Commerce Bancshares, Inc.

Company Overview

Business Model: Commerce Bancshares, Inc. is a bank holding company that, through its wholly-owned subsidiary Commerce Bank, engages in a general banking business. The Company provides a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. Its non-banking subsidiaries are involved in private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities. The Company operates under a "super-community banking" model, combining extensive product offerings with deep local market knowledge and centralized support, aiming to be the preferred financial services provider in its communities through strong customer relationships, robust risk management, and a solid balance sheet.

Market Position: Commerce Bancshares, Inc. is one of the nation’s top 50 bank holding companies by asset size, with consolidated assets of $32.9 billion at December 31, 2025. The Company holds approximately 10% of the deposit market share in Kansas City and 7% in St. Louis, its two largest markets. It operates in a highly competitive financial services environment, facing competition from various financial institutions, including larger entities with greater economies of scale and resources, as well as financial technology companies. The Company differentiates itself through a broad product and service offering, strong customer service, quality, innovation, convenience, reputation, and industry knowledge.

Recent Strategic Developments: On January 1, 2026, Commerce Bancshares, Inc. completed the acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of its common stock. FineMark Holdings, Inc. had 13 banking offices in Florida, Arizona, and South Carolina, strengthening the Company's presence in Florida and adding new high-growth markets to its wealth segment. At December 31, 2025, FineMark Holdings, Inc. had $2.7 billion in total loans, $3.1 billion in total deposits, and $8.7 billion in assets under administration. Post-merger, in January 2026, the Company liquidated FineMark Holdings, Inc.'s debt securities portfolios for $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off-balance sheet. In 2023, the Company acquired L.J. Hart & Company, a municipal bond underwriter and advisor. The Company's strategy focuses on expanding customer relationships, controlled expansion into new markets, leveraging technology, and enhancing customer satisfaction to drive core revenue growth and shareholder value.

Geographic Footprint: The Company's principal markets are primarily located throughout Missouri, Kansas, and central Illinois, with additional presence in Tulsa and Oklahoma City, Oklahoma, and Denver, Colorado, served by 140 branch facilities as of December 31, 2025. Its two largest markets are St. Louis and Kansas City. The Company also maintains offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples to support its commercial and wealth segments, and operates a commercial payments business with sales representatives across the continental U.S. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. The Bank's markets in the lower Midwest benefit from a diversified economy spanning construction, logistics, automotive, technology, financial services, aerospace, manufacturing, healthcare, and agribusiness.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025) vs. 3.47% (2024)
• Operating Margin: 41.48% (2025) vs. 40.16% (2024)
• Net Margin: 32.10% (2025) vs. 31.79% (2024)
• Return on Average Assets: 1.79% (2025) vs. 1.72% (2024)
• Return on Average Common Equity: 15.76% (2025) vs. 16.66% (2024)
• Efficiency Ratio: 55.47% (2025) vs. 57.37% (2024)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025, up from $46.1 million in 2024.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration (9.9 million shares of common stock issued) in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89% (2025) vs. 47.77% (2024)
• Key Growth Drivers: In 2025, pre-tax income increased by $9.6 million (+2.6%). This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, resulting from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The segment offers corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and provides securities safekeeping and accounting services.

Market Dynamics: The Commercial segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure including manufacturing, wholesale, retail, agribusiness, financial services, healthcare, and other service sectors. A relationship-banking approach is emphasized, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56% (2025) vs. 40.16% (2024)
• Key Growth Drivers: In 2025, pre-tax income decreased by $19.1 million (-7.8%). This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees (credit and debit card fees). Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: This segment offers consumer deposits, consumer installment lending, personal mortgage banking, and consumer debit and credit bank card activities through its retail branch network.

Market Dynamics: The Retail Banking segment's credit card portfolio is concentrated within the Company's regional markets. Approximately 36% of households with a Commerce Bank credit card also maintain a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41% (2025) vs. 52.16% (2024)
• Key Growth Drivers: In 2025, pre-tax income increased by $17.9 million (+10.3%). This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025, up from $3.90 billion at December 31, 2024.
• Total Debt: $3.00 billion at December 31, 2025, up from $2.93 billion at December 31, 2024.
• Net Cash Position: $1.40 billion at December 31, 2025, up from $0.97 billion at December 31, 2024.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025, an increase from $577.9 million in 2024.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with other financial institutions, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Manufacturing: Not applicable.
• Research & Development: Not explicitly stated as separate facilities.
• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators
Company Name: COMMERCE BANCSHARES, INC.

Company Overview

Business Model: Commerce Bancshares, Inc. is a bank holding company that, through its wholly-owned subsidiary Commerce Bank, provides a comprehensive range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. The Company also operates non-banking subsidiaries engaged in private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities. Its strategy is built on a "super-community banking" model, combining extensive product offerings with deep local market knowledge and centralized support, aiming to foster strong customer relationships and maintain a robust balance sheet.

Market Position: Commerce Bancshares, Inc. is recognized as one of the nation’s top 50 bank holding companies based on asset size, reporting consolidated assets of $32.9 billion at December 31, 2025. The Company holds significant deposit market shares in its largest markets, with approximately 10% in Kansas City and 7% in St. Louis. It operates in a highly competitive financial services industry, competing with a diverse array of institutions including larger national banks, credit unions, brokerage firms, and financial technology companies. The Company differentiates itself through its broad product suite, commitment to customer service, innovation, convenience, reputation, and industry expertise.

Recent Strategic Developments: On January 1, 2026, Commerce Bancshares, Inc. completed the acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of its common stock. This merger integrated FineMark National Bank & Trust into Commerce Bank, adding 13 banking offices in Florida, Arizona, and South Carolina, thereby strengthening the Company's presence in Florida and expanding into new high-growth wealth markets. At December 31, 2025, FineMark Holdings, Inc. had $2.7 billion in loans, $3.1 billion in deposits, and $8.7 billion in assets under administration. Post-acquisition, in January 2026, the Company liquidated FineMark Holdings, Inc.'s debt securities portfolios for $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off-balance sheet. In 2023, the Company also acquired L.J. Hart & Company, a municipal bond underwriter and advisor.

Geographic Footprint: The Company's primary operational regions include Missouri, Kansas, and central Illinois, with additional presence in Tulsa and Oklahoma City, Oklahoma, and Denver, Colorado, served by 140 branch facilities as of December 31, 2025. Its two largest markets are St. Louis and Kansas City. The Company also maintains commercial and/or wealth segment offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples, and operates a commercial payments business with sales representatives covering the continental U.S. The FineMark Holdings, Inc. acquisition in January 2026 expanded its branch network into Florida, Arizona, and South Carolina. The Bank's markets in the lower Midwest benefit from a diversified economy across various major industries.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025)
• Operating Margin: 41.48% (2025)
• Net Margin: 32.10% (2025)
• Return on Average Assets: 1.79% (2025)
• Return on Average Common Equity: 15.76% (2025)
• Efficiency Ratio: 55.47% (2025)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89%
• Key Growth Drivers: Pre-tax income increased by $9.6 million (+2.6%) in 2025. This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, stemming from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The Commercial segment provides corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management services, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and offers securities safekeeping and accounting services.

Market Dynamics: This segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure. The Company emphasizes relationship banking, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56%
• Key Growth Drivers: Pre-tax income decreased by $19.1 million (-7.8%) in 2025. This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees. Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: The Retail Banking segment offers various consumer loan and deposit products through its retail branch network, including residential mortgage, indirect and other consumer loan financing businesses, and debit and credit card loan and fee businesses.

Market Dynamics: The segment's credit card portfolio is concentrated within the Company's regional markets, with approximately 36% of Commerce Bank credit card households also maintaining a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41%
• Key Growth Drivers: Pre-tax income increased by $17.9 million (+10.3%) in 2025. This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025.
• Total Debt: $3.00 billion at December 31, 2025.
• Net Cash Position: $1.40 billion at December 31, 2025.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with large, publicly traded companies, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Manufacturing: Not applicable.
• Research & Development: Not explicitly stated as separate facilities.
• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators ---

Company Overview

Business Model: Commerce Bancshares, Inc. is a bank holding company that, through its wholly-owned subsidiary Commerce Bank, provides a comprehensive range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. The Company also operates non-banking subsidiaries engaged in private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities. Its strategy is built on a "super-community banking" model, combining extensive product offerings with deep local market knowledge and centralized support, aiming to foster strong customer relationships and maintain a robust balance sheet.

Market Position: Commerce Bancshares, Inc. is recognized as one of the nation’s top 50 bank holding companies based on asset size, with consolidated assets of $32.9 billion at December 31, 2025. The Company holds significant deposit market shares in its largest markets, with approximately 10% in Kansas City and 7% in St. Louis. It operates in a highly competitive financial services environment, competing with a diverse array of institutions including larger national banks, credit unions, brokerage firms, and financial technology companies. The Company differentiates itself through its broad product suite, commitment to customer service, quality, innovation, convenience, reputation, and industry expertise.

Recent Strategic Developments: On January 1, 2026, Commerce Bancshares, Inc. completed the acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of its common stock. This merger integrated FineMark National Bank & Trust into Commerce Bank, adding 13 banking offices in Florida, Arizona, and South Carolina, thereby strengthening the Company's presence in Florida and expanding into new high-growth wealth markets. At December 31, 2025, FineMark Holdings, Inc. had $2.7 billion in loans, $3.1 billion in deposits, and $8.7 billion in assets under administration. Post-acquisition, in January 2026, the Company liquidated FineMark Holdings, Inc.'s debt securities portfolios for $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off-balance sheet. In 2023, the Company also acquired L.J. Hart & Company, a municipal bond underwriter and advisor. The Company's strategy focuses on expanding customer relationships, controlled expansion into new markets, leveraging technology, and enhancing customer satisfaction to drive core revenue growth and shareholder value.

Geographic Footprint: The Company's primary operational regions include Missouri, Kansas, and central Illinois, with additional presence in Tulsa and Oklahoma City, Oklahoma, and Denver, Colorado, served by 140 branch facilities as of December 31, 2025. Its two largest markets are St. Louis and Kansas City. The Company also maintains commercial and/or wealth segment offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples to support its commercial and wealth segments, and operates a commercial payments business with sales representatives across the continental U.S. The FineMark Holdings, Inc. acquisition in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. The Bank's markets in the lower Midwest benefit from a diversified economy across various major industries.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025)
• Operating Margin: 41.48% (2025)
• Net Margin: 32.10% (2025)
• Return on Average Assets: 1.79% (2025)
• Return on Average Common Equity: 15.76% (2025)
• Efficiency Ratio: 55.47% (2025)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89%
• Key Growth Drivers: Pre-tax income increased by $9.6 million (+2.6%) in 2025. This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, stemming from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The Commercial segment provides corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management services, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and offers securities safekeeping and accounting services.

Market Dynamics: This segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure. The Company emphasizes relationship banking, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56%
• Key Growth Drivers: Pre-tax income decreased by $19.1 million (-7.8%) in 2025. This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees. Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: The Retail Banking segment offers various consumer loan and deposit products through its retail branch network, including residential mortgage, indirect and other consumer loan financing businesses, and debit and credit card loan and fee businesses.

Market Dynamics: The segment's credit card portfolio is concentrated within the Company's regional markets, with approximately 36% of Commerce Bank credit card households also maintaining a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41%
• Key Growth Drivers: Pre-tax income increased by $17.9 million (+10.3%) in 2025. This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025.
• Total Debt: $3.00 billion at December 31, 2025.
• Net Cash Position: $1.40 billion at December 31, 2025.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with large, publicly traded companies, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators

Company Overview

Business Model: Commerce Bancshares, Inc. is a bank holding company that, through its wholly-owned subsidiary Commerce Bank, engages in a general banking business. The Company provides a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. Its non-banking subsidiaries are involved in private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities. The Company operates under a "super-community banking" model, combining extensive product offerings with deep local market knowledge and centralized support, aiming to be the preferred financial services provider in its communities through strong customer relationships, robust risk management, and a solid balance sheet.

Market Position: Commerce Bancshares, Inc. is recognized as one of the nation’s top 50 bank holding companies based on asset size, with consolidated assets of $32.9 billion at December 31, 2025. The Company holds significant deposit market shares in its largest markets, with approximately 10% in Kansas City and 7% in St. Louis. It operates in a highly competitive financial services environment, competing with a diverse array of institutions including larger national banks, credit unions, brokerage firms, and financial technology companies. The Company differentiates itself through its broad product suite, commitment to customer service, quality, innovation, convenience, reputation, and industry expertise.

Recent Strategic Developments: On January 1, 2026, Commerce Bancshares, Inc. completed the acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of its common stock. This merger integrated FineMark National Bank & Trust into Commerce Bank, adding 13 banking offices in Florida, Arizona, and South Carolina, thereby strengthening the Company's presence in Florida and expanding into new high-growth wealth markets. At December 31, 2025, FineMark Holdings, Inc. had $2.7 billion in loans, $3.1 billion in deposits, and $8.7 billion in assets under administration. Post-acquisition, in January 2026, the Company liquidated FineMark Holdings, Inc.'s debt securities portfolios for $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off-balance sheet. In 2023, the Company also acquired L.J. Hart & Company, a municipal bond underwriter and advisor. The Company's strategy focuses on expanding customer relationships, controlled expansion into new markets, leveraging technology, and enhancing customer satisfaction to drive core revenue growth and shareholder value.

Geographic Footprint: The Company's primary operational regions include Missouri, Kansas, and central Illinois, with additional presence in Tulsa and Oklahoma City, Oklahoma, and Denver, Colorado, served by 140 branch facilities as of December 31, 2025. Its two largest markets are St. Louis and Kansas City. The Company also maintains commercial and/or wealth segment offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples to support its commercial and wealth segments, and operates a commercial payments business with sales representatives across the continental U.S. The FineMark Holdings, Inc. acquisition in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. The Bank's markets in the lower Midwest benefit from a diversified economy across various major industries.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025)
• Operating Margin: 41.48% (2025)
• Net Margin: 32.10% (2025)
• Return on Average Assets: 1.79% (2025)
• Return on Average Common Equity: 15.76% (2025)
• Efficiency Ratio: 55.47% (2025)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89%
• Key Growth Drivers: Pre-tax income increased by $9.6 million (+2.6%) in 2025. This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, stemming from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The Commercial segment provides corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management services, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and offers securities safekeeping and accounting services.

Market Dynamics: This segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure. The Company emphasizes relationship banking, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56%
• Key Growth Drivers: Pre-tax income decreased by $19.1 million (-7.8%) in 2025. This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees. Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: The Retail Banking segment offers various consumer loan and deposit products through its retail branch network, including residential mortgage, indirect and other consumer loan financing businesses, and debit and credit card loan and fee businesses.

Market Dynamics: The segment's credit card portfolio is concentrated within the Company's regional markets, with approximately 36% of Commerce Bank credit card households also maintaining a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41%
• Key Growth Drivers: Pre-tax income increased by $17.9 million (+10.3%) in 2025. This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025.
• Total Debt: $3.00 billion at December 31, 2025.
• Net Cash Position: $1.40 billion at December 31, 2025.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with large, publicly traded companies, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators ---

Company Overview

Business Model: Commerce Bancshares, Inc. is a bank holding company that, through its wholly-owned subsidiary Commerce Bank, engages in a general banking business. The Company provides a broad range of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals, businesses, and municipalities. Its non-banking subsidiaries are involved in private equity investment, securities brokerage, underwriting, specialty lending, and leasing activities. The Company operates under a "super-community banking" model, combining extensive product offerings with deep local market knowledge and centralized support, aiming to be the preferred financial services provider in its communities through strong customer relationships, robust risk management, and a solid balance sheet.

Market Position: Commerce Bancshares, Inc. is recognized as one of the nation’s top 50 bank holding companies based on asset size, with consolidated assets of $32.9 billion at December 31, 2025. The Company holds significant deposit market shares in its largest markets, with approximately 10% in Kansas City and 7% in St. Louis. It operates in a highly competitive financial services environment, competing with a diverse array of institutions including larger national banks, credit unions, brokerage firms, and financial technology companies. The Company differentiates itself through its broad product suite, commitment to customer service, quality, innovation, convenience, reputation, and industry expertise.

Recent Strategic Developments: On January 1, 2026, Commerce Bancshares, Inc. completed the acquisition of FineMark Holdings, Inc. in an all-stock transaction, issuing 9.9 million shares of its common stock. This merger integrated FineMark National Bank & Trust into Commerce Bank, adding 13 banking offices in Florida, Arizona, and South Carolina, thereby strengthening the Company's presence in Florida and expanding into new high-growth wealth markets. At December 31, 2025, FineMark Holdings, Inc. had $2.7 billion in loans, $3.1 billion in deposits, and $8.7 billion in assets under administration. Post-acquisition, in January 2026, the Company liquidated FineMark Holdings, Inc.'s debt securities portfolios for $543.0 million, paid off $350 million of FHLB advances, and moved $1.0 billion of high-cost trust deposits off-balance sheet. In 2023, the Company also acquired L.J. Hart & Company, a municipal bond underwriter and advisor. The Company's strategy focuses on expanding customer relationships, controlled expansion into new markets, leveraging technology, and enhancing customer satisfaction to drive core revenue growth and shareholder value.

Geographic Footprint: The Company's primary operational regions include Missouri, Kansas, and central Illinois, with additional presence in Tulsa and Oklahoma City, Oklahoma, and Denver, Colorado, served by 140 branch facilities as of December 31, 2025. Its two largest markets are St. Louis and Kansas City. The Company also maintains commercial and/or wealth segment offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, Grand Rapids, and Naples to support its commercial and wealth segments, and operates a commercial payments business with sales representatives across the continental U.S. The FineMark Holdings, Inc. acquisition in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. The Bank's markets in the lower Midwest benefit from a diversified economy across various major industries.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025)
• Operating Margin: 41.48% (2025)
• Net Margin: 32.10% (2025)
• Return on Average Assets: 1.79% (2025)
• Return on Average Common Equity: 15.76% (2025)
• Efficiency Ratio: 55.47% (2025)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89%
• Key Growth Drivers: Pre-tax income increased by $9.6 million (+2.6%) in 2025. This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, stemming from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The Commercial segment provides corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management services, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and offers securities safekeeping and accounting services.

Market Dynamics: This segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure. The Company emphasizes relationship banking, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56%
• Key Growth Drivers: Pre-tax income decreased by $19.1 million (-7.8%) in 2025. This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees. Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: The Retail Banking segment offers various consumer loan and deposit products through its retail branch network, including residential mortgage, indirect and other consumer loan financing businesses, and debit and credit card loan and fee businesses.

Market Dynamics: The segment's credit card portfolio is concentrated within the Company's regional markets, with approximately 36% of Commerce Bank credit card households also maintaining a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41%
• Key Growth Drivers: Pre-tax income increased by $17.9 million (+10.3%) in 2025. This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025.
• Total Debt: $3.00 billion at December 31, 2025.
• Net Cash Position: $1.40 billion at December 31, 2025.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with large, publicly traded companies, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators SADVERTISEMENT

Profitability Metrics:

• Net Yield on Interest Earning Assets (FTE): 3.63% (2025)
• Operating Margin: 41.48% (2025)
• Net Margin: 32.10% (2025)
• Return on Average Assets: 1.79% (2025)
• Return on Average Common Equity: 15.76% (2025)
• Efficiency Ratio: 55.47% (2025)

Investment in Growth:

• Capital Expenditures: $52.7 million in 2025.
• Strategic Investments: The acquisition of FineMark Holdings, Inc. for $519.9 million in total consideration in January 2026. The acquisition of L.J. Hart & Company in 2023.

Business Segment Analysis

Commercial

Financial Performance:

• Revenue: $0.81 billion (+4.5% YoY)
• Operating Margin: 46.89%
• Key Growth Drivers: Pre-tax income increased by $9.6 million (+2.6%) in 2025. This was primarily driven by a $16.5 million (+3.2%) increase in net interest income, stemming from lower interest expense on deposits and customer repurchase agreements, and higher net allocated funding credits, partially offset by lower loan interest income. Non-interest income grew by $18.6 million (+7.1%), mainly due to higher gains on asset sales and increased corporate cash management fees, partially offset by lower net corporate card fees. Average segment loans increased by $274.1 million (+2.4%), and average deposits increased by $386.9 million (+3.9%).

Product Portfolio: The Commercial segment provides corporate lending (including Small Business Banking), leasing, international services, business and government deposit products, commercial cash management services, and merchant and commercial bank card products. It also includes the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds, and offers securities safekeeping and accounting services.

Market Dynamics: This segment focuses on middle-market and community businesses, primarily in the central Midwest, with a diversified industry exposure. The Company emphasizes relationship banking, with most borrowing customers also utilizing other banking services.

Retail Banking

Financial Performance:

• Revenue: $0.60 billion (-1.4% YoY)
• Operating Margin: 37.56%
• Key Growth Drivers: Pre-tax income decreased by $19.1 million (-7.8%) in 2025. This was due to increases in non-interest expense (+2.9%) and the provision for credit losses (+3.2%), alongside declines in net interest income (-1.4%) and non-interest income (-1.4%). Net interest income decreased due to a $15.1 million decline in net allocated funding credits, partially offset by a $9.8 million decrease in deposit interest expense. Non-interest income decreased mainly due to lower net bank card fees. Average segment loans decreased by $98.0 million, while average deposits increased by $37.3 million (+0.3%).

Product Portfolio: The Retail Banking segment offers various consumer loan and deposit products through its retail branch network, including residential mortgage, indirect and other consumer loan financing businesses, and debit and credit card loan and fee businesses.

Market Dynamics: The segment's credit card portfolio is concentrated within the Company's regional markets, with approximately 36% of Commerce Bank credit card households also maintaining a deposit relationship with the Bank.

Wealth

Financial Performance:

• Revenue: $0.36 billion (+7.7% YoY)
• Operating Margin: 53.41%
• Key Growth Drivers: Pre-tax income increased by $17.9 million (+10.3%) in 2025. This was driven by a $2.8 million (+3.2%) increase in net interest income, primarily from higher loan interest income and lower deposit interest expense, partially offset by a decrease in net allocated funding credits. Non-interest income increased by $22.8 million (+9.4%), mainly due to higher private client and institutional trust fees, and increased brokerage services fees (life insurance, annuity, and advisory fees). Average assets increased by $212.9 million (+10.8%), and average deposits increased by $148.6 million (+6.2%).

Product Portfolio: The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management services, brokerage services, and Private Banking accounts. It also offers investment management services to The Commerce Funds, a series of mutual funds with $2.6 billion in total assets at December 31, 2025.

Market Dynamics: At December 31, 2025, the Trust group managed investments with a market value of $50.6 billion and administered an additional $31.0 billion in non-managed assets.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: The Company repurchased $207.6 million of its common stock (3,608,530 shares) in 2025, following $170.5 million (2.9 million shares) in 2024. As of December 31, 2025, 3,186,721 shares remained available for purchase under the current Board authorization.
• Dividend Payments: Cash dividends paid on common stock totaled $146.6 million in 2025, an increase from $139.5 million in 2024. The Company paid cash dividends of $1.05 per share in 2025, representing a 6.9% increase over the prior year.
• Future Capital Return Commitments: The Company increased its first quarter 2026 cash dividend by 5.0%, marking its 58th consecutive year of regular cash dividend increases. It also distributed its 32nd consecutive annual 5% common stock dividend in December 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.40 billion at December 31, 2025.
• Total Debt: $3.00 billion at December 31, 2025.
• Net Cash Position: $1.40 billion at December 31, 2025.
• Credit Rating: Commerce Bancshares, Inc. holds an A- issuer rating with a Stable outlook from Standard & Poor’s. Commerce Bank holds an A issuer rating from Standard & Poor’s and A3 from Moody’s, with a Stable outlook from both, and short-term ratings of A-1 and P-1, respectively.
• Debt Maturity Profile: Certificates of deposit have scheduled maturities of $2.27 billion in 2026, $98.1 million in 2027, $9.3 million in 2028, $3.1 million in 2029, $3.1 million in 2030, and $8 thousand thereafter. Securities purchased under agreements to resell mature $250.0 million in 2028, $250.0 million in 2029, and $350.0 million in 2030.

Cash Flow Generation:

• Operating Cash Flow: $645.1 million in 2025.

Operational Excellence

Production & Service Model: The Company operates as a "super-community bank," delivering a broad range of financial products to consumer, municipal, and commercial customers with a focus on high-quality, personalized service. This model integrates large bank product offerings with deep local market knowledge, supported by experienced, centralized teams and regional advisory boards of local business leaders. Services are delivered through an extensive network of branches and ATMs, online banking, a mobile application, and a centralized contact center.

Supply Chain Architecture: Key Suppliers & Partners: The Company relies on third-party vendors for critical operational functions, including information systems, communication, data management, and transaction processing. It also engages in credit risk participation agreements with other financial institutions to share credit risk on interest rate swaps. The Company pledges assets to the Federal Reserve Bank and the FHLB to secure lines of credit and borrowings. It participates in Shared National Credits (SNCs) with large, publicly traded companies, totaling $1.5 billion in loans and $2.6 billion in unfunded commitments at December 31, 2025.

Facility Network:

• Distribution: The Company operates 140 branch facilities primarily across Missouri, Kansas, and central Illinois, as well as Oklahoma and Colorado. The acquisition of FineMark Holdings, Inc. in January 2026 added 13 banking offices in Florida, Arizona, and South Carolina. Main offices are located in Kansas City and St. Louis, Missouri.

Operational Metrics: The Company's efficiency ratio improved to 55.47% in 2025 from 57.37% in 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: The Company utilizes a multi-channel approach including direct sales through its branch network, online banking, a mobile application, and a centralized contact center. Its commercial payments business employs sales representatives across the continental U.S. Regional advisory boards, composed of local business leaders, also assist in responding to local banking needs. Customer Portfolio: Enterprise Customers: The Company primarily targets middle-market and community businesses, emphasizing relationships where customers often maintain deposit accounts and utilize multiple banking services. It also participates in Shared National Credits (SNCs) with large, publicly traded companies, typically when business operations are maintained in local or regional markets. Corporate card loans are extended to corporate, non-profit, and government customers nationwide. Geographic Revenue Distribution: The loan portfolio is diversified geographically, with approximately 31% in the Kansas City market, 25% in the St. Louis market, and 44% in other regional markets. The Bank's personal real estate lending operations are predominantly centered in its principal markets.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The financial services industry is highly competitive and subject to rapid technological change, including the emergence of financial technology companies. The U.S. economy in 2025 experienced positive but uneven growth, with moderating but elevated inflation, a solid but slowing labor market, and strong consumer spending. Looking into 2026, inflationary pressures have eased, but elevated living costs remain a concern, with ongoing uncertainties regarding tariffs, monetary policy, and unemployment.

Competitive Positioning Matrix:

| Competitive Factor | Company Position | Key Differentiators
| Technology Leadership | Strong | Regularly upgrades systems for efficiency, product enhancement, and cost reduction. Focus on customer satisfaction.