Commerce Bancshares, Inc. Stock

Hello, and welcome to the Annual Meeting of Shareholders of Commerce Bancshares, Inc. Please note that today's meeting is being recorded. [Operator Instructions]

It is now my pleasure to turn today's meeting over to David Kemper, Executive Chairman of Commerce Bancshares, Inc. Mr. Kemper, the floor is yours.

Thank you, and good morning. The Annual Meeting of the Shareholders of Commerce Bancshares will please come to order. On behalf of your Board of Directors and the officers of your company, I'm pleased to welcome those virtually attending the 2026 Annual Meeting of the Shareholders.

First, I'd like to introduce the members of our Board of Directors: Terry Bassham, retired Chief Executive Officer and President of Evergy, Inc.; Beau Brauer, President of Hunter Engineering; Kyle Chapman, President and CEO and Board member of Barry-Wehmiller Group, Inc.; Karen Daniel, retired Chief Financial Officer and Executive Director of Black & Veatch; Tim Dunn, Chairman of the Board and Chief Investment Officer of J.E. Dunn Construction Company; June Fowler, retired Senior Vice President of Communications, Marketing and Public Affairs of BJC Healthcare; John Kemper, President and CEO of Commerce Bancshares; Alaina Macia, President and Chief Executive Officer, MTM Health; Ben Rassieur, retired President of Paulo Products; Todd Schnuck, Chairman of the Board and Chief Executive Officer of Schnuck Markets, Inc.; and Chrissy Taylor, President and Chief Executive Officer of Enterprise Mobility.

I'll call your attention to the Rules of Conduct set forth for this meeting. These are made available to each shareholder on the Documents tab in the upper right corner of the screen.

Before asking the Secretary to present her report, any shareholders who have not submitted their proxies might do so at this time by clicking on the link provided online.

Okay. If we're good on that, the online voting will now be closed. I'll ask our Secretary, Peggy Rowe, to make her report. Peggy?

An affidavit has been filed by our Stock Transfer Agent stating that the Notice of the Annual Meeting has been furnished to all shareholders of record as of February 17, 2026. The Inspectors of Elections have filed with me their certificates stating that proxies representing 125,909,553 shares of the 147,283,966 outstanding shares have been received, so a quorum is present.

Thank you. The first matter to be presented to the shareholders today is the election of 4 directors to constitute the 2029 class of directors to serve until the 2029 Annual Meeting. At this time, I request the Secretary to present the nominations of the Board of Directors and the results of the voting.

The Board of Directors nominated Blackford F. Brauer; W. Kyle Chapman; Karen L. Daniel; and David W. Kemper to the 2029 Class of Directors to be elected at the meeting. No other nominations were received.

Based on proxies submitted, each of the nominees has received a number of votes sufficient to elect all nominees, with the majority of votes cast. A final report of the actual number of votes cast will be available online in the next few days.

On the basis of the report presented, the 4 nominees have been elected to the Board for a term of 3 years, to serve until the 2029 Annual Meeting.

The second matter is the ratification of the selection of KPMG LLC as the company's independent registered public accounting firm for 2026.

KPMG LLC's selection as the company's independent registered public accounting firm was ratified by over 98% of the shares voted. A final report of the actual number of votes cast will be available online in the next few days.

On the basis of the report presented, KPMG has been ratified as the company's independent registered public accounting firm for 2026.

The next matter is the Say on Pay proposal, which is an advisory vote on the compensation awarded to certain executive officers.

Based on proxies submitted, votes for Proposal 3 represented 91% of the votes cast. A final report of the actual number of votes cast will be available online in the next few days.

On the basis of the Secretary's report, Proposal 3, approving the compensation awards to certain executive officers, passed. Proposal 3 is an advisory vote and is not binding on the company, but it will be taken into consideration both by the Compensation Committee and by the Board as a whole.

At this time, I'd like to introduce Stephen Penn and Jenny Pearson of KPMG, the company's public accounting firm, who are attending this meeting virtually. Mr. Penn and Ms. Pearson will be available to answer any questions shareholders may have during the question period later in the meeting.

At this time now, I'd like to turn the meeting over to John Kemper, President and CEO of the company, for a State of the Company presentation. John?

Okay. Thank you. Good morning, and thank you, everyone, for being here with us today. It is always a pleasure to have our shareholders gather at this annual meeting. It's a great opportunity to step back and to reflect on the year that is now behind us. Like most years, 2025 included both successes and challenges. Taken as a whole, however, it was a very good year for your company.

You may have seen our annual report this year, that the theme for that report is From Insight to Action. And to me, that theme captures one of the most important distinctions between high and low-performing organizations. In a period like we're in today, one marked by rapid change and disruption, the strongest companies are not just those that recognize the need to evolve, but those that actively turn that understanding into decisive action. The success requires both, sound strategy and disciplined execution.

Today, I'm pleased to share some examples of how Commerce has translated insight into action and how those efforts have produced results for our shareholders. And for a deeper look, I would encourage you to review our annual report, which is available on our investor website.

So I'll just offer the usual cautions about forward-looking statements. And with that, we can step into the presentation itself.

In our time today, I will cover 4 areas broadly. I'm going to talk about Commerce at a high level. I'll talk about what we see in the economy and the banking industry. And then looking ahead, we'll talk about how Commerce is positioned against this backdrop. And finally, we'll talk about our company's performance relative to the industry, including some thoughts on how we're positioning the company to compete well into the future.

Again, I'll start with just a thumbnail on Commerce here on this page. You can see a quick view of who we are, an overview of the company. Commerce is now in its 161st year of operation. Our core footprint is concentrated in the middle of the country, while several businesses, most notably payments, serve clients nationwide.

You'll see our year-end financial highlights here along the bottom of this page. At the end of 2025, we were approximately $33 billion in asset size, ranking us as the 40th largest bank in the country. By market capitalization, however, at year-end, we were ranked 29th.

As we've discussed before, that valuation relative to our balance sheet size reflects the diversity of our earning streams. A meaningful portion of our revenue comes from businesses that are not heavily balance sheet dependent. We operate a large and growing B2B and consumer payments platform, alongside a significant wealth management franchise. At year-end, we administered more than $80 billion in trust assets, which places us among the top 16 banks nationally. And with the acquisition that we closed in January, that figure is now north of $90 billion of assets under administration.

We're also a highly-liquid, well-capitalized and safe institution. Attributes, I think, that matter even more in an environment marked by uncertainty. That strength is reflected in a number of ways, that you see here is in our baseline credit assessment, which ranks among the highest in the country.

So here is a refresher on our operating model and our go-to-market approach. Commerce operates as a super community bank. And in practice, that means bringing together strengths that are typically associated with both smaller and larger institutions. We seek to offer the capabilities, the breadth of products, the sophisticated advice that you'd expect from a large bank, while delivering these things through deep relationships, through empowered local bankers and alongside a strong commitment to customer service. Our teams are trusted to take care of their customers and are closely connected to the communities they serve.

I will say this model is not always easy to execute, but it really has been a defining differentiator for us over the years. Over time it's proven to be a winning formula. I think you see that reflected consistently in our high employee engagement, our strong customer satisfaction scores and our solid long-term return to shareholders.

Of course, this all starts with our team. And that team is backed by what I'd call really a distinctive culture. We really very proactively shape that culture over time to make sure we're evolving in positive ways and always improving. Ultimately, it's our shared values, which you can see here in the circles across the slide, our shared language and our understanding of our shared direction that allows for us to communicate and execute effectively on our business model. It's how we translate insight into action. Put simply, that is how we win in the marketplace.

An important part of our culture is how we support our communities and how we support one another. When we measure teammate engagement and enablement, Commerce consistently outperforms even the highest-performing industry benchmarks. Many banks express their community presence through financial contributions and sponsorships. We do that as well, but we're equally proud of the time and the talent that our teammates invest in our communities. Across our footprint, Commerce teammates serve on the Board of more than 500 nonprofit organizations, providing leadership, hands-on involvement where it matters most.

That long-standing commitment is also reflected in our regulatory record. For nearly 30 years at this point, the Bank has consistently earned a Community Reinvestment Act rating of Outstanding. And while we try not to read too many of our own press clippings, I thought I'd just flag some of the recent recognitions for the Bank, which I do think is a reflection of our team members' hard work and collaboration.

Okay. I've just got a couple of slides now about the economy and the banking environment. I'm going to wind back the clock a little bit and focus on 2025 for a moment just because, of course, that is the backdrop for our performance this past year.

And despite a lot of disruption and uncertainty, 2025 ended up being a largely favorable operating environment for business. Though slowing, overall economic growth was positive and corporate profits remained strong. Jobs growth slowed, but overall consumer health proved quite resilient and equity markets continued to rally through the year. After an early-year pause, the Fed cut rates by 75 basis points toward year-end, and that provided a boost to the economy, and also to so-called liability-sensitive banks, those banks with higher funding costs.

Against this backdrop, banks performed quite well. You can see that in our earnings and in industry valuations. Banks were probably helped by some regulatory relief. Notably, you saw that in a pickup in M&A activity. And accordingly, we probably saw some valuation increases in banks that are perceived to be acquisition targets.

One thing that continues to bear emphasis, banks were helped by benign credit. Despite some trend toward normalization on things like consumer credit losses, credit continues to be an area where banks are probably over-earning relative to historic averages. Although, of course, we won't know the magnitude of that until we see an economic downdraft. And we, of course, don't know when that downdraft will come. When it does, I think Commerce is in very good shape.

As we've said for a long time, our goal is to be there consistently for our customers through all economic cycles. And that's really how we think about our risk appetite. I'll come back to our positioning in the current economic environment in a moment, but first, I just want to tell you a little bit about the ongoing investments that we're making in our business.

So in general, we think about our strategic posture as striking a balance between 2 things. First, continuously improving the functioning of our 160-year-old-plus core bank. And second, making innovative bets and investing in areas that we think can drive long-term growth. And to me, these things operate in harmony. If we get the continuous improvement part right in our core bank, getting more efficient, improving our earnings, building the best team and culture that we can, it buys us the capital to place these longer-term bets. In our culture, we call these bets blue chips for the company. And you can see some of those blue chips here on the right side of the page.

Now in support of our strategic growth, we were happy to announce last year the acquisition of FineMark National Bank & Trust. This announcement marked a significant milestone for Commerce. It was the culmination of really years of relationship building, a lot of mutual trust and some shared values.

FineMark is a natural culture fit with Commerce. It has a strong history of asset quality, a shared client-centric service model and a deep commitment to community engagement. This addition will accelerate meaningful growth in our wealth management business, and it will build on our existing presence in Florida, while also expanding our footprint in some attractive new geographies.

As a reminder, this slide is a snapshot of FineMark at the time we announced the deal. There was a little bit of who they were -- who they are on a page. Move forward to 2026, and we marked the close of the transaction. We completed that on January 1 of this year. And through January, we successfully onboarded $2.7 billion in loans, $2.1 billion in deposits and $8.7 billion in trust assets.

As part of this integration, we took several deliberate balance sheet actions to improve efficiency and margins. Given Commerce's strong core funding position, we moved certain customer deposits off of our shared balance sheet and we repositioned the securities portfolio to align with the broader enterprise asset liability strategy.

The successful integration of FineMark, of course, is one of the company's top priorities this year, and I'm pleased to say that progress is very much on track. The systems conversion is targeted for the fourth quarter of this year. And by every measure, the integration is proceeding well. Our teams are fully engaged. Clients are enthusiastic. We remain firmly committed to care continuity and a high-quality client experience throughout the transition.

More broadly, we believe this acquisition is going to serve as a catalyst for our wealth management business, expanding our capabilities into, as I mentioned, some new markets, and also strengthening our overall long-term growth trajectory.

Zooming out a little bit and speaking about that Wealth business as a whole, FineMark fits within this overall business segment for Commerce. And here's a snapshot of that Wealth business at year-end. So again, this is without the FineMark numbers folded in. You can see where we stack up against bank-owned trust companies, at 16th largest in the country. And again, this is an area where we are outsized relative to our balance sheet.

As of year-end, we oversaw about $82 billion in client assets, the majority of which we actively manage. This is a business with very nice financial return characteristics, relatively low risk, quite steady. And most importantly, it's complementary to everything else that we do for our customers, be they families, commercial customers or institutions. So this business really allows us to build deep and enduring relationships.

Within the Wealth segment, you can see some of the key growth initiatives, which are laid out on the left side of the page here, related mostly to our investments in systems and people, and also expansion into new geographies. Customer segmentation is really important in this business. Our family of Wealth-related brands is a reflection of the very tailored approach that we take to customers across the wealth spectrum. This is complemented also with high-touch banking services, leveraging our broader platform at Commerce.

And that banking platform also supports our very important Retail business. You can get a snapshot here of the size of the business. We currently serve more than 750,000 households, representing $12.3 billion in deposits and nearly $4 billion in loans on our balance sheet. And just to be clear, these numbers exclude the loans and deposits in our Wealth segment.

In 2025, we held the primary banking relationship with more than 75% of our Retail households, which marks the seventh consecutive year at or above this level. We exceeded our overall customer experience goals for the sixth year in a row. Our mortgage customer satisfaction and net promoter scores put us in the best-in-class categories for all lenders that participate in that survey.

We continue to grow our premier banking program. We now have 8% growth in that portfolio over the last year. This group represents a relatively small percentage of our total households, but a large proportion of our overall deposits and loans. And in 2025, we expanded program parameters to take into account small business relationships, reflecting the overall depth of a customer's relationship with Commerce and making sure that we're giving them the highest possible service.

After launching during COVID, we migrated our Commerce Bank CONNECT messaging experience into our mobile app, enabling customers to connect directly in a secure environment with their own bankers; a real person, I might add; with access to English and Spanish translation if needed. This continues to be our highest-rated customer channel with 98% satisfaction. And in 2025, we saw a 50% increase in users, with growth continuing into 2026.

Our emphasis, as you see through that Commerce Bank CONNECT app, is really on growing our digital channel and making sure we're using all the tools that are available to us. Our app has a 4.7 star rating in both the Apple and Android store, which puts us on about the same footing as best-in-class banks.

Turning the page to our Commercial segment, you can see here a snapshot of our loan and deposit footings. You can also see the revenue associated with this segment. Our capabilities in the Commercial space span a broad array of products and services. Our goal is to be the full-service partner to any commercial customer, and that means helping them with credit, deposits and any services that they may require.

I talked earlier about the importance of our commercial payments franchise. This slide gives some dimension to that business. It's an area where we compete against the largest players in the industry, and we have a good deal of success. We really like this business because of the value that it brings to our customers as well as the risk return characteristics that it delivers to our franchise and our shareholders.

Within our payments business, health care is our single largest customer vertical. As this snapshot shows, the platform operates at a truly national scale. We partner with more than 3,000 health care providers, including over 500 hospitals across 48 states. Our offerings span the full provider revenue cycle and include patient-facing solutions designed to improve the overall patient experience. In addition, we provide traditional banking services and investment management to support our clients more holistically.

The health care services market certainly is a credible one. There are a lot of technology-only providers. But we found that our positioning as a stable and well-capitalized bank with deep focus in this vertical is both distinctive and it's been very compelling for our customers.

A large part of our profitable growth in recent years has come from our so-called expansion markets, which are markets where we planted a flag in the last 15 years or so. You can see these markets enumerated on this page. You can also get a sense for the loan growth over time.

But just as important and what I flag here is the fee growth. You can see that this has grown even more quickly in recent years. Now again, these numbers do not include FineMark. So putting those into the picture, I think we're really optimistic about the continued growth trajectory that we have in some of these expansion markets.

Just a note on digital and application modernization. If you think about it as digital being our front door to the bank, it's important to note the equally significant investments that we continue to make behind the scenes in our core technology ecosystem.

One of the advantage of your Bank's steady earnings profile is that it enables us to invest proactively and very consistently in our business. The initiatives shown on this page represents some of our largest enterprise projects. Some are already underway, some are to come in the near future. Most of these are multiyear efforts. And while they may not always be directly visible to our customers, these investments are critical to the long-term reliability and scalability of the Bank, and delivering a consistently high-quality customer experience across every channel.

So now I'm going to close with a recap of our performance in 2025. And as I said before, I'll share a few thoughts about how we're positioned in the current environment and where we're headed.

So you can see in our financial metrics for the year, really was very strong performance for 2025. We had record revenues, record earnings, record returns on assets and record earnings per share.

Net income came at $566 million or $4.04 per share. Our returns on assets and equity of 1.79% and 15.8%, respectively, ranked among the highest in our peer set and among all banks. In fact, our balance sheet on a year-end to year-end basis grew only modestly, but margin expansion allowed for net interest income growth on the year. Again, as you can see, our long-term returns remain very favorable relative to bank indices.

Now here's a little more detail on the earnings picture for the year. You can see what I'd call balanced growth on the top line, with solid gains in both our fee income and our net interest income. Expenses were well controlled on the whole. The bottom line rose 7% year-over-year. And factoring in stock buybacks, that translated into 9% earnings per share growth. You can see the 7% growth in the dividend.

Unfortunately, these results did not translate into a growing stock price in 2025. But as always, we remain focused on the things that we can impact. And I think you can see here the underlying financial performance remains strong.

Now just going a little deeper on that, I'd like to point out the diversity of our revenues, and in particular, the superior mix of fee income that we enjoy relative to peers. You can see here that our fee mix outstrips our peers by about 14 percentage points. 37% of our overall revenue comes from fees versus 23% for peers.

We have particular strength in the card and wealth management areas. The year-over-year fee growth that we saw on the prior page came from a variety of places, but most notably, our wealth management business. And this year, that number should continue to grow, again, particularly in light of the addition of FineMark.

Over the long term, we really are focused on sustaining and growing this noninterest income. These diversified businesses offer high returns on capital, they allow us to generate acceptable returns, and to do it in a way that doesn't require reaching for risk in places like our loan book or our asset liability mix.

This theme of balance, I think, is also reflected in our loan book. You can see here we're very well diversified relative to peers. We have less commercial real estate exposure and construction exposure; that's offset by higher C&I and consumer loan balances.

We're still in a very strong position relative to our peers on capital and liquidity, with solid core funding and lending capacity. You see our low loan-to-deposit ratio there, so plenty of capacity to take care of our customers. The numbers you see here are again the year-end numbers. And I should note that this capital level, which ranks very strongly among our peers, comes after paying out our regular dividend and returning another $200 million through share repurchases last year.

Our credit performance remains strong. Of course, the industry has taken very few losses in recent years, but at some point, possibly sooner rather than later, credit quality is really going to matter again. And as I mentioned earlier, we're underwriting with that correction in mind. And I think that posture served us well over time. And in fact, we tended to outperform relative to the industry in recessionary times.

And then speaking of relative performance, here just you can see how we stack up on both returns and safety, looking at ROA, ROE, capital levels and our levels of problem loans. So here among peers, we're among the top 2 in every category.

So far I've been talking about performance for 2025. This week though, we did release earnings for the first quarter of 2026. I think our shareholders should be pleased to see our steady performance. We came in at $0.96 of earnings per share, which is $0.03 higher than the same period last year. We deployed excess capital while still paying our dividend and buying back about $84 million in shares during the quarter.

We had a solid start to the year, good profitability and nice momentum across our fee businesses. The quarter also marked our first full period with FineMark, so our combined numbers are reflected here. And you can see in our release that the combination is already adding to our private banking and our wealth management platform. So overall, our first quarter results reflect, I think, the underlying strength of the franchise, steady net interest income, continued trustee growth, solid returns on most core metrics.

But of course, the performance in the short term is going to depend on the environment we operate in. But as I've said in past shareholder meetings, this is really a long race that we are running, and your team at Commerce is focused on delivering value over the long term and with consistency. Over the last 10 years, just looking back, our earnings per share have grown at almost exactly a 10% compounded annual rate and our regular dividend has doubled in that time. This year marked the 58th consecutive year of dividend increases for the company, and we are not aware of another bank with that sort of track record.

And I'll just close by saying, in a world with a lot of uncertainty, it's worth noting some of the reasons that we believe that -- and we hear from our investors, why they choose to own shares in our business. What we seek to do is to run an all-weather business, one that's capable of delivering results through the economic cycle and to withstand even the most significant disruptions.

This company has a diversified portfolio of businesses. We have a high-quality deposit franchise. The risk in our business is tightly managed. You can see that in a number of ways, notably in our credit metrics, among other things. And at the same time, we carry ample capital to ensure against unanticipated adverse events. Over time this model has allowed us to invest in and sustain our franchise. It's generated, I think, steady returns for our shareholders.

So let me please just conclude by thanking our shareholders who are on this call, for the confidence that you place in our team. We are very much focused on the future, and we're always grateful for the support that you give us.

Mr. Chairman, that concludes my remarks. I'd be happy to respond to any questions if there are any.

Okay, John, thank you. As John said, at this time, we invite any questions shareholders might have for the company or KPMG. [Operator Instructions] In the event any questions presented online are not answered in this meeting, such questions will be responded to promptly after the meeting by the Investor Relations group for the company or by KPMG, as appropriate.

Do we have any questions?

We have no questions.

Okay. Peggy, thank you. Well, thanks, everybody, for being here. The shareholders portion has concluded, and I declare the meeting adjourned. Thank you for attending today.

This concludes the meeting, and the meeting is adjourned. You may now disconnect.

I'm the senior mid-cap analyst here at Bank of America. And joining me this afternoon is Chuck Kim, Commerce Bancshares Executive Vice President and Chief Financial Officer. You've served as CFO since 2009. You've been with the bank since 1989. And under your leadership, the bank has essentially maintained reputation as being one of the most consistent, well-capitalized banks in the country. So it's a pleasure to have you.

Before we jump into 2026, I would love to hear your thoughts on how 2025 went for the bank in your perspective?

Sure. So 2025 is an exciting year for us back in the M&A space for the first time in 13 years with FineMark, and we can talk some more about that later, but very exciting strategic opportunity for us. '25 was a record year, almost no matter how you slice it, record earnings, record EPS probably record ROA for the whole year, and that was built on the back of 10% EPS growth in '24, where we had posted sort of similar results, 9% growth in EPS in '25. So really strong years.

I think our model with our low-cost deposit base and our really strong fee income businesses really played out the way it should play out, and we've enjoyed a couple of strong years. And then we did close on the FineMark transaction, which was an exciting thing for us. It was fun to get that across the finish line, a result of a 5-year relationship that we had with FineMark, getting to know them and the timing got to be right. And so we were thrilled to be able to execute on that transaction and get it closed right at the first of the year.

That's great. And it's a great transition into FineMark, right? So as you said, it closed on the first. As you get through the 90 days of integration, all that, like what are the operational and client-facing milestones that you're prioritizing that we should on the outside be keeping a track -- keeping an eye on?

Yes. For us, when -- this purchase is a strategy play, not a cost takeout play. And so one of our most important goals is to keep the FineMark model intact. And so that means keeping the client-facing associates engaged and happy and keeping the customers in place. It's a little -- that will be hard for you all to track other than just talking to us about it and looking at the numbers in terms of growth. But we're very pleased with how that's going thus far since the deal has been announced, FineMark's assets under management have grown nicely from -- in the $7 billion to over $8 billion. And so it's a sign that they've been able to continue to sell and bring in new customers even while the deal was in play.

So ultimately, this strengthens our wealth business. So sort of looking overall at growth in trust assets, trust fees. And then within the loan buckets, our private banking business is one of our faster-growing segments in terms of loans. It's kind of spread across several categories. So you don't see as much, but should show up more with FineMark in place.

So those would be the areas and what we're looking to do, and we've done it so far with the legal day 1 close. We retained the FineMark brand and sort of in a co-branding strategy because that was a brand that's well known in the Wealth segment in Florida and particularly, and it means something to the customers.

And then Joe Catti, who built the business over the last 20 years, very much still in place running the FineMark brand and the FineMark branches alongside John Handy, our Head of Wealth. So we're very excited from what we can learn from them and then our ability to bring the larger commerce set products and services to them.

Got you. And so you described the acquisition as being a strategy play. And I'm curious to hear from your perspective, you're in some newer markets. How does that strengthen your competitive advantage in those markets? Like you're bringing a bigger balance sheet, more capabilities. Can we just talk about from your perspective, how you can posture yourself or position yourself to sort of take advantage of the market?

Sure. So FineMark has some very nice locations in some great parts of Southern Florida as well as Scottsdale and South Carolina. But that Southern Florida franchise is particularly important to us. It has one, I think, our third largest concentration of assets under management outside of St. Louis and Kansas City because lots of folks from the Midwest tend to migrate down to that area.

So our ability to offer more convenience to our existing customers is a big deal. We had a client event there, the first joint client event, I think, a couple of weeks ago and over 300 people in attendance, half -- maybe 40% commerce. And so they have a set of branches as well as some of the best wealth management professionals that we've seen at FineMark at their service now.

So I think it helps us with that customer base, but it also gives us -- so the FineMark bankers have pretty broad sets of experience, some more on the commercial banking side, even though now they're more focused at the Wealth segment. And they can spot opportunities that maybe FineMark might not have been able to go after and because of our broader product set, more treasury services offerings, maybe our specialization in health care, just bigger balance sheet.

Some of those things, we feel -- we're already seeing them reach out and say, "Hey, can you help me with this?" And then I would say just sort of strengthening their good business. There's a lot of infrastructure in our wealth management business. We've got people that specialize in managing farms and business valuation specialists, just many different specialists that FineMark either wouldn't have as much of a portfolio there, wouldn't have as many people with that expertise or maybe they're outsourcing it. And now we can bring that to bear and improve service provided to their customers. And their customers are very, very happy bunch, but I think there's more opportunity to -- for both just in the market and with the customer base.

Got you. And before we move to the next topic, if you guys have any questions in the audience, please raise your hand and someone will come around with the mic. But -- so shifting away from the acquisition and focus on legacy core Commerce Bancshares. Let's talk quickly or for however long you want, actually, the borrower sentiment, the expectations for loan growth into this year, what you're hearing, whether or not any of the tax benefits are trickling through?

Yes. So this would be a question I've answered a few times today because everybody is very interested in borrower sentiment.

And if you want to juxtapose it against a year ago, I think there was a lot of uncertainty. You had the tariffs and huge numbers, and everybody worried about, how is that going to affect inflation? How is that going to affect the economy? Just a lot of noise and uncertainty. And that continued on through the year, but I think people now have adjusted a little bit to the noise. We've seen the tariffs work their way through and their impact on inflation, GDP, whatever. I think it feels like people are in a better place than they would have been a year ago in terms of uncertainty.

And so now -- but it's still probably kind of a moderate sentiment. I wouldn't say that it's a real go-go sentiment, but I don't think people are afraid of making investments or afraid of stepping out maybe earlier, they were looking for rates to drop a lot. Now it kind of seems like rates maybe have stabilized for a while and maybe that gets some people into the market.

I think the jury is still out as to what does that translate into. We've seen about 3% loan growth in 2025. And if you look at average to average for the fourth quarter, about that same level. And we usually talk about the fact that we're kind of a moderate single-digit grower of loans, not that we can't do better than that sometime, but it tends to be just sort of a lumpy exception. And we'll do whatever loans that fit our credit box, but that's kind of the way it tends to turn out.

So in this environment where the trend -- trend line is running about 3% right now, not a lot of expectation. We're -- I'm from Missouri, you kind of have to show it to me before I believe it. So while our lenders will talk about pipeline and all those things, I think we sort of need to see the first quarter work out. And maybe as we get a little further into the year, we can see something that lifts us above the trend line. But right now, that's kind of what we're looking at.

Got you. And just going back quickly to the deal, just in terms of how you're thinking about the core franchise. You did make some balance sheet -- you did take some balance sheet actions since the close. But I'm curious, FineMark was a little bit more heavy in resi. Are you making any changes to how you think about growth in that? So when the -- I guess, as the 2 portfolios do come together, the -- it's a little bit more balanced than maybe more weighted to resi.

Yes. So if you look at -- I mean, we have a decent-sized 1 to 4 family mortgage business in our portfolio and a good piece of it is wealth oriented. We're not outsized there. Throw in $1.2 billion from FineMark in that space. And we're probably above average, maybe tilting into the 75th percentile or something. But we have been reducing our exposure to mortgage-backed securities, so sort of reducing the convexity risk in the bond portfolio so that we can keep the balance sheet freed up for those good customers that come our way.

FineMark is particularly good at sort of multiple relationships or multiple services to their customers. So if they're doing a mortgage loan, they're likely -- they've got that person's deposits. They've got that person's wealth management. And we want to make sure that we've got the capacity to continue to accommodate their growth, which had been high single-digit, double-digit loan growth, although last year slowed down a little bit, the production was still what was expected. The payoffs were greater.

And on the legacy commerce side, that's kind of in the commercial real estate space. With them, it was a little bit of that, but basically, their wealth customers had experienced quite a bit of appreciation, and they sort of opportunistically paid off more than what was anticipated. So the production amounts didn't create that same loan growth. But we feel like that, that can come back gradually as we work our way through 2026.

Great. And then sort of switching to the other side of the balance sheet for a second, right? When we catch up during the year, you guys have told us that the deposit competition in the market had been elevated, right? But it did stabilize in the end of the year. Balances did grow about 1% quarter-over-quarter in the fourth quarter. How would you describe the competition at the start this year relative to how things were in 2025 and what your expectations are for some maybe balance sheet growth?

Sure. So what we kind of talked about most of last year was getting back to sort of trend line growth in deposits, which for us is in the 2% to 3% range in high interest rate environments where the competition gets heavy and very expensive, probably lower deposit growth rates in low interest rate times lower than where we are now, we tend to grow faster because we're kind of the operating bank for a lot of our customers, and they tend to just accumulate extra cash if there's nothing else to do with it -- with us.

So right now, we think that kind of trend line growth, 2% to 3% is pretty representative of where we are. That gives us more than enough to fund loan growth. When you look at competitiveness, I think what we saw is when we got a few rate decreases in a row fairly quickly, we didn't see as much decline sort of in the retail rate it tends to be promotions and CDs. It felt like people were sort of artificially keeping those up.

And then later in the year, as you mentioned, it feels like they've begun to do what they needed to do in terms of lowering rates. And so that's a good thing. We were able to lower deposit costs in the fourth quarter. But with our low-cost funding base, there's a lot of deposit -- a lot of our deposits that can't go down. Now we do have our wealth deposits some of our commercial money market. We have some customer repos that are all very interest rate sensitive. Those can go down with a pretty good beta. But as we get lower, that becomes more challenging.

Got you. And I think that's one aspect that people may not necessarily get -- have a full grasp of how you sort of approach the deposit customer with the whole bank opportunity, right? And it's the reason why your deposit costs have been as low as they are, right? Obviously, it does limit the deposit beta leverage on the downside. But you did see 37% deposit beta on the upside. Is there an opportunity to, with or without rate cuts, to sort of retrace that so that the through the cycle on the downside is also 37%? Or is the competition in the market sort of keeping you sort of higher, or I should say, lower than that 37%?

Sure. So we're not quite there. We'd still be in the 20s right now through the cycle, can we get into the 30s? I think so. I mean I think we originally -- and our treasurer would probably still say, yes, we'll eventually get there. Some of it's got to do, though, with the timing of how quickly you get the rate increases and decreases.

And -- but we do -- through another couple of 3 rate decreases, we've got plenty of room to move sort of the heavy barbell end of our deposits down more. But you start getting much further than 3 to 4 -- another 100 basis points, and it's a little tougher to squeeze at that point. It will be tougher for everybody to squeeze, which is why we have some hedges. Our biggest risk is to -- downward is to 0 rates. So we have about $2 billion worth of floors that actually, if we move one more rate decrease or maybe 2, we get into the money on one of those, and that kind of sounds good. Oh, we're going to get into the money. We'd rather rates stay high. That would -- it's sort of like do you really want to use your homeowners insurance? You probably don't. You'd rather just pay the premium and never realize it, and that's the way we'd be on interest rates.

But we do have those things in place. We have some asset repos that will kick up in yield as rates move down. So we try to hedge that exposure to 0 interest rates. And we experienced 0 interest rates for a number of years, and we posted good returns during those times. It was more challenging, but still or ROAs, ROEs and top quartile performance even with that sort of asset sensitivity working against us.

Got you. And so that's a great segue, right, the [indiscernible] give the bank, right? So can you just walk through the cadence of how legacy CBSH NIM could progress over the course of the year, right? You talked about around 3% loan growth, 2%, 3% deposit growth, having some leverage on the deposit side. But I would love to know how legacy CBSH can -- what the NIM expansion story could be?

Sure, sure. So I think what the best thing to look at is what happened in the last 2 quarters because we had some rate decreases in those 2 quarters. And actually, if you look at the fourth quarter with a decrease in December and another one pretty late in the quarter, those are still yet to filter through.

And if you look at our headline NIM or if you want to adjust for a couple of things that we typically adjust for, we were quarter-to-quarter, probably down somewhere 3 to 6 basis points each quarter. In NIM now we managed to get, NII was up fourth quarter over third quarter because of some balance sheet expansion. But I think with the interest rate environment in the first quarter, it is going to make us look a lot like what happened in the last 2 in terms of pressure. After that, if we don't see rate cuts early in the year, things can kind of stabilize, I think, a little more pressure as those rate increases come later in the year.

Although for us, there's still some asset repricing, $300 million in the bond book that's coming off, the average is 2.98% and probably going back on in the mid- to high 3s if we're buying treasuries. So there's some leverage there. And then we do have some fixed rate loans that also are repricing, getting probably a little bit better spread there.

So those are all things that kind of work in our favor in a more stable interest rate environment, which is kind of what the market is forecasting for the first couple of quarters. But we still kind of have to -- we have to endure sort of the full quarter effect of what happened in the fourth quarter in Q1.

Got you. And so sort of switching to fees, which is really what differentiates you guys from your mid-cap peers in terms of the diversification in revenue. Just talk about the drivers there. I think Visa and Mastercard sort of talked about a healthy consumer. Just what you're sort of seeing on the card side and payment stuff?

Sure. So I would say our numbers would reflect what Visa is saying. But the consumer, I think, pretty resilient on spending. Debit, credit card fees on the consumer side, kind of flattish, a little bit of competition on the rewards side. Historically, over the last several years, the driver of growth has been on the commercial side for us.

And although we've kind of plateaued a little bit in our growth in our commercial card fees, it seems like volume and spend is picking up a little bit. So that usually portends an increase in the fees on the go forward. What we're hoping for in 2026 instead of being a bit of a drag or flat part of our fee income portfolio that it will be totally flat or we'll get a little bit of growth out of the card business. And then -- so that's sort of one of the second largest component of our fee income.

And a lot of the business in health care, health care is growing. Health care spend is growing. So we feel good about that. On the trust side, we had growth both in our trust fees and brokerage fees and those 2 units run together, one sort of serving mass affluent, the other serving the wealth side. And that growth, high single digit, helped a little bit by the market, but mostly by record sales in our asset management business.

And so as we look into '26, we expect continued growth there. Of course, it's going to be enhanced by FineMark coming on board. But I think both groups should be able to continue to grow. Now if you don't get help from the market, it's hard to grow the trust fees much more than mid-single digits, but even with really successful sales. But with the kind of retention that we have and the kind of sales that we've had in the -- and I think the combination of our forces with FineMark should be really good for that fee income business.

And then another piece would be our treasury services fees, our overall deposit account fees, which were growing at 5% or 6% last year. Again, a lot of that related to the health care business, the processing of payments through their handling of receivables, the payables on the card side. And we expect that to continue to do well.

And we have several other smaller fee income businesses, which tend to -- whether it's swaps or foreign exchange or tax credit business, a little capital markets business selling bonds to banks. In '25, we had some pretty good outcomes on some disposition of lease assets. It was produced about $9 million in one-timers that we really won't count on. We get some of those, but usually, it's not of that magnitude. So it's a little bit of a headwind on that growth number because that won't be replicated.

But the model continues to work as expected. And I think it heads down on getting the FineMark integration right, but it's not going to slow down the growth either on the FineMark side or the commerce side and now the combined entities in terms of that assets under management.

Got you. One of the positive surprises that investors got was the buyback. I know when we caught up, you guys explained that you were just catching up for being out of the market related to the deal, and you're going back to the $4 million, $5 million per quarter pace. I guess the first question I have is like why not increase the pace, like explain to investors why your view of holding more capital than peers is a value add?

Sure. So I would say -- maybe we'll start there. Our capital position gives us a lot of flexibility. So when things are tough, when you went through 2023, I didn't have anybody coming to me and saying, "Hey, you got too much capital." So the tune changes depending on what's going on in the environment.

But we're a bit of a belt and suspenders kind of operation, maybe belt suspenders and an overcoat in terms of the way we approach the business prudently, whether that's our credit underwriting, our liquidity management and our capital management. And we feel like that's a strength of who we are just because of that flexibility.

Now that said, the buyback is a consistent part of who we are. And we're one of the last ones -- if the economic environment is sort of dictating to slow down buybacks, we're one of the last ones to stop, and we're also one of the first ones to start because our model generates a lot of capital. And we have -- in those fee businesses, those revenues the businesses that support those fee businesses don't require a lot of capital. So we've always got that sort of high-class problem. So that's why the buyback is always going to be a part of who we are.

I would say, yes, there was a bit of a catch-up in the fourth quarter. There was also some opportunistic buying because we feel like the price is a good one. And as we look out into 2026, one of the nice things about the buyback is it's a lever you can move up and down depending -- it's not like your dividend. You don't want to move that up and down, especially when you got 57 years of increasing it. But the buyback can move up and down.

So we've got some flexibility there. It will be interesting. We'll get the -- we'll get all the fair value accounting done here in the first quarter. Probably the FineMark transaction uses a little bit less their 20 basis points of capital less than what we projected initially. And we'll see where the capital ratios land and then sort of go from there. But we've got a history of being in the market. We've got a history of returning capital consistently. And when we get too much, we return more.

Great. I do want to change the pace of the conversation if we can, right? And you talked about being opportunistic with the buyback. You guys have shown historically as being a high-quality compounder, right? So what do you think the market is underappreciating when you look at the stock and what your earnings trajectory could produce?

Sure. So we're known as being sort of a safe haven. People -- a lot of the buy-side folks will say, you can never get fired for holding commerce. Nobody is -- because we pretty much -- we hold up well in bad times. Well, we haven't really had very many bad times. I mean everybody looks like a fantastic credit underwriter in these conditions.

And so I think probably -- and that's part of what gives us the valuation we have is our credit underwriting. And I think right now, that's -- that's probably underappreciated, and I understand that just because nobody is experiencing much there. But over time, that will pay off.

I think, again, tying into that safe haven thing, we're kind of a lower beta stock. We tend to move a little bit less. And sometimes that makes us look good, sometimes that makes us not look as good. And then a risk-on environment is where we might not be the name you'd go to.

I do think people kind of -- because of just the environment that we're in right now, our asset sensitivity is underappreciated. I mean the reason we're asset sensitive is because we have one of the best deposit bases in the business, low cost. And over time and through the cycle, that low-cost deposit base is a key part of why we're able to return significantly above our peers in ROA year in, year out, over 10 years, over 20 years.

And right now, okay, yes, if you're more liability sensitive, you're going to get some margin expansion in Q1 or Q4 here. And if you're a little bit asset sensitive like we are, yes, it's going to work against you. But over time, I think we've proven that's a positive to our model, not a negative.

Got you. And then so as we enter and get into 2026, what are the 1 or 2 things you want investors to understand about the earnings durability of the bank?

Yes. It ties into what I was just saying, we're kind of an all-weather model. We're -- we have diversity in our revenue stream and our asset base, really all over the bank. So -- you got the diversity between the net interest margin exposure and the fee income exposure. And even our fee income, we're not a one-trick pony on the fee income.

I described 3 of the big legs of the stool in card, in treasury services fees and wealth. But on top of that, a lot of ancillary fee businesses that are really pretty good. So lots of diversity, things that work well in different kinds of environment. So when there's NIM pressure, we still got the fee income there to grow. So diversity there.

And then in our loan portfolio, diversity there as well. We have more -- for a bank our size, we have more consumer exposure than most. That allows us to sort of be less concentrated in some areas that concern people. We're diversified in terms of our markets, at least we are now. We used to get some critique because we were just in low sort of lower growth Midwestern markets. But now with the expansion down into Texas, Colorado and then, of course, with FineMark, we've got some higher growth geographies that we're in. So I think it's that the diverse business model that does well in all environments -- that's -- I think that's a huge takeaway. And then the capital strength and liquidity strength allows us to weather any kind of situation.

Great. And with a few more minutes, I do want to sort of pivot to expenses. One of the observations we made was the larger banks were spending a little bit more on tech than the average mid-cap bank, and you could see it in the expense growth rate divergence into 2026.

I'm just curious, like as you enter '26, what are the investments you're making? What is table stakes now? Is AI just as important as having a good mobile app? Like I'm just -- with respect to commerce, like where are you investing? Where do you see the greatest ROI?

Sure. So in a couple of different areas. One, certainly sort of enhancing our digital offerings to our customers. And so our customers can open accounts digitally, but there are things that we need to do to improve that to make it easier. Banks have to balance, know your customer with the ease of signing up. We have to get better at that. We have to -- a lot of times, you have to turn off your digital channels because fraud is creeping in, and we've got to get past that. We've got to figure out how to fight that off and still give the convenience to the customer.

So we have initiatives on the consumer side and the commercial side to just continue to make it easier for our customers, less paper-intensive, easier to do it in whatever channel that they want to manage us -- that they want to manage their business with us.

So I'd say that sort of continued investment in digital. Investment in data -- and if you think about sort of utilizing AI, you got to have clean data in order to really leverage that. And so we're upgrading our overall infrastructure, whether that's the tools we use to extract the data or where we use to house it. We're -- we have stepped up our data governance, which kind of ties into the quality of the data so that you know when you're running those algorithms or you're utilizing AI, you know that the -- what's feeding it makes -- is true. And so the outcomes you get are better.

So a lot of investment there, investing in commercial APIs, which we have a lot of sophisticated card and payments products that we need those things to tie in easily to our customers' ERP systems. So it's important that we've got those APIs that just easily can fit into the major systems. We do that with some of the hospital-based systems already, but we need to be stronger because we're passing more information. I mean that's what kind of makes our payment systems products sticky. It's not just processing the payment quickly, which is another thing we're spending money on continuously, but it's also passing the information they need to tie right into their general ledger. So a lot of spend there.

And I would say sort of on the AI side, both internally figuring out sort of how various areas of the bank can utilize AI tools to make their jobs easier and then looking for sort of those long-term business cases that are very valuable. At our size, we're going to have to leverage our partners that are providing us with systems. So I think Temenos, think Avaya in the call center world. We're not going to build the best AI call center agent that -- somebody else is going to do that, and we're going to buy that.

That doesn't mean that on the inside, we're not investing as well to sort of figure out what business cases make sense, a lot of fraud, a lot of solutions around fraud utilizing AI. And maybe the trick there is I've got all kinds of engines that try to capture fraud in the card business. Maybe we can unplug some of those and plug in a cheaper AI version and save some money there, but still catch the same amount of fraud.

So I'd say we've done a nice job of kind of getting in front of modernizing our systems, our core, but there's continued expansion there of improving our commercial loan system, investments going in there. On the retail side, we're a Salesforce shop in commercial and wealth, and we're on the cusp of being a Salesforce shop in retail. And it really will just improve data movement between our frontline folks and enable the data flow into the data warehouses just that much slicker.

Great. Great. Great. So any questions from the audience?

Well, I guess just before I let you go, is there any final message you want investors to walk away? I mean you talked about the revenue diversity of the bank, the capital position that provides you flexibility, the opportunity that FineMark gives. Is there any closing remarks you want to give the attendance here -- for them to remember when they leave?

Sure. I would say one thing -- we talked about the sort of misunderstanding about our asset sensitivity. I'd say our asset sensitivity is a feature of our model. It's not a fault. And over the long run, that's what helps us outperform. It's driven by that low-cost deposit base. And you'd always rather have a lower cost of funds; lower cost there than you would higher cost. So that would be one thing.

Another thing is -- and a couple of investors have said, we're ridiculously cheap right now. And we run the bank. We've been around 160 years. We run the bank to be around another 160 years. We run it for the long run. So I'm not necessarily saying we're a quick turnaround play in terms of valuation. But I talk to a lot of people who say, yes, we'd like to own you. You're a good earner. You're consistent with your execution year in and year out, but there's never a time to get in. Well, I'd say there's a time to get in now. So that's what I'd leave you with.

Well, thank you, everybody. Thank you very much, Chuck, for coming. I appreciate it.

Yes.