $131.6 million in the prior quarter.

For the six months ended June 30, 2025, earnings per share totaled $2.12, compared to $1.85 for the first six months of 2024. Net income amounted to $284.1 million for the six months ended June 30, 2025, compared to $252.2 million in the comparable period last year. For the year to date, the return on average assets was 1.82%, and the return on average equity was 16.63%.

In making this announcement, John Kemper, Chief Executive Officer, said, “Commerce delivered a strong financial performance in the second quarter, one that reflected our diversified operating model and the talented team behind it. Our financial results were supported by loan growth, strong fee income, low credit costs and continued disciplined expense management, all key ingredients in our steady profit growth over time.”

Mr. Kemper continued, “Our return on average assets was strong at 1.95%. Net interest income of $280 million was another record quarter for Commerce and reflects the continued benefits of fixed-rate asset repricing, higher loan demand, and our strong deposit franchise. Non-interest income was $166 million and made up 37.2% of total revenue, led by trust fees and bank card transaction fees. Credit quality of the loan portfolio remains excellent with non-accrual loans at .11% of total loans. Capital and liquidity levels remain strong.”

On the FineMark announcement, Mr. Kemper, added, “In June, we announced our plans to acquire FineMark Holdings, a respected and well-established bank and trust company, headquartered in Fort Myers, Florida. With this acquisition, FineMark will bring new capabilities, specialized services for niche client segments, and extended market reach. Commerce will add scale and depth with resources, capital, operational infrastructure, regulatory experience, and long-term stability.

Looking ahead, our franchise is well-positioned to execute against our long-term strategies, serve our customers and deliver value to our shareholders.”

Second Quarter 2025 Financial Highlights:

• Net interest income was $280.1 million, an $11.0 million increase over the prior quarter. The net yield on interest earning assets increased 14 basis points to 3.70%.
• Non-interest income totaled $165.6 million, an increase of $13.4 million, or 8.8%, over the same quarter last year.
• Trust fees grew $3.3 million, or 6.3%, compared to the same period last year, mostly due to higher private client fees.
• Non-interest expense totaled $244.4 million, an increase of $12.2 million, or 5.3%, over the same quarter last year.
• Average loan balances totaled $17.5 billion, an increase of $253.1 million, or 1.5%, over the prior quarter.
• Total average available for sale debt securities decreased $128.5 million compared to the prior quarter to $9.1 billion, at fair value.
• Total average deposits increased $63.0 million, or .3%, over the prior quarter. The average rate paid on interest bearing deposits declined five basis points to 1.67%, compared to the prior quarter.
• The ratio of annualized net loan charge-offs to average loans was .22% in the current quarter compared to .25% in the prior quarter.
• The allowance for credit losses on loans decreased $1.8 million during the second quarter of 2025 to $165.3 million, and the ratio of the allowance for credit losses on loans to total loans was .94% on June 30, 2025, compared to .96% at March 31, 2025.
• Total assets on June 30, 2025 were $32.3 billion, a decrease of $80.7 million, or .2%, from the prior quarter.
• For the quarter, the return on average assets was 1.95%, the return on average equity was 17.40%, and the efficiency ratio was 54.8%.

Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services through its subsidiaries, including payment solutions, investment management and securities brokerage. One of its subsidiaries, Commerce Bank, leverages 160 years of proven strength and experience to help individuals and businesses solve financial challenges. In addition to offering payment solutions across the U.S., Commerce Bank currently operates full-service banking facilities across the Midwest including the St. Louis and Kansas City metropolitan areas, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City, and Denver. Beyond the Midwest, Commerce also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids and wealth offices in Dallas, Houston, and Naples. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial and wealth offices, ATMs, online, mobile and through a 24/7 customer service line.

This financial news release and the supplementary Earnings Highlights presentation are available on the Company’s website at https://investor.commercebank.com/news-info/financial-news-releases/default.aspx.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES FINANCIAL HIGHLIGHTS
		For the Three Months Ended						For the Six Months Ended
(Unaudited) (Dollars in thousands, except per share data)		Jun. 30, 2025		Mar. 31, 2025		Jun. 30, 2024		Jun. 30, 2025		Jun. 30, 2024
FINANCIAL SUMMARY
Net interest income		$280,147		$269,102		$262,249		$549,249		$511,248
Non-interest income		165,613		158,949		152,244		324,562		301,092
Total revenue		445,760		428,051		414,493		873,811		812,340
Investment securities gains (losses)		437		(7,591	)	3,233		(7,154	)	2,974
Provision for credit losses		5,597		14,487		5,468		20,084		10,255
Non-interest expense		244,437		238,376		232,214		482,813		477,911
Income before taxes		196,163		167,597		180,044		363,760		327,148
Income taxes		42,400		36,964		38,602		79,364		70,254
Non-controlling interest expense (income)		1,284		(959	)	1,889		325		4,678
Net income attributable to Commerce Bancshares, Inc.		$152,479		$131,592		$139,553		$284,071		$252,216
Earnings per common share:
Net income — basic		$1.14		$0.98		$1.03		$2.12		$1.85
Net income — diluted		$1.14		$0.98		$1.03		$2.12		$1.85
Effective tax rate		21.76	%	21.93	%	21.67	%	21.84	%	21.79	%
Fully-taxable equivalent net interest income		$282,428		$271,416		$264,578		$553,844		$515,890
Average total interest earning assets (1)		$30,629,715		$30,901,110		$30,016,060		$30,764,662		$30,190,917
Diluted wtd. average shares outstanding		132,582,673		133,071,719		135,041,228		132,825,845		135,343,213
RATIOS
Average loans to deposits (2)		70.22	%	69.38	%	70.73	%	69.80	%	70.30	%
Return on total average assets		1.95		1.69		1.86		1.82		1.67
Return on average equity (3)		17.40		15.82		18.52		16.63		16.98
Non-interest income to total revenue		37.15		37.13		36.73		37.14		37.06
Efficiency ratio (4)		54.77		55.61		55.95		55.18		58.75
Net yield on interest earning assets		3.70		3.56		3.55		3.63		3.44
EQUITY SUMMARY
Cash dividends per share		$.275		$.275		$.257		$.550		$.514
Cash dividends on common stock		$36,761		$36,866		$34,960		$73,627		$70,100
Book value per share (5)		$27.43		$26.19		$23.31
Market value per share (5)		$62.17		$62.23		$53.12
High market value per share		$66.14		$68.87		$54.74
Low market value per share		$52.69		$58.80		$48.50
Common shares outstanding (5)		133,419,701		133,597,405		135,454,443
Tangible common equity to tangible assets (6)		10.86	%	10.33	%	9.82	%
Tier I leverage ratio		12.75	%	12.29	%	12.13	%
OTHER QTD INFORMATION
Number of bank/ATM locations		239		242		247
Full-time equivalent employees		4,658		4,662		4,724
(1) Excludes allowance for credit losses on loans and unrealized gains/(losses) on available for sale debt securities.
(2) Includes loans held for sale.
(3) Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(4) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.
(5) As of period end.
(6) The tangible common equity ratio is a non-gaap ratio and is calculated as stockholders’ equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).
All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2024.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (In thousands, except per share data)		For the Three Months Ended										For the Six Months Ended
		Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Jun. 30, 2024		Jun. 30, 2025		Jun. 30, 2024
Interest income		$371,636		$364,365		$369,405		$372,068		$369,363		$736,001		$728,084
Interest expense		91,489		95,263		102,758		109,717		107,114		186,752		216,836
Net interest income		280,147		269,102		266,647		262,351		262,249		549,249		511,248
Provision for credit losses		5,597		14,487		13,508		9,140		5,468		20,084		10,255
Net interest income after credit losses		274,550		254,615		253,139		253,211		256,781		529,165		500,993
NON-INTEREST INCOME
Trust fees		55,571		56,592		56,345		54,689		52,291		112,163		103,396
Bank card transaction fees		46,362		45,593		47,807		47,570		47,477		91,955		94,407
Deposit account charges and other fees		26,248		26,622		25,480		25,380		25,325		52,870		49,476
Capital market fees		6,175		5,112		5,129		5,995		4,760		11,287		8,652
Consumer brokerage services		5,383		4,785		4,636		4,619		4,478		10,168		8,886
Loan fees and sales		3,419		3,404		2,874		3,444		3,431		6,823		6,572
Other		22,455		16,841		13,165		17,328		14,482		39,296		29,703
Total non-interest income		165,613		158,949		155,436		159,025		152,244		324,562		301,092
INVESTMENT SECURITIES GAINS (LOSSES), NET		437		(7,591	)	977		3,872		3,233		(7,154	)	2,974
NON-INTEREST EXPENSE
Salaries and employee benefits		155,025		153,078		153,819		153,122		149,120		308,103		300,921
Data processing and software		32,904		32,238		32,514		32,194		31,529		65,142		62,682
Net occupancy		13,654		14,020		13,694		13,411		12,544		27,674		26,118
Professional and other services		12,973		10,026		8,982		8,830		8,617		22,999		17,265
Marketing		5,974		5,843		5,683		7,278		5,356		11,817		9,392
Equipment		5,157		5,248		5,232		5,286		5,091		10,405		10,101
Supplies and communication		4,962		5,046		4,948		4,963		4,636		10,008		9,380
Deposit Insurance		3,312		3,744		3,181		2,930		2,354		7,056		10,371
Other		10,476		9,133		7,665		9,586		12,967		19,609		31,681
Total non-interest expense		244,437		238,376		235,718		237,600		232,214		482,813		477,911
Income before income taxes		196,163		167,597		173,834		178,508		180,044		363,760		327,148
Less income taxes		42,400		36,964		36,590		38,245		38,602		79,364		70,254
Net income		153,763		130,633		137,244		140,263		141,442		284,396		256,894
Less non-controlling interest expense (income)		1,284		(959	)	1,136		2,256		1,889		325		4,678
Net income attributable to Commerce Bancshares, Inc.		$152,479		$131,592		$136,108		$138,007		$139,553		$284,071		$252,216
Net income per common share — basic		$1.14		$0.98		$1.01		$1.02		$1.03		$2.12		$1.85
Net income per common share — diluted		$1.14		$0.98		$1.01		$1.01		$1.03		$2.12		$1.85
OTHER INFORMATION
Return on total average assets		1.95	%	1.69	%	1.73	%	1.80	%	1.86	%	1.82	%	1.67	%
Return on average equity (1)		17.40		15.82		15.97		16.81		18.52		16.63		16.98
Efficiency ratio (2)		54.77		55.61		55.77		56.31		55.95		55.18		58.75
Effective tax rate		21.76		21.93		21.19		21.70		21.67		21.84		21.79
Net yield on interest earning assets		3.70		3.56		3.49		3.50		3.55		3.63		3.44
Fully-taxable equivalent net interest income		$282,428		$271,416		$268,935		$264,638		$264,578		$553,844		$515,890
(1) Annualized net income attributable to Commerce Bancshares, Inc. divided by average total equity.
(2) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of total revenue.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - PERIOD END
(Unaudited) (In thousands)		Jun. 30, 2025		Mar. 31, 2025		Jun. 30, 2024
ASSETS
Loans
Business		$6,328,684		$6,239,276		$6,090,724
Real estate — construction and land		1,405,398		1,419,572		1,396,515
Real estate — business		3,757,778		3,628,635		3,572,539
Real estate — personal		3,058,845		3,047,809		3,055,182
Consumer		2,157,867		2,116,160		2,145,609
Revolving home equity		364,429		356,675		331,381
Consumer credit card		576,151		568,163		566,925
Overdrafts		16,316		3,131		4,190
Total loans		17,665,468		17,379,421		17,163,065
Allowance for credit losses on loans		(165,260	)	(167,031	)	(158,557	)
Net loans		17,500,208		17,212,390		17,004,508
Loans held for sale		3,592		2,890		2,930
Investment securities:
Available for sale debt securities		8,915,779		9,264,947		8,534,271
Trading debt securities		46,630		56,569		45,499
Equity securities		54,511		58,182		113,584
Other securities		219,906		221,370		223,798
Total investment securities		9,236,826		9,601,068		8,917,152
Securities purchased under agreements to resell		850,000		850,000		475,000
Interest earning deposits with banks		2,624,264		2,756,521		2,215,057
Cash and due from banks		522,049		517,332		329,692
Premises and equipment — net		477,401		476,921		467,256
Goodwill		146,539		146,539		146,539
Other intangible assets — net		13,333		13,441		13,801
Other assets		910,035		787,862		997,423
Total assets		$32,284,247		$32,364,964		$30,569,358
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing		$7,393,559		$7,518,243		$7,492,751
Savings, interest checking and money market		15,727,549		15,975,283		14,367,710
Certificates of deposit of less than $100,000		986,014		985,878		1,010,251
Certificates of deposit of $100,000 and over		1,386,906		1,362,393		1,408,548
Total deposits		25,494,028		25,841,797		24,279,260
Federal funds purchased and securities sold under agreements to repurchase		2,596,461		2,400,036		2,551,399
Other borrowings		15,049		17,743		3,984
Other liabilities		518,595		606,986		576,380
Total liabilities		28,624,133		28,866,562		27,411,023
Stockholders’ equity:
Common stock		676,054		676,054		655,322
Capital surplus		3,386,218		3,381,960		3,153,107
Retained earnings		255,938		140,220		235,299
Treasury stock		(96,589	)	(85,871	)	(98,176	)
Accumulated other comprehensive income (loss)		(581,049	)	(634,576	)	(807,817	)
Total stockholders’ equity		3,640,572		3,477,787		3,137,735
Non-controlling interest		19,542		20,615		20,600
Total equity		3,660,114		3,498,402		3,158,335
Total liabilities and equity		$32,284,247		$32,364,964		$30,569,358

COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS
(Unaudited) (In thousands)	For the Three Months Ended
	Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Jun. 30, 2024
ASSETS:
Loans:
Business	$6,247,252		$6,106,185		$5,963,217		$5,966,797		$5,980,364
Real estate — construction and land	1,430,758		1,415,349		1,411,437		1,400,563		1,471,504
Real estate — business	3,692,405		3,667,833		3,636,026		3,580,772		3,666,057
Real estate — personal	3,048,895		3,045,876		3,047,494		3,047,563		3,044,943
Consumer	2,148,666		2,082,360		2,087,237		2,129,483		2,127,650
Revolving home equity	362,312		358,684		350,541		335,817		326,204
Consumer credit card	559,858		560,534		568,138		559,410		552,896
Overdrafts	5,663		5,860		5,628		5,460		4,856
Total loans	17,495,809		17,242,681		17,069,718		17,025,865		17,174,474
Allowance for credit losses on loans	(166,391	)	(162,186	)	(160,286	)	(158,003	)	(159,791	)
Net loans	17,329,418		17,080,495		16,909,432		16,867,862		17,014,683
Loans held for sale	1,741		1,584		2,080		2,448		2,455
Investment securities:
U.S. government and federal agency obligations	2,623,896		2,586,944		2,459,485		1,888,985		1,201,954
Government-sponsored enterprise obligations	55,038		55,330		55,428		55,583		55,634
State and municipal obligations	780,063		804,363		831,695		856,620		1,069,934
Mortgage-backed securities	4,641,295		4,788,102		4,905,187		5,082,091		5,553,656
Asset-backed securities	1,585,364		1,655,701		1,570,878		1,525,593		1,785,598
Other debt securities	237,385		258,136		221,076		224,528		364,828
Unrealized gain (loss) on debt securities	(838,028	)	(935,054	)	(896,346	)	(961,695	)	(1,272,127	)
Total available for sale debt securities	9,085,013		9,213,522		9,147,403		8,671,705		8,759,477
Trading debt securities	51,131		38,298		56,440		47,440		46,565
Equity securities	54,472		57,028		56,758		85,118		127,584
Other securities	216,560		233,461		222,529		217,377		228,403
Total investment securities	9,407,176		9,542,309		9,483,130		9,021,640		9,162,029
Federal funds sold	158		2,089		826		12		1,612
Securities purchased under agreements to resell	850,000		788,889		566,307		474,997		303,586
Interest earning deposits with banks	2,036,803		2,388,504		2,610,315		2,565,188		2,099,777
Other assets	1,671,763		1,698,296		1,701,822		1,648,321		1,651,808
Total assets	$31,297,059		$31,502,166		$31,273,912		$30,580,468		$30,235,950
LIABILITIES AND EQUITY:
Non-interest bearing deposits	$7,356,882		$7,298,686		$7,464,255		$7,284,834		$7,297,955
Savings	1,303,391		1,294,174		1,281,291		1,303,675		1,328,989
Interest checking and money market	13,901,634		13,906,827		13,679,666		13,242,398		13,162,118
Certificates of deposit of less than $100,000	984,845		991,826		1,061,783		1,055,683		1,003,798
Certificates of deposit of $100,000 and over	1,371,428		1,363,655		1,451,851		1,464,143		1,492,592
Total deposits	24,918,180		24,855,168		24,938,846		24,350,733		24,285,452
Borrowings:
Federal funds purchased	129,891		128,340		121,781		206,644		265,042
Securities sold under agreements to repurchase	2,371,031		2,723,227		2,445,956		2,351,870		2,254,849
Other borrowings	2,748		616		1,067		496		838
Total borrowings	2,503,670		2,852,183		2,568,804		2,559,010		2,520,729
Other liabilities	360,204		421,370		375,463		405,490		399,080
Total liabilities	27,782,054		28,128,721		27,883,113		27,315,233		27,205,261
Equity	3,515,005		3,373,445		3,390,799		3,265,235		3,030,689
Total liabilities and equity	$31,297,059		$31,502,166		$31,273,912		$30,580,468		$30,235,950

COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES
(Unaudited)	For the Three Months Ended
	Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Jun. 30, 2024
ASSETS:
Loans:
Business (1)	5.72	%	5.75	%	5.86	%	6.17	%	6.11	%
Real estate — construction and land	7.39		7.30		7.75		8.44		8.36
Real estate — business	5.92		5.88		6.01		6.28		6.26
Real estate — personal	4.30		4.28		4.17		4.10		4.04
Consumer	6.43		6.52		6.52		6.64		6.56
Revolving home equity	7.41		7.26		7.28		7.69		7.68
Consumer credit card	13.18		13.49		13.60		14.01		13.96
Overdrafts	—		—		—		—		—
Total loans	6.01		6.02		6.11		6.35		6.30
Loans held for sale	9.22		5.89		7.65		6.34		7.54
Investment securities:
U.S. government and federal agency obligations	4.28		4.09		3.86		3.68		5.04
Government-sponsored enterprise obligations	2.38		2.40		2.36		2.37		2.39
State and municipal obligations (1)	2.05		2.05		2.01		2.00		2.00
Mortgage-backed securities	2.08		2.08		2.17		1.95		2.09
Asset-backed securities	3.73		3.46		2.99		2.66		2.50
Other debt securities	2.94		2.69		2.11		2.07		2.01
Total available for sale debt securities	2.95		2.83		2.70		2.41		2.50
Trading debt securities (1)	4.63		4.97		4.26		4.52		4.95
Equity securities (1)	6.26		8.02		6.58		4.44		2.82
Other securities (1)	11.63		7.85		5.75		6.09		13.20
Total investment securities	3.16		2.98		2.80		2.52		2.75
Federal funds sold	5.08		5.63		5.78		—		6.74
Securities purchased under agreements to resell	4.02		3.81		3.57		3.53		3.21
Interest earning deposits with banks	4.46		4.46		4.78		5.43		5.48
Total interest earning assets	4.90		4.81		4.83		4.96		4.98
LIABILITIES AND EQUITY:
Interest bearing deposits:
Savings	.05		.05		.05		.07		.06
Interest checking and money market	1.49		1.52		1.63		1.74		1.73
Certificates of deposit of less than $100,000	3.44		3.65		3.91		4.17		4.22
Certificates of deposit of $100,000 and over	3.78		3.96		4.24		4.51		4.55
Total interest bearing deposits	1.67		1.72		1.87		2.00		1.99
Borrowings:
Federal funds purchased	4.37		4.37		4.71		5.38		5.42
Securities sold under agreements to repurchase	2.85		2.86		3.11		3.56		3.44
Other borrowings	3.79		.66		3.36		4.81		3.84
Total borrowings	2.93		2.93		3.18		3.71		3.65
Total interest bearing liabilities	1.83	%	1.89	%	2.04	%	2.22	%	2.21	%
Net yield on interest earning assets	3.70	%	3.56	%	3.49	%	3.50	%	3.55	%
(1) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES CREDIT QUALITY
	For the Three Months Ended										For the Six Months Ended
(Unaudited) (In thousands, except ratios)	Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Jun. 30, 2024		Jun. 30, 2025		Jun. 30, 2024
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$167,031		$162,742		$160,839		$158,557		$160,465		$162,742		$162,395
Provision for credit losses on loans	7,919		15,095		12,557		11,861		7,849		23,014		14,796
Net charge-offs (recoveries):
Commercial portfolio:
Business	432		46		335		114		622		478		645
Real estate — construction and land	24		—		—		—		—		24		—
Real estate — business	(425	)	377		50		(7	)	(8	)	(48	)	(149	)
	31		423		385		107		614		454		496
Personal banking portfolio:
Consumer credit card	7,085		6,967		6,557		6,273		6,746		14,052		13,181
Consumer	2,168		2,852		3,237		2,759		1,804		5,020		3,787
Overdraft	360		495		470		464		521		855		1,078
Real estate — personal	35		72		8		128		79		107		103
Revolving home equity	11		(3	)	(3	)	(152	)	(7	)	8		(11	)
	9,659		10,383		10,269		9,472		9,143		20,042		18,138
Total net loan charge-offs	9,690		10,806		10,654		9,579		9,757		20,496		18,634
Balance at end of period	$165,260		$167,031		$162,742		$160,839		$158,557		$165,260		$158,557
LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$16,005		$18,327		$18,935		$17,984		$20,705
NET CHARGE-OFF RATIOS (1)
Commercial portfolio:
Business	.03	%	—	%	.02	%	.01	%	.04	%	.02	%	.02	%
Real estate — construction and land	.01		—		—		—		—		—		—
Real estate — business	(.05	)	.04		.01		—		—		—		(.01	)
	—		.02		.01		—		.02		.01		.01
Personal banking portfolio:
Consumer credit card	5.08		5.04		4.59		4.46		4.91		5.06		4.75
Consumer	.40		.56		.62		.52		.34		.48		.36
Overdraft	25.50		34.26		33.22		33.81		43.15		29.93		34.54
Real estate — personal	—		.01		—		.02		.01		.01		.01
Revolving home equity	.01		—		—		(.18	)	(.01	)	—		(.01	)
	.63		.70		.67		.62		.61		.66		.60
Total	.22	%	.25	%	.25	%	.22	%	.23	%	.24	%	.22	%
CREDIT QUALITY RATIOS
Non-accrual loans to total loans	.11	%	.13	%	.11	%	.11	%	.11	%
Allowance for credit losses on loans to total loans	.94		.96		.95		.94		.92
NON-ACCRUAL AND PAST DUE LOANS
Non-accrual loans:
Business	$410		$1,112		$101		$354		$504
Real estate — construction and land	426		220		220		—		—
Real estate — business	15,109		18,305		14,954		14,944		15,050
Real estate — personal	948		989		1,026		1,144		1,772
Revolving home equity	1,977		1,977		1,977		1,977		1,977
Total	18,870		22,603		18,278		18,419		19,303
Loans past due 90 days and still accruing interest	$25,303		$19,417		$24,516		$21,986		$18,566
(1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale).

COMMERCE BANCSHARES, INC.
Management Discussion of Second Quarter Results
June 30, 2025

For the quarter ended June 30, 2025, net income amounted to $152.5 million, compared to $131.6 million in the previous quarter and $139.6 million in the same quarter last year. The increase in net income compared to the previous quarter was primarily the result of higher net interest income, non-interest income, and net investment securities gains, coupled with lower provision for credit losses, partly offset by higher non-interest expense. The net yield on interest earning assets increased 14 basis points over the previous quarter to 3.70%. Average loans and deposits increased $253.1 million and $63.0 million, respectively, while average available for sale debt securities, at fair value, decreased $128.5 million compared to the prior quarter. For the quarter, the return on average assets was 1.95%, the return on average equity was 17.40%, and the efficiency ratio was 54.8%.

Balance Sheet Review

During the 2nd quarter of 2025, average loans totaled $17.5 billion, an increase of $253.1 million over the prior quarter, and an increase of $321.3 million over the same quarter last year. Compared to the previous quarter, average balances of business loans and consumer loans grew $141.1 million and $66.3 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $19.7 million, compared to $14.9 million in the prior quarter.

Total average available for sale debt securities decreased $128.5 million compared to the previous quarter to $9.1 billion, at fair value. The decrease in available for sale debt securities was mainly the result of lower average balances of mortgage-backed securities and asset-backed securities. During the 2nd quarter of 2025, the unrealized loss on available for sale debt securities decreased $68.5 million to $764.4 million, at period end. Also, during the 2nd quarter of 2025, purchases of available for sale debt securities totaled $24.7 million with a weighted average yield of approximately 4.01%, and sales, maturities and pay downs of available for sale debt securities were $451.5 million. On June 30, 2025, the duration of the available for sale investment portfolio was 4.2 years, and maturities and pay downs of approximately $1.3 billion are expected to occur during the next 12 months.

Total average deposits increased $63.0 million this quarter compared to the previous quarter. The increase in deposits mostly resulted from higher average demand deposit balances of $58.2 million. Compared to the previous quarter, total average wealth deposits grew $71.1 million. The average loans to deposits ratio was 70.2% in the current quarter and 69.4% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.4 billion, decreased $348.5 million to $2.5 billion in the 2nd quarter of 2025.

Net Interest Income

Net interest income in the 2nd quarter of 2025 amounted to $280.1 million, an increase of $11.0 million over the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $11.0 million over the previous quarter to $282.4 million. The increase in net interest income was mostly due to higher interest income on loans and investment securities and lower interest expense on borrowings and deposits, partly offset by lower interest income on deposits with banks. The net yield (FTE) on earning assets increased to 3.70%, from 3.56% in the prior quarter.

Compared to the previous quarter, interest income on loans (FTE) increased $6.2 million, mostly due to higher average rates earned on commercial banking and personal real estate loans and higher average balances of commercial banking and consumer loans. The average yield (FTE) on the loan portfolio decreased one basis point to 6.01% this quarter.

Interest income on investment securities (FTE) increased $3.6 million over the prior quarter, mostly due to higher average balances and rates earned on U.S. government and federal agency securities and higher rates on asset-backed securities and other securities, partially offset by lower average balances of mortgage- and asset-backed securities. Interest income earned on U.S. government and federal agency securities included the impact of $1.5 million in higher inflation income from Treasury inflation-protected securities compared to previous quarter. Interest on other securities included $1.8 million of dividend and non-accrual interest income related to a private equity investment. Additionally, the Company recorded a $1.0 million adjustment to premium amortization on June 30, 2025, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. This increase was higher than the $539 thousand adjustment that increased interest income in the prior quarter. The average yield (FTE) on total investment securities was 3.16% in the current quarter, compared to 2.98% in the previous quarter.

Compared to the previous quarter, interest income on deposits with banks decreased $3.6 million, due to lower average balances. Additionally, interest earned on securities purchased under agreements to resell increased $1.1 million due to higher average balances and rates.

Interest expense decreased $3.8 million compared to the previous quarter, mainly due to lower average rates paid on deposits and lower average balances of borrowings. Interest expense on borrowings decreased $2.3 million mostly due to a decline of $352.2 million in average securities sold under repurchase agreement balances. Interest expense on deposits decreased $1.5 million mostly due to lower average rates. The average rate paid on interest bearing deposits totaled 1.67% in the current quarter compared to 1.72% in the prior quarter. The overall rate paid on interest bearing liabilities was 1.83% in the current quarter and 1.89% in the prior quarter.

Non-Interest Income

In the 2nd quarter of 2025, total non-interest income amounted to $165.6 million, an increase of $13.4 million, or 8.8%, over the same period last year and an increase of $6.7 million over the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees and gains on sales of assets. The increase in non-interest income compared to the prior quarter was mainly due to higher gains on sales of assets of $3.3 million.

Total net bank card fees in the current quarter decreased $1.1 million, or 2.3%, compared to the same period last year, and increased $769 thousand compared to the prior quarter. Net corporate card fees decreased $270 thousand compared to the same quarter of last year mainly due to lower interchange fees, mostly offset by lower rewards expense. Net merchant fees increased $68 thousand, or 1.2%, due to lower network expense. Net debit card fees decreased $123 thousand, or 1.1%, while net credit card fees decreased $791 thousand, or 19.6%, mostly due to higher rewards expense. Total net bank card fees this quarter were comprised of fees on corporate card ($25.9 million), debit card ($11.3 million), merchant ($5.9 million) and credit card ($3.2 million) transactions.

In the current quarter, trust fees increased $3.3 million, or 6.3%, over the same period last year, mostly resulting from higher private client fees. Compared to the same period last year, deposit account fees increased $923 thousand, or 3.6%, mostly due to higher corporate cash management fees, while capital market fees increased $1.4 million, or 29.7%, mostly due to higher trading securities income.

Other non-interest income increased over the same period last year primarily due to higher gains on sales of assets of $5.5 million and higher tax credit sales income of $956 thousand. Additionally, higher fair value adjustments of $1.3 million were recorded this quarter compared to the 2nd quarter of 2024 on the Company’s deferred compensation plan assets and liabilities, which affect both other income and other expense. For the 2nd quarter of 2025, non-interest income comprised 37.2% of the Company’s total revenue.

Investment Securities Gains and Losses

The Company recorded net securities gains of $437 thousand in the current quarter, compared to losses of $7.6 million in the prior quarter and gains of $3.2 million in the 2nd quarter of 2024. Net securities gains in the current quarter mostly resulted from net fair value adjustments of $4.4 million, partly offset by losses of $4.2 million on sales of available for sale debt securities.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $244.4 million, compared to $232.2 million in the same period last year and $238.4 million in the prior quarter. The increase in non-interest expense over the same period last year was mainly due to higher salaries and benefits expense, data processing and software, and professional and other services expense, partly offset by lower contribution expense. The increase in non-interest expense compared to the prior quarter was mainly due to higher salaries expense and professional and other services expense, partly offset by lower employee benefits expense.

Compared to the 2nd quarter of 2024, salaries and employee benefits expense increased $5.9 million, or 4.0%, mostly due to higher full-time salaries of $2.1 million, incentive compensation of $2.2 million and healthcare expense of $2.3 million. Full-time equivalent employees totaled 4,658 and 4,724 on June 30, 2025 and 2024, respectively.

Compared to the same period last year, deposit insurance expense increased $958 thousand, mostly due to a $1.2 million accrual adjustment that lowered expense in the prior year from a one-time special assessment by the FDIC to replenish the Deposit Insurance Fund. Data processing and software expense increased $1.4 million due to higher costs for service providers and software. Professional and other services, which increased $4.4 million compared to the 2nd quarter of 2024, included $1.9 million of acquisition related legal and professional services expense. Other non-interest expense decreased mainly due to a $5.0 million donation to a related charitable foundation in 2024 that did not reoccur.

Income Taxes

The effective tax rate for the Company was 21.8% in the current quarter, 21.9% in the prior quarter, and 21.7% in the 2nd quarter of 2024.

Credit Quality

Net loan charge-offs in the 2nd quarter of 2025 amounted to $9.7 million, compared to $10.8 million in the prior quarter, and $9.8 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .22% in the current quarter, .25% in the previous quarter, and .23% in the same quarter of last year. Compared to the prior quarter, net loan charge-offs on consumer loans and business real estate loans decreased $684 thousand and $802 thousand, respectively.

In the 2nd quarter of 2025, annualized net loan charge-offs on average consumer credit card loans were 5.08%, compared to 5.04% in the previous quarter and 4.91% in the same quarter last year. Consumer loan net charge-offs were .40% of average consumer loans in the current quarter, .56% in the prior quarter, and .34% in the same quarter last year.

On June 30, 2025, the allowance for credit losses on loans totaled $165.3 million, or .94% of total loans, and decreased $1.8 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments on June 30, 2025 was $16.0 million, a decrease of $2.3 million compared to the liability on March 31, 2025.

On June 30, 2025, total non-accrual loans amounted to $18.9 million, a decrease of $3.7 million compared to the previous quarter. On June 30, 2025, the balance of non-accrual loans, which represented .11% of loans outstanding, included business loans of $410 thousand, revolving home equity loans of $2.0 million, personal real estate loans of $948 thousand, construction loans of $426 thousand, and business real estate loans of $15.1 million. Loans more than 90 days past due and still accruing interest totaled $25.3 million on June 30, 2025.

Other

During the 2nd quarter of 2025, the Company paid a cash dividend of $.275 per common share, representing a 7.0% increase over the same period last year. The Company purchased 171,899 shares of treasury stock during the current quarter at an average price of $60.54.

On June 16, 2025, the Company announced that it has entered into a definitive merger agreement to acquire FineMark Holdings, Inc. (OTCQX:FNBT) (“FineMark”), Ft. Meyers, Florida, with 13 banking locations in Florida, Arizona, and South Carolina. As of March 31, 2025, FineMark had loans and deposits of $2.6 billion and $3.1 billion, respectively, and $7.7 billion of investment and trust assets under administration. It is expected that this transaction will close on January 1, 2026.

Forward Looking Information

This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions, and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. Additional information about risks and uncertainties is included in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections within the Company's Annual Report on Form 10-K.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250715967721/en/

Matt Burkemper, Investor Relations

(314) 746-7485

www.commercebank.com

matthew.burkemper@commercebank.com

Source: Commerce Bancshares, Inc.