Commerce Bancshares, Inc.NASDAQ: CBSH

Commerce Bancshares, Inc. Reports Third Quarter Earnings Per Share of $1.06

Oct 16, 2025 · Issued by Commerce Bancshares, Inc. via Business Wire

KANSAS CITY, Mo.--(BUSINESS WIRE)-- Commerce Bancshares, Inc. announced earnings of $1.06 per share for the three months ended September 30, 2025, compared to $1.01 per share in the same quarter last year and $1.14 per share in the second quarter of 2025. Net income for the third quarter of 2025 amounted to $141.5 million, compared to $138.0 million in the third quarter of 2024 and $152.5 million in the prior quarter.

For the nine months ended September 30, 2025, earnings per share totaled $3.18, compared to $2.86 for the first nine months of 2024. Net income amounted to $425.6 million for the nine months ended September 30, 2025, compared to $390.2 million in the comparable period last year. For the year to date, the return on average assets was 1.81%, and the return on average equity was 16.15%.

In making this announcement, John Kemper, Chief Executive Officer, said, “Commerce delivered another strong quarter, underscoring the resilience of our diversified operating model and the dedication of our talented team. Our third quarter results reflect steady loan balances, robust fee income, and disciplined expense management, all of which contributed to another period of high profitability.

“Our return on average assets remained solid at 1.78%, and our return on average equity was 15.26%. We maintained excellent credit quality, with non-accrual loans at just .09% of total loans, and added a modest reserve to the allowance for credit losses. Our capital and liquidity positions remain strong, supporting our ability to serve customers and invest in future growth.

“Net interest income was $279.5 million, reflecting the continued benefits of our strong balance sheet, even as the interest rate environment remains dynamic. Non-interest income was $161.5 million, led by growth in trust and deposit fees, and comprised 36.6% of total revenue.”

Mr. Kemper continued, “We look forward to welcoming FineMark's team, clients, and shareholders to Commerce on January 1, 2026, our expected close date, which will mark a strategic milestone after years of relationship building and months of integration planning by our dedicated teams.

“As we continue to build on our momentum, our franchise is well-positioned to execute on our long-term strategies, deliver value to our shareholders, and support our customers and communities.”

Third Quarter 2025 Financial Highlights:

Net interest income was $279.5 million, a $690 thousand decrease compared to the prior quarter. The net yield on interest earning assets decreased six basis points to 3.64%.
Non-interest income totaled $161.5 million, an increase of $2.5 million, or 1.6%, over the same quarter last year.
Trust fees grew $3.7 million, or 6.8%, compared to the same period last year, mostly due to higher private client fees.
Non-interest expense totaled $244.0 million, an increase of $6.4 million, or 2.7%, over the same quarter last year.
Average loan balances totaled $17.5 billion, flat compared to the prior quarter.
Total average available for sale debt securities decreased $214.5 million compared to the prior quarter to $8.9 billion, at fair value.
Total average deposits decreased $140.1 million, or .6%, compared to the prior quarter. The average rate paid on interest bearing deposits increased four basis points to 1.71%, compared to the prior quarter.
The ratio of annualized net loan charge-offs to average loans was .23% in the current quarter compared to .22% in the prior quarter.
The allowance for credit losses on loans increased $10.4 million during the third quarter of 2025 to $175.7 million, and the ratio of the allowance for credit losses on loans to total loans was .99% at September 30, 2025, compared to .94% at June 30, 2025.
Total assets on September 30, 2025 were $32.3 billion, flat compared to the prior quarter.
For the quarter, the return on average assets was 1.78%, the return on average equity was 15.26%, and the efficiency ratio was 55.3%.

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 Nine Months Ended
(Unaudited) (Dollars in thousands, except per share data)	Sep. 30, 2025		Jun. 30, 2025		Sep. 30, 2024		Sep. 30, 2025		Sep. 30, 2024
FINANCIAL SUMMARY
Net interest income	$279,457		$280,147		$262,351		$828,706		$773,599
Non-interest income	161,511		165,613		159,025		486,073		460,117
Total revenue	440,968		445,760		421,376		1,314,779		1,233,716
Investment securities gains (losses)	7,885		437		3,872		731		6,846
Provision for credit losses	20,061		5,597		9,140		40,145		19,395
Non-interest expense	244,018		244,437		237,600		726,831		715,511
Income before taxes	184,774		196,163		178,508		548,534		505,656
Income taxes	41,152		42,400		38,245		120,516		108,499
Non-controlling interest expense (income)	2,104		1,284		2,256		2,429		6,934
Net income attributable to Commerce Bancshares, Inc.	$141,518		$152,479		$138,007		$425,589		$390,223
Earnings per common share:
Net income — basic	$1.06		$1.14		$1.02		$3.18		$2.87
Net income — diluted	$1.06		$1.14		$1.01		$3.18		$2.86
Effective tax rate	22.53	%	21.76	%	21.70	%	22.07	%	21.76	%
Fully-taxable equivalent net interest income	$281,770		$282,428		$264,638		$835,614		$780,528
Average total interest earning assets (1)	$30,732,665		$30,629,715		$30,051,845		$30,753,879		$30,144,221
Diluted wtd. average shares outstanding	132,463,271		132,582,673		134,394,825		132,703,659		135,024,776
RATIOS
Average loans to deposits (2)	70.61	%	70.22	%	69.93	%	70.08	%	70.17	%
Return on total average assets	1.78		1.95		1.80		1.81		1.71
Return on average equity (3)	15.26		17.40		16.81		16.15		16.92
Non-interest income to total revenue	36.63		37.15		37.74		36.97		37.30
Efficiency ratio (4)	55.26		54.77		56.31		55.21		57.92
Net yield on interest earning assets	3.64		3.70		3.50		3.63		3.46
EQUITY SUMMARY
Cash dividends per share	$.275		$.275		$.257		$.825		$.771
Cash dividends on common stock	$36,733		$36,761		$34,794		$110,360		$104,894
Book value per share (5)	$28.51		$27.43		$25.62
Market value per share (5)	$59.76		$62.17		$56.57
High market value per share	$66.34		$66.14		$62.72
Low market value per share	$57.92		$52.69		$52.27
Common shares outstanding (5)	133,021,127		133,419,701		134,797,835
Tangible common equity to tangible assets (6)	11.27	%	10.86	%	10.47	%
Tier I leverage ratio	12.95	%	12.75	%	12.31	%
OTHER QTD INFORMATION
Number of bank/ATM locations	239		239		244
Full-time equivalent employees	4,666		4,658		4,711
(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 Nine Months Ended
(Unaudited) (In thousands, except per share data)	Sep. 30, 2025		Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Sep. 30, 2025		Sep. 30, 2024
Interest income	$374,105		$371,636		$364,365		$369,405		$372,068		$1,110,106		$1,100,152
Interest expense	94,648		91,489		95,263		102,758		109,717		281,400		326,553
Net interest income	279,457		280,147		269,102		266,647		262,351		828,706		773,599
Provision for credit losses	20,061		5,597		14,487		13,508		9,140		40,145		19,395
Net interest income after credit losses	259,396		274,550		254,615		253,139		253,211		788,561		754,204
NON-INTEREST INCOME
Trust fees	58,412		55,571		56,592		56,345		54,689		170,575		158,085
Bank card transaction fees	45,551		46,362		45,593		47,807		47,570		137,506		141,977
Deposit account charges and other fees	27,427		26,248		26,622		25,480		25,380		80,297		74,856
Capital market fees	5,138		6,175		5,112		5,129		5,995		16,425		14,647
Consumer brokerage services	6,698		5,383		4,785		4,636		4,619		16,866		13,505
Loan fees and sales	3,465		3,419		3,404		2,874		3,444		10,288		10,016
Other	14,820		22,455		16,841		13,165		17,328		54,116		47,031
Total non-interest income	161,511		165,613		158,949		155,436		159,025		486,073		460,117
INVESTMENT SECURITIES GAINS (LOSSES), NET	7,885		437		(7,591	)	977		3,872		731		6,846
NON-INTEREST EXPENSE
Salaries and employee benefits	157,461		155,025		153,078		153,819		153,122		465,564		454,043
Data processing and software	33,555		32,904		32,238		32,514		32,194		98,697		94,876
Net occupancy	13,474		13,654		14,020		13,694		13,411		41,148		39,529
Professional and other services	11,284		12,973		10,026		8,982		8,830		34,283		26,095
Marketing	6,670		5,974		5,843		5,683		7,278		18,487		16,670
Equipment	5,421		5,157		5,248		5,232		5,286		15,826		15,387
Supplies and communication	4,837		4,962		5,046		4,948		4,963		14,845		14,343
Deposit Insurance	3,074		3,312		3,744		3,181		2,930		10,130		13,301
Other	8,242		10,476		9,133		7,665		9,586		27,851		41,267
Total non-interest expense	244,018		244,437		238,376		235,718		237,600		726,831		715,511
Income before income taxes	184,774		196,163		167,597		173,834		178,508		548,534		505,656
Less income taxes	41,152		42,400		36,964		36,590		38,245		120,516		108,499
Net income	143,622		153,763		130,633		137,244		140,263		428,018		397,157
Less non-controlling interest expense (income)	2,104		1,284		(959	)	1,136		2,256		2,429		6,934
Net income attributable to Commerce Bancshares, Inc.	$141,518		$152,479		$131,592		$136,108		$138,007		$425,589		$390,223
Net income per common share — basic	$1.06		$1.14		$0.98		$1.01		$1.02		$3.18		$2.87
Net income per common share — diluted	$1.06		$1.14		$0.98		$1.01		$1.01		$3.18		$2.86
OTHER INFORMATION
Return on total average assets	1.78	%	1.95	%	1.69	%	1.73	%	1.80	%	1.81	%	1.71	%
Return on average equity (1)	15.26		17.40		15.82		15.97		16.81		16.15		16.92
Efficiency ratio (2)	55.26		54.77		55.61		55.77		56.31		55.21		57.92
Effective tax rate	22.53		21.76		21.93		21.19		21.70		22.07		21.76
Net yield on interest earning assets	3.64		3.70		3.56		3.49		3.50		3.63		3.46
Fully-taxable equivalent net interest income	$281,770		$282,428		$271,416		$268,935		$264,638		$835,614		$780,528
(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)	Sep. 30, 2025		Jun. 30, 2025		Sep. 30, 2024
ASSETS
Loans
Business	$6,414,792		$6,328,684		$6,048,328
Real estate — construction and land	1,433,652		1,405,398		1,381,607
Real estate — business	3,745,000		3,757,778		3,586,999
Real estate — personal	3,070,980		3,058,845		3,043,391
Consumer	2,171,599		2,157,867		2,108,281
Revolving home equity	364,241		364,429		342,376
Consumer credit card	575,317		576,151		574,746
Overdrafts	11,186		16,316		4,272
Total loans	17,786,767		17,665,468		17,090,000
Allowance for credit losses on loans	(175,671	)	(165,260	)	(160,839	)
Net loans	17,611,096		17,500,208		16,929,161
Loans held for sale	2,538		3,592		1,707
Investment securities:
Available for sale debt securities	8,998,586		8,915,779		9,167,681
Trading debt securities	56,282		46,630		42,645
Equity securities	53,193		54,511		57,115
Other securities	227,430		219,906		216,543
Total investment securities	9,335,491		9,236,826		9,483,984
Federal funds sold	—		—		10
Securities purchased under agreements to resell	850,000		850,000		475,000
Interest earning deposits with banks	2,477,668		2,624,264		2,642,048
Cash and due from banks	476,441		522,049		507,941
Premises and equipment — net	483,000		477,401		469,986
Goodwill	146,539		146,539		146,539
Other intangible assets — net	13,329		13,333		13,722
Other assets	892,586		910,035		823,494
Total assets	$32,288,688		$32,284,247		$31,493,592
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$7,489,645		$7,393,559		$7,396,153
Savings, interest checking and money market	15,551,799		15,727,549		15,216,557
Certificates of deposit of less than $100,000	1,002,640		986,014		1,113,962
Certificates of deposit of $100,000 and over	1,413,965		1,386,906		1,511,120
Total deposits	25,458,049		25,494,028		25,237,792
Federal funds purchased and securities sold under agreements to repurchase	2,473,065		2,596,461		2,182,229
Other borrowings	9,270		15,049		10,201
Other liabilities	555,257		518,595		609,831
Total liabilities	28,495,641		28,624,133		28,040,053
Stockholders’ equity:
Common stock	676,054		676,054		655,322
Capital surplus	3,390,526		3,386,218		3,154,300
Retained earnings	360,723		255,938		338,512
Treasury stock	(121,972	)	(96,589	)	(139,149	)
Accumulated other comprehensive income (loss)	(533,666	)	(581,049	)	(576,904	)
Total stockholders’ equity	3,771,665		3,640,572		3,432,081
Non-controlling interest	21,382		19,542		21,458
Total equity	3,793,047		3,660,114		3,453,539
Total liabilities and equity	$32,288,688		$32,284,247		$31,493,592

COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCE SHEETS

(Unaudited) (In thousands)	For the Three Months Ended
(Unaudited) (In thousands)	Sep. 30, 2025		Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024
ASSETS:
Loans:
Business	$6,230,019		$6,247,252		$6,106,185		$5,963,217		$5,966,797
Real estate — construction and land	1,396,977		1,430,758		1,415,349		1,411,437		1,400,563
Real estate — business	3,715,597		3,692,405		3,667,833		3,636,026		3,580,772
Real estate — personal	3,059,913		3,048,895		3,045,876		3,047,494		3,047,563
Consumer	2,160,637		2,148,666		2,082,360		2,087,237		2,129,483
Revolving home equity	360,820		362,312		358,684		350,541		335,817
Consumer credit card	563,351		559,858		560,534		568,138		559,410
Overdrafts	7,037		5,663		5,860		5,628		5,460
Total loans	17,494,351		17,495,809		17,242,681		17,069,718		17,025,865
Allowance for credit losses on loans	(164,623	)	(166,391	)	(162,186	)	(160,286	)	(158,003	)
Net loans	17,329,728		17,329,418		17,080,495		16,909,432		16,867,862
Loans held for sale	2,369		1,741		1,584		2,080		2,448
Investment securities:
U.S. government and federal agency obligations	2,693,327		2,623,896		2,586,944		2,459,485		1,888,985
Government-sponsored enterprise obligations	55,014		55,038		55,330		55,428		55,583
State and municipal obligations	756,137		780,063		804,363		831,695		856,620
Mortgage-backed securities	4,461,056		4,641,295		4,788,102		4,905,187		5,082,091
Asset-backed securities	1,466,770		1,585,364		1,655,701		1,570,878		1,525,593
Other debt securities	204,281		237,385		258,136		221,076		224,528
Unrealized gain (loss) on debt securities	(766,025	)	(838,028	)	(935,054	)	(896,346	)	(961,695	)
Total available for sale debt securities	8,870,560		9,085,013		9,213,522		9,147,403		8,671,705
Trading debt securities	56,032		51,131		38,298		56,440		47,440
Equity securities	50,823		54,472		57,028		56,758		85,118
Other securities	220,041		216,560		233,461		222,529		217,377
Total investment securities	9,197,456		9,407,176		9,542,309		9,483,130		9,021,640
Federal funds sold	23		158		2,089		826		12
Securities purchased under agreements to resell	850,000		850,000		788,889		566,307		474,997
Interest earning deposits with banks	2,422,441		2,036,803		2,388,504		2,610,315		2,565,188
Other assets	1,709,247		1,671,763		1,698,296		1,701,822		1,648,321
Total assets	$31,511,264		$31,297,059		$31,502,166		$31,273,912		$30,580,468

LIABILITIES AND EQUITY:
Non-interest bearing deposits	$7,345,156		$7,356,882		$7,298,686		$7,464,255		$7,284,834
Savings	1,283,671		1,303,391		1,294,174		1,281,291		1,303,675
Interest checking and money market	13,740,770		13,901,634		13,906,827		13,679,666		13,242,398
Certificates of deposit of less than $100,000	991,877		984,845		991,826		1,061,783		1,055,683
Certificates of deposit of $100,000 and over	1,416,572		1,371,428		1,363,655		1,451,851		1,464,143
Total deposits	24,778,046		24,918,180		24,855,168		24,938,846		24,350,733
Borrowings:
Federal funds purchased	130,622		129,891		128,340		121,781		206,644
Securities sold under agreements to repurchase	2,519,660		2,371,031		2,723,227		2,445,956		2,351,870
Other borrowings	1,860		2,748		616		1,067		496
Total borrowings	2,652,142		2,503,670		2,852,183		2,568,804		2,559,010
Other liabilities	402,265		360,204		421,370		375,463		405,490
Total liabilities	27,832,453		27,782,054		28,128,721		27,883,113		27,315,233
Equity	3,678,811		3,515,005		3,373,445		3,390,799		3,265,235
Total liabilities and equity	$31,511,264		$31,297,059		$31,502,166		$31,273,912		$30,580,468

COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE RATES

(Unaudited)	For the Three Months Ended
(Unaudited)	Sep. 30, 2025		Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024
ASSETS:
Loans:
Business (1)	5.72	%	5.72	%	5.75	%	5.86	%	6.17	%
Real estate — construction and land	7.37		7.39		7.30		7.75		8.44
Real estate — business	5.92		5.92		5.88		6.01		6.28
Real estate — personal	4.34		4.30		4.28		4.17		4.10
Consumer	6.42		6.43		6.52		6.52		6.64
Revolving home equity	7.94		7.41		7.26		7.28		7.69
Consumer credit card	13.21		13.18		13.49		13.60		14.01
Overdrafts	—		—		—		—		—
Total loans	6.02		6.01		6.02		6.11		6.35
Loans held for sale	6.03		9.22		5.89		7.65		6.34
Investment securities:
U.S. government and federal agency obligations	4.06		4.28		4.09		3.86		3.68
Government-sponsored enterprise obligations	2.35		2.38		2.40		2.36		2.37
State and municipal obligations (1)	2.05		2.05		2.05		2.01		2.00
Mortgage-backed securities	2.01		2.08		2.08		2.17		1.95
Asset-backed securities	3.69		3.73		3.46		2.99		2.66
Other debt securities	2.97		2.94		2.69		2.11		2.07
Total available for sale debt securities	2.86		2.95		2.83		2.70		2.41
Trading debt securities (1)	4.67		4.63		4.97		4.26		4.52
Equity securities (1)	6.09		6.26		8.02		6.58		4.44
Other securities (1)	7.29		11.63		7.85		5.75		6.09
Total investment securities	2.99		3.16		2.98		2.80		2.52
Federal funds sold	—		5.08		5.63		5.78		—
Securities purchased under agreements to resell	4.00		4.02		3.81		3.57		3.53
Interest earning deposits with banks	4.45		4.46		4.46		4.78		5.43
Total interest earning assets	4.86		4.90		4.81		4.83		4.96

LIABILITIES AND EQUITY:
Interest bearing deposits:
Savings	.05		.05		.05		.05		.07
Interest checking and money market	1.54		1.49		1.52		1.63		1.74
Certificates of deposit of less than $100,000	3.33		3.44		3.65		3.91		4.17
Certificates of deposit of $100,000 and over	3.71		3.78		3.96		4.24		4.51
Total interest bearing deposits	1.71		1.67		1.72		1.87		2.00
Borrowings:
Federal funds purchased	4.34		4.37		4.37		4.71		5.38
Securities sold under agreements to repurchase	2.88		2.85		2.86		3.11		3.56
Other borrowings	1.71		3.79		.66		3.36		4.81
Total borrowings	2.95		2.93		2.93		3.18		3.71
Total interest bearing liabilities	1.87	%	1.83	%	1.89	%	2.04	%	2.22	%

Net yield on interest earning assets	3.64	%	3.70	%	3.56	%	3.49	%	3.50	%
(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 Nine Months Ended
(Unaudited) (In thousands, except ratios)	Sep. 30, 2025		Jun. 30, 2025		Mar. 31, 2025		Dec. 31, 2024		Sep. 30, 2024		Sep. 30, 2025		Sep. 30, 2024
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period	$165,260		$167,031		$162,742		$160,839		$158,557		$162,742		$162,395
Provision for credit losses on loans	20,739		7,919		15,095		12,557		11,861		43,753		26,657
Net charge-offs (recoveries):
Commercial portfolio:
Business	826		432		46		335		114		1,304		759
Real estate — construction and land	—		24		—		—		—		24		—
Real estate — business	(23	)	(425	)	377		50		(7	)	(71	)	(156	)
	803		31		423		385		107		1,257		603
Personal banking portfolio:
Consumer credit card	6,515		7,085		6,967		6,557		6,273		20,567		19,454
Consumer	2,310		2,168		2,852		3,237		2,759		7,330		6,546
Overdraft	432		360		495		470		464		1,287		1,542
Real estate — personal	269		35		72		8		128		376		231
Revolving home equity	(1	)	11		(3	)	(3	)	(152	)	7		(163	)
	9,525		9,659		10,383		10,269		9,472		29,567		27,610
Total net loan charge-offs	10,328		9,690		10,806		10,654		9,579		30,824		28,213
Balance at end of period	$175,671		$165,260		$167,031		$162,742		$160,839		$175,671		$160,839
LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$15,327		$16,005		$18,327		$18,935		$17,984
NET CHARGE-OFF RATIOS (1)
Commercial portfolio:
Business	.05	%	.03	%	—	%	.02	%	.01	%	.03	%	.02	%
Real estate — construction and land	—		.01		—		—		—		—		—
Real estate — business	—		(.05	)	.04		.01		—		—		(.01	)
	.03		—		.02		.01		—		.01		.01
Personal banking portfolio:
Consumer credit card	4.59		5.08		5.04		4.59		4.46		4.90		4.65
Consumer	.42		.40		.56		.62		.52		.46		.41
Overdraft	24.36		25.50		34.26		33.22		33.81		27.79		34.32
Real estate — personal	.03		—		.01		—		.02		.02		.01
Revolving home equity	—		.01		—		—		(.18	)	—		(.07	)
	.61		.63		.70		.67		.62		.65		.61
Total	.23	%	.22	%	.25	%	.25	%	.22	%	.24	%	.22	%
CREDIT QUALITY RATIOS
Non-accrual loans to total loans	.09	%	.11	%	.13	%	.11	%	.11	%
Allowance for credit losses on loans to total loans	.99		.94		.96		.95		.94
NON-ACCRUAL AND PAST DUE LOANS
Non-accrual loans:
Business	$255		$410		$1,112		$101		$354
Real estate — construction and land	191		426		220		220		—
Real estate — business	14,940		15,109		18,305		14,954		14,944
Real estate — personal	867		948		989		1,026		1,144
Revolving home equity	—		1,977		1,977		1,977		1,977
Total	16,253		18,870		22,603		18,278		18,419
Loans past due 90 days and still accruing interest	$21,536		$25,303		$19,417		$24,516		$21,986
(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 Third Quarter Results September 30, 2025

For the quarter ended September 30, 2025, net income amounted to $141.5 million, compared to $152.5 million in the previous quarter and $138.0 million in the same quarter last year. The decrease in net income compared to the previous quarter was primarily the result of an increase in the provision for credit losses and lower non-interest income, partly offset by higher gains on investment securities. The net yield on interest earning assets decreased six basis points from the previous quarter. Average loans were flat, while average available for sale investment securities, at fair value, and deposits decreased $214.5 million and $140.1 million, respectively, compared to the prior quarter. For the quarter, the return on average assets was 1.78%, the return on average equity was 15.26%, and the efficiency ratio was 55.3%.

Balance Sheet Review

During the 3rd quarter of 2025, average loans totaled $17.5 billion, flat compared to the prior quarter, and an increase of $468.5 million over the same quarter last year. Compared to the previous quarter, average balances of business real estate loans grew $23.2 million, while construction and business loans declined $33.8 million and $17.2 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $30.6 million, compared to $19.7 million in the prior quarter.

Total average available for sale debt securities decreased $214.5 million compared to the previous quarter to $8.9 billion, at fair value. The decrease in available for sale debt securities was mainly the result of lower average balances of mortgage-backed and asset-backed securities. During the 3rd quarter of 2025, the unrealized loss on available for sale debt securities decreased $75.9 million to $688.5 million, at period end. Also, during the 3rd quarter of 2025, purchases of available for sale debt securities totaled $459.3 million with a weighted average yield of approximately 4.15%, and maturities and pay downs of available for sale debt securities were $456.7 million. On September 30, 2025, the duration of the available for sale investment portfolio was 4.4 years, and maturities and pay downs of approximately $1.3 billion are expected to occur during the next 12 months.

Total average deposits decreased $140.1 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from lower average interest checking and money market balances of $160.9 million. Compared to the previous quarter, total average wealth and consumer deposits declined $132.4 million and $111.1 million, respectively, while average commercial deposits grew $118.1 million. The average loans to deposits ratio was 70.6% in the current quarter and 70.2% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.5 billion, increased $148.5 million to $2.7 billion in the 3rd quarter of 2025.

Net Interest Income

Net interest income in the 3rd quarter of 2025 amounted to $279.5 million, a decrease of $690 thousand compared to the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter decreased $658 thousand compared to the previous quarter to $281.8 million. The decrease in net interest income was mostly due to lower interest income on investment securities and higher interest expense on borrowings and deposits, partly offset by higher interest income on loans and deposits with banks. The net yield (FTE) on earning assets decreased to 3.64%, from 3.70% in the prior quarter.

Compared to the previous quarter, interest income on loans (FTE) increased $3.5 million, mostly due to an additional day of interest earned in the 3rd quarter, partly offset by lower average balances of construction loans. The average yield (FTE) on the loan portfolio increased one basis point to 6.02% this quarter.

Interest income on investment securities (FTE) decreased $5.6 million compared to the prior quarter, mostly due to lower average balances of asset-backed and mortgage-backed securities and lower rates on U.S. government and federal agency securities and other securities, partially offset by higher average balances of U.S. government and federal agency securities. Interest income earned on U.S. government and federal agency securities included the impact of a $1.1 million decline in inflation income from Treasury inflation-protected securities compared to previous quarter. Interest on other securities included $1.3 million of non-accrual interest income related to a private equity investment but was lower than the $1.8 million of dividend and non-accrual interest recorded in the prior quarter. Additionally, the Company recorded a $314 thousand adjustment to premium amortization on September 30, 2025, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. This increase was lower than the $1.0 million adjustment that increased interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.99% in the current quarter, compared to 3.16% in the previous quarter.

Compared to the previous quarter, interest income on deposits with banks increased $4.5 million, due to higher average balances.

Interest expense increased $3.2 million compared to the previous quarter, mainly due to higher average rates paid on deposits and higher average balances of borrowings. Interest expense on borrowings increased $1.4 million mostly due to an increase of $148.6 million in average securities sold under repurchase agreement balances. Interest expense on deposits increased $1.8 million mostly due to higher average rates. The average rate paid on interest bearing deposits totaled 1.71% in the current quarter compared to 1.67% in the prior quarter. The overall rate paid on interest bearing liabilities was 1.87% in the current quarter and 1.83% in the prior quarter.

Non-Interest Income

In the 3rd quarter of 2025, total non-interest income amounted to $161.5 million, an increase of $2.5 million, or 1.6%, over the same period last year and a decrease of $4.1 million compared to the prior quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees, deposit account fees and brokerage fees, partly offset by lower bank card fees and lower gains on sales of assets. The decrease in non-interest income compared to the prior quarter was mainly due to lower gains on sales of assets of $6.5 million, partly offset by higher trust fees.

Total net bank card fees in the current quarter decreased $2.0 million, or 4.2%, compared to the same period last year, and decreased $811 thousand compared to the prior quarter. Net corporate card fees decreased $1.7 million compared to the same quarter of last year mainly due to higher rewards expense, partly offset by higher interchange fees. Net merchant fees increased $89 thousand, or 1.6%, while net debit card fees decreased $107 thousand, or .9%. Net credit card fees decreased $336 thousand, or 8.5%, mostly due to higher rewards expense. Total net bank card fees this quarter were comprised of fees on corporate card ($25.1 million), debit card ($11.3 million), merchant ($5.6 million) and credit card ($3.6 million) transactions.

In the current quarter, trust fees increased $3.7 million, or 6.8%, over the same period last year, mostly resulting from higher private client fees. Compared to the same period last year, deposit account fees increased $2.0 million, or 8.1%, mostly due to higher corporate cash management fees, while consumer brokerage fees increased $2.1 million.

Other non-interest income decreased compared to the same period last year primarily due to lower gains on sales of assets of $4.7 million. For the 3rd quarter of 2025, non-interest income comprised 36.6% of the Company’s total revenue.

Investment Securities Gains and Losses

The Company recorded net securities gains of $7.9 million in the current quarter, compared to $437 thousand in the prior quarter and $3.9 million in the 3rd quarter of 2024. Net securities gains in the current quarter mostly resulted from net fair value adjustments of $8.0 million on the Company’s portfolio of private equity investments.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $244.0 million, compared to $237.6 million in the same period last year and $244.4 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.

Compared to the 3rd quarter of 2024, salaries and employee benefits expense increased $4.3 million, or 2.8%, mostly due to higher full-time salaries of $3.0 million and higher incentive compensation of $1.4 million, partly offset by lower healthcare expense of $805 thousand. Full-time equivalent employees totaled 4,666 and 4,711 on September 30, 2025 and 2024, respectively.

Compared to the same period last year, data processing and software expense increased $1.4 million due to higher costs for service providers and software. Professional and other services, which increased $2.5 million compared to the 3rd quarter of 2024, included $1.1 million of acquisition related legal and professional services expense. Other non-interest expense decreased mainly due to a $1.5 million reimbursement during the 3rd quarter of 2025 related to a litigation settlement.

Income Taxes

The effective tax rate for the Company was 22.5% in the current quarter, 21.8% in the prior quarter, and 21.7% in the 3rd quarter of 2024. The increase in the effective tax rate compared to the prior quarter was mostly due to tax law changes enacted in the prior quarter that decreased the effective tax rate. The increase in the effective tax rate compared to the 3rd quarter of 2024 was mostly due to higher state and local income taxes.

Credit Quality

Net loan charge-offs in the 3rd quarter of 2025 amounted to $10.3 million, compared to $9.7 million in the prior quarter, and $9.6 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .23% in the current quarter, .22% in the previous quarter, and .22% in the same quarter of last year. Compared to the prior quarter, net loan charge-offs on business real estate, business and personal real estate loans increased $402 thousand, $394 thousand and $234 thousand, respectively, while net charge-offs on consumer credit card loans decreased $570 thousand.

In the 3rd quarter of 2025, annualized net loan charge-offs on average consumer credit card loans were 4.59%, compared to 5.08% in the previous quarter and 4.46% in the same quarter last year. Consumer loan net charge-offs were .42% of average consumer loans in the current quarter, .40% in the prior quarter, and .52% in the same quarter last year.

On September 30, 2025, the allowance for credit losses on loans totaled $175.7 million, or .99% of total loans, and increased $10.4 million compared to the prior quarter. The increase in the allowance for credit losses on loans was primarily due to weakness in soft commodity prices impacting certain industries. Additionally, the liability for unfunded lending commitments on September 30, 2025 was $15.3 million, a decrease of $678 thousand compared to the liability on June 30, 2025.

On September 30, 2025, total non-accrual loans amounted to $16.3 million, a decrease of $2.6 million compared to the previous quarter. On September 30, 2025, the balance of non-accrual loans, which represented .09% of loans outstanding, included business real estate loans of $14.9 million, personal real estate loans of $867 thousand, business loans of $255 thousand and construction loans of $191 thousand. Loans more than 90 days past due and still accruing interest totaled $21.5 million on September 30, 2025.

Other

During the 3rd 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 418,131 shares of treasury stock during the current quarter at an average price of $60.32.

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 June 30, 2025, FineMark had loans and deposits of $2.7 billion and $3.1 billion, respectively, and $8.3 billion of assets under administration. The Company has received all regulatory approvals to complete its proposed merger. The transaction has been approved by the Federal Reserve Bank of Kansas City, the Missouri Division of Finance, and FineMark shareholders. The transaction remains subject to customary closing conditions and is anticipated to 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/20251015624038/en/

Matt Burkemper, Investor Relations (314) 746-7485 www.commercebank.com matthew.burkemper@commercebank.com

Source: Commerce Bancshares, Inc.