Core Points - Commerce Bancshares, Inc. has adjusted the exchange ratio for the acquisition of FineMark Holdings, Inc. to 0.7245 shares of Commerce stock for each share of FineMark stock [1] - The original exchange ratio was 0.690 shares of Commerce stock for each share of FineMark stock, reflecting a 5% stock dividend declaration [1]

Financial Performance - For the three months ended September 30, 2025, net income attributable to Commerce Bancshares, Inc. was $141.5 million, a 2.5% increase from $138.0 million in the same period last year [171]. - Net income for the first nine months of 2025 was $425.6 million, an increase of $35.4 million, or 9.1% year-over-year [173]. - The diluted earnings per common share for Q3 2025 was $1.06, a 5.0% increase from $1.01 in Q3 2024 [171]. - Diluted earnings per share increased to $3.18, up 11.2% from $2.86 in the same period last year [173]. - The efficiency ratio for Q3 2025 was 55.26%, compared to 56.31% in Q3 2024, indicating improved operational efficiency [171]. - The efficiency ratio was 55.21% for the first nine months of 2025 [173]. Income and Revenue - Net interest income for the third quarter of 2025 was $279.5 million, reflecting a 6.5% increase compared to $262.4 million in the third quarter of 2024 [171]. - Non-interest income rose to $161.5 million, a 1.6% increase from $159.0 million in the prior year [171]. - Non-interest income increased by $26.0 million, or 5.6%, primarily due to higher trust fees, deposit fees, and brokerage fees [173]. - Non-interest income for the first nine months of 2025 was $486.1 million, an increase of $26.0 million, or 5.6%, compared to $460.1 million in the same period of 2024 [191]. Credit Losses and Provisions - The provision for credit losses increased by 119.5% to $(20.1) million in Q3 2025 from $(9.1) million in Q3 2024 [171]. - The provision for credit losses was $40.1 million for the first nine months of 2025, compared to $19.4 million in the same period last year [173]. - The provision for credit losses increased to $40.1 million, up from $19.4 million in the previous year, reflecting higher auto and consumer credit card loan net charge-offs [260][261]. - The allowance for credit losses on loans increased to $175.7 million at the end of Q3 2025, up from $165.3 million at the end of Q2 2025 [199]. Loans and Assets - Total loans increased by $566.7 million or 3.3% from December 31, 2024, driven by growth in business and consumer loans [233]. - Total assets reached $32.3 billion at September 30, 2025, compared to $32.0 billion at December 31, 2024 [232]. - Total loans reached $17,494,351, generating interest income of $265,635, with an average rate of 6.02% in Q3 2025, compared to $17,025,865 and $271,811 at 6.35% in Q3 2024 [271]. - Investment securities totaled $9,963,481, yielding $75,002 in interest income at an average rate of 2.99% in Q3 2025, up from $9,983,335 and $63,256 at 2.52% in Q3 2024 [271]. Expenses - Non-interest expense for Q3 2025 was $244.0 million, a 2.7% increase from $237.6 million in the same quarter last year [171]. - For the first nine months of 2025, non-interest expense totaled $726.8 million, an increase of $11.3 million, or 1.6%, over the same period in 2024 [197]. - Salaries and employee benefits expense increased by $4.3 million, or 2.8%, primarily due to higher full-time salaries and incentive compensation [196]. - Professional and other services expense rose by $2.5 million, or 27.8%, including $1.1 million in acquisition-related legal and professional services [196]. Acquisitions and Investments - The company announced a pending acquisition of FineMark Holdings, valued at approximately $585 million, expected to close on January 1, 2026 [161]. - As of June 30, 2025, FineMark had total assets of $3.9 billion, including $2.6 billion in loans and $3.5 billion in total liabilities [161]. Capital and Liquidity - Capital ratios exceeded the minimum requirements for well-capitalized institutions, with a Tier I common risk-based capital ratio of 17.46% [250]. - The Company maintained a strong liquidity position, believing it will adequately satisfy its financial obligations [258]. - Core customer deposits totaled $23.0 billion, representing 90.5% of total deposits, with an increase of $136.2 million since December 31, 2024 [239]. Tax and Regulatory - The effective tax rate for Q3 2025 was 22.5%, up from 21.8% in Q2 2025, primarily due to higher state and local income taxes [230]. - The Company expects to adopt new accounting standards related to income taxes and expense disaggregation, effective in 2025 and 2027 respectively, with no significant impact anticipated on consolidated financial statements [267][268].

Core Viewpoint - Missouri's Commerce Bancshares (CBSH) has underperformed in a generally weak year for regional bank stocks, with a decline of approximately 13% [1] Company Performance - The significant portion of CBSH's underperformance has occurred in the recent past, indicating a trend of weakness in its stock performance [1] Investment Strategy - The investment approach discussed emphasizes a long-term, buy-and-hold strategy focused on stocks that can consistently deliver high-quality earnings, particularly in the dividend and income sectors [1]

Core Viewpoint - Shares of Commerce Bancshares (CBSH) have underperformed over the past year, losing approximately 13% of their value, with a significant decline in recent weeks following disappointing Q3 results that raised concerns about credit quality, particularly in comparison to other banks [1] Company Performance - Commerce Bancshares reported disappointing Q3 results, which contributed to the decline in stock value and heightened concerns regarding credit quality [1] Market Context - The performance of Commerce Bancshares is reflective of broader market trends, as concerns about credit quality are prevalent among other banks as well [1]

Core Viewpoint - Commerce Bancshares, Inc. has announced a share repurchase program allowing for the repurchase of up to 5,000,000 shares of its common stock, reflecting the company's strategy to enhance shareholder value [1] Group 1: Share Repurchase Program - The Board of Directors approved a repurchase program that includes the remaining amount from a prior authorization, allowing for the repurchase of up to 5,000,000 shares [1] - Repurchases may occur through open market purchases, privately negotiated transactions, or other compliant methods, with management having sole discretion over timing and number of shares [1] - The program does not obligate the company to repurchase a specific number of shares and can be suspended, modified, or terminated at any time [1] Group 2: Company Overview - Commerce Bancshares, Inc. is a regional bank holding company with $32.3 billion in assets, offering a full range of banking services through its subsidiaries [2] - The company operates full-service banking facilities across the Midwest and maintains commercial offices in several major cities beyond the Midwest [2] - Commerce Bank, a subsidiary, has a 160-year history of providing financial solutions to individuals and businesses [2] Group 3: Financial Performance - For the third quarter of 2025, Commerce Bancshares reported earnings of $1.06 per share, an increase from $1.01 per share in the same quarter of the previous year [6] - Net income for the third quarter of 2025 was $141.5 million, compared to $138.0 million in the third quarter of 2024 [6] - For the nine months ended September 30, 2025, earnings per share totaled $3.18 [6] Group 4: Merger Activity - FineMark Holdings' shareholders have approved the merger agreement with Commerce Bancshares, marking a significant step in the strategic combination of the two institutions [7] - Over 83% of FineMark's issued and outstanding shares were represented at the special meeting for the merger approval [7]

Core Points - Commerce Bancshares, Inc. declared a quarterly dividend of $0.275 per share on its common stock [1] - The dividend is scheduled to be payable on December 15, 2025, to stockholders of record as of the close of business on December 2, 2025 [1] - The Board also approved a 5% common stock dividend, which will be payable on December 16, 2025, to shareholders of record at the close of business on December 2, 2025 [1]

Core Viewpoint - Investors in Commerce Bancshares, Inc. (CBSH) should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the Feb 20, 2026 $35 Call option [1] Group 1: Implied Volatility - Implied volatility indicates the market's expectation of future price movement, with high levels suggesting a potential significant price change or an upcoming event that could lead to a rally or sell-off [2] - The current high implied volatility for Commerce Bancshares may signal a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay [4] Group 2: Analyst Sentiment - Commerce Bancshares currently holds a Zacks Rank 4 (Sell) within the Banks – Midwest industry, which is in the top 35% of the Zacks Industry Rank [3] - Over the past 30 days, one analyst has raised the earnings estimate for the current quarter, while four analysts have lowered their estimates, resulting in a decrease of the Zacks Consensus Estimate from $1.07 to $1.05 per share [3]

Core Insights - Commerce Bancshares Inc. (CBSH) reported third-quarter 2025 earnings of $1.06 per share, missing the Zacks Consensus Estimate of $1.09, but reflecting a 3.9% increase from the prior-year quarter [1][9] - The results were supported by an increase in net interest income (NII) and non-interest income, alongside a rise in loan balances, although increased provisions and higher expenses posed challenges [1][12] Financial Performance - Net income attributable to common shareholders was $141.5 million, up 2.5% year over year, surpassing the estimate of $140.3 million [2] - Total revenues reached $440.9 million, marking a 4.6% year-over-year increase and exceeding the Zacks Consensus Estimate of $433.8 million [3] - NII was reported at $279.4 million, a 6.5% increase from the previous year, also above the estimate of $273.6 million [3] - Non-interest income totaled $161.5 million, up 1.5% year over year, driven by increases in most components, except for bank card transaction fees and capital market fees [4] Expense and Efficiency Metrics - Non-interest expenses rose 2.7% year over year to $244 million, attributed to increases in nearly all cost components [5] - The efficiency ratio improved to 55.26% from 56.31% in the prior-year quarter, indicating enhanced profitability [5] Loan and Deposit Trends - As of September 30, 2025, net loans were $17.61 billion, showing a slight increase from the prior quarter, while total deposits declined marginally to $25.46 billion [6] Asset Quality and Provisions - Provision for credit losses surged to $20.1 million from $9.1 million in the prior-year quarter, significantly exceeding the estimate of $6.9 million [7] - The allowance for credit losses on loans to total loans was 0.99%, up 5 basis points year over year [7] Capital Ratios and Profitability - The Tier I leverage ratio improved to 12.95% from 12.31% in the year-ago quarter, and the tangible common equity to tangible assets ratio increased to 11.27% from 10.47% [10] - Return on total average assets was 1.78%, down from 1.80% in the prior year, while return on average equity decreased to 15.26% from 16.81% [10] Share Repurchase Activity - In the reported quarter, the company repurchased 0.42 million shares at an average price of $60.32 [11] Future Outlook - CBSH's revenues are anticipated to be driven by solid loan demand and a balance sheet repositioning strategy, although rising expenses and deteriorating asset quality present near-term challenges [12]

Core Insights - Commerce Bancshares, Inc. reported earnings per share (EPS) of $1.06, slightly below the estimated $1.09, and generated revenue of approximately $441 million, which was also below the estimated $448 million [1][2] Revenue Performance - The revenue of $441 million for the quarter ending September 2025 marked a 4.7% increase from the same period last year, slightly exceeding the Zacks Consensus Estimate of $438.41 million, resulting in a positive surprise of 0.58% [2][5] Earnings Analysis - The EPS of $1.06 fell short of the consensus estimate by 2.75% and showed a slight decline from the $1.07 reported in the same quarter last year [2][5] Valuation Metrics - The company has a price-to-earnings (P/E) ratio of approximately 12.53 and a price-to-sales (P/S) ratio of about 3.34, providing insights into the company's market valuation and potential return on investment [3][5] Financial Health - The debt-to-equity ratio is approximately 0.72, indicating a balanced use of debt in financing its assets, while the current ratio of around 0.43 reflects the company's ability to cover short-term liabilities with short-term assets [4]

[Executive Summary](index=1&type=section&id=Executive%20Summary) This section provides an overview of Commerce Bancshares, Inc.'s third quarter 2025 financial performance and key strategic highlights [Third Quarter 2025 Earnings Overview](index=1&type=section&id=Third%20Quarter%202025%20Earnings%20Overview) Commerce Bancshares, Inc. reported Q3 2025 earnings per share of $1.06, an increase from $1.01 in Q3 2024 but a decrease from $1.14 in Q2 2025 Earnings Per Share and Net Income | Metric | Q3 2025 | Q3 2024 | Q2 2025 | YTD 2025 | YTD 2024 | | :----- | :------ | :------ | :------ | :------- | :------- | | EPS | $1.06 | $1.01 | $1.14 | $3.18 | $2.86 | | Net Income | $141.5M | $138.0M | $152.5M | $425.6M | $390.2M | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO John Kemper highlighted a strong quarter driven by the diversified operating model, steady loan balances, robust fee income, and disciplined expense management - Commerce delivered a strong quarter, reflecting the resilience of its diversified operating model, steady loan balances, robust fee income, and disciplined expense management, leading to high profitability[4](index=4&type=chunk) - The company maintained excellent credit quality, with non-accrual loans at just **0.09% of total loans**, and strong capital and liquidity positions[5](index=5&type=chunk) - The acquisition of FineMark is expected to close on January 1, 2026, representing a strategic milestone after years of relationship building and integration planning[6](index=6&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Third quarter 2025 financial highlights include a slight decrease in net interest income compared to the prior quarter, while non-interest income increased 1.6% year-over-year, driven by trust fees Key Financial Metrics | Metric | Q3 2025 | QoQ Change | YoY Change | | :------------------------------------ | :------ | :--------- | :--------- | | Net Interest Income | $279.5M | -$690K | N/A | | Non-Interest Income | $161.5M | N/A | +$2.5M (1.6%) | | Trust Fees (YoY) | N/A | N/A | +$3.7M (6.8%) | | Non-Interest Expense | $244.0M | N/A | +$6.4M (2.7%) | | Average Loan Balances | $17.5B | Flat | N/A | | Total Average Deposits | N/A | -$140.1M (0.6%) | N/A | | Net Loan Charge-offs to Average Loans | 0.23% | +0.01% | +0.01% | | Allowance for Credit Losses on Loans | $175.7M | +$10.4M | N/A | | Return on Average Assets | 1.78% | N/A | N/A | | Return on Average Equity | 15.26% | N/A | N/A | | Efficiency Ratio | 55.3% | N/A | N/A | [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) This section details the company's consolidated financial performance, including key income statement and balance sheet metrics for the reported periods [Financial Summary](index=3&type=section&id=Financial%20Summary) The financial summary provides a snapshot of key performance indicators for the three and nine months ended September 30, 2025, compared to prior periods Consolidated Financial Summary (in thousands, except per share) | Metric (in thousands, except per share) | Sep. 30, 2025 (Q3) | Jun. 30, 2025 (Q2) | Sep. 30, 2024 (Q3) | Sep. 30, 2025 (YTD) | Sep. 30, 2024 (YTD) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | :------------------ | :------------------ | | 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 | | Net income attributable to Commerce Bancshares, Inc. | $141,518 | $152,479 | $138,007 | $425,589 | $390,223 | | Diluted EPS | $1.06 | $1.14 | $1.01 | $3.18 | $2.86 | | Return on total average assets | 1.78% | 1.95% | 1.80% | 1.81% | 1.71% | | Return on average equity | 15.26% | 17.40% | 16.81% | 16.15% | 16.92% | | Efficiency ratio | 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% | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income detail the components of revenue and expense, showing net interest income, non-interest income, and total non-interest expense for the reported periods Consolidated Income Statement Details (in thousands) | Metric (in thousands) | Sep. 30, 2025 (Q3) | Jun. 30, 2025 (Q2) | Sep. 30, 2024 (Q3) | Sep. 30, 2025 (YTD) | Sep. 30, 2024 (YTD) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Interest income | $374,105 | $371,636 | $372,068 | $1,110,106 | $1,100,152 | | Interest expense | 94,648 | 91,489 | 109,717 | 281,400 | 326,553 | | Net interest income | 279,457 | 280,147 | 262,351 | 828,706 | 773,599 | | Provision for credit losses | 20,061 | 5,597 | 9,140 | 40,145 | 19,395 | | Total non-interest income | 161,511 | 165,613 | 159,025 | 486,073 | 460,117 | | Trust fees | 58,412 | 55,571 | 54,689 | 170,575 | 158,085 | | Bank card transaction fees | 45,551 | 46,362 | 47,570 | 137,506 | 141,977 | | Total non-interest expense | 244,018 | 244,437 | 237,600 | 726,831 | 715,511 | | Salaries and employee benefits | 157,461 | 155,025 | 153,122 | 465,564 | 454,043 | | Net income attributable to Commerce Bancshares, Inc. | $141,518 | $152,479 | $138,007 | $425,589 | $390,223 | [Balance Sheet Analysis](index=5&type=section&id=Balance%20Sheet%20Analysis) This section provides a detailed analysis of the company's balance sheet, including period-end and average balances for assets, liabilities, and equity [Consolidated Balance Sheets (Period End)](index=5&type=section&id=Consolidated%20Balance%20Sheets%20(Period%20End)) As of September 30, 2025, total assets were $32.3 billion, remaining flat compared to the prior quarter, with total deposits at $25.5 billion and stockholders' equity increasing to $3.77 billion Period-End Balance Sheet (in thousands) | Metric (in thousands) | Sep. 30, 2025 | Jun. 30, 2025 | Sep. 30, 2024 | | :-------------------------------------- | :------------ | :------------ | :------------ | | Total assets | $32,288,688 | $32,284,247 | $31,493,592 | | 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 | | Total investment securities | 9,335,491 | 9,236,826 | 9,483,984 | | Total deposits | 25,458,049 | 25,494,028 | 25,237,792 | | Non-interest bearing deposits | 7,489,645 | 7,393,559 | 7,396,153 | | Total liabilities | 28,495,641 | 28,624,133 | 28,040,053 | | Total stockholders' equity | 3,771,665 | 3,640,572 | 3,432,081 | [Average Balance Sheets](index=6&type=section&id=Average%20Balance%20Sheets) Average total assets for Q3 2025 were $31.5 billion, a slight increase from the prior quarter, while average total deposits decreased to $24.8 billion Average Balance Sheet (in thousands) | Metric (in thousands) | Sep. 30, 2025 (Q3) | Jun. 30, 2025 (Q2) | Sep. 30, 2024 (Q3) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | | Total assets | $31,511,264 | $31,297,059 | $30,580,468 | | Total loans | 17,494,351 | 17,495,809 | 17,025,865 | | Total investment securities | 9,197,456 | 9,407,176 | 9,021,640 | | Total deposits | 24,778,046 | 24,918,180 | 24,350,733 | | Non-interest bearing deposits | 7,345,156 | 7,356,882 | 7,284,834 | | Total borrowings | 2,652,142 | 2,503,670 | 2,559,010 | | Equity | 3,678,811 | 3,515,005 | 3,265,235 | [Interest Rate and Yield Analysis](index=7&type=section&id=Interest%20Rate%20and%20Yield%20Analysis) This section analyzes the average rates on the company's interest-earning assets and interest-bearing liabilities, along with the net yield on interest-earning assets [Average Rates on Assets and Liabilities](index=7&type=section&id=Average%20Rates%20on%20Assets%20and%20Liabilities) For Q3 2025, the average yield on total loans slightly increased to 6.02%, while the net yield on interest earning assets decreased six basis points to 3.64% Average Yields and Rates | Metric | Sep. 30, 2025 (Q3) | Jun. 30, 2025 (Q2) | Sep. 30, 2024 (Q3) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | | Total loans yield | 6.02% | 6.01% | 6.35% | | Total investment securities yield | 2.99% | 3.16% | 2.52% | | Total interest earning assets yield | 4.86% | 4.90% | 4.96% | | Total interest bearing deposits rate | 1.71% | 1.67% | 2.00% | | Total borrowings rate | 2.95% | 2.93% | 3.71% | | Total interest bearing liabilities rate | 1.87% | 1.83% | 2.22% | | Net yield on interest earning assets | 3.64% | 3.70% | 3.50% | [Credit Quality](index=8&type=section&id=Credit%20Quality) This section examines the company's credit quality metrics, including the allowance for credit losses, net charge-offs, and non-accrual loans [Allowance for Credit Losses and Net Charge-offs](index=8&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Net%20Charge-offs) The allowance for credit losses on loans increased to $175.7 million at September 30, 2025, with total net loan charge-offs for the quarter amounting to $10.3 million Allowance for Credit Losses and Net Charge-offs Summary (in thousands, except ratios) | Metric (in thousands, except ratios) | Sep. 30, 2025 (Q3) | Jun. 30, 2025 (Q2) | Sep. 30, 2024 (Q3) | Sep. 30, 2025 (YTD) | Sep. 30, 2024 (YTD) | | :-------------------------------------- | :----------------- | :----------------- | :----------------- | :------------------ | :------------------ | | Balance at beginning of period (ACL) | $165,260 | $167,031 | $160,839 | $162,742 | $162,395 | | Provision for credit losses on loans | 20,739 | 7,919 | 11,861 | 43,753 | 26,657 | | Total net loan charge-offs | 10,328 | 9,690 | 9,579 | 30,824 | 28,213 | | Balance at end of period (ACL) | $175,671 | $165,260 | $160,839 | $175,671 | $160,839 | | Total net charge-off ratio | 0.23% | 0.22% | 0.22% | 0.24% | 0.22% | [Non-Accrual and Past Due Loans](index=8&type=section&id=Non-Accrual%20and%20Past%20Due%20Loans) Total non-accrual loans decreased to $16.3 million at September 30, 2025, representing 0.09% of total loans, while the allowance for credit losses on loans to total loans ratio increased to 0.99% Non-Accrual and Past Due Loan Metrics | Metric | Sep. 30, 2025 | Jun. 30, 2025 | Sep. 30, 2024 | | :-------------------------------------- | :------------ | :------------ | :------------ | | Non-accrual loans to total loans | 0.09% | 0.11% | 0.11% | | Allowance for credit losses on loans to total loans | 0.99% | 0.94% | 0.94% | | Total non-accrual loans (in thousands) | $16,253 | $18,870 | $18,419 | | Loans past due 90 days and still accruing interest (in thousands) | $21,536 | $25,303 | $21,986 | [Management's Discussion and Analysis of Third Quarter Results](index=9&type=section&id=Management's%20Discussion%20and%20Analysis) This section provides management's perspective and detailed discussion of the company's financial and operational performance for the third quarter [Overall Performance Discussion](index=9&type=section&id=Overall%20Performance%20Discussion) Net income for Q3 2025 decreased compared to the previous quarter, primarily due to an increased provision for credit losses and lower non-interest income, partially offset by higher gains on investment securities - Net income decreased QoQ primarily due to an increased provision for credit losses and lower non-interest income, partly offset by higher gains on investment securities[28](index=28&type=chunk) - The net yield on interest earning assets decreased six basis points from the previous quarter[28](index=28&type=chunk) - Average loans were flat, while average available for sale investment securities and deposits decreased QoQ by **$214.5 million** and **$140.1 million**, respectively[28](index=28&type=chunk) [Balance Sheet Review](index=9&type=section&id=Balance%20Sheet%20Review%20(Narrative)) The balance sheet review highlights that average loans remained flat quarter-over-quarter but increased year-over-year, while average available for sale debt securities and total average deposits decreased [Loans](index=9&type=section&id=Loans%20Discussion) Average loans totaled $17.5 billion, flat compared to the prior quarter but up $468.5 million year-over-year, with growth in business real estate loans - Average loans totaled **$17.5 billion**, flat QoQ but increased **$468.5 million** YoY[29](index=29&type=chunk) - Business real estate loans grew **$23.2 million** QoQ, while construction and business loans declined[29](index=29&type=chunk) - The company sold **$30.6 million** in fixed rate personal real estate loans in Q3 2025[29](index=29&type=chunk) [Investment Securities](index=9&type=section&id=Investment%20Securities%20Discussion) Total average available for sale debt securities decreased $214.5 million QoQ to $8.9 billion, mainly due to lower mortgage-backed and asset-backed securities, though unrealized losses improved - Total average available for sale debt securities decreased **$214.5 million** QoQ to **$8.9 billion**, primarily due to lower mortgage-backed and asset-backed securities[30](index=30&type=chunk) - The unrealized loss on available for sale debt securities decreased **$75.9 million** to **$688.5 million** at period end[30](index=30&type=chunk) - Purchases of AFS debt securities totaled **$459.3 million** (weighted average yield of **4.15%**), with maturities and pay downs of **$456.7 million**[30](index=30&type=chunk) [Deposits and Borrowings](index=9&type=section&id=Deposits%20and%20Borrowings%20Discussion) Total average deposits decreased $140.1 million QoQ, mainly from lower average interest checking and money market balances, while average commercial deposits grew - Total average deposits decreased **$140.1 million** QoQ, primarily due to lower average interest checking and money market balances[31](index=31&type=chunk) - Average wealth and consumer deposits declined, while average commercial deposits grew **$118.1 million** QoQ[31](index=31&type=chunk) - The average loans to deposits ratio was **70.6%** in Q3 2025, up from **70.2%** in the prior quarter[31](index=31&type=chunk) [Net Interest Income Discussion](index=9&type=section&id=Net%20Interest%20Income%20Discussion) Net interest income decreased $690 thousand QoQ to $279.5 million, with the fully taxable-equivalent (FTE) net yield on earning assets decreasing to 3.64% - Net interest income decreased **$690 thousand** QoQ to **$279.5 million**, with the net yield on interest earning assets decreasing six basis points to **3.64%**[7](index=7&type=chunk)[32](index=32&type=chunk) - The decrease in NII 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[32](index=32&type=chunk) - Interest income on loans (FTE) increased **$3.5 million** QoQ, mainly due to an additional day of interest, with the average loan portfolio yield increasing one basis point to **6.02%**[33](index=33&type=chunk) - Interest income on investment securities (FTE) decreased **$5.6 million** QoQ, primarily due to lower average balances of asset-backed and mortgage-backed securities and lower rates on certain government securities[34](index=34&type=chunk) - Interest expense increased **$3.2 million** QoQ, mainly due to higher average rates paid on deposits (**1.71%** vs **1.67%**) and higher average balances of borrowings[36](index=36&type=chunk)[37](index=37&type=chunk) [Non-Interest Income Discussion](index=10&type=section&id=Non-Interest%20Income%20Discussion) Total non-interest income for Q3 2025 was $161.5 million, an increase of 1.6% year-over-year but a decrease of $4.1 million quarter-over-quarter - Total non-interest income was **$161.5 million**, increasing **1.6%** YoY but decreasing **$4.1 million** QoQ[10](index=10&type=chunk)[38](index=38&type=chunk) - The YoY increase was mainly due to higher trust fees (up **$3.7 million** or **6.8%**), deposit account fees (up **$2.0 million** or **8.1%**), and consumer brokerage fees (up **$2.1 million**)[10](index=10&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) - The QoQ decrease was mainly due to lower gains on sales of assets (**$6.5 million** decrease)[38](index=38&type=chunk) - Total net bank card fees decreased **$2.0 million** (**4.2%**) YoY and **$811 thousand** QoQ, primarily due to higher rewards expense on corporate and credit cards[39](index=39&type=chunk) - Non-interest income comprised **36.6%** of the Company's total revenue in Q3 2025[6](index=6&type=chunk)[12](index=12&type=chunk)[41](index=41&type=chunk) [Investment Securities Gains and Losses Discussion](index=10&type=section&id=Investment%20Securities%20Gains%20and%20Losses%20Discussion) The company recorded net securities gains of $7.9 million in Q3 2025, a significant increase from the prior quarter and Q3 2024, primarily from fair value adjustments on its private equity investment portfolio - Net securities gains were **$7.9 million** in Q3 2025, up from **$437 thousand** QoQ and **$3.9 million** YoY[12](index=12&type=chunk)[16](index=16&type=chunk)[42](index=42&type=chunk) - The gains mostly resulted from **$8.0 million** in net fair value adjustments on the private equity investment portfolio[42](index=42&type=chunk) [Non-Interest Expense Discussion](index=10&type=section&id=Non-Interest%20Expense%20Discussion) Non-interest expense for Q3 2025 amounted to $244.0 million, increasing year-over-year but remaining flat quarter-over-quarter, driven by higher salaries, data processing, and professional services expenses - Non-interest expense was **$244.0 million**, increasing YoY by **$6.4 million** (**2.7%**) but remaining flat QoQ[10](index=10&type=chunk)[43](index=43&type=chunk) - The YoY increase was mainly due to higher salaries and employee benefits (up **$4.3 million**), data processing and software (up **$1.4 million**), and professional and other services (up **$2.5 million**)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - Professional and other services included **$1.1 million** of acquisition-related legal and professional services expense[45](index=45&type=chunk) - Other non-interest expense decreased due to a **$1.5 million** reimbursement from a litigation settlement[45](index=45&type=chunk) [Income Taxes Discussion](index=10&type=section&id=Income%20Taxes%20Discussion) The effective tax rate for Q3 2025 was 22.5%, an increase from both the prior quarter and Q3 2024, primarily due to prior tax law changes and higher state and local income taxes - The effective tax rate was **22.5%** in Q3 2025, up from **21.8%** QoQ and **21.7%** YoY[12](index=12&type=chunk)[16](index=16&type=chunk)[46](index=46&type=chunk) - The QoQ increase was mostly due to tax law changes in the prior quarter that had decreased the effective tax rate[46](index=46&type=chunk) - The YoY increase was mostly due to higher state and local income taxes[46](index=46&type=chunk) [Credit Quality Discussion](index=10&type=section&id=Credit%20Quality%20Discussion) Net loan charge-offs in Q3 2025 increased to $10.3 million, with the annualized ratio to average loans at 0.23%, while the allowance for credit losses on loans increased to $175.7 million - Net loan charge-offs amounted to **$10.3 million** in Q3 2025, up from **$9.7 million** QoQ and **$9.6 million** YoY, with the annualized ratio to average loans at **0.23%**[10](index=10&type=chunk)[26](index=26&type=chunk)[47](index=47&type=chunk) - Net loan charge-offs on business real estate, business, and personal real estate loans increased QoQ, while consumer credit card loan charge-offs decreased **$570 thousand**[47](index=47&type=chunk) - The allowance for credit losses on loans increased **$10.4 million** QoQ to **$175.7 million**, primarily due to weakness in soft commodity prices impacting certain industries[10](index=10&type=chunk)[49](index=49&type=chunk) - Total non-accrual loans decreased **$2.6 million** QoQ to **$16.3 million**, representing **0.09%** of loans outstanding[50](index=50&type=chunk)[51](index=51&type=chunk) [Other Information](index=11&type=section&id=Other%20Information) During Q3 2025, the company paid a cash dividend of $0.275 per common share, repurchased 418,131 shares of treasury stock, and announced the anticipated closing of the FineMark acquisition on January 1, 2026 - The company paid a cash dividend of **$0.275** per common share in Q3 2025, a **7.0%** increase YoY[12](index=12&type=chunk)[52](index=52&type=chunk) - **418,131 shares** of treasury stock were purchased during the quarter at an average price of **$60.32**[52](index=52&type=chunk) - The acquisition of FineMark Holdings, Inc. has received all regulatory approvals and FineMark shareholder approval, with an anticipated closing date of January 1, 2026[53](index=53&type=chunk) [Company Information & Forward-Looking Statements](index=2&type=section&id=Company%20Information%20%26%20Forward-Looking%20Statements) This section provides an overview of Commerce Bancshares, Inc.'s profile and important disclosures regarding forward-looking statements [Company Profile](index=2&type=section&id=Company%20Profile) 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 - Commerce Bancshares, Inc. is a regional bank holding company providing banking services, payment solutions, investment management, and securities brokerage[9](index=9&type=chunk) - Commerce Bank operates full-service banking facilities across the Midwest and commercial/wealth offices in other key U.S. cities[9](index=9&type=chunk) - The company delivers financial solutions through regional branches, commercial and wealth offices, ATMs, online, mobile, and a 24/7 customer service line[9](index=9&type=chunk) [Forward-Looking Information](index=11&type=section&id=Forward-Looking%20Information) This section contains forward-looking statements regarding future financial and operating results, expectations, and intentions, which are subject to significant risks and uncertainties - The report contains forward-looking statements about future financial and operating results, expectations, and intentions[54](index=54&type=chunk) - These statements are based on current management beliefs and expectations and are subject to significant risks and uncertainties[54](index=54&type=chunk) - Actual results may differ materially from forward-looking statements, with additional risk information available in the company's Annual Report on Form 10-K[54](index=54&type=chunk)