EX-99.1 2 cbsh12312024ex991.htm EX-99.1 Document

Exhibit 99.1
commercebancshares914a01a05.jpg
CBSH
                   1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000
FOR IMMEDIATE RELEASE:
Wednesday, January 22, 2025

COMMERCE BANCSHARES, INC. REPORTS
FOURTH QUARTER EARNINGS PER SHARE OF $1.01

Commerce Bancshares, Inc. announced earnings of $1.01 per share for the three months ended December 31, 2024, compared to $.79 per share in the same quarter last year and $1.01 per share in the third quarter of 2024. Net income for the fourth quarter of 2024 amounted to $136.1 million, compared to $109.2 million in the fourth quarter of 2023 and $138.0 million in the prior quarter.

In announcing these results, John Kemper, President and Chief Executive Officer, said, “Our fourth quarter earnings were strong, reflecting our resilient balance sheet, diversified operating model, and well-controlled expenses.

“Net interest margin declined only one basis point to 3.49% in light of a declining rate environment. The repricing of our fixed-rate earning assets, coupled with lower deposit costs, largely offset lower variable rate loan yields. Additionally, growth in deposits and investment securities contributed to quarterly net interest income growth.

"Total non-interest income was 36.8% of total revenue. Trust fees were strong and experienced continued growth, up 14.6% over the same period last year.

"We continue to maintain ample levels of liquidity and capital, which positions us well moving into 2025. Book value per share increased 14.5% compared to the same period last year and our tangible common equity to tangible assets ratio grew 107 basis points to 9.92%.

"Credit quality remains excellent with non-accrual loans at .11% of total loans, flat when compared to the last two quarters.”


Fourth Quarter 2024 Financial Highlights:

•Net interest income was $266.6 million, a $4.3 million increase over the prior quarter. The net yield on interest earning assets decreased one basis point to 3.49%.

•Non-interest income totaled $155.4 million, an increase of $10.6 million over the same quarter last year.

•Trust fees grew $7.2 million, or 14.6%, compared to the same period last year, mostly due to higher private client fees.

•Non-interest expense totaled $235.7 million, a decrease of $15.5 million, or 6.2%, compared to the same quarter last year.

•Average loan balances totaled $17.1 billion, an increase of .3% compared to the prior quarter.
1


•Total average available for sale debt securities increased $475.7 million from the prior quarter to $9.1 billion, at fair value. During the fourth quarter of 2024, the unrealized loss on available for sale debt securities increased $204.2 million to $990.6 million, at period end.

•Total average deposits increased $588.1 million, or 2.4%, compared to the prior quarter. The average rate paid on interest bearing deposits in the current quarter was 1.87%.

•The ratio of annualized net loan charge-offs to average loans was .25% compared to .22% in the prior quarter.

•The allowance for credit losses on loans increased $1.9 million during the fourth quarter of 2024 to $162.7 million, and the ratio of the allowance for credit losses on loans to total loans was .95%, at December 31, 2024, compared to .94% at September 30, 2024.

•Total assets at December 31, 2024 were $32.0 billion, an increase of $503.0 million, or 1.6%, over the prior quarter.

•For the quarter, the return on average assets was 1.73%, the return on average equity was 15.97%, and the efficiency ratio was 55.8%.

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 nearly 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.
* * * * * * * * * * * * * * *
For additional information, contact
Matt Burkemper, Investor Relations
(314) 746-7485
www.commercebank.com
matthew.burkemper@commercebank.com


2

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS

 For the Three Months EndedFor the Year Ended
(Unaudited)
(Dollars in thousands, except per share data)		Dec. 31, 2024Sep. 30, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023
FINANCIAL SUMMARY
Net interest income$266,647 $262,351 $248,421 $1,040,246 $998,129 
Non-interest income155,436 159,025 144,879 615,553 573,045 
Total revenue422,083 421,376 393,300 1,655,799 1,571,174 
Investment securities gains (losses)977 3,872 7,601 7,823 14,985 
Provision for credit losses13,508 9,140 5,879 32,903 35,451 
Non-interest expense235,718 237,600 251,254 951,229 930,982 
Income before taxes173,834 178,508 143,768 679,490 619,726 
Income taxes36,590 38,245 32,307 145,089 134,549 
Non-controlling interest expense (income)1,136 2,256 2,238 8,070 8,117 
Net income attributable to Commerce Bancshares, Inc.$136,108 $138,007 $109,223 $526,331 $477,060 
Earnings per common share:  
Net income — basic$1.01 $1.02 $0.80 $3.88 $3.47 
Net income — diluted$1.01 $1.01 $0.79 $3.87 $3.46 
Effective tax rate21.19 %21.70 %22.83 %21.61 %22.00 %
Fully-taxable equivalent net interest income$268,935 $264,638 $250,547 $1,049,463 $1,006,677 
Average total interest earning assets (1)
$30,628,722 $30,051,845 $31,340,958 $30,266,008 $31,823,935 
Diluted wtd. average shares outstanding133,686,588 134,394,825 136,088,738 134,688,401 136,575,226 
RATIOS  
Average loans to deposits (2)
68.45 %69.93 %67.69 %69.73 %66.31 %
Return on total average assets1.73 1.80 1.38 1.72 1.49 
Return on average equity (3)
15.97 16.81 16.48 16.66 17.94 
Non-interest income to total revenue36.83 37.74 36.84 37.18 36.47 
Efficiency ratio (4)
55.77 56.31 63.80 57.37 59.17 
Net yield on interest earning assets3.49 3.50 3.17 3.47 3.16 
EQUITY SUMMARY  
Cash dividends per share$.257 $.257 $.245 $1.029 $.980 
Cash dividends on common stock$34,609 $34,794 $33,574 $139,503 $134,734 
Book value per share (5)
$24.84 $25.62 $21.69 
Market value per share (5)
$62.31 $56.57 $50.87 
High market value per share$72.75 $62.72 $54.05 
Low market value per share$54.01 $52.27 $38.96 
Common shares outstanding (5)
134,152,172 134,797,835 136,684,850 
Tangible common equity to tangible assets (6)
9.92 %10.47 %8.85 %
Tier I leverage ratio12.26 %12.31 %11.25 %
OTHER QTD INFORMATION 
Number of bank/ATM locations243 244 257 
Full-time equivalent employees4,693 4,711 4,718 
(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.
3

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

 (Unaudited)
(In thousands, except per share data)		For the Three Months EndedFor the Year Ended
Dec. 31, 2024Sep. 30, 2024Jun. 30, 2024Mar. 31, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023
Interest income$369,405 $372,068 $369,363 $358,721 $362,609 $1,469,557 $1,381,291 
Interest expense102,758 109,717 107,114 109,722 114,188 429,311 383,162 
Net interest income266,647 262,351 262,249 248,999 248,421 1,040,246 998,129 
Provision for credit losses13,508 9,140 5,468 4,787 5,879 32,903 35,451 
Net interest income after credit losses253,139 253,211 256,781 244,212 242,542 1,007,343 962,678 
NON-INTEREST INCOME   
Trust fees56,345 54,689 52,291 51,105 49,154 214,430 190,954 
Bank card transaction fees47,807 47,570 47,477 46,930 47,878 189,784 191,156 
Deposit account charges and other fees25,480 25,380 25,325 24,151 23,517 100,336 90,992 
Capital market fees5,129 5,995 4,760 3,892 4,269 19,776 14,100 
Consumer brokerage services4,636 4,619 4,478 4,408 3,641 18,141 17,223 
Loan fees and sales2,874 3,444 3,431 3,141 2,875 12,890 11,165 
Other13,165 17,328 14,482 15,221 13,545 60,196 57,455 
Total non-interest income155,436 159,025 152,244 148,848 144,879 615,553 573,045 
INVESTMENT SECURITIES GAINS (LOSSES), NET977 3,872 3,233 (259)7,601 7,823 14,985 
NON-INTEREST EXPENSE   
Salaries and employee benefits153,819 153,122 149,120 151,801 147,456 607,862 584,063 
Data processing and software32,514 32,194 31,529 31,153 31,141 127,390 118,758 
Net occupancy13,694 13,411 12,544 13,574 13,927 53,223 53,629 
Professional and other services8,982 8,830 8,617 8,648 9,219 35,077 36,198 
Marketing5,683 7,278 5,356 4,036 6,505 22,353 24,511 
Equipment5,232 5,286 5,091 5,010 5,137 20,619 19,548 
Supplies and communication4,948 4,963 4,636 4,744 5,242 19,291 19,420 
Deposit Insurance3,181 2,930 2,354 8,017 20,304 16,482 33,163 
Other7,665 9,586 12,967 18,714 12,323 48,932 41,692 
Total non-interest expense235,718 237,600 232,214 245,697 251,254 951,229 930,982 
Income before income taxes173,834 178,508 180,044 147,104 143,768 679,490 619,726 
Less income taxes36,590 38,245 38,602 31,652 32,307 145,089 134,549 
Net income137,244 140,263 141,442 115,452 111,461 534,401 485,177 
Less non-controlling interest expense (income)1,136 2,256 1,889 2,789 2,238 8,070 8,117 
Net income attributable to Commerce Bancshares, Inc.$136,108 $138,007 $139,553 $112,663 $109,223 $526,331 $477,060 
Net income per common share — basic$1.01 $1.02 $1.03 $0.82 $0.80 $3.88 $3.47 
Net income per common share — diluted$1.01 $1.01 $1.03 $0.82 $0.79 $3.87 $3.46 
OTHER INFORMATION
Return on total average assets1.73 %1.80 %1.86 %1.48 %1.38 %1.72 %1.49 %
Return on average equity (1)
15.97 16.81 18.52 15.39 16.48 16.66 17.94 
Efficiency ratio (2)
55.77 56.31 55.95 61.67 63.80 57.37 59.17 
Effective tax rate21.19 21.70 21.67 21.93 22.83 21.61 22.00 
Net yield on interest earning assets3.49 3.50 3.55 3.33 3.17 3.47 3.16 
Fully-taxable equivalent net interest income$268,935 $264,638 $264,578 $251,312 $250,547 $1,049,463 $1,006,677 
(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.
4

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - PERIOD END

(Unaudited)
(In thousands)		Dec. 31, 2024Sep. 30, 2024Dec. 31, 2023
ASSETS   
Loans
     Business $6,053,820 $6,048,328 $6,019,036 
     Real estate — construction and land1,409,901 1,381,607 1,446,764 
     Real estate — business3,661,218 3,586,999 3,719,306 
     Real estate — personal3,058,195 3,043,391 3,026,041 
     Consumer2,073,123 2,108,281 2,077,723 
     Revolving home equity356,650 342,376 319,894 
     Consumer credit card595,930 574,746 589,913 
     Overdrafts11,266 4,272 6,802 
Total loans17,220,103 17,090,000 17,205,479 
Allowance for credit losses on loans(162,742)(160,839)(162,395)
Net loans17,057,361 16,929,161 17,043,084 
Loans held for sale3,242 1,707 4,177 
Investment securities:
Available for sale debt securities9,136,853 9,167,681 9,684,760 
Trading debt securities38,034 42,645 28,830 
Equity securities57,442 57,115 12,701 
Other securities230,051 216,543 222,473 
Total investment securities9,462,380 9,483,984 9,948,764 
Federal funds sold3,000 10 5,025 
Securities purchased under agreements to resell625,000 475,000 450,000 
Interest earning deposits with banks2,624,553 2,642,048 2,239,010 
Cash and due from banks748,357 507,941 443,147 
Premises and equipment — net475,275 469,986 469,059 
Goodwill146,539 146,539 146,539 
Other intangible assets — net13,632 13,722 14,179 
Other assets837,288 823,494 938,077 
Total assets$31,996,627 $31,493,592 $31,701,061 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Deposits:   
Non-interest bearing$8,150,669 $7,396,153 $7,975,935 
Savings, interest checking and money market14,754,571 15,216,557 14,512,273 
Certificates of deposit of less than $100,000996,721 1,113,962 930,432 
Certificates of deposit of $100,000 and over1,391,683 1,511,120 1,945,258 
Total deposits25,293,644 25,237,792 25,363,898 
Federal funds purchased and securities sold under agreements to repurchase2,926,758 2,182,229 2,908,815 
Other borrowings56 10,201 1,404 
Other liabilities443,694 609,831 462,714 
Total liabilities28,664,152 28,040,053 28,736,831 
Stockholders’ equity:   
Common stock676,054 655,322 655,322 
Capital surplus3,380,370 3,154,300 3,162,622 
Retained earnings60,769 338,512 53,183 
Treasury stock(48,401)(139,149)(35,599)
Accumulated other comprehensive income (loss)(758,911)(576,904)(891,412)
Total stockholders’ equity3,309,881 3,432,081 2,944,116 
Non-controlling interest22,594 21,458 20,114 
Total equity3,332,475 3,453,539 2,964,230 
Total liabilities and equity$31,996,627 $31,493,592 $31,701,061 

5

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS

(Unaudited)
(In thousands)		For the Three Months Ended
Dec. 31, 2024Sep. 30, 2024Jun. 30, 2024Mar. 31, 2024Dec. 31, 2023
ASSETS:
Loans:
Business$5,963,217 $5,966,797 $5,980,364 $5,873,525 $5,861,229 
Real estate — construction and land1,411,437 1,400,563 1,471,504 1,472,554 1,523,682 
Real estate — business3,636,026 3,580,772 3,666,057 3,727,643 3,644,589 
Real estate — personal3,047,494 3,047,563 3,044,943 3,031,193 3,027,664 
Consumer2,087,237 2,129,483 2,127,650 2,082,490 2,117,268 
Revolving home equity350,541 335,817 326,204 322,074 310,282 
Consumer credit card568,138 559,410 552,896 562,892 568,112 
Overdrafts5,628 5,460 4,856 7,696 5,258 
Total loans
17,069,718 17,025,865 17,174,474 17,080,067 17,058,084 
Allowance for credit losses on loans(160,286)(158,003)(159,791)(161,891)(161,932)
Net loans16,909,432 16,867,862 17,014,683 16,918,176 16,896,152 
Loans held for sale2,080 2,448 2,455 2,149 5,392 
Investment securities:
U.S. government and federal agency obligations2,459,485 1,888,985 1,201,954 851,656 889,390 
Government-sponsored enterprise obligations55,428 55,583 55,634 55,652 55,661 
State and municipal obligations831,695 856,620 1,069,934 1,330,808 1,363,649 
Mortgage-backed securities4,905,187 5,082,091 5,553,656 5,902,328 6,022,502 
Asset-backed securities1,570,878 1,525,593 1,785,598 2,085,050 2,325,089 
Other debt securities
221,076 224,528 364,828 503,204 510,721 
Unrealized gain (loss) on debt securities(896,346)(961,695)(1,272,127)(1,274,125)(1,595,845)
Total available for sale debt securities9,147,403 8,671,705 8,759,477 9,454,573 9,571,167 
Trading debt securities
56,440 47,440 46,565 40,483 37,234 
Equity securities56,758 85,118 127,584 12,768 12,249 
Other securities 222,529 217,377 228,403 221,695 222,378 
Total investment securities9,483,130 9,021,640 9,162,029 9,729,519 9,843,028 
Federal funds sold826 12 1,612 599 1,194 
Securities purchased under agreements to resell566,307 474,997 303,586 340,934 450,000 
Interest earning deposits with banks2,610,315 2,565,188 2,099,777 1,938,381 2,387,415 
Other assets1,701,822 1,648,321 1,651,808 1,715,716 1,797,849 
Total assets$31,273,912 $30,580,468 $30,235,950 $30,645,474 $31,381,030 
LIABILITIES AND EQUITY:
Non-interest bearing deposits$7,464,255 $7,284,834 $7,297,955 $7,328,603 $7,748,654 
Savings1,281,291 1,303,675 1,328,989 1,333,983 1,357,733 
Interest checking and money market13,679,666 13,242,398 13,162,118 13,215,270 13,166,783 
Certificates of deposit of less than $100,0001,061,783 1,055,683 1,003,798 976,804 1,097,224 
Certificates of deposit of $100,000 and over1,451,851 1,464,143 1,492,592 1,595,310 1,839,057 
Total deposits24,938,846 24,350,733 24,285,452 24,449,970 25,209,451 
Borrowings:
Federal funds purchased121,781 206,644 265,042 328,216 473,534 
Securities sold under agreements to repurchase2,445,956 2,351,870 2,254,849 2,511,959 2,467,118 
Other borrowings1,067 496 838 76 179,587 
Total borrowings2,568,804 2,559,010 2,520,729 2,840,251 3,120,239 
Other liabilities375,463 405,490 399,080 410,310 421,402 
Total liabilities27,883,113 27,315,233 27,205,261 27,700,531 28,751,092 
Equity3,390,799 3,265,235 3,030,689 2,944,943 2,629,938 
Total liabilities and equity$31,273,912 $30,580,468 $30,235,950 $30,645,474 $31,381,030 

6

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES

(Unaudited)For the Three Months Ended
Dec. 31, 2024Sep. 30, 2024Jun. 30, 2024Mar. 31, 2024Dec. 31, 2023
ASSETS: 
Loans: 
Business (1)
5.86 %6.17 %6.11 %6.07 %5.91 %
Real estate — construction and land7.75 8.44 8.36 8.40 8.34 
Real estate — business6.01 6.28 6.26 6.26 6.18 
Real estate — personal4.17 4.10 4.04 3.95 3.85 
Consumer6.52 6.64 6.56 6.40 6.21 
Revolving home equity7.28 7.69 7.68 7.70 7.70 
Consumer credit card13.60 14.01 13.96 14.11 13.83 
Overdrafts— — — — — 
Total loans6.11 6.35 6.30 6.27 6.15 
Loans held for sale7.65 6.34 7.54 7.49 9.93 
Investment securities: 
U.S. government and federal agency obligations3.86 3.68 5.04 2.08 2.32 
Government-sponsored enterprise obligations2.36 2.37 2.39 2.39 2.36 
State and municipal obligations (1)
2.01 2.00 2.00 1.97 1.94 
Mortgage-backed securities2.17 1.95 2.09 2.19 2.05 
Asset-backed securities2.99 2.66 2.50 2.39 2.30 
Other debt securities2.11 2.07 2.01 1.93 1.85 
Total available for sale debt securities2.70 2.41 2.50 2.18 2.10 
Trading debt securities (1)
4.26 4.52 4.95 5.30 5.05 
Equity securities (1)
6.58 4.44 2.82 25.64 27.47 
Other securities (1)
5.75 6.09 13.20 13.04 8.60 
Total investment securities2.80 2.52 2.75 2.44 2.27 
Federal funds sold5.78 — 6.74 6.71 6.65 
Securities purchased under agreements to resell3.57 3.53 3.21 1.93 1.64 
Interest earning deposits with banks4.78 5.43 5.48 5.48 5.47 
Total interest earning assets4.83 4.96 4.98 4.78 4.62 
LIABILITIES AND EQUITY: 
Interest bearing deposits: 
Savings.05 .07 .06 .06 .05 
Interest checking and money market1.63 1.74 1.73 1.69 1.57 
Certificates of deposit of less than $100,0003.91 4.17 4.22 4.20 4.21 
Certificates of deposit of $100,000 and over4.24 4.51 4.55 4.56 4.55 
Total interest bearing deposits1.87 2.00 1.99 1.97 1.93 
Borrowings: 
Federal funds purchased4.71 5.38 5.42 5.42 5.40 
Securities sold under agreements to repurchase3.11 3.56 3.44 3.43 3.25 
Other borrowings3.36 4.81 3.84 — 5.45 
Total borrowings3.18 3.71 3.65 3.66 3.71 
Total interest bearing liabilities2.04 %2.22 %2.21 %2.21 %2.20 %
Net yield on interest earning assets3.49 %3.50 %3.55 %3.33 %3.17 %
(1) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.







7

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CREDIT QUALITY

 For the Three Months EndedFor the Year Ended
(Unaudited)
(In thousands, except ratios)		Dec. 31, 2024Sep. 30, 2024Jun. 30, 2024Mar. 31, 2024Dec. 31, 2023Dec. 31, 2024Dec. 31, 2023
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period$160,839 $158,557 $160,465 $162,395 $162,244 $162,395 $150,136 
     Provision for credit losses on loans12,557 11,861 7,849 6,947 8,170 39,214 43,325 
     Net charge-offs (recoveries):
        Commercial portfolio:
     Business335 114 622 23 96 1,094 3,104 
     Real estate — construction and land — — — — — — (115)
     Real estate — business50 (7)(8)(141)128 (106)104 
385 107 614 (118)224 988 3,093 
        Personal banking portfolio:
     Consumer credit card6,557 6,273 6,746 6,435 5,325 26,011 19,053 
     Consumer3,237 2,759 1,804 1,983 1,903 9,783 6,248 
     Overdraft470 464 521 557 588 2,012 2,766 
     Real estate — personal8 128 79 24 (11)239 (37)
     Revolving home equity(3)(152)(7)(4)(10)(166)(57)
10,269 9,472 9,143 8,995 7,795 37,879 27,973 
     Total net loan charge-offs 10,654 9,579 9,757 8,877 8,019 38,867 31,066 
Balance at end of period$162,742 $160,839 $158,557 $160,465 $162,395 $162,742 $162,395 
LIABILITY FOR UNFUNDED LENDING COMMITMENTS$18,935 $17,984 $20,705 $23,086 $25,246 
NET CHARGE-OFF RATIOS (1)
Commercial portfolio:
     Business.02 %.01 %.04 %— %.01 %.02 %.05 %
     Real estate — construction and land— — — — — — (.01)
     Real estate — business.01 — — (.02).01 — — 
.01 — .02 — .01 .01 .03 
Personal banking portfolio:
     Consumer credit card4.59 4.46 4.91 4.60 3.72 4.64 3.40 
     Consumer.62 .52 .34 .38 .36 .46 .30 
     Overdraft33.22 33.81 43.15 29.11 44.37 34.06 56.19 
     Real estate — personal— .02 .01 — — .01 — 
     Revolving home equity— (.18)(.01)— (.01)(.05)(.02)
.67 .62 .61 .60 .51 .63 .47 
Total.25 %.22 %.23 %.21 %.19 %.23 %.19 %
CREDIT QUALITY RATIOS
Non-accrual loans to total loans.11 %.11 %.11 %.03 %.04 %
Allowance for credit losses on loans to total loans.95 .94 .92 .93 .94 
NON-ACCRUAL AND PAST DUE LOANS
  Non-accrual loans:
     Business$101 $354 $504 $1,038 $3,622 
     Real estate — construction and land220 — — — — 
     Real estate — business14,954 14,944 15,050 1,246 60 
     Real estate — personal1,026 1,144 1,772 1,523 1,653 
     Revolving home equity1,977 1,977 1,977 1,977 1,977 
   Total 18,278 18,419 19,303 5,784 7,312 
Loans past due 90 days and still accruing interest$24,516 $21,986 $18,566 $20,281 $21,864 
(1) Net charge-offs are annualized and calculated as a percentage of average loans (excluding loans held for sale).
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COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2024
For the quarter ended December 31, 2024, net income amounted to $136.1 million, compared to $138.0 million in the previous quarter and $109.2 million in the same quarter last year. The decrease in net income compared to the previous quarter was primarily the result of lower non-interest income and net investment securities gains coupled with higher provision expense, partly offset by higher net interest income and lower non-interest expense. The net yield on interest earning assets decreased one basis point compared to the previous quarter to 3.49%. Average available for sale debt securities, at fair value, increased $475.7 million, while deposits, and loans increased $588.1 million and $43.9 million, respectively, over the prior quarter. For the quarter, the return on average assets was 1.73%, the return on average equity was 15.97%, and the efficiency ratio was 55.8%.

Balance Sheet Review
During the 4th quarter of 2024, average loans totaled $17.1 billion, an increase of $43.9 million compared to the prior quarter, and flat compared to the same quarter last year. Compared to the previous quarter, average balances of business real estate grew $55.3 million, while average consumer loans declined $42.2 million. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $21.9 million, compared to $22.6 million in the prior quarter.

Total average available for sale debt securities increased $475.7 million over the previous quarter to $9.1 billion, at fair value. The increase in debt securities was mainly the result of higher average balances of U.S. government and federal agency obligations, partly offset by lower average balances of mortgage-backed securities. During the 4th quarter of 2024, the unrealized loss on available for sale debt securities increased $204.2 million to $990.6 million, at period end. Also, during the 4th quarter of 2024, purchases of available for sale debt securities totaled $573.1 million with a weighted average yield of approximately 4.45%, and sales, maturities and pay downs of available for sale debt securities were $405.0 million. At December 31, 2024, the duration of the available for sale investment portfolio was 4.0 years, and maturities and pay downs of approximately $1.6 billion are expected to occur during the next 12 months.

Total average deposits increased $588.1 million this quarter over the previous quarter. The increase in deposits mostly resulted from growth of $437.3 million and $179.4 million in interest checking and money market deposit average balances and demand deposit average balances, respectively. Compared to the previous quarter, total average commercial, trust, and consumer deposits grew $503.0 million, $60.0 million, and $21.5 million, respectively. The average loans to deposits ratio was 68.5% in the current quarter and 69.9% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.4 billion, increased $9.8 million to $2.6 billion in the 4th quarter of 2024.

Net Interest Income
Net interest income in the 4th quarter of 2024 amounted to $266.6 million, an increase of $4.3 million over the previous quarter. On a fully taxable-equivalent (FTE) basis, net interest income for the current quarter increased $4.3 million over the previous quarter to $268.9 million. The increase in net interest income was mostly due to higher interest income on investment securities and lower interest expense on deposits and borrowings, partly offset by lower interest income on loans and deposits with banks. The net yield (FTE) on earning assets decreased to 3.49%, from 3.50% in the prior quarter.

Compared to the previous quarter, interest income on loans (FTE) decreased $9.5 million, mostly due to lower average rates earned on most loan categories. The average yield (FTE) on the loan portfolio decreased 24 basis points to 6.11% this quarter.

Interest income on investment securities (FTE) increased $9.7 million compared to the prior quarter, mostly due to higher average balances and rates earned on U.S. government and federal agency securities. Interest income earned on U.S. government and federal agency securities included the impact of $176 thousand in higher inflation income from Treasury inflation-protected securities compared to previous quarter. Additionally, the Company recorded a $2.3 million adjustment to premium amortization at December 31, 2024, which increased interest income to reflect slower forward prepayment speed estimates on mortgage-backed securities. This increase was higher than the $286 thousand adjustment decreasing interest income in the prior quarter. The average yield (FTE) on total investment securities was 2.80% in the current quarter, compared to 2.52% in the previous quarter.

Compared to the previous quarter, interest income on deposits with banks decreased $3.7 million, mainly due to lower average rates. Interest earned on securities purchased under agreements to resell increased $873 thousand mostly due to higher average balances.

Interest expense decreased $7.0 million compared to the previous quarter, mainly due to lower average rates on deposits and borrowings, partly offset by higher average deposit balances. Interest expense on borrowings decreased $3.3 million due to lower average rates. Interest expense on deposits decreased $3.7 million due to lower average rates, partly offset by higher average balances. The average rate paid on interest bearing deposits totaled 1.87% in the current quarter compared to 2.00% in the prior quarter. The overall rate paid on interest bearing liabilities was 2.04% in the current quarter and 2.22% in the prior quarter.

Non-Interest Income
In the 4th quarter of 2024, total non-interest income amounted to $155.4 million, an increase of $10.6 million, or 7.3%, over the same period last year and a decrease of $3.6 million compared to the prior
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COMMERCE BANCSHARES, INC.                                
Management Discussion of Fourth Quarter Results
December 31, 2024
quarter. The increase in non-interest income compared to the same period last year was mainly due to higher trust fees and deposit account fees. These increases were partly offset by a decrease of $1.8 million in fair value adjustments recorded on the company’s deferred compensation plan, which are held in a trust and recorded as both an asset and liability, affecting both other income and other expense. The decrease in non-interest income compared to the prior quarter was mainly due to lower gains on sales of real estate and lower deferred compensation adjustments, partly offset by higher trust fees and tax credit sales income.

Total net bank card fees in the current quarter decreased $71 thousand, or .1%, compared to the same period last year, and increased $237 thousand compared to the prior quarter. Net corporate card fees decreased $1.4 million, or 4.9%, compared to the same quarter of last year mainly due to lower fees, partly offset by lower rewards expense. Net merchant fees increased $383 thousand, or 6.8%, mainly due to higher fees. Net debit card fees increased $187 thousand, or 1.7%, while net credit card fees increased $718 thousand, or 20.3%, mostly due to higher interchange fees and lower rewards expense. Total net bank card fees this quarter were comprised of fees on corporate card ($26.2 million), debit card ($11.4 million), merchant ($6.0 million) and credit card ($4.3 million) transactions.

In the current quarter, trust fees increased $7.2 million, or 14.6%, 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 8.3%, mostly due to higher corporate cash management fees, while capital market fees increased $860 thousand, or 20.1%, mostly due to higher trading securities income.

Other non-interest income decreased slightly compared to the same period last year primarily due to the deferred compensation adjustment previously mentioned, partly offset by higher tax credit sales income of $1.7 million. For the 4th quarter of 2024, non-interest income comprised 36.8% of the Company’s total revenue.

Investment Securities Gains and Losses
The Company recorded net securities gains of $977 thousand in the current quarter, compared to gains of $3.9 million in the prior quarter and gains of $7.6 million in the 4th quarter of 2023. Net securities gains in the current quarter resulted from net fair value adjustments of $3.9 million on the Company’s portfolio of private equity investments. These net gains were partly offset by losses of $3.3 million on sales of available for sale debt securities.

Non-Interest Expense
Non-interest expense for the current quarter amounted to $235.7 million, compared to $251.3 million in the same period last year and $237.6 million in the prior quarter. The decrease in non-interest expense compared to the same period last year was mainly due to lower deposit insurance expense,
partly offset by higher salaries and employee benefits expense and higher data processing and software expense. The decrease in non-interest expense compared to the prior quarter was mainly due to lower marketing expense and a lower deferred compensation adjustment.

Compared to the 4th quarter of last year, salaries and employee benefits expense increased $6.4 million, or 4.3%, mostly due to higher full-time salaries expense of $3.0 million, incentive compensation of $2.7 million, and medical expense of $1.1 million. Full-time equivalent employees totaled 4,693 and 4,718 at December 31, 2024 and 2023, respectively.

Compared to the same period last year, deposit insurance expense decreased $17.1 million, mostly due to a $16.0 million accrual in the prior year of a one-time special assessment by the FDIC to replenish the Deposit Insurance Fund. Data processing and software expense increased $1.4 million compared to the same period last year due to higher costs for service providers.

Income Taxes
The effective tax rate for the Company was 21.2% in the current quarter, 21.7% in the prior quarter, and 22.8% in the 4th quarter of 2023. The decrease in the effective tax rate compared to the same quarter last year was mostly due to lower state and local income taxes.

Credit Quality
Net loan charge-offs in the 4th quarter of 2024 amounted to $10.7 million, compared to $9.6 million in the prior quarter, and $8.0 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .25% in the current quarter, and .22% in the previous quarter, and .19% in the same quarter of last year. Compared to the prior quarter, net loan charge-offs on consumer credit card and consumer loans increased $284 thousand and $478 thousand, respectively.

In the 4th quarter of 2024, annualized net loan charge-offs on average consumer credit card loans were 4.59%, compared to 4.46% in the previous quarter and 3.72% in the same quarter last year. Consumer loan net charge-offs were .62% of average consumer loans in the current quarter, .52% in the prior quarter, and .36% in the same quarter last year.

At December 31, 2024, the allowance for credit losses on loans totaled $162.7 million, or .95% of total loans, and increased $1.9 million compared to the prior quarter. Additionally, the liability for unfunded lending commitments at December 31, 2024 was $18.9 million, an increase of $951 thousand compared to the liability at September 30, 2024.

At December 31, 2024, total non-accrual loans amounted to $18.3 million, a decrease of $141 thousand compared to the previous quarter. At December 31, 2024, the balance of non-accrual loans, which represented .11% of loans outstanding, included business loans of $101 thousand, revolving
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COMMERCE BANCSHARES, INC.                                
Management Discussion of Fourth Quarter Results
December 31, 2024
home equity loans of $2.0 million, personal real estate loans of $1.0 million, construction loans of $220 thousand, and business real estate loans of $15.0 million. Loans more than 90 days past due and still accruing interest totaled $24.5 million at December 31, 2024.

Other
During the 4th quarter of 2024, the Company distributed a 5% stock dividend on its common stock and paid a cash dividend of $.27 per common share, representing a 5.1% increase over the same period last year. The Company purchased 683,528 shares of treasury stock during the current quarter at an average price of $67.88.

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.
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