CBSH 10-Q Quarterly Report March 31, 2025

COMMERCE BANCSHARES INC /MO/

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cbsh-20250331

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
			SECURITIES EXCHANGE ACT OF 1934

________________________________________________________

For the quarterly period ended March 31, 2025


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
			SECURITIES EXCHANGE ACT OF 1934

____________________________________________________________

For the transition period from to

Commission File No. 001-36502


			COMMERCE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)


Missouri		43-0889454
(State of Incorporation)		(IRS Employer Identification No.)
1000 Walnut
Kansas City,	MO	64106
(Address of principal executive offices)		(Zip Code)

( 816 ) 234-2000

(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:

Title of class	Trading symbol(s)	Name of exchange on which registered
$5 Par Value Common Stock	CBSH	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 2, 2025, the registrant had outstanding 133,427,562 shares of its $5 par value common stock, registrant’s only class of common stock.

Commerce Bancshares, Inc. and Subsidiaries

Form 10-Q


			Page
INDEX
Part I	Financial Information
	Item 1.	Financial Statements
		Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024	3
		Consolidated Statements of Income for the Three Months Ended March 31, 2025 and 2024 (unaudited)	4
		Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 (unaudited)	5
		Consolidated Statements of Changes in Equity for the Three Months Ended March 31, 2025 and 2024 (unaudited)	6
		Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited)	7
		Notes to Consolidated Financial Statements	8
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	45
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	67
	Item 4.	Controls and Procedures	67

Part II	Other Information
	Item 1.	Legal Proceedings	68
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
	Item 5.	Other Information	68
	Item 6.	Exhibits	68
Signatures			69

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS


	March 31, 2025		December 31, 2024
	(Unaudited)
	(In thousands)
ASSETS
Loans	$	17,379,421	$	17,220,103
Allowance for credit losses on loans	( 167,031 )		( 162,742 )
Net loans	17,212,390		17,057,361
Loans held for sale (including $ 2,702,000 and $ 2,981,000 of residential mortgage loans carried at fair value at March 31, 2025 and December 31, 2024, respectively)	2,890		3,242
Investment securities:
Available for sale debt, at fair value (amortized cost of $ 10,097,801,000 and $ 10,127,426,000 at
March 31, 2025 and December 31, 2024, respectively, and allowance for credit losses of $ —
at both March 31, 2025 and December 31, 2024)	9,264,947		9,136,853
Trading debt	56,569		38,034
Equity	58,182		57,442
Other	221,370		230,051
Total investment securities	9,601,068		9,462,380
Federal funds sold	—		3,000
Securities purchased under agreements to resell	850,000		625,000
Interest earning deposits with banks	2,756,521		2,624,553
Cash and due from banks	517,332		748,357
Premises and equipment – net	476,921		475,275
Goodwill	146,539		146,539
Other intangible assets – net	13,441		13,632
Other assets	787,862		837,288
Total assets	$	32,364,964	$	31,996,627
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing	$	7,518,243	$	8,150,669
Savings, interest checking and money market	15,975,283		14,754,571
Certificates of deposit of less than $100,000	985,878		996,721
Certificates of deposit of $100,000 and over	1,362,393		1,391,683
Total deposits	25,841,797		25,293,644
Federal funds purchased and securities sold under agreements to repurchase	2,400,036		2,926,758
Other borrowings	17,743		56
Other liabilities	606,986		443,694
Total liabilities	28,866,562		28,664,152
Commerce Bancshares, Inc. stockholders’ equity:



Common stock, $ 5 par value
Authorized 190,000,000 ; issued 135,210,812 shares at both March 31, 2025 and December 31, 2024	676,054		676,054
Capital surplus	3,381,960		3,395,645
Retained earnings	140,220		45,494
Treasury stock of 1,353,720 shares at March 31, 2025
and 784,203 shares at December 31, 2024, at cost	( 85,871 )		( 48,401 )
Accumulated other comprehensive income (loss)	( 634,576 )		( 758,911 )
Total Commerce Bancshares, Inc. stockholders' equity	3,477,787		3,309,881
Non-controlling interest	20,615		22,594
Total equity	3,498,402		3,332,475
Total liabilities and equity	$	32,364,964	$	31,996,627

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME


	For the Three Months Ended March 31
(In thousands, except per share data)		2025		2024
	(Unaudited)
INTEREST INCOME
Interest and fees on loans		$	254,194	$	264,677
Interest and fees on loans held for sale		23		40
Interest on investment securities		76,452		65,928
Interest on federal funds sold		29		10
Interest on securities purchased under agreements to resell		7,418		1,634
Interest on deposits with banks		26,249		26,432
Total interest income		364,365		358,721
INTEREST EXPENSE
Interest on deposits:
Savings, interest checking and money market		52,403		55,580
Certificates of deposit of less than $100,000		8,932		10,191
Certificates of deposit of $100,000 and over		13,319		18,096
Interest on federal funds purchased		1,384		4,419
Interest on securities sold under agreements to repurchase		19,224		21,438
Interest on other borrowings		1		( 2 )
Total interest expense		95,263		109,722
Net interest income		269,102		248,999
Provision for credit losses		14,487		4,787
Net interest income after credit losses		254,615		244,212
NON-INTEREST INCOME
Trust fees		56,592		51,105
Bank card transaction fees		45,593		46,930
Deposit account charges and other fees		26,622		24,151
Capital market fees		5,112		3,892
Consumer brokerage services		4,785		4,408
Loan fees and sales		3,404		3,141
Other		16,841		15,221
Total non-interest income		158,949		148,848





INVESTMENT SECURITIES GAINS (LOSSES), NET		( 7,591 )		( 259 )
NON-INTEREST EXPENSE
Salaries and employee benefits		153,078		151,801
Data processing and software		32,238		31,153
Net occupancy		14,020		13,574
Professional and other services		10,026		8,648
Marketing		5,843		4,036
Equipment		5,248		5,010
Supplies and communication		5,046		4,744
Deposit insurance		3,744		8,017
Other		9,133		18,714
Total non-interest expense		238,376		245,697
Income before income taxes		167,597		147,104
Less income taxes		36,964		31,652
Net income		130,633		115,452
Less non-controlling interest expense (income)		( 959 )		2,789
Net income attributable to Commerce Bancshares, Inc.		$	131,592	$	112,663


Net income per common share — basic		$	.98	$	.82
Net income per common share — diluted		$	.98	$	.82

See accompanying notes to consolidated financial statements.

Table of Contents

Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Three Months Ended March 31
(In thousands)		2025		2024
		(Unaudited)
Net income		$	130,633	$	115,452
Other comprehensive income (loss), net of tax:


Net unrealized gains (losses) on available for sale debt securities		118,288		( 20,401 )
Change in pension loss		172		176
Unrealized gains (losses) on cash flow hedge derivatives		5,875		( 19,390 )
Other comprehensive income (loss), net of tax		124,335		( 39,615 )
Comprehensive income (loss)		254,968		75,837
Less non-controlling interest (income) expense		( 959 )		2,789
Comprehensive income (loss) attributable to Commerce Bancshares, Inc.		$	255,927	$	73,048

See accompanying notes to consolidated financial statements.

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Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Three Months Ended March 31, 2025 and 2024


	Commerce Bancshares, Inc. Shareholders
(In thousands, except per share data)	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Non-Controlling Interest		Total
	(Unaudited)
Balance December 31, 2024	$	676,054	$	3,395,645	$	45,494	$	( 48,401 )	$	( 758,911 )	$	22,594	$	3,332,475
Net income					131,592						( 959 )		130,633
Other comprehensive income (loss)									124,335				124,335
Distributions to non-controlling interest											( 1,020 )		( 1,020 )
Purchases of treasury stock							( 55,579 )						( 55,579 )


Issuance under stock purchase and equity compensation plans			( 18,111 )				18,109						( 2 )
Stock-based compensation			4,426										4,426
Cash dividends paid on common stock ($ 0.275 per share)					( 36,866 )								( 36,866 )

Balance March 31, 2025	$	676,054	$	3,381,960	$	140,220	$	( 85,871 )	$	( 634,576 )	$	20,615	$	3,498,402
Balance December 31, 2023	$	655,322	$	3,162,622	$	53,183	$	( 35,599 )	$	( 891,412 )	$	20,114	$	2,964,230

Net Income					112,663						2,789		115,452
Other comprehensive income (loss)									( 39,615 )				( 39,615 )
Distributions to non-controlling interest											( 2,990 )		( 2,990 )
Purchases of treasury stock							( 42,314 )						( 42,314 )

Issuance under stock purchase and equity compensation plans			( 18,239 )				18,239						—
Stock-based compensation			4,266										4,266
Cash dividends paid on common stock ($ .257 per share)					( 35,140 )								( 35,140 )

Balance March 31, 2024	$	655,322	$	3,148,649	$	130,706	$	( 59,674 )	$	( 931,027 )	$	19,913	$	2,963,889

See accompanying notes to consolidated financial statements.

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Commerce Bancshares, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Three Months Ended March 31
(In thousands)	2025		2024
	(Unaudited)
OPERATING ACTIVITIES:
Net income	$	130,633	$	115,452
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	14,487		4,787
Provision for depreciation and amortization	13,721		13,269
Amortization of investment security premiums, net	( 3,724 )		3,905
Investment securities (gains) losses, net (A)	7,591		259
Net (gains) losses on sales of loans held for sale	( 515 )		( 328 )
Originations of loans held for sale	( 22,626 )		( 15,914 )
Proceeds from sales of loans held for sale	23,357		18,007
Net (increase) decrease in trading debt securities, excluding unsettled transactions	( 21,277 )		( 40,529 )

Stock-based compensation	4,426		4,266
(Increase) decrease in interest receivable	5,149		561
Increase (decrease) in interest payable	5,432		( 286 )
Increase (decrease) in income taxes payable	35,134		28,750


Other changes, net	( 53,184 )		3,277
Net cash provided by (used in) operating activities	138,604		135,476
INVESTING ACTIVITIES:



Proceeds from sales of investment securities (A)	6,757		10,250
Proceeds from maturities/pay downs of investment securities (A)	542,456		571,764
Purchases of investment securities (A)	( 514,579 )		( 155,475 )
Net (increase) decrease in loans	( 170,573 )		( 102,295 )
Securities purchased under agreements to resell	( 350,000 )		( 100,000 )
Repayments of securities purchased under agreements to resell	125,000		325,000
Purchases of premises and equipment	( 12,586 )		( 10,998 )
Sales of premises and equipment	100		2,671
Net cash provided by (used in) investing activities	( 373,425 )		540,917
FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing, savings, interest checking and money market deposits	774,974		( 571,329 )
Net increase (decrease) in certificates of deposit	( 40,133 )		( 412,170 )


Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase	( 526,722 )		( 403,239 )




Net increase (decrease) in other borrowings	17,687		955

Purchases of treasury stock	( 55,184 )		( 42,028 )



Cash dividends paid on common stock and distributions to non-controlling interest	( 37,886 )		( 35,140 )

Other, net	( 2 )		—
Net cash provided by (used in) financing activities	132,734		( 1,462,951 )
Increase (decrease) in cash, cash equivalents and restricted cash	( 102,087 )		( 786,558 )
Cash, cash equivalents and restricted cash at beginning of year	3,375,992		2,687,283
Cash, cash equivalents and restricted cash at March 31	$	3,273,905	$	1,900,725
Income tax payments, net	$	562	$	1,029
Interest paid on deposits and borrowings	$	89,831	$	110,008
Loans transferred to foreclosed real estate	$	449	$	57

(A) Available for sale debt securities, equity securities, and other securities.

See accompanying notes to consolidated financial statements.

Restricted cash is comprised of cash collateral posted by the Company to secure interest rate swap agreements. This balance is included in other assets in the consolidated balance sheets and totaled $ 52 thousand at March 31, 2025. The Company had $ 71 thousand in restricted cash at March 31, 2024.

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Commerce Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025 (Unaudited)

1. Principles of Consolidation and Presentation

The accompanying consolidated financial statements include the accounts of Commerce Bancshares, Inc. and all majority-owned subsidiaries (the Company). Most of the Company's operations are conducted by its subsidiary bank, Commerce Bank (the Bank). The consolidated financial statements in this report have not been audited by an independent registered public accounting firm, but in the opinion of management, all adjustments necessary to present fairly the financial position and the results of operations for the interim periods have been made. All such adjustments are of a normal recurring nature. All significant intercompany accounts and transactions have been eliminated. Certain reclassifications were made to 2024 data to conform to current year presentation. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and revenues and expenses for the periods. Actual results could differ significantly from those estimates. Management has evaluated subsequent events for potential recognition or disclosure. The results of operations for the three month period ended March 31, 2025 are not necessarily indicative of results to be attained for the full year or any other interim period.

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company's most recent Annual Report on Form 10-K, containing the latest audited consolidated financial statements and notes thereto.

2. Loans and Allowance for Credit Losses

Major classifications within the Company’s held for investment loan portfolio at March 31, 2025 and December 31, 2024 are as follows:


(In thousands)	March 31, 2025		December 31, 2024
Commercial:
Business	$	6,239,276	$	6,053,820
Real estate – construction and land	1,419,572		1,409,901
Real estate – business	3,628,635		3,661,218
Personal Banking:
Real estate – personal	3,047,809		3,058,195
Consumer	2,116,160		2,073,123
Revolving home equity	356,675		356,650
Consumer credit card	568,163		595,930
Overdrafts	3,131		11,266
Total loans	$	17,379,421	$	17,220,103

Accrued interest receivable totaled $ 66.2 million and $ 70.6 million at March 31, 2025 and December 31, 2024, respectively, and was included within other assets on the consolidated balance sheets. For the three months ended March 31, 2025, the Company wrote-off accrued interest by reversing interest income of $ 112 thousand and $ 1.7 million in the Commercial and Personal Banking portfolios, respectively. Similarly, for the three months ended March 31, 2024, the Company reversed $ 94 thousand and $ 1.6 million in the Commercial and Personal Banking portfolios, respectively.

At March 31, 2025, loans of $ 3.3 billion were pledged at the Federal Home Loan Bank as collateral for borrowings and letters of credit obtained to secure public deposits. Additional loans of $ 2.6 billion were pledged at the Federal Reserve Bank as collateral for discount window borrowings.

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Allowance for credit losses

The allowance for credit losses is measured using an average historical loss model which incorporates relevant information about past events (including historical credit loss experience on loans with similar risk characteristics), current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the loans. The allowance for credit losses is measured on a collective (pool) basis. Loans are aggregated into pools based on similar risk characteristics including borrower type, collateral type and expected credit loss patterns. Loans that do not share similar risk characteristics, primarily large loans on non-accrual status, are evaluated on an individual basis.

For loans evaluated for credit losses on a collective basis, average historical loss rates are calculated for each pool using the Company’s historical net charge-offs (combined charge-offs and recoveries by observable historical reporting period) and outstanding loan balances during a lookback period. Lookback periods can be different based on the individual pool and represent management’s credit expectations for the pool of loans over the remaining contractual life. In certain loan pools, if the Company’s own historical loss rate is not reflective of the loss expectations, the historical loss rate is augmented by industry and peer data. The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts. These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables including GDP, disposable income, various interest rates, unemployment rate, consumer price index (CPI) inflation rate, housing price index (HPI), commercial real estate price index (CREPI) and market volatility. The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates. The forecast is used for a reasonable and supportable period before reverting back to historical averages using a straight-line method. The forecast-adjusted loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments. The contractual term excludes expected extensions (except for contractual extensions at the option of the customer), renewals and modifications. Credit cards and certain similar consumer lines of credit do not have stated maturities and therefore, for these loan classes, remaining contractual lives are determined by estimating future cash flows expected to be received from customers until payments have been fully allocated to outstanding balances. Additionally, the allowance for credit losses considers other qualitative factors not included in historical loss rates or macroeconomic forecast such as changes in portfolio composition, underwriting practices, or significant unique events or conditions.

Table of Contents

Key assumptions in the Company’s allowance for credit loss model include the economic forecast, the reasonable and supportable period, forecasted macro-economic variables, prepayment assumptions and qualitative factors applied for portfolio composition changes, underwriting practices, or significant unique events or conditions. The assumptions utilized in estimating the Company’s allowance for credit losses at March 31, 2025 and December 31, 2024 are discussed below.


Key Assumption	March 31, 2025	December 31, 2024

Overall economic forecast	• Economic uncertainty surged in first quarter of 2025 and will weigh on the economy • The overall US effective tariff rate is expected to more than triple from March 31, 2025 • Federal worker layoffs cause slight increase in unemployment	• The US economy will continue to grow • Expansionary fiscal policy and less immigration cause the labor market to tighten, pushing the unemployment rate lower
Reasonable and supportable period and related reversion period	• Reasonable and supportable period of one year • Reversion to historical average loss rates within two quarters using a straight-line method	• Reasonable and supportable period of one year • Reversion to historical average loss rates within two quarters using a straight-line method
Forecasted macro-economic variables	• Unemployment rate ranges from 4.2% to 4.4% during the supportable forecast period • Real GDP growth ranges from 1.7% to 2.1% • BBB corporate yield from 5.4% to 5.5% • Housing Price Index from 331.1 to 338.4	• Unemployment rate ranges from 4.2% to 4.3% during the reasonable and supportable forecast period • Real GDP growth ranges from 2.5% to 2.7% • BBB corporate yield from 5.2% to 5.3% • Housing Price Index from 324.8 to 335.4
Prepayment assumptions	Commercial loans • 5% for most loan pools Personal banking loans • Ranging from 7.0% to 23.5% for most loan pools • Consumer credit cards 66.5%	Commercial loans • 5% for most loan pools Personal banking loans • Ranging from 8.9% to 23.1% for most loan pools • Consumer credit cards 66.5%
Qualitative factors	Added qualitative factors related to: • Changes in the composition of the loan portfolios • Certain industries experiencing stress or emerging concerns within the portfolio • Loans downgraded to special mention, substandard, or non-accrual status • Consumer auto portfolio loss expectation adjustment • Other consumer portfolio loss expectation adjustment • Certain portfolios where the model assumptions do not capture all identified loss risk	Added qualitative factors related to: • Changes in the composition of the loan portfolios • Certain industries experiencing stress or emerging concerns within the portfolio • Loans downgraded to special mention, substandard, or non-accrual status • Consumer auto portfolio • Certain portfolios where the model assumptions do not capture all identified loss risk

The liability for unfunded lending commitments utilizes the same model as the allowance for credit losses on loans, however, the liability for unfunded lending commitments incorporates an assumption for the portion of unfunded commitments that are expected to be funded.

Sensitivity in the Allowance for Credit Loss model

The allowance for credit losses is an estimate that requires significant judgment including projections of the macro-economic environment. The forecasted macro-economic environment continuously changes which can cause fluctuations in the estimate of expected credit losses.

The current forecast includes projections on the impact of the tariffs the United States ("U.S.") administration announced and reduction in U.S. federal workers due to announced layoffs, while noting significant policy uncertainty.

Both trade policy uncertainty and fiscal policy uncertainty are not likely to resolve in the short term. Policy changes and the market's response to the changes could impact inflation, labor market trends, Federal Reserve monetary policy, business growth and consumer spending. Economic, political, and social developments regionally, nationally, and even globally could significantly modify economic projections used in the estimation of the allowance for credit losses.

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Potential changes in any one economic variable may or may not affect the overall allowance because a variety of economic variables and inputs are considered in estimating the allowance, and changes in those variables and inputs may not occur at the same rate, may not be consistent across product types, and may have offsetting impacts to other changing variables and inputs.

A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments for the three months ended March 31, 2025 and 2024, respectively, follows:


	For the Three Months Ended March 31, 2025
(In thousands)	Commercial		Personal Banking		Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS


Balance at beginning of period	$	106,769	$	55,973	$	162,742
Provision for credit losses on loans	354		14,741		15,095
Deductions:
Loans charged off	726		12,567		13,293
Less recoveries on loans	303		2,184		2,487
Net loan charge-offs (recoveries)	423		10,383		10,806
Balance March 31, 2025	$	106,700	$	60,331	$	167,031
LIABILITY FOR UNFUNDED LENDING COMMITMENTS


Balance at beginning of period	$	17,887	$	1,048	$	18,935
Provision for credit losses on unfunded lending commitments	( 840 )		232		( 608 )
Balance March 31, 2025	$	17,047	$	1,280	$	18,327
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	123,747	$	61,611	$	185,358


	For the Three Months Ended March 31, 2024
(In thousands)	Commercial		Personal Banking		Total
ALLOWANCE FOR CREDIT LOSSES ON LOANS


Balance at beginning of period	$	108,201	$	54,194	$	162,395
Provision for credit losses on loans	( 2,855 )		9,802		6,947
Deductions:
Loans charged off	316		10,849		11,165
Less recoveries on loans	434		1,854		2,288
Net loan charge-offs (recoveries)	( 118 )		8,995		8,877
Balance March 31, 2024	$	105,464	$	55,001	$	160,465
LIABILITY FOR UNFUNDED LENDING COMMITMENTS


Balance at beginning of period	$	23,909	$	1,337	$	25,246
Provision for credit losses on unfunded lending commitments	( 2,273 )		113		( 2,160 )
Balance March 31, 2024	$	21,636	$	1,450	$	23,086
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	127,100	$	56,451	$	183,551

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Delinquent and non-accrual loans

The Company considers loans past due on the day following the contractual repayment date, if the contractual repayment was not received by the Company as of the end of the business day. The following table provides aging information on the Company’s past due and accruing loans, in addition to the balances of loans on non-accrual status, at March 31, 2025 and December 31, 2024.


(In thousands)	Current or Less Than 30 Days Past Due		30 – 89 Days Past Due		90 Days Past Due and Still Accruing		Non-accrual		Total
March 31, 2025
Commercial:
Business	$	6,235,165	$	2,386	$	613	$	1,112	$	6,239,276
Real estate – construction and land	1,419,343		9		—		220		1,419,572
Real estate – business	3,610,277		10		43		18,305		3,628,635
Personal Banking:
Real estate – personal	3,017,240		22,556		7,024		989		3,047,809
Consumer	2,089,260		24,157		2,743		—		2,116,160
Revolving home equity	353,166		990		542		1,977		356,675
Consumer credit card	552,121		7,590		8,452		—		568,163
Overdrafts	2,874		257		—		—		3,131
Total	$	17,279,446	$	57,955	$	19,417	$	22,603	$	17,379,421
December 31, 2024
Commercial:
Business	$	6,051,654	$	1,501	$	564	$	101	$	6,053,820
Real estate – construction and land	1,409,681		—		—		220		1,409,901
Real estate – business	3,640,643		5,621		—		14,954		3,661,218
Personal Banking:
Real estate – personal	3,021,017		25,267		10,885		1,026		3,058,195
Consumer	2,029,115		40,398		3,610		—		2,073,123
Revolving home equity	351,056		2,798		819		1,977		356,650
Consumer credit card	579,670		7,622		8,638		—		595,930
Overdrafts	10,953		313		—		—		11,266
Total	$	17,093,789	$	83,520	$	24,516	$	18,278	$	17,220,103

At March 31, 2025, the Company had $ 5.9 million in non-accrual loans that had no allowance for credit loss, compared to $ 2.0 million in non-accrual loans that had no allowance for credit loss at December 31, 2024. The Company did not record any interest income on non-accrual loans during the three months ended March 31, 2025 and 2024, respectively.

Credit quality indicators

The following table provides information about the credit quality of the Commercial loan portfolio. The Company utilizes an internal risk rating system comprised of a series of grades to categorize loans according to perceived risk associated with the expectation of debt repayment based on borrower specific information including, but not limited to, current financial information, historical payment experience, industry information, collateral levels and collateral types. The “pass” category consists of a range of loan grades that reflect increasing, though still acceptable, risk. A loan is assigned the risk rating at origination and then monitored throughout the contractual term for possible risk rating changes. Movement of risk through the various grade levels in the “pass” category is monitored for early identification of credit deterioration. The “special mention” rating is applied to loans where the borrower exhibits negative financial trends due to borrower specific or systemic conditions that, if left uncorrected, threaten its capacity to meet its debt obligations. The borrower is believed to have sufficient financial flexibility to react to and resolve its negative financial situation. It is a transitional grade that is closely monitored for improvement or deterioration. The “substandard” rating is applied to loans where the borrower exhibits well-defined weaknesses that jeopardize its continued performance and are of a severity that the distinct possibility of default exists. Loans are placed on “non-accrual” when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

All loans are analyzed for risk rating updates annually. For larger loans, rating assessments may be more frequent if relevant information is obtained earlier through debt covenant monitoring or overall relationship management. Smaller loans

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are monitored as identified by the loan officer based on the risk profile of the individual borrower or if the loan becomes past due related to credit issues. Loans rated Special Mention, Substandard or Non-accrual are subject to quarterly review and monitoring processes. In addition to the regular monitoring performed by the lending personnel and credit committees, loans are subject to review by a credit review department which verifies the appropriateness of the risk ratings for the loans chosen as part of its risk-based review plan.

The risk category of loans in the Commercial portfolio as of March 31, 2025 and December 31, 2024 are as follows:


	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Total
March 31, 2025
Business
Risk Rating:
Pass	$	419,931	$	1,273,288	$	838,520	$	565,125	$	372,791	$	457,180	$	2,087,293	$	6,014,128
Special mention	652		6,120		8,566		11,061		3,927		4,088		61,804		96,218
Substandard	—		2,064		6,349		18,432		11,245		9,148		80,580		127,818
Non-accrual	—		1		77		126		897		11		—		1,112
Total Business:	$	420,583	$	1,281,473	$	853,512	$	594,744	$	388,860	$	470,427	$	2,229,677	$	6,239,276
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	326	$	326
Real estate-construction
Risk Rating:
Pass	$	99,421	$	358,930	$	487,381	$	402,951	$	22,518	$	3,742	$	28,632	$	1,403,575
Special mention	—		—		—		12,953		—		—		—		12,953
Substandard	—		236		2,588		—		—		—		—		2,824
Non-accrual	—		220		—		—		—		—		—		220
Total Real estate-construction:	$	99,421	$	359,386	$	489,969	$	415,904	$	22,518	$	3,742	$	28,632	$	1,419,572
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate-business
Risk Rating:
Pass	$	152,673	$	714,302	$	537,158	$	739,443	$	443,965	$	669,762	$	154,304	$	3,411,607
Special mention	489		15,125		9,404		14,060		934		2,701		—		42,713
Substandard	—		1,267		37,134		28,600		15,380		66,650		6,979		156,010
Non-accrual	—		—		2,917		292		429		14,667		—		18,305
Total Real estate-business:	$	153,162	$	730,694	$	586,613	$	782,395	$	460,708	$	753,780	$	161,283	$	3,628,635
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	400	$	—	$	—	$	—	$	—	$	400
Commercial loans
Risk Rating:
Pass	$	672,025	$	2,346,520	$	1,863,059	$	1,707,519	$	839,274	$	1,130,684	$	2,270,229	$	10,829,310
Special mention	1,141		21,245		17,970		38,074		4,861		6,789		61,804		151,884
Substandard	—		3,567		46,071		47,032		26,625		75,798		87,559		286,652
Non-accrual	—		221		2,994		418		1,326		14,678		—		19,637
Total Commercial loans:	$	673,166	$	2,371,553	$	1,930,094	$	1,793,043	$	872,086	$	1,227,949	$	2,419,592	$	11,287,483
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	400	$	—	$	—	$	—	$	326	$	726

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	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
December 31, 2024
Business
Risk Rating:
Pass	$	1,505,299	$	956,449	$	596,681	$	405,669	$	148,483	$	350,106	$	1,887,596	$	5,850,283
Special mention	13,576		7,978		8,941		4,155		263		2,065		34,997		71,975
Substandard	2,218		5,596		19,145		5,069		928		10,086		88,419		131,461
Non-accrual	1		47		1		—		—		52		—		101
Total Business:	$	1,521,094	$	970,070	$	624,768	$	414,893	$	149,674	$	362,309	$	2,011,012	$	6,053,820
Gross write-offs for the year ended December 31, 2024	$	200	$	275	$	40	$	53	$	—	$	18	$	1,387	$	1,973
Real estate-construction
Risk Rating:
Pass	$	419,562	$	442,720	$	451,606	$	53,462	$	3,143	$	2,450	$	34,075	$	1,407,018
Special mention	—		—		—		—		—		—		—		—
Substandard	—		2,663		—		—		—		—		—		2,663
Non-accrual	220		—		—		—		—		—		—		220
Total Real estate-construction:	$	419,782	$	445,383	$	451,606	$	53,462	$	3,143	$	2,450	$	34,075	$	1,409,901
Gross write-offs for the year ended December 31, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate- business
Risk Rating:
Pass	$	755,498	$	604,936	$	753,023	$	448,041	$	363,717	$	368,350	$	129,868	$	3,423,433
Special mention	324		—		12,383		12,524		1,643		298		—		27,172
Substandard	1,280		23,420		36,657		18,429		4,416		104,382		7,075		195,659
Non-accrual	—		—		170		—		14,668		116		—		14,954
Total Real-estate business:	$	757,102	$	628,356	$	802,233	$	478,994	$	384,444	$	473,146	$	136,943	$	3,661,218
Gross write-offs for the year ended December 31, 2024	$	—	$	—	$	—	$	—	$	—	$	62	$	—	$	62
Commercial loans
Risk Rating:
Pass	$	2,680,359	$	2,004,105	$	1,801,310	$	907,172	$	515,343	$	720,906	$	2,051,539	$	10,680,734
Special mention	13,900		7,978		21,324		16,679		1,906		2,363		34,997		99,147
Substandard	3,498		31,679		55,802		23,498		5,344		114,468		95,494		329,783
Non-accrual	221		47		171		—		14,668		168		—		15,275
Total Commercial loans:	$	2,697,978	$	2,043,809	$	1,878,607	$	947,349	$	537,261	$	837,905	$	2,182,030	$	11,124,939
Gross write-offs for the year ended December 31, 2024	$	200	$	275	$	40	$	53	$	—	$	80	$	1,387	$	2,035

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The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of March 31, 2025 and December 31, 2024 below.


	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans Amortized Cost Basis		Total
March 31, 2025
Real estate-personal
Current to 90 days past due	$	75,510	$	370,737	$	377,835	$	397,730	$	474,009	$	1,335,077	$	8,898	$	3,039,796
Over 90 days past due	—		195		643		682		1,383		4,121		—		7,024
Non-accrual	—		—		7		—		107		875		—		989
Total Real estate-personal:	$	75,510	$	370,932	$	378,485	$	398,412	$	475,499	$	1,340,073	$	8,898	$	3,047,809
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	45	$	35	$	—	$	—	$	—	$	80
Consumer
Current to 90 days past due	$	139,297	$	362,193	$	339,427	$	202,952	$	137,489	$	104,513	$	827,546	$	2,113,417
Over 90 days past due	—		263		303		285		107		293		1,492		2,743

Total Consumer:	$	139,297	$	362,456	$	339,730	$	203,237	$	137,596	$	104,806	$	829,038	$	2,116,160
Gross write-offs for the three months ended March 31, 2025	$	—	$	1,139	$	912	$	663	$	265	$	140	$	511	$	3,630
Revolving home equity
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	354,156	$	354,156
Over 90 days past due	—		—		—		—		—		—		542		542
Non-accrual	—		—		—		—		—		—		1,977		$	1,977
Total Revolving home equity:	$	—	$	—	$	—	$	—	$	—	$	—	$	356,675	$	356,675
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer credit card
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	559,711	$	559,711
Over 90 days past due	—		—		—		—		—		—		8,452		8,452

Total Consumer credit card:	$	—	$	—	$	—	$	—	$	—	$	—	$	568,163	$	568,163
Gross write-offs for the three months ended March 31, 2025	$	—	$	—	$	—	$	—	$	—	$	—	$	8,171	$	8,171
Overdrafts
Current to 90 days past due	$	3,131	$	—	$	—	$	—	$	—	$	—	$	—	$	3,131


Total Overdrafts:	$	3,131	$	—	$	—	$	—	$	—	$	—	$	—	$	3,131
Gross write-offs for the three months ended March 31, 2025	$	686	$	—	$	—	$	—	$	—	$	—	$	—	$	686
Personal banking loans
Current to 90 days past due	$	217,938	$	732,930	$	717,262	$	600,682	$	611,498	$	1,439,590	$	1,750,311	$	6,070,211
Over 90 days past due	—		458		946		967		1,490		4,414		10,486		18,761
Non-accrual	—		—		7		—		107		875		1,977		2,966
Total Personal banking loans:	$	217,938	$	733,388	$	718,215	$	601,649	$	613,095	$	1,444,879	$	1,762,774	$	6,091,938
Gross write-offs for the three months ended March 31, 2025	$	686	$	1,139	$	957	$	698	$	265	$	140	$	8,682	$	12,567

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	Term Loans Amortized Cost Basis by Origination Year
(In thousands)	2024		2023		2022		2021		2020		Prior		Revolving Loans Amortized Cost Basis		Total
December 31, 2024
Real estate-personal
Current to 90 days past due	$	387,119	$	387,486	$	404,680	$	482,733	$	637,115	$	736,217	$	10,934	$	3,046,284
Over 90 days past due	665		892		1,431		1,890		3,180		2,827		—		10,885
Non-accrual	—		8		—		108		—		910		—		1,026
Total Real estate-personal:	$	387,784	$	388,386	$	406,111	$	484,731	$	640,295	$	739,954	$	10,934	$	3,058,195
Gross write-offs for the year ended December 31, 2024	$	—	$	82	$	115	$	83	$	—	$	22	$	—	$	302
Consumer
Current to 90 days past due	$	418,902	$	369,855	$	228,189	$	165,030	$	72,314	$	49,890	$	765,333	$	2,069,513
Over 90 days past due	465		584		406		213		47		367		1,528		3,610

Total Consumer:	$	419,367	$	370,439	$	228,595	$	165,243	$	72,361	$	50,257	$	766,861	$	2,073,123
Gross write-offs for the year ended December 31, 2024	$	1,438	$	3,109	$	2,859	$	1,308	$	540	$	255	$	2,309	$	11,818
Revolving home equity
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	353,854	$	353,854
Over 90 days past due	—		—		—		—		—		—		819		819
Non-accrual	—		—		—		—		—		—		1,977		$	1,977
Total Revolving home equity:	$	—	$	—	$	—	$	—	$	—	$	—	$	356,650	$	356,650
Gross write-offs for the year ended December 31, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer credit card
Current to 90 days past due	$	—	$	—	$	—	$	—	$	—	$	—	$	587,292	$	587,292
Over 90 days past due	—		—		—		—		—		—		8,638		8,638

Total Consumer credit card:	$	—	$	—	$	—	$	—	$	—	$	—	$	595,930	$	595,930
Gross write-offs for the year ended December 31, 2024	$	—	$	—	$	—	$	—	$	—	$	—	$	30,427	$	30,427
Overdrafts
Current to 90 days past due	$	11,266	$	—	$	—	$	—	$	—	$	—	$	—	$	11,266


Total Overdrafts:	$	11,266	$	—	$	—	$	—	$	—	$	—	$	—	$	11,266
Gross write-offs for the year ended December 31, 2024	$	2,689	$	—	$	—	$	—	$	—	$	—	$	—	$	2,689
Personal banking loans
Current to 90 days past due	$	817,287	$	757,341	$	632,869	$	647,763	$	709,429	$	786,107	$	1,717,413	$	6,068,209
Over 90 days past due	1,130		1,476		1,837		2,103		3,227		3,194		10,985		23,952
Non-accrual	—		8		—		108		—		910		1,977		3,003
Total Personal banking loans:	$	818,417	$	758,825	$	634,706	$	649,974	$	712,656	$	790,211	$	1,730,375	$	6,095,164
Gross write-offs for the year ended December 31, 2024	$	4,127	$	3,191	$	2,974	$	1,391	$	540	$	277	$	32,736	$	45,236

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Collateral-dependent loans

The Company's collateral-dependent loans are comprised of large loans on non-accrual status. The Company requires that collateral-dependent loans are either over-collateralized or carry collateral equal to the amortized cost of the loan. The following table presents the amortized cost basis of collateral-dependent loans as of March 31, 2025 and December 31, 2024.


(In thousands)	Business Assets		Real Estate		Total
March 31, 2025
Commercial:
Business	$	1,023	$	—	$	1,023

Real estate - business	—		17,585		17,585
Personal Banking:


Revolving home equity	—		1,977		1,977


Total	$	1,023	$	19,562	$	20,585
December 31, 2024
Commercial:


Real estate - business	$	—	$	14,667	$	14,667
Personal Banking:


Revolving home equity	—		1,977		1,977


Total	$	—	$	16,644	$	16,644

Modifications for borrowers experiencing financial difficulty

The Company's modifications of loans to borrowers experiencing financial difficulty are generally in the form of term extensions, repayment plans, payment deferrals, forbearance agreements, interest rate reductions, forgiveness of interest and/or fees, or any combination thereof. Commercial loans modified to borrowers experiencing financial difficulty are primarily loans that are substandard or non-accrual, where the maturity date was extended. Modifications on personal real estate loans are primarily those placed on forbearance plans, repayment plans, or deferral plans where monthly payments are suspended for a period of time or past due amounts are paid off over a certain period of time in the future or set up as a balloon payment at maturity. Modifications to certain credit card and other small consumer loans are often modified under debt counseling programs that can reduce the contractual rate or, in certain instances, forgive certain fees and interest charges. Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.

The following tables present the amortized cost at March 31, 2025 of loans that were modified during the three months ended March 31, 2025 and the amortized cost of at March 31, 2024 of loans that were modified during the three months ended March 31, 2024.


	For the Three Months Ended March 31, 2025
(Dollars in thousands)	Term Extension		Payment Delay		Interest Rate Reduction		Total		% of Total Loan Category
March 31, 2025
Commercial:
Business	$	54,539	$	—	$	—	$	54,539	0.9	%

Real estate – business	76,958		—		—		76,958		2.1
Personal Banking:
Real estate – personal	—		3,884		—		3,884		0.1
Consumer	—		—		67		67		—

Consumer credit card	—		—		880		880		0.2

Total	$	131,497	$	3,884	$	947	$	136,328	0.8	%

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	For the Three Months Ended March 31, 2024
(Dollars in thousands)	Term Extension		Payment Delay		Interest Rate Reduction		Total		% of Total Loan Category
March 31, 2024
Commercial:
Business	$	11,648	$	—	$	—	$	11,648	0.2	%

Real estate – business	17,004		—		—		17,004		0.5
Personal Banking:
Real estate – personal	526		2,706		—		3,232		0.1
Consumer	—		—		31		31		—

Consumer credit card	—		—		945		945		0.2

Total	$	29,178	$	2,706	$	976	$	32,860	0.2	%

The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty. As a result, a change to the allowance for credit losses is generally not recorded upon modification. For modifications to loans made to borrowers experiencing financial difficulty that are placed on non-accrual status, the Company determines the allowance for credit losses on an individual evaluation, using the same process that it utilizes for other loans on non-accrual status. Modifications made to commercial loans which are not on non-accrual status for borrowers experiencing financial difficulty are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience, and current economic factors. Modifications made to borrowers experiencing financial difficulty for personal banking loans which are not on non-accrual status are collectively evaluated based on loan type, delinquency, historical experience, and current economic factors.

If a loan to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the allowance for credit losses continues to be based on individual evaluation, if that loan is already on non-accrual status. For those loans, the allowance for credit losses is estimated using discounted expected cash flows or the fair value of collateral. If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The following tables summarize the financial impact of loan modifications and payment deferrals during the three months ended March 31, 2025 and March 31, 2024.


	Term Extension
	Three Months Ended March 31, 2025	Three Months Ended March 31, 2024
Commercial:
Business	Extended maturity by a weighted average of 7 months.	Extended maturity by a weighted average of 6 months.

Real estate – business	Extended maturity by a weighted average of 18 months.	Extended maturity by a weighted average of 8 months.
Personal Banking:
Real estate – personal	-	Extended maturity by a weighted average of 6 months.


	Payment Delay
	Three Months Ended March 31, 2025	Three Months Ended March 31, 2024




Personal Banking:
Real estate – personal	Deferred certain payments by a weighted average of 16 years .	Deferred certain payments by a weighted average of 8 years .

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	Interest Rate Reduction
	Three Months Ended March 31, 2025	Three Months Ended March 31, 2024




Personal Banking:

Consumer	Reduced contractual interest rate from average 21% to 6%.	Reduced contractual interest rate from average 23% to 6%.

Consumer credit card	Reduced contractual interest rate from average 21% to 6%.	Reduced contractual interest rate from average 23% to 6%.

The Company had commitments of $ 11.8 million and $ 14.9 million at March 31, 2025 and December 31, 2024, respectively, to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified the terms of loans in the form of an interest rate reduction; an other-than-insignificant payment delay; forgiveness of principal, interest, or fees; or a term extension during the current reporting period.

The following tables provide the amortized cost basis at March 31, 2025 of loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2025 and were modified within the 12 months preceding the payment default, as well as the amortized cost basis at March 31, 2024 of loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2024 and had been modified within the 12 months preceding the payment default. For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.


	For the Three Months Ended March 31, 2025
(Dollars in thousands)	Term Extension		Payment Delay		Interest Rate Reduction		Interest/Fees Forgiven		Total
March 31, 2025
Commercial:


Real estate – business	$	14,667	$	—	$	—	$	—	$	14,667
Personal Banking:
Real estate – personal	—		1,762		—		—		1,762
Consumer	—		—		33		—		33

Consumer credit card	—		—		218		—		218

Total	$	14,667	$	1,762	$	251	$	—	$	16,680

	For the Three Months Ended March 31, 2024
(Dollars in thousands)	Term Extension		Payment Delay		Interest Rate Reduction		Interest/Fees Forgiven		Total
March 31, 2024




Personal Banking:
Real estate – personal	$	—	$	1,138	$	—	$	—	$	1,138
Consumer	—		—		14		—		14

Consumer credit card	—		—		260		61		321

Total	$	—	$	1,138	$	274	$	61	$	1,473

The following tables present the amortized cost basis at March 31, 2025 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months as well as the amortized cost basis at March 31, 2024 of loans to borrowers experiencing financial difficulty that had been modified within the 12 months preceding March 31, 2024.

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(In thousands)	Current		30-89 Days Past Due		90 Days Past Due		Total
March 31, 2025
Commercial:
Business	$	89,831	$	44	$	—	$	89,875

Real estate – business	124,311		124		14,667		139,102
Personal Banking:
Real estate – personal	7,008		2,762		1,763		11,533
Consumer	852		17		33		902

Consumer credit card	2,418		445		218		3,081

Total	$	224,420	$	3,392	$	16,681	$	244,493


(In thousands)	Current		30-89 Days Past Due		90 Days Past Due		Total
March 31, 2024
Commercial:
Business	$	25,544	$	—	$	—	$	25,544

Real estate – business	93,924		—		—		93,924
Personal Banking:
Real estate – personal	3,556		1,136		1,761		6,453
Consumer	150		17		14		181

Consumer credit card	2,107		513		296		2,916

Total	$	125,281	$	1,666	$	2,071	$	129,018

Loans held for sale

The Company designates certain long-term fixed rate personal real estate loans as held for sale, and the Company has elected the fair value option for these loans. The election of the fair value option aligns the accounting for these loans with the related economic hedges discussed in Note 11. The loans are primarily sold to Federal Home Loan Mortgage Corporation (FHLMC) and Federal National Mortgage Association (FNMA). At March 31, 2025, the fair value of these loans was $ 2.7 million, and the unpaid principal balance was $ 2.7 million.

At March 31, 2025, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing interest.

Foreclosed real estate/repossessed assets

The Company’s holdings of foreclosed real estate totaled $ 642 thousand and $ 343 thousand at March 31, 2025 and December 31, 2024, respectively, and included in those amounts were $ 642 thousand and $ 343 thousand at March 31, 2025 and December 31, 2024, respectively, of foreclosed residential real estate properties held as a result of obtaining physical possession. Personal property acquired in repossession, generally autos, totaled $ 2.3 million and $ 2.2 million at March 31, 2025 and December 31, 2024. Upon acquisition, these assets are recorded at fair value less estimated selling costs at the date of foreclosure, establishing a new cost basis. They are subsequently carried at the lower of this cost basis or fair value less estimated selling costs.

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3. Investment Securities

Investment securities consisted of the following at March 31, 2025 and December 31, 2024.


(In thousands)	March 31, 2025		December 31, 2024
Available for sale debt securities	$	9,264,947	$	9,136,853
Trading debt securities	56,569		38,034
Equity securities:
Readily determinable fair value	48,951		48,359
No readily determinable fair value	9,231		9,083
Other:
Federal Reserve Bank stock	35,638		35,545
Federal Home Loan Bank stock	10,114		10,120

Private equity investments	175,618		184,386
Total investment securities (1)	$	9,601,068	$	9,462,380

(1) Accrued interest receivable totaled $ 33.3 million and $ 35.0 million at March 31, 2025 and December 31, 2024, respectively, and was included within other assets on the consolidated balance sheets.

Most of the Company’s investment securities are classified as available for sale debt securities, and this portfolio is discussed in more detail below. The Company’s equity securities are also discussed below. Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, and investments in portfolio concerns held by the Company’s private equity subsidiary. FRB stock and FHLB stock are held for liquidity management and regulatory purposes. Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is tied to the asset size of the borrowing bank and the level of borrowings from the FHLB. These holdings are carried at cost. The Company’s private equity investments are carried at estimated fair value.

Equity Securities

The Company’s equity securities portfolio includes mutual funds, common stock, and preferred stock with readily determinable fair values as well as equity securities with no readily determinable fair value. The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for the identical or similar investment of the same issuer. At March 31, 2024, this portfolio included the Company’s 823,447 shares of Visa Inc. (“Visa”) Class B-1 common stock (formerly Class B common stock), which were held by Commerce Bancshares, Inc. The Company’s Visa Class B-1 shares had a carrying value of zero at March 31, 2024, as there had not been observable price changes in orderly transactions for identical or similar investments of the same issuer.

On April 8, 2024, Visa announced the commencement of a public offering to permit the exchange of its Class B-1 common stock for a combination of shares of its Class B-2 common stock and its Class C common stock (“Exchange Offer”). The Company tendered all of its Visa Class B-1 shares pursuant to the Exchange Offer. On May 3, 2024, the Exchange Offer closed, and in exchange for its 823,447 shares of Visa Class B-1 common stock, the Company received 411,723 shares of Visa Class B-2 common stock (which will be convertible under certain circumstances, as further described below, into Visa’s publicly traded Class A common stock at an initial rate of 1.5875 shares of Class A common for each share of Class B-2 common stock, subject to adjustment) and 163,404 shares of Visa Class C common stock which automatically convert into four shares of Visa's Class A common stock (subject to future adjustments for any stock splits, recapitalizations or similar transactions) upon any transfer to a person other than a Visa member or an affiliate of a Visa member.

As a condition of participating in the exchange, the Company entered into a Makewhole Agreement with Visa that provides for cash payments to Visa to the extent (if any) that future adjustments to the conversion ratio for the Visa Class B-2 common stock to Class A common stock cause such ratio to fall below zero. Changes to the conversion ratio occur when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain covered litigation that pre-dated Visa’s initial public offering, for which Visa has been effectively indemnified by Visa USA members through reductions to the conversion ratio for its Class B-1 common stock. The purpose of the Makewhole Agreement is to preserve the economic benefit of these adjustments to the Class B-1 conversion ratio for the benefit of Visa’s Class A and Class C common stockholders following the exchange. As further described in Visa’s related Issuer Tender Offer Statement on Schedule TO and Prospectus, each dated April 8, 2024, publicly filed with the U. S. Securities and Exchange Commission, both the Makewhole Agreement and the related escrow fund and transfer restrictions on Visa’s Class B-1 common stock and the new Class B-2 common stock will terminate whenever the covered litigation is ultimately resolved, at which future date outstanding shares of Visa Class B-2 common stock will be convertible into shares of its Class A common stock at the then-applicable conversion ratio.

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As a result of the exchange, the Company elected the measurement alternative approach for its Visa Class C common stock and marked the stock to fair value, recording a gain based on the conversion privilege of the Visa Class C common stock and the closing price of Visa Class A common stock. During the second quarter of 2024, the Company sold 436 thousand shares of Visa Class A common stock at an average price of $ 274.91 , resulting in proceeds of $ 119.8 million. During the third quarter of 2024, the Company sold 218 thousand Visa Class A shares at an average price of $ 260.56 , resulting of proceeds of $ 56.8 million. As of September 30, 2024, the Company has sold all of the Visa Class C shares it received from the Visa Exchange Offer. The Company’s Visa Class B-2 common stock will continue to be carried at cost of $ 0 as the Company elected the measurement alternative approach for these shares as well, and there are not observable price changes in orderly transactions for identical or similar investments of the same issuer for the Visa Class B-2 shares held by the Company.

There were no significant changes in equity investments with no readily determinable fair value for the three months ended March 31, 2025 and March 31, 2024. Additionally, there were no significant gains or losses in the Company's equity securities portfolio during the three months ended March 31, 2025 and March 31, 2024.

Available for sale debt securities portfolio

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in accumulated other comprehensive income (AOCI). A summary of the available for sale debt securities by maturity groupings as of March 31, 2025 is shown below. The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and Government National Mortgage Association (GNMA), in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages. Also included are certain other asset-backed securities, which are primarily collateralized by credit cards, automobiles, student loans, and commercial loans. These securities differ from traditional debt securities primarily in that they may have uncertain maturity dates and are priced based on estimated prepayment rates on the underlying collateral.


(In thousands)	Amortized Cost		Fair Value
U.S. government and federal agency obligations:
Within 1 year	$	437,727	$	438,583
After 1 but within 5 years	1,449,802		1,451,299
After 5 but within 10 years	738,986		736,753

Total U.S. government and federal agency obligations	2,626,515		2,626,635
Government-sponsored enterprise obligations:


After 5 but within 10 years	35,221		30,150
After 10 years	19,820		13,906
Total government-sponsored enterprise obligations	55,041		44,056
State and municipal obligations:
Within 1 year	69,962		69,275
After 1 but within 5 years	400,964		376,308
After 5 but within 10 years	205,286		179,376
After 10 years	113,367		96,228
Total state and municipal obligations	789,579		721,187
Mortgage and asset-backed securities:
Agency mortgage-backed securities	4,098,966		3,430,566
Non-agency mortgage-backed securities	614,798		566,126
Asset-backed securities	1,652,018		1,625,282
Total mortgage and asset-backed securities	6,365,782		5,621,974
Other debt securities:
Within 1 year	64,955		64,330
After 1 but within 5 years	68,308		63,659
After 5 but within 10 years	102,874		98,777
After 10 years	24,747		24,329
Total other debt securities	260,884		251,095
Total available for sale debt securities	$	10,097,801	$	9,264,947

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Investments in U.S. government and federal agency obligations include U.S. Treasury inflation-protected securities, which totaled $ 410.5 million, at fair value, at March 31, 2025. Interest earned on these securities increases with inflation and decreases with deflation, as measured by the non-seasonally adjusted Consumer Price Index (CPI-U). At maturity, the principal paid is the greater of an inflation-adjusted principal or the original principal.

Allowance for credit losses on available for sale debt securities

Securities for which fair value is less than amortized cost are reviewed for impairment. Special emphasis is placed on securities whose credit rating has fallen below Baa3 (Moody's) or BBB- (Standard & Poor's), whose fair values have fallen more than 20 % below purchase price, or those which have been identified based on management’s judgment. These securities are placed on a watch list and cash flow analyses are prepared on an individual security basis. Certain securities are analyzed using a projected cash flow model, discounted to present value, and compared to the current amortized cost bases of the securities. The model uses input factors such as cash flow projections, contractual payments required, expected delinquency rates, credit support from other tranches, prepayment speeds, collateral loss severity rates (including loan to values), and various other information related to the underlying collateral. Securities not analyzed using the cash flow model are analyzed by reviewing credit ratings, credit support agreements, and industry knowledge to project future cash flows and any possible credit impairment.

At March 31, 2025, the fair value of securities on this watch list was $ 1.2 billion compared to $ 1.6 billion at December 31, 2024. Almost all of the securities included on the Company's watch list in the current quarter were experiencing unrealized loss positions due to the increase in interest rates since their purchase and were analyzed outside of the cash flow model. At March 31, 2025, the securities on the Company's watch list that were not deemed to be solely related to increasing interest rates were securities backed by government-guaranteed student loans and are expected to perform as contractually required. As of March 31, 2025, the Company did not identify any securities for which a credit loss exists, and for the three months ended March 31, 2025 and 2024, the Company did not recognize a credit loss expense on any available for sale debt securities.

The table below summarizes debt securities available for sale in an unrealized loss position, aggregated by length of loss period, for which an allowance for credit losses has not been recorded at March 31, 2025 and December 31, 2024. Unrealized losses on these available for sale securities have not been recognized into income because after review, the securities were deemed not to be impaired. The unrealized losses on these securities are primarily attributable to changes in interest rates and current market conditions. At March 31, 2025, the Company does not intend to sell the securities, nor is it anticipated that it would be required to sell any of these securities at a loss.


	Less than 12 months				12 months or longer				Total
(In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2025
U.S. government and federal agency obligations	$	764,764	$	8,128	$	289,771	$	8,437	$	1,054,535	$	16,565
Government-sponsored enterprise obligations	—		—		44,056		10,985		44,056		10,985
State and municipal obligations	14,633		368		701,240		68,024		715,873		68,392
Mortgage and asset-backed securities:
Agency mortgage-backed securities	2,920		13		3,382,090		668,998		3,385,010		669,011
Non-agency mortgage-backed securities	38,677		169		512,713		48,799		551,390		48,968
Asset-backed securities	193,670		1,499		792,889		29,393		986,559		30,892
Total mortgage and asset-backed securities	235,267		1,681		4,687,692		747,190		4,922,959		748,871
Other debt securities	37,211		128		161,965		10,338		199,176		10,466
Total	$	1,051,875	$	10,305	$	5,884,724	$	844,974	$	6,936,599	$	855,279
December 31, 2024
U.S. government and federal agency obligations	$	1,492,875	$	24,662	$	353,129	$	17,197	$	1,846,004	$	41,859
Government-sponsored enterprise obligations	—		—		42,848		12,576		42,848		12,576
State and municipal obligations	14,860		230		724,587		79,685		739,447		79,915
Mortgage and asset-backed securities:
Agency mortgage-backed securities	3,882		42		3,409,405		750,664		3,413,287		750,706
Non-agency mortgage-backed securities	10		—		564,637		56,986		564,647		56,986
Asset-backed securities	219,414		2,371		1,083,938		36,824		1,303,352		39,195
Total mortgage and asset-backed securities	223,306		2,413		5,057,980		844,474		5,281,286		846,887
Other debt securities	26,390		579		198,936		12,718		225,326		13,297
Total	$	1,757,431	$	27,884	$	6,377,480	$	966,650	$	8,134,911	$	994,534

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The entire available for sale debt portfolio included $ 6.9 billion of securities that were in a loss position at March 31, 2025, compared to $ 8.1 billion at December 31, 2024. The total amount of unrealized loss on these securities was $ 855.3 million at March 31, 2025, a decrease of $ 139.3 million compared to the unrealized loss at December 31, 2024. Securities with significant unrealized losses are discussed in the "Allowance for credit losses on available for sale debt securities" section above.

For debt securities classified as available for sale, the following table shows the amortized cost, fair value, and allowance for credit losses of securities available for sale at March 31, 2025 and December 31, 2024, and the corresponding amounts of gross unrealized gains and losses (pre-tax) in AOCI, by security type.


(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
March 31, 2025
U.S. government and federal agency obligations	$	2,626,515	$	16,685	$	( 16,565 )	$	—	$	2,626,635
Government-sponsored enterprise obligations	55,041		—		( 10,985 )		—		44,056
State and municipal obligations	789,579		—		( 68,392 )		—		721,187
Mortgage and asset-backed securities:
Agency mortgage-backed securities	4,098,966		611		( 669,011 )		—		3,430,566
Non-agency mortgage-backed securities	614,798		296		( 48,968 )		—		566,126
Asset-backed securities	1,652,018		4,156		( 30,892 )		—		1,625,282
Total mortgage and asset-backed securities	6,365,782		5,063		( 748,871 )		—		5,621,974
Other debt securities	260,884		677		( 10,466 )		—		251,095
Total	$	10,097,801	$	22,425	$	( 855,279 )	$	—	$	9,264,947
December 31, 2024
U.S. government and federal agency obligations	$	2,594,130	$	2,981	$	( 41,859 )	$	—	$	2,555,252
Government-sponsored enterprise obligations	55,425		—		( 12,576 )		—		42,849
State and municipal obligations	822,790		16		( 79,915 )		—		742,891
Mortgage and asset-backed securities:
Agency mortgage-backed securities	4,195,182		415		( 750,706 )		—		3,444,891
Non-agency mortgage-backed securities	625,539		136		( 56,986 )		—		568,689
Asset-backed securities	1,595,797		413		( 39,195 )		—		1,557,015
Total mortgage and asset-backed securities	6,416,518		964		( 846,887 )		—		5,570,595
Other debt securities	238,563		—		( 13,297 )		—		225,266
Total	$	10,127,426	$	3,961	$	( 994,534 )	$	—	$	9,136,853

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The following table presents proceeds from sales of securities and the components of investment securities gains and losses which have been recognized in earnings.


	For the Three Months Ended March 31
(In thousands)	2025		2024
Proceeds from sales of securities:
Available for sale debt securities	$	—	$	25,494

Other investments	6,757		10,250
Total proceeds	$	6,757	$	35,744

Investment securities gains (losses), net:
Available for sale debt securities:

Gains realized on sales	$	4	$	—
Losses realized on sales	—		( 8,470 )

Equity securities:




Gains (losses) on equity securities, net	( 97 )		142
Other:
Gains realized on sales	1,071		969
Losses realized on sales	( 44 )		—
Fair value adjustments, net	( 8,525 )		7,100
Total investment securities gains (losses), net	$	( 7,591 )	$	( 259 )

Net losses on investment securities for the three months ended March 31, 2025 were mainly comprised of net losses in fair value of $ 8.5 million recorded on private equity investments and net losses in fair value of $ 97 thousand of on equity investments. These losses were partially offset by net gains of $ 1.0 million on sales of private equity securities.

Pledged securities

At March 31, 2025, securities totaling $ 6.3 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $ 6.9 billion at December 31, 2024. Excluding obligations of various government-sponsored enterprises such as FNMA, FHLB and FHLMC, no investment in a single issuer exceeded 10 % of stockholders’ equity.

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4. Goodwill and Other Intangible Assets

The following table presents information about the Company's intangible assets which have estimable useful lives.


	March 31, 2025								December 31, 2024
(In thousands)	Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount		Gross Carrying Amount		Accumulated Amortization		Valuation Allowance		Net Amount
Amortizable intangible assets:
Core deposit premium	$	5,550	$	( 5,325 )	$	—	$	225	$	5,550	$	( 5,286 )	$	—	$	264
Mortgage servicing rights	13,636		( 4,020 )		—		9,616		13,673		( 3,905 )		—		9,768
Total	$	19,186	$	( 9,345 )	$	—	$	9,841	$	19,223	$	( 9,191 )	$	—	$	10,032

Aggregate amortization expense on intangible assets was $ 338 thousand and $ 331 thousand for the three month periods ended March 31, 2025 and 2024, respectively. The following table shows the estimated annual amortization expense for the next five fiscal years. This expense is based on existing asset balances and the interest rate environment as of March 31, 2025. The Company’s actual amortization expense in any given period may be different from the estimated amounts depending upon the acquisition of intangible assets, changes in mortgage interest rates, prepayment rates and other market conditions.


(In thousands)
2025	$	1,258
2026	1,101
2027	951
2028	824
2029	741

Changes in the carrying amount of goodwill and other intangible assets for the three month period ended March 31, 2025 are as follows:


(In thousands)	Goodwill		Easement		Core Deposit Premium		Mortgage Servicing Rights
Balance January 1, 2025	$	146,539	$	3,600	$	264	$	9,768

Originations, net of disposals	—		—		—		147
Amortization	—		—		( 39 )		( 299 )

Balance March 31, 2025	$	146,539	$	3,600	$	225	$	9,616

Goodwill allocated to the Company’s operating segments at March 31, 2025 and December 31, 2024 is shown below.


(In thousands)	March 31, 2025		December 31, 2024
Consumer segment	$	70,721	$	70,721
Commercial segment	75,072		75,072
Wealth segment	746		746
Total goodwill	$	146,539	$	146,539

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5. Guarantees

The Company, as a provider of financial services, routinely issues financial guarantees in the form of financial and performance standby letters of credit. Standby letters of credit are contingent commitments issued by the Company generally to guarantee the payment or performance obligation of a customer to a third party. While these represent a potential outlay by the Company, a significant amount of the commitments may expire without being drawn upon. The Company has recourse against the customer for any amount it is required to pay to a third party under a standby letter of credit. The letters of credit are subject to the same credit policies, underwriting standards and approval process as loans made by the Company. Most of the standby letters of credit are secured, and in the event of nonperformance by customers, the Company has rights to the underlying collateral, which could include commercial real estate, physical plant and property, inventory, receivables, cash and marketable securities.

Upon issuance of standby letters of credit, the Company recognizes a liability for the fair value of the obligation undertaken, which is estimated to be equivalent to the amount of fees received from the customer over the life of the agreement. At March 31, 2025, that net liability was $ 4.4 million, which will be accreted into income over the remaining life of the respective commitments. The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was $ 632.9 million at March 31, 2025.

The Company periodically enters into credit risk participation agreements (RPAs) as a guarantor to other financial institutions, in order to mitigate those institutions’ credit risk associated with interest rate swaps with third parties. The RPA stipulates that, in the event of default by the third party on the interest rate swap, the Company will reimburse a portion of the loss borne by the financial institution. These interest rate swaps are normally collateralized (generally with real property, inventories and equipment) by the third party, which limits the credit risk associated with the Company’s RPAs. The third parties usually have other borrowing relationships with the Company. The Company monitors overall borrower collateral and at March 31, 2025, believes sufficient collateral is available to cover potential swap losses. The RPAs are carried at fair value throughout their term with all changes in fair value, including those due to a change in the third party’s creditworthiness, recorded in current earnings. The terms of the RPAs, which correspond to the terms of the underlying swaps, range from 1 to 15 years. At March 31, 2025, the fair value of the Company's guarantee liabilities for RPAs was $ 79 thousand, and the notional amount of the underlying swaps was $ 318.8 million. The maximum potential future payment guaranteed by the Company cannot be readily estimated but is dependent upon the fair value of the interest rate swaps at the time of default.

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6. Leases

The Company has net investments in direct financing and sales-type leases to commercial, industrial, and tax-exempt entities. These leases are included within business loans on the Company's consolidated balance sheets. The Company primarily leases various types of equipment, trucks and trailers, and office furniture and fixtures. Lease agreements may include options for the lessee to renew or purchase the leased equipment at the end of the lease term. The Company has elected to adopt the lease component expedient in which the lease and nonlease components are combined into the total lease receivable. The Company also leases office space to third parties, and these leases are classified as operating leases. The leases may include options to renew or expand the leased space, and currently the leases have remaining terms of 3 months to 14 years.

The following table provides the components of lease income.


	For the Three Months Ended March 31
(in thousands)		2025		2024
Direct financing and sales-type leases		$	9,843	$	9,012
Operating leases (a)		4,297		4,132
Total lease income		$	14,140	$	13,144

(a) Includes rent from Tower Properties Company, a related party, of $ 0 and $ 19 thousand for the three month periods ended March 31, 2025 and March 31, 2024, respectively. Tower Properties Company was no longer a lessee of the Company as of January 1, 2025.

7. Pension

The amount of net pension cost is shown in the table below:


	For the Three Months Ended March 31
(In thousands)		2025		2024
Service cost		$	136	$	97
Interest cost on projected benefit obligation		1,073		1,112
Expected return on plan assets		( 980 )		( 1,019 )
Amortization of prior service cost		—		( 45 )
Amortization of unrecognized net loss (gain)		229		280
Net periodic pension cost		$	458	$	425

All benefits accrued under the Company’s defined benefit pension plan have been frozen since January 1, 2011. During the first three months of 2025, the Company made no funding contributions to its defined benefit pension plan and made minimal funding contributions to a supplemental executive retirement plan (the CERP), which carries no segregated assets.

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8. Common Stock *

Presented below is a summary of the components used to calculate basic and diluted income per share. The Company applies the two-class method of computing income per share, as nonvested share-based awards that pay nonforfeitable common stock dividends are considered securities which participate in undistributed earnings with common stock. The two-class method requires the calculation of separate income per share amounts for the nonvested share-based awards and for common stock. Income per share attributable to common stock is shown in the table below. Nonvested share-based awards are further discussed in Note 13.


	For the Three Months Ended March 31
(In thousands, except per share data)		2025		2024
Basic income per common share:
Net income attributable to Commerce Bancshares, Inc.		$	131,592	$	112,663
Less income allocated to nonvested restricted stock		1,259		1,044
Net income allocated to common stock		$	130,333	$	111,619
Weighted average common shares outstanding		132,917		135,494
Basic income per common share		$	.98	$	.82
Diluted income per common share:
Net income attributable to Commerce Bancshares, Inc.		$	131,592	$	112,663
Less income allocated to nonvested restricted stock		1,258		1,043
Net income allocated to common stock		$	130,334	$	111,620
Weighted average common shares outstanding		132,917		135,494

Net effect of the assumed exercise of stock-based awards - based on the treasury stock method using the average market price for the respective periods		155		151
Weighted average diluted common shares outstanding		133,072		135,645
Diluted income per common share		$	.98	$	.82

Unexercised stock appreciation rights of 159 thousand and 371 thousand for the three month periods ended March 31, 2025 and 2024, respectively, were excluded from the computation of diluted income per common share because their inclusion would have been anti-dilutive.

* All prior year share and per share amounts in this note have been restated for the 5% common stock dividend distributed in December 2024.

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9. Accumulated Other Comprehensive Income

The table below shows the activity and accumulated balances for components of other comprehensive income. Information about unrealized gains and losses on securities can be found in Note 3, and information about unrealized gains and losses on cash flow hedge derivatives is located in Note 11.


	Unrealized Gains (Losses) on Securities (1)		Pension Loss		Unrealized Gains (Losses) on Cash Flow Hedge Derivatives (2)		Total Accumulated Other Comprehensive Income (Loss)
(In thousands)

Balance January 1, 2025	$	( 742,926 )	$	( 12,059 )	$	( 3,926 )	$	( 758,911 )


Other comprehensive income (loss) before reclassifications to current earnings	157,722		—		10,366		168,088
Amounts reclassified to current earnings from accumulated other comprehensive income	( 4 )		229		( 2,533 )		( 2,308 )
Current period other comprehensive income (loss), before tax	157,718		229		7,833		165,780
Income tax (expense) benefit	( 39,430 )		( 57 )		( 1,958 )		( 41,445 )
Current period other comprehensive income (loss), net of tax	118,288		172		5,875		124,335

Balance March 31, 2025	$	( 624,638 )	$	( 11,887 )	$	1,949	$	( 634,576 )
Balance January 1, 2024	$	( 915,001 )	$	( 13,596 )	$	37,185	$	( 891,412 )


Other comprehensive income (loss) before reclassifications to current earnings	( 35,671 )		—		( 22,865 )		( 58,536 )
Amounts reclassified to current earnings from accumulated other comprehensive income	8,469		235		( 2,989 )		5,715
Current period other comprehensive income (loss), before tax	( 27,202 )		235		( 25,854 )		( 52,821 )
Income tax (expense) benefit	6,801		( 59 )		6,464		13,206
Current period other comprehensive income (loss), net of tax	( 20,401 )		176		( 19,390 )		( 39,615 )

Balance March 31, 2024	$	( 935,402 )	$	( 13,420 )	$	17,795	$	( 931,027 )

(1) The pre-tax amounts reclassified from accumulated other comprehensive income to current earnings are included in "investment securities gains (losses), net" in the consolidated statements of income.

(2) The pre-tax amounts reclassified from accumulated other comprehensive income to current earnings are included in "interest and fees on loans" in the consolidated statements of income.

10. Segments

The Company segregates financial information for use in assessing its performance and allocating resources among three operating segments: Consumer, Commercial and Wealth. The Consumer segment consists of various consumer loan and deposit products offered through its retail branch network of approximately 140 locations. This segment also includes residential mortgage, indirect and other consumer loan financing businesses, along with debit and credit card loan and fee businesses. The Commercial segment provides corporate lending (including the Small Business Banking product line within the branch network), leasing, and international services, along with business and governmental deposit products and commercial cash management services. This segment also includes both merchant and commercial bank card products as well as the Commercial Tradable Products division, which sells fixed income securities, underwrites municipal bonds, and provides securities safekeeping and accounting services to its business and correspondent bank customers. The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management, and brokerage services. This segment also provides various loan and deposit related services to its private banking customers.

The Company’s chief executive officer is its chief operating decision maker ("CODM"). The CODM is the primary individual in control of resource allocation, and the allocation determinations are made in consultation with the Company’s executive management committee, of which the CODM is a member. The Company’s CODM primarily utilizes net income before taxes to evaluate each segment’s performance and allocate resources (including employees, financial, or capital resources), primarily through the Company’s annual budgeting process and periodic segment performance reviews. To manage operations and make decisions regarding resource allocations, the CODM is regularly provided and reviews total non-interest expense at a consolidated level and total non-interest expense for each segment.

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The following table presents selected financial information by segment and reconciliations of combined segment totals to consolidated totals. There were no material intersegment revenues between the three segments. Management periodically makes changes to methods of assigning costs and income to its business segments to better reflect operating results. If appropriate, these changes are reflected in prior year information presented below.


(In thousands)	Consumer		Commercial		Wealth		Other/Elimination		Consolidated Totals
Three Months Ended March 31, 2025
Net interest income	$	125,385	$	133,115	$	22,159	$	( 11,557 )	$	269,102
Provision for credit losses	( 10,250 )		( 532 )		—		( 3,705 )		( 14,487 )
Non-interest income	23,987		69,599		64,039		1,324		158,949
Investment securities gains (losses), net	—		—		—		( 7,591 )		( 7,591 )
Non-interest expense	( 83,805 )		( 103,244 )		( 41,279 )		( 10,048 )		( 238,376 )
Income before income taxes	$	55,317	$	98,938	$	44,919	$	( 31,577 )	$	167,597







Three Months Ended March 31, 2024
Net interest income	$	128,157	$	126,687	$	23,198	$	( 29,043 )	$	248,999
Provision for loan losses	( 8,888 )		( 41 )		1		4,141		( 4,787 )
Non-interest income	24,335		63,802		58,399		2,312		148,848
Investment securities gains (losses), net	—		—		—		( 259 )		( 259 )
Non-interest expense	( 80,717 )		( 100,356 )		( 39,551 )		( 25,073 )		( 245,697 )
Income before income taxes	$	62,887	$	90,092	$	42,047	$	( 47,922 )	$	147,104

Non-interest expense for the Consumer, Commercial, and Wealth segments above is primarily comprised of salaries, incentives, benefits, and allocated overhead costs for service and support. Non-interest expense for the segments also includes expenses for data processing and software, occupancy, and professional and other services.

The information presented above was derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting procedures and methods, which have been developed to reflect the underlying economics of the businesses. The methodologies are applied in connection with funds transfer pricing and assignment of overhead costs among segments. Funds transfer pricing was used in the determination of net interest income by assigning a standard cost (credit) for funds used (provided by) assets and liabilities based on their maturity, prepayment and/or repricing characteristics.

The segment activity, as shown above, includes both direct and allocated items. Amounts in the “Other/Elimination” column include activity not related to the segments, such as that relating to administrative functions, the investment securities portfolio, and the effect of certain expense allocations to the segments. The provision for credit losses in this category contains the difference between net loan charge-offs assigned directly to the segments and the recorded provision for credit loss expense. Included in this category’s net interest income are earnings of the investment portfolio, which are not allocated to a segment. Additionally, interest expense on the Company's brokered certificates of deposit is included in this column, as the Company's brokered certificates of deposit are not allocated to a segment.

The performance measurement of the operating segments is based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. The information is also not necessarily indicative of the segments' financial condition and results of operations if they were independent entities.

11. Derivative Instruments

The notional amounts of the Company’s derivative instruments are shown in the table below. These contractual amounts, along with other terms of the derivative, are used to determine amounts to be exchanged between counterparties and are not a measure of loss exposure. The Company's derivatives are not accounted for as accounting hedges except for the interest rate floors, as discussed below.

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(In thousands)	March 31, 2025		December 31, 2024
Interest rate swaps	$	1,966,263	$	2,065,400
Interest rate floors	2,000,000		2,000,000
Interest rate caps	58,060		37,488
Credit risk participation agreements	493,988		503,196
Foreign exchange contracts	14,849		16,978
Mortgage loan commitments	4,705		3,060
Mortgage loan forward sale contracts	476		1,759
Forward TBA contracts	5,000		3,500
Total notional amount	$	4,543,341	$	4,631,381

Interest rate swap contracts are sold to commercial customers who wish to modify their interest rate sensitivity. The customers are engaged in a variety of businesses, including real estate, manufacturing, retail product distribution, education, and retirement communities. These interest rate swap contracts with customers are offset by matching interest rate swap contracts purchased by the Company from other financial institutions (dealers). Contracts with dealers that require central clearing are novated to a clearing agency who becomes the Company's counterparty. Because of the matching terms of the offsetting contracts, in addition to collateral provisions which mitigate the impact of non-performance risk, changes in fair value subsequent to initial recognition have a minimal effect on earnings.

Many of the Company’s interest rate swap contracts with large financial institutions contain contingent features relating to debt ratings or capitalization levels. Under these provisions, if the Company’s debt rating falls below investment grade or if the Company ceases to be “well-capitalized” under risk-based capital guidelines, certain counterparties can require immediate and ongoing collateralization on interest rate swaps in net liability positions or instant settlement of the contracts. The Company maintains debt ratings and capital well above these minimum requirements.

As of March 31, 2025, the Company held four interest rate floors indexed to 1-month SOFR to hedge the risk of declining interest rates on certain floating rate commercial loans. The floors have a combined notional value of $2.0 billion and are forward-starting. Each of the four interest rate floors has a six-year term and a notional amount of $500.0 million. In the event that the index rate falls below zero, the maximum rate that the Company can earn on the notional amount of each floor is limited to the strike rate. Information about the floors is provided in the table below.


Strike Rate		Effective Date	Maturity Date
3.50	%	July 1, 2024	July 1, 2030
3.25	%	November 1, 2024	November 1, 2030
3.00	%	March 1, 2025	March 1, 2031
2.75	%	July 1, 2025	July 1, 2031

The premium paid for the floors totaled $ 90.2 million. At March 31, 2025, the maximum length of time over which the Company is hedging its exposure to lower rates is approximately 6.3 years. These interest rate floors qualified and were designated as cash flow hedges and were assessed for effectiveness using regression analysis. The change in the fair value of these interest rate floors is recorded in AOCI, net of the amortization of the premiums paid, which are recorded against interest and fees on loans in the consolidated statements of income. As of March 31, 2025, net deferred losses on the interest rate floors totaled $ 21.4 million (pre-tax) and were recorded in AOCI in the consolidated balance sheet. As of March 31, 2025, it is expected that $ 11.5 million (pre-tax) interest rate floor premium amortization will be reclassified from AOCI into earnings over the next 12 months for the outstanding interest rate floors.

During the year ended December 31, 2020, the Company monetized three interest rate floors that were previously classified as cash flow hedges with a combined notional balance of $ 1.5 billion and an asset fair value of $ 163.2 million. As of March 31, 2025, the total realized gains on the monetized cash flow hedges remaining in AOCI was $ 24.0 million (pre-tax), which will be reclassified into interest income over the next 1.7 years. The estimated amount of net gains related to the cash flow hedges remaining in AOCI at March 31, 2025 that is expected to be reclassified into income within the next 12 months is $ 18.4 million.

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The Company also contracts with other financial institutions, as a guarantor or beneficiary, to share credit risk associated with certain interest rate swaps through risk participation agreements. The Company’s risks and responsibilities as guarantor are further discussed in Note 5 on Guarantees. In addition, the Company enters into foreign exchange contracts, which are mainly comprised of contracts with customers to purchase or deliver specific foreign currencies at specific future dates.

Under its program to sell residential mortgage loans in the secondary market, the Company designates certain newly-originated residential mortgage loans as held for sale. Derivative instruments arising from this activity include mortgage loan commitments and forward loan sale contracts. Changes in the fair values of the loan commitments and funded loans prior to sale that are due to changes in interest rates are economically hedged with forward contracts to sell residential mortgage-backed securities in the to-be-announced (TBA) market. These forward TBA contracts are also considered to be derivatives and are settled in cash at the security settlement date.

The fair values of the Company's derivative instruments, whose notional amounts are listed above, are shown in the table below. Information about the valuation methods used to determine fair value is provided in Note 15 on Fair Value Measurements.

The Company's policy is to present its derivative assets and derivative liabilities on a gross basis on its consolidated balance sheets, and these are reported in other assets and other liabilities. In prior years, certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swap. There was no reduction to positive or negative fair values of cleared swaps at March 31, 2025 and December 31, 2024.


	Asset Derivatives				Liability Derivatives
	Mar. 31, 2025		Dec. 31, 2024		Mar. 31, 2025		Dec. 31, 2024
(In thousands )	Fair Value				Fair Value
Derivatives designated as hedging instruments:
Interest rate floors	$	45,910	$	35,544	$	—	$	—
Total derivatives designated as hedging instruments	$	45,910	$	35,544	$	—	$	—
Derivative instruments not designated as hedging instruments:
Interest rate swaps	$	22,993	$	26,759	$	( 22,993 )	$	( 26,759 )
Interest rate caps	17		44		( 17 )		( 44 )
Credit risk participation agreements	48		35		( 79 )		( 58 )
Foreign exchange contracts	263		179		( 217 )		( 101 )
Mortgage loan commitments	102		58		—		—
Mortgage loan forward sale contracts	4		14		—		—
Forward TBA contracts	2		15		( 6 )		( 1 )
Total derivatives not designated as hedging instruments	$	23,429	$	27,104	$	( 23,312 )	$	( 26,963 )
Total	$	69,339	$	62,648	$	( 23,312 )	$	( 26,963 )

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The Company made an election to exclude the initial premiums paid on the interest rate floors from the hedge effectiveness measurement. Those initial premiums are amortized over the periods between the premium payment month and the contract maturity month. The pre-tax effects of the gains and losses (both the included and excluded amounts for hedge effectiveness assessment) recognized in the other comprehensive income from the cash flow hedging instruments and the amounts reclassified from accumulated other comprehensive income into income (both included and excluded amounts for hedge effectiveness measurement) are shown in the table below.


	Amount of Gain or (Loss) Recognized in OCI						Location of Gain (Loss) Reclassified from AOCI into Income	Amount of Gain (Loss) Reclassified from AOCI into Income

(In thousands)	Total		Included Component		Excluded Component			Total		Included Component		Excluded Component
For the Three Months Ended March 31, 2025
Derivatives in cash flow hedging relationships:
Interest rate floors	$	10,366	$	647	$	9,719	Interest and fees on loans	$	2,533	$	6,697	$	( 4,164 )
Total	$	10,366	$	647	$	9,719	Total	$	2,533	$	6,697	$	( 4,164 )




For the Three Months Ended March 31, 2024
Derivatives in cash flow hedging relationships:
Interest rate floors	$	( 22,865 )	$	( 9,977 )	$	( 12,888 )	Interest and fees on loans	$	2,989	$	7,199	$	( 4,210 )
Total	$	( 22,865 )	$	( 9,977 )	$	( 12,888 )	Total	$	2,989	$	7,199	$	( 4,210 )

The gain and loss recognized through various derivative instruments on the consolidated statements of income are shown in the table below.


	Location of Gain or (Loss) Recognized in Consolidated Statements of Income		Amount of Gain or (Loss) Recognized in Income on Derivatives
		For the Three Months Ended March 31
(In thousands)			2025		2024



Derivative instruments:
Interest rate swaps	Other non-interest income		$	105	$	126

Credit risk participation agreements	Other non-interest income		( 8 )		26
Foreign exchange contracts	Other non-interest income		( 32 )		38
Mortgage loan commitments	Loan fees and sales		44		15
Mortgage loan forward sale contracts	Loan fees and sales		( 10 )		( 8 )
Forward TBA contracts	Loan fees and sales		( 65 )		6
Total			$	34	$	203

The following table shows the extent to which assets and liabilities relating to derivative instruments have been offset in the consolidated balance sheets. It also provides information about these instruments which are subject to an enforceable master netting arrangement, irrespective of whether they are offset, and the extent to which the instruments could potentially be offset. Also shown is collateral received or pledged in the form of other financial instruments, which is generally cash or marketable securities. The collateral amounts in this table are limited to the outstanding balances of the related asset or liability (after netting is applied); thus, amounts of excess collateral are not shown. Most of the derivatives in the following table were transacted under master netting arrangements that contain a conditional right of offset, such as close-out netting, upon default.

While the Company is party to master netting arrangements with most of its swap derivative counterparties, the Company does not offset derivative assets and liabilities under these agreements on its consolidated balance sheets. Collateral exchanged between the Company and dealer bank counterparties is generally subject to thresholds and transfer minimums, and usually consists of marketable securities. By contract, these may be sold or re-pledged by the secured party until recalled at a subsequent valuation date by the pledging party. For those swap transactions requiring central clearing, the Company posts cash or securities to its clearing agent. Collateral positions are valued daily, and adjustments to amounts received and pledged by the Company are made as appropriate to maintain proper collateralization for these transactions. Swap derivative transactions with customers are generally secured by rights to non-financial collateral, such as real and personal property, which is not shown in the table below.

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							Gross Amounts Not Offset in the Balance Sheet
(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Collateral Received/ Pledged		Net Amount
March 31, 2025
Assets:
Derivatives subject to master netting agreements	$	69,099	$	—	$	69,099	$	( 7,796 )	$	( 51,921 )	$	9,382
Derivatives not subject to master netting agreements	240		—		240
Total derivatives	$	69,339	$	—	$	69,339
Liabilities:
Derivatives subject to master netting agreements	$	23,041	$	—	$	23,041	$	( 7,796 )	$	—	$	15,245
Derivatives not subject to master netting agreements	271		—		271
Total derivatives	$	23,312	$	—	$	23,312
December 31, 2024
Assets:
Derivatives subject to master netting agreements	$	62,437	$	—	$	62,437	$	( 3,780 )	$	( 54,620 )	$	4,037
Derivatives not subject to master netting agreements	211		—		211
Total derivatives	$	62,648	$	—	$	62,648
Liabilities:
Derivatives subject to master netting agreements	$	26,848	$	—	$	26,848	$	( 3,780 )	$	—	$	23,068
Derivatives not subject to master netting agreements	115		—		115
Total derivatives	$	26,963	$	—	$	26,963

12. Resale and Repurchase Agreements

The Company regularly enters into resale and repurchase agreement transactions with other financial institutions and with its own customers. Resale and repurchase agreements are agreements to purchase/sell securities subject to an obligation to resell/repurchase the same or similar securities. They are accounted for as secured lending and collateralized borrowing (e.g. financing transactions), not as true sales and purchases of the underlying collateral securities. Some of the resale and repurchase agreements were transacted under master netting arrangements that contain a conditional right of offset, such as close-out netting, upon default. The security collateral accepted or pledged in resale and repurchase agreements with other financial institutions may be sold or re-pledged by the secured party, but is usually delivered to and held by third party trustees. The Company generally retains custody of securities pledged for repurchase agreements with its customers.

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The following table shows the extent to which resale agreement assets and repurchase agreement liabilities with the same counterparty have been offset on the consolidated balance sheets, in addition to the extent to which they could potentially be offset. Also shown is collateral received or pledged, which consists of marketable securities. The collateral amounts in the table are limited to the outstanding balances of the related asset or liability (after offsetting is applied); thus amounts of excess collateral are not shown.


							Gross Amounts Not Offset in the Balance Sheet
(In thousands)	Gross Amount Recognized		Gross Amounts Offset in the Balance Sheet		Net Amounts Presented in the Balance Sheet		Financial Instruments Available for Offset		Securities Collateral Received/Pledged		Unsecured Amount
March 31, 2025
Total resale agreements, subject to master netting arrangements	$	850,000	$	—	$	850,000	$	—	$	( 850,000 )	$	—
Total repurchase agreements, subject to master netting arrangements	2,267,666		—		2,267,666		—		( 2,267,666 )		—
December 31, 2024
Total resale agreements, subject to master netting arrangements	$	625,000	$	—	$	625,000	$	—	$	( 625,000 )	$	—
Total repurchase agreements, subject to master netting arrangements	2,803,043		—		2,803,043		—		( 2,803,043 )		—

The table below shows the remaining contractual maturities of repurchase agreements outstanding at March 31, 2025 and December 31, 2024, in addition to the various types of marketable securities that have been pledged by the Company as collateral for these borrowings.


	Remaining Contractual Maturity of the Agreements
(In thousands)	Overnight and continuous		Up to 90 days		Greater than 90 days		Total
March 31, 2025
Repurchase agreements, secured by:
U.S. government and federal agency obligations	$	420,128	$	—	$	—	$	420,128
Government-sponsored enterprise obligations	10,526		—		—		10,526

Agency mortgage-backed securities	1,322,624		4,350		30,000		1,356,974
Non-agency mortgage-backed securities	37,649		—		—		37,649
Asset-backed securities	323,769		18,227		31,131		373,127
Other debt securities	69,262		—		—		69,262
Total repurchase agreements, gross amount recognized	$	2,183,958	$	22,577	$	61,131	$	2,267,666
December 31, 2024
Repurchase agreements, secured by:
U.S. government and federal agency obligations	$	518,937	$	—	$	—	$	518,937
Government-sponsored enterprise obligations	9,969		—		—		9,969

Agency mortgage-backed securities	1,641,156		9,600		22,250		1,673,006
Non-agency mortgage-backed securities	24,273		—		—		24,273
Asset-backed securities	462,841		30,623		18,227		511,691
Other debt securities	65,167		—		—		65,167
Total repurchase agreements, gross amount recognized	$	2,722,343	$	40,223	$	40,477	$	2,803,043

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13. Stock-Based Compensation

The Company issues stock-based compensation in the form of nonvested restricted stock and stock appreciation rights (SARs). Historically, most of the awards have been issued during the first quarter of each year. The stock-based compensation expense charged against income was $ 4.4 million and $ 4.3 million in the three months ended March 31, 2025 and 2024, respectively.

Nonvested stock awards granted generally vest in 4 to 7 years and contain restrictions as to transferability, sale, pledging, or assigning, among others, prior to the end of the vesting period. Dividend and voting rights are conferred upon grant. A summary of the status of the Company’s nonvested share awards as of March 31, 2025, and changes during the three month period then ended, is presented below.


	Shares	Weighted Average Grant Date Fair Value
Nonvested at January 1, 2025	1,252,653	$ 55.41
Granted	278,551	65.42
Vested	( 224,481 )	55.56
Forfeited	( 11,380 )	54.84

Nonvested at March 31, 2025	1,295,343	$ 57.55

SARs are granted with exercise prices equal to the market price of the Company’s stock at the date of grant. SARs vest ratably over 4 years of continuous service and have contractual terms of 10 years. All SARs must be settled in stock under provisions of the plan. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of SARs on date of grant. The current year per share average fair value and the model assumptions are shown in the table below.


Weighted per share average fair value at grant date	$ 19.72
Assumptions:
Dividend yield	1.7	%
Volatility	29.6	%
Risk-free interest rate	4.1	%
Expected term	6.0 years

A summary of SAR activity during the first three months of 2025 is presented below.


(Dollars in thousands, except per share data)	Rights	Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2025	841,962	$ 48.90
Granted	38,770	64.93
Forfeited	( 384 )	56.67
Expired	( 530 )	49.03
Exercised	( 42,981 )	37.78
Outstanding at March 31, 2025	836,837	$ 50.21	5.4 years	$ 10,164

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14. Revenue from Contracts with Customers

Revenue from contracts with customers, Accounting Standard Codification 606 ("ASC 606"), requires revenue recognition for the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For the three months ended March 31, 2025, approximately 63 % of the Company’s total revenue was comprised of net interest income, which is not within the scope of this guidance. Of the remaining revenue, those items that were subject to this guidance mainly included fees for bank card, trust, deposit account services and consumer brokerage services.

The following table disaggregates revenue from contracts with customers by major product line.


	Three Months Ended March 31
(In thousands)		2025		2024
Trust fees		$	56,592	$	51,105
Bank card transaction fees		45,593		46,930
Deposit account charges and other fees		26,622		24,151
Consumer brokerage services		4,785		4,408
Other non-interest income		14,391		10,516
Total non-interest income from contracts with customers		147,983		137,110
Other non-interest income (1)		10,966		11,738
Total non-interest income		$	158,949	$	148,848

(1) This revenue is not within the scope of ASC 606, and includes fees relating to bond trading activities, loan fees and sales, derivative instruments, standby letters of credit and various other transactions.

For bank card transaction fees, nearly all of debit and credit card fees are earned in the Consumer segment, while corporate card and merchant fees are earned in the Commercial segment. The Consumer and Commercial segments contributed approximately 28 % and 72 %, respectively, of the Company's deposit account charge revenue. All trust fees and nearly all consumer brokerage services income were earned in the Wealth segment.

The following table presents the opening and closing receivable balances for the three month periods ended March 31, 2025 and 2024 for the Company’s significant revenue from contracts with customers.


(In thousands)	March 31, 2025		December 31, 2024		March 31, 2024		December 31, 2023
Bank card transaction fees	$	14,538	$	17,754	$	15,673	$	18,069
Trust fees	1,787		2,165		2,506		1,764
Deposit account charges and other fees	7,549		7,897		6,156		6,588
Consumer brokerage services	—		—		—		8

For these revenue categories, none of the transaction price has been allocated to performance obligations that are unsatisfied as of the end of a reporting period.

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15. Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain financial and nonfinancial assets and liabilities and to determine fair value disclosures. Various financial instruments such as available for sale debt securities, equity securities, trading debt securities, certain investments relating to private equity activities, and derivatives are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets and liabilities on a nonrecurring basis, such as mortgage servicing rights and certain other investment securities. These nonrecurring fair value adjustments typically involve lower of cost or fair value accounting or write-downs of individual assets.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Depending on the nature of the asset or liability, the Company uses various valuation techniques and assumptions when estimating fair value. For accounting disclosure purposes, a three-level valuation hierarchy of fair value measurements has been established. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

• Level 1 – inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

• Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and inputs that are observable for the assets or liabilities, either directly or indirectly (such as interest rates, yield curves, and prepayment speeds).

• Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value. These may be internally developed, using the Company’s best information and assumptions that a market participant would consider.

The valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis are described in the Fair Value Measurements note in the Company's 2024 Annual Report on Form 10-K. There have been no significant changes in these methodologies since then.

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Instruments Measured at Fair Value on a Recurring Basis

The table below presents the March 31, 2025 and December 31, 2024 carrying values of assets and liabilities measured at fair value on a recurring basis. There were no transfers among levels during the first three months of 2025 or the year ended December 31, 2024.


			Fair Value Measurements Using
(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2025
Assets:
Residential mortgage loans held for sale	$	2,702	$	—	$	2,702	$	—
Available for sale debt securities:
U.S. government and federal agency obligations	2,626,635		2,626,635		—		—
Government-sponsored enterprise obligations	44,056		—		44,056		—
State and municipal obligations	721,187		—		720,240		947
Agency mortgage-backed securities	3,430,566		—		3,430,566		—
Non-agency mortgage-backed securities	566,126		—		566,126		—
Asset-backed securities	1,625,282		—		1,625,282		—
Other debt securities	251,095		—		251,095		—
Trading debt securities	56,569		10,325		46,244		—
Equity securities	48,951		48,951		—		—
Private equity investments	175,618		—		—		175,618
Derivatives *	69,339		—		69,189		150
Assets held in trust for deferred compensation plan	20,873		20,873		—		—
Total assets	9,638,999		2,706,784		6,755,500		176,715
Liabilities:
Derivatives *	23,312		—		23,233		79
Liabilities held in trust for deferred compensation plan	20,873		20,873		—		—
Total liabilities	$	44,185	$	20,873	$	23,233	$	79
December 31, 2024
Assets:
Residential mortgage loans held for sale	$	2,981	$	—	$	2,981	$	—
Available for sale debt securities:
U.S. government and federal agency obligations	2,555,252		2,555,252		—		—
Government-sponsored enterprise obligations	42,849		—		42,849		—
State and municipal obligations	742,891		—		741,927		964
Agency mortgage-backed securities	3,444,891		—		3,444,891		—
Non-agency mortgage-backed securities	568,689		—		568,689		—
Asset-backed securities	1,557,015		—		1,557,015		—
Other debt securities	225,266		—		225,266		—
Trading debt securities	38,034		10,219		27,815		—
Equity securities	48,359		48,359		—		—
Private equity investments	184,386		—		—		184,386
Derivatives *	62,648		—		62,555		93
Assets held in trust for deferred compensation plan	21,849		21,849		—		—
Total assets	9,495,110		2,635,679		6,673,988		185,443
Liabilities:
Derivatives *	26,963		—		26,905		58
Liabilities held in trust for deferred compensation plan	21,849		21,849		—		—
Total liabilities	$	48,812	$	21,849	$	26,905	$	58

* The fair value of each class of derivative is shown in Note 11.

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The changes in the Company's Level 3 assets and liabilities measured at fair value on a recurring basis are summarized as follows:


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(In thousands)	State and Municipal Obligations		Private Equity Investments		Total
For the three months ended March 31, 2025
Balance January 1, 2025	$	964	$	184,386	$	185,350
Total gains (losses) realized/unrealized:
Included in earnings	—		( 8,525 )		( 8,525 )
Included in other comprehensive income *	( 18 )		—		( 18 )

Discount accretion	1		—		1
Purchases of private equity investments	—		5,698		5,698
Sale/pay down of private equity investments	—		( 5,958 )		( 5,958 )
Capitalized interest/dividends	—		17		17


Balance at March 31, 2025	$	947	$	175,618	$	176,565
Total gains (losses) for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2025	$	—	$	( 8,525 )	$	( 8,525 )
*Total gains (losses) for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2025	$	( 18 )	$	—	$	( 18 )
For the three months ended March 31, 2024
Balance January 1, 2024	$	947	$	176,667	$	177,614
Total gains (losses) realized/unrealized:
Included in earnings	—		7,100		7,100
Included in other comprehensive income *	9		—		9


Purchases of private equity investments	—		9,477		9,477
Sale/pay down of private equity investments	—		( 9,400 )		( 9,400 )
Capitalized interest/dividends	—		( 138 )		( 138 )


Balance at March 31, 2024	$	956	$	183,706	$	184,662
Total gains (losses) for the three months included in earnings attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2024	$	—	$	7,100	$	7,100
*Total gains (losses) for the three months included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets still held at March 31, 2024	$	9	$	—	$	9

* Included in "net unrealized gains (losses) on available for sale debt securities" in the consolidated statements of comprehensive income.

Gains and losses included in earnings for the Company's Level 3 assets and liabilities in the previous table are reported in the following line items in the consolidated statements of income:


(In thousands)	Investment Securities Gains (Losses), Net
For the three months ended March 31, 2025



Total gains or losses included in earnings	$	( 8,525 )
Change in unrealized gains or losses relating to assets still held at March 31, 2025	$	( 8,525 )



For the three months ended March 31, 2024
Total gains or losses included in earnings	$	7,100
Change in unrealized gains or losses relating to assets still held at March 31, 2024	$	7,100

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Level 3 Inputs

The Company's Level 3 measurements at March 31, 2025, which employ unobservable inputs that are readily quantifiable, pertain to investments in portfolio concerns held by the Company's private equity subsidiaries. Information about these inputs is presented in the table below.

Quantitative Information about Level 3 Fair Value Measurements

Weighted

Valuation Technique

Unobservable Input

Range

Average*

Private equity investments

Market comparable companies

EBITDA multiple

3.8

6.0

5.0

* Unobservable inputs were weighted by the relative fair value of the instruments.

Instruments Measured at Fair Value on a Nonrecurring Basis

For assets measured at fair value on a nonrecurring basis during the first three months of 2025 and 2024, and still held as of March 31, 2025 and 2024, the following table provides the adjustments to fair value recognized during the respective periods, the level of valuation inputs used to determine each adjustment, and the carrying value of the related individual assets or portfolios at March 31, 2025 and 2024.


			Fair Value Measurements Using
(In thousands)	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses) Recognized During the Three Months Ended March 31
March 31, 2025
Collateral dependent loans	$	3,940	$	—	$	—	$	3,940	$	( 400 )



Foreclosed assets	112		—		—		112		( 55 )


March 31, 2024
Collateral dependent loans	$	63	$	—	$	—	$	63	$	( 32 )

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16. Fair Value of Financial Instruments

The carrying amounts and estimated fair values of financial instruments held by the Company are set forth below. Fair value estimates are made at a specific point in time based on relevant market information. They do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for many of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, risk characteristics and economic conditions. These estimates are subjective, involve uncertainties, and cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The estimated fair values of the Company’s financial instruments and the classification of their fair value measurement within the valuation hierarchy are as follows at March 31, 2025 and December 31, 2024:


	Carrying Amount		Estimated Fair Value at March 31, 2025
(In thousands)			Level 1		Level 2		Level 3		Total
Financial Assets
Loans:
Business	$	6,239,276	$	—	$	—	$	6,150,944	$	6,150,944
Real estate - construction and land	1,419,572		—		—		1,394,466		1,394,466
Real estate - business	3,628,635		—		—		3,556,181		3,556,181
Real estate - personal	3,047,809		—		—		2,730,015		2,730,015
Consumer	2,116,160		—		—		2,098,352		2,098,352
Revolving home equity	356,675		—		—		353,533		353,533
Consumer credit card	568,163		—		—		518,592		518,592
Overdrafts	3,131		—		—		3,003		3,003
Total loans	17,379,421		—		—		16,805,086		16,805,086
Loans held for sale	2,890		—		2,890		—		2,890




Investment securities	9,591,837		2,685,911		6,683,609		222,317		9,591,837

Securities purchased under agreements to resell	850,000		—		—		865,070		865,070
Interest earning deposits with banks	2,756,521		2,756,521		—		—		2,756,521
Cash and due from banks	517,332		517,332		—		—		517,332
Derivative instruments	69,339		—		69,189		150		69,339
Assets held in trust for deferred compensation plan	20,873		20,873		—		—		20,873
Total	$	31,188,213	$	5,980,637	$	6,755,688	$	17,892,623	$	30,628,948
Financial Liabilities
Non-interest bearing deposits	$	7,518,243	$	7,518,243	$	—	$	—	$	7,518,243
Savings, interest checking and money market deposits	15,975,283		15,975,283		—		—		15,975,283
Certificates of deposit	2,348,271		—		—		2,373,983		2,373,983
Federal funds purchased	132,370		132,370		—		—		132,370
Securities sold under agreements to repurchase	2,267,666		—		—		2,270,404		2,270,404
Other borrowings	17,659		14,746		2,913		—		17,659
Derivative instruments	23,312		—		23,233		79		23,312
Liabilities held in trust for deferred compensation plan	20,873		20,873		—		—		20,873
Total	$	28,303,677	$	23,661,515	$	26,146	$	4,644,466	$	28,332,127

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	Carrying Amount		Estimated Fair Value at December 31, 2024
(In thousands)			Level 1		Level 2		Level 3		Total
Financial Assets
Loans:
Business	$	6,053,820	$	—	$	—	$	5,943,565	$	5,943,565
Real estate - construction and land	1,409,901		—		—		1,384,029		1,384,029
Real estate - business	3,661,218		—		—		3,558,862		3,558,862
Real estate - personal	3,058,195		—		—		2,738,880		2,738,880
Consumer	2,073,123		—		—		2,053,191		2,053,191
Revolving home equity	356,650		—		—		353,731		353,731
Consumer credit card	595,930		—		—		549,874		549,874
Overdrafts	11,266		—		—		11,120		11,120
Total loans	17,220,103		—		—		16,593,252		16,593,252
Loans held for sale	3,242		—		3,242		—		3,242




Investment securities	9,453,297		2,613,830		6,608,452		231,015		9,453,297
Federal funds sold	3,000		3,000		—		—		3,000
Securities purchased under agreements to resell	625,000		—		—		622,021		622,021
Interest earning deposits with banks	2,624,553		2,624,553		—		—		2,624,553
Cash and due from banks	748,357		748,357		—		—		748,357
Derivative instruments	62,648		—		62,555		93		62,648
Assets held in trust for deferred compensation plan	21,849		21,849		—		—		21,849
Total	$	30,762,049	$	6,011,589	$	6,674,249	$	17,446,381	$	30,132,219
Financial Liabilities
Non-interest bearing deposits	$	8,150,669	$	8,150,669	$	—	$	—	$	8,150,669
Savings, interest checking and money market deposits	14,754,571		14,754,571		—		—		14,754,571
Certificates of deposit	2,388,404		—		—		2,409,537		2,409,537
Federal funds purchased	123,715		123,715		—		—		123,715
Securities sold under agreements to repurchase	2,803,043		—		—		2,806,428		2,806,428

Derivative instruments	26,963		—		26,905		58		26,963
Liabilities held in trust for deferred compensation plan	21,849		21,849		—		—		21,849
Total	$	28,269,214	$	23,050,804	$	26,905	$	5,216,023	$	28,293,732

17. Legal and Regulatory Proceedings

The Company has various legal proceedings pending at March 31, 2025, arising in the normal course of business. While some matters pending against the Company specify damages claimed by plaintiffs, others do not seek a specified amount of damages or are at early stages of the legal process. The Company records a loss accrual for all legal and regulatory matters for which it deems a loss is probable and can be reasonably estimated. Some matters, which are in the early stages, have not yet progressed to the point where a loss amount can be determined to be probable and estimable.

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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and with the statistical information and financial data appearing in this report as well as the Company's 2024 Annual Report on Form 10-K. Results of operations for the three months ended March 31, 2025 are not necessarily indicative of results to be attained for any other period.

Forward-Looking Information

This report may contain "forward-looking statements" that are subject to risks and uncertainties and include information about possible or assumed future results of operations. Many possible events or factors could affect the future financial results and performance of the Company. This could cause results or performance to differ materially from those expressed in the forward-looking statements. Words such as "expects", "anticipates", "believes", "estimates", variations of such words and other similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, such forward-looking statements. Readers should not rely solely on the forward-looking statements and should consider all uncertainties and risks discussed throughout this report. Forward-looking statements speak only as of the date they are made. The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events. Such possible events or factors include: changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, governmental legislation and regulation, fluctuations in interest rates, changes in liquidity requirements, demand for loans in the Company's market area, changes in accounting and tax principles, estimates made on income taxes, competition with other entities that offer financial services, cybersecurity threats, and such other factors as discussed in Part I Item 1A - "Risk Factors" and Part II Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 2024 Annual Report on Form 10-K. During the quarter ended March 31, 2025, there were no material changes to the Risk Factors disclosed in the Company's 2024 Annual Report on Form 10-K.

Critical Accounting Estimates and Related Policies

The Company has identified certain policies as being critical because they require management to make particularly difficult, subjective and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These estimates and related policies are the Company's allowance for credit losses and fair value measurement policies. A discussion of these estimates and related policies can be found in the sections captioned "Critical Accounting Policies" and "Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments" in Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's 2024 Annual Report on Form 10-K. There have been no changes in the Company's application of critical accounting policies since December 31, 2024.

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Selected Financial Data


	Three Months Ended March 31
		2025			2024
Per Share Data
Net income per common share — basic		$	.98		$	.82	*
Net income per common share — diluted		.98			.82		*
Cash dividends on common stock		.275			.257		*
Book value per common share		26.19			21.62		*
Market price		62.23			50.67		*
Selected Ratios
(Based on average balance sheets)
Loans to deposits (1)		69.38		%	69.87		%
Non-interest bearing deposits to total deposits		29.36			29.97
Equity to loans (1)		19.56			17.24
Equity to deposits		13.57			12.05
Equity to total assets		10.71			9.61
Return on total assets		1.69			1.48

Return on equity		15.82			15.39
(Based on end-of-period data)
Non-interest income to revenue (2)		37.13			37.41
Efficiency ratio (3)		55.61			61.67
Tier I common risk-based capital ratio		16.86			15.35
Tier I risk-based capital ratio		16.86			15.35
Total risk-based capital ratio		17.65			16.11
Tangible common equity to tangible assets ratio (4)		10.33			9.24
Tier I leverage ratio		12.29			11.75

* Restated for the 5% stock dividend distributed in December 2024.

(1) Includes loans held for sale.

(2) Revenue includes net interest income and non-interest income.

(3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

(4) The tangible common equity to tangible assets ratio is a measurement which management believes is a useful indicator of capital adequacy and utilization.

It provides a meaningful basis for period to period and company to company comparisons, and also assists regulators, investors and analysts in analyzing the financial position of the Company. Tangible common equity and tangible assets are non-GAAP measures and should not be viewed as substitutes for, or superior to, data prepared in accordance with GAAP.

The following table is a reconciliation of the GAAP financial measures of total equity and total assets to the non-GAAP measures of total tangible common equity and total tangible assets.


	March 31
(Dollars in thousands)	2025			2024
Total equity	$	3,498,402		$	2,963,889
Less non-controlling interest	20,615			19,913

Less goodwill	146,539			146,539
Less intangible assets*	3,825			4,005
Total tangible common equity (a)	$	3,327,423		$	2,793,432
Total assets	$	32,364,964		$	30,372,108
Less goodwill	146,539			146,539
Less intangible assets*	3,825			4,005
Total tangible assets (b)	$	32,214,600		$	30,221,564
Tangible common equity to tangible assets ratio (a)/(b)	10.33		%	9.24		%

* Intangible assets other than mortgage servicing rights.

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Results of Operations

Summary


	Three Months Ended March 31				Increase (Decrease)
(Dollars in thousands)	2025		2024			Amount		% change
Net interest income (expense)	$	269,102	$	248,999		$	20,103	8.1	%
Provision for credit losses	(14,487)		(4,787)			9,700		202.6
Non-interest income	158,949		148,848			10,101		6.8
Investment securities gains (losses), net	(7,591)		(259)			(7,332)		N.M.
Non-interest expense	(238,376)		(245,697)			(7,321)		(3.0)
Income taxes	(36,964)		(31,652)			5,312		16.8
Non-controlling interest income (expense)	959		(2,789)			(3,748)		N.M.
Net income attributable to Commerce Bancshares, Inc.	$	131,592	$	112,663		$	18,929	16.8	%

For the quarter ended March 31, 2025, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $131.6 million, an increase of $18.9 million, or 16.8%, compared to the first quarter of the previous year. For the current quarter, the annualized return on average assets was 1.69%, the annualized return on average equity was 15.82%, and the efficiency ratio was 55.61%. Diluted earnings per common share was $.98 per share in the current quarter, an increase of 19.5% compared to $.82 per share in the first quarter of 2024, and a decrease compared to $1.01 per share in the previous quarter.

Compared to the first quarter of last year, net interest income increased $20.1 million, or 8.1%, mainly due to increases in interest income on investment securities and securities purchased under agreements to resell ("resale agreements") of $10.5 million and $5.8 million, respectively. In addition to the increase in interest income, interest expense on deposits decreased $9.2 million and interest expense on borrowings decreased $5.2 million. The provision for credit losses increased $9.7 million, compared to the same quarter in the prior year due to an increase in the estimate of allowance for credit losses on loans. Non-interest income increased $10.1 million, or 6.8%, compared to the first quarter of 2024, mainly due to an increase in trust fees, deposit account fees, and capital market fees. Net losses on investment securities totaled $7.6 million in the current quarter compared to net losses of $259 thousand in the same quarter of last year. Securities losses in the current quarter primarily resulted from net losses in fair value of $8.5 million recorded on private equity investment which were partly offset by net gains of $1.0 million on sales of private equity securities. Non-interest expense decreased $7.3 million, or 3.0%, over the first quarter of 2024, mainly due to non-recurring litigation settlement expense and an FDIC special assessment accrual adjustment during the prior year, partly offset by higher marketing expense, professional and other services expense, salaries expense, and data processing and software expense.

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Net Interest Income

The following table summarizes the changes in net interest income on a fully taxable-equivalent basis, by major category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates. Changes not solely due to volume or rate are allocated to rate.

Analysis of Changes in Net Interest Income


	Three Months Ended March 31, 2025 vs. 2024
	Change due to
(In thousands)	Average Volume		Average Rate		Total
Interest income, fully taxable equivalent basis:
Loans:
Business	$	3,637	$	(5,711)	$	(2,074)
Real estate - construction and land	(1,185)		(4,083)		(5,268)
Real estate - business	(923)		(3,903)		(4,826)
Real estate - personal	143		2,227		2,370
Consumer	(2)		342		340
Revolving home equity	695		(433)		262
Consumer credit card	(82)		(1,021)		(1,103)
Overdrafts	—		—		—
Total interest on loans	2,283		(12,582)		(10,299)
Loans held for sale	(31)		14		(17)
Investment securities:
U.S. government and federal agency securities	8,900		12,761		21,661
Government-sponsored enterprise obligations	(2)		(1)		(3)
State and municipal obligations	(2,557)		110		(2,447)
Mortgage-backed securities	(6,017)		(1,456)		(7,473)
Asset-backed securities	(2,530)		4,246		1,716
Other securities	1,982		(5,097)		(3,115)
Total interest on investment securities	(224)		10,563		10,339
Federal funds sold	25		(6)		19
Securities purchased under agreements to resell	2,132		3,652		5,784
Interest earning deposits with banks	6,082		(6,265)		(183)
Total interest income	10,267		(4,624)		5,643
Interest expense:
Deposits:
Savings	(6)		(22)		(28)
Interest checking and money market	3,431		(6,580)		(3,149)
Certificates of deposit of less than $100,000	509		(1,768)		(1,259)
Certificates of deposit of $100,000 and over	(2,467)		(2,310)		(4,777)
Total interest on deposits	1,467		(10,680)		(9,213)
Federal funds purchased	(2,671)		(364)		(3,035)
Securities sold under agreements to repurchase	1,787		(4,001)		(2,214)
Other borrowings	2		(1)		1
Total interest expense	585		(15,046)		(14,461)
Net interest income, fully taxable-equivalent basis	$	9,682	$	10,422	$	20,104

Net interest income in the first quarter of 2025 was $269.1 million, an increase of $20.1 million over the first quarter of 2024. On a fully taxable-equivalent (FTE) basis, net interest income totaled $271.4 million in the first quarter of 2025, up $20.1 million over the same period last year and up $2.5 million over the previous quarter. The increase in net interest income

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compared to the first quarter of 2024 was mainly due to higher interest income earned on investment securities (FTE) of $10.3 million and lower deposit interest expense of $9.2 million, partly offset by lower interest income earned on loans (FTE) of $10.3 million. The increase in total interest earned on investment securities (FTE) was mainly the result of higher average rates earned, while the decrease in deposit interest expense was due to lower average rates paid, slightly offset by higher average balances. Interest income on loans (FTE) decreased mainly due to lower average rates earned, partly offset by higher average business loan balances. The Company's net yield on earning assets (FTE) was 3.56% in the current quarter compared to 3.33% in the first quarter of 2024.

Total interest income (FTE) increased $5.6 million over the first quarter of 2024. Interest income on loans (FTE) was $255.9 million during the first quarter of 2025, a decrease of $10.3 million, or 3.9%, from the same quarter last year. The decrease in loan interest income from the same quarter of last year was primarily due to a decrease of 25 basis points in the average rate earned, partly offset by growth of $162.6 million, or 1.0%, in average loan balances. Most of the decrease in interest income occurred in the construction and land, business real estate and business loan categories. The largest decrease to interest income occurred in construction and land loan interest, which declined $5.3 million due to a 110 basis point decrease in the average rate earned, coupled with a decline in average balances of $57.2 million, or 3.9%. Business real estate loan interest income decreased $4.8 million due to a decrease of 38 basis points in the average rate earned and lower average balances of $59.8 million, or 1.6%. Business loan interest income declined $2.1 million due to a 32 basis point decrease in the average rate earned, partly offset by higher average balances of $232.7 million, or 4.0%. Consumer credit card loan interest income declined $1.1 million mainly due to a 62 basis point decrease in the average rate earned. These decreases in interest income were partly offset by an increase in personal real estate loan interest income of $2.4 million due to a 33 basis point increase in the average rate earned and growth of $14.7 million in average loan balances.

Interest income on investment securities (FTE) was $77.0 million during the first quarter of 2025, which was an increase of $10.3 million over the same quarter last year. The increase in interest income occurred mainly in interest earned on U.S. government and federal agency securities which grew $21.7 million due to a $1.7 billion increase in average balances and a 201 basis point increase in the average rate earned. A portion of the increase in interest earned on U.S. government securities was interest related to the Company's U.S. Treasury inflation-protected securities, which are tied to the non-seasonally adjusted Consumer Price Index (CPI-U). Interest earned on these securities increased $1.6 million over the same quarter last year. Interest income earned on asset-backed securities grew $1.7 million due to a 107 basis point increase in the average rate earned, partly offset by a decrease in average balances of $429.3 million, or 20.6%. These increases to interest income were partly offset by a decline in interest income on mortgage-backed securities of $7.5 million, driven by lower average balances of $1.1 billion, or 18.9%, and a decline of 11 basis points in the average rate earned. In addition, the Company recorded a $539 thousand adjustment to premium amortization at March 31, 2025, which increased interest income and reflected slower forward prepayment speed estimates on mortgage-backed securities. This increase was lower than the $2.0 million adjustment increasing income in the same quarter last year. Interest income earned on state and municipal obligations declined $2.4 million mainly due to a $526.4 million, or 39.6%, decrease in average balances. Interest earned on other securities decreased $3.1 million mainly driven by dividend payments of $3.4 million from the Company's private equity investments recorded in 2024. Additionally, the average rate earned on investment securities during the three months ended March 31, 2025 increased 54 basis points over the same period in the prior year. The average balance of the total investment portfolio (excluding unrealized fair value adjustments on available for sale debt securities) was $10.5 billion in the first quarter of 2025, compared to $11.0 billion in the first quarter of 2024.

Interest income on securities purchased under agreements to resell increased $5.8 million over the same quarter last year, due to an increase of 188 basis points in the average rate earned and growth of $448.0 million in the average balance. Interest income on deposits at the Federal Reserve decreased $183 thousand mainly due to a decline of 102 basis points in average rate earned, mostly offset by an increase of $450.1 million in the average balance.

The average fully taxable-equivalent yield on total interest earning assets was 4.81% in the first quarter of 2025, up from 4.78% in the first quarter of 2024.

Total interest expense decreased $14.5 million compared to the first quarter of 2024 due to decreases of $9.2 million in interest expense on interest bearing deposits and $5.2 million in interest expense on borrowings. The decrease in deposit interest expense resulted mainly from a decrease of $6.0 million in interest expense on certificates of deposit due to a 59 basis point decline in the average rate paid and a decrease of $216.6 million, or 8.4%, in average balances. Interest expense on interest checking and money market deposit accounts decreased $3.1 million due to a 17 basis point decrease in average rates paid, partly offset by an increase of $691.6 million, or 5.2%, in average balances. The overall rate paid on total deposits decreased 25 basis points from the same quarter last year. Interest expense on federal funds purchased decreased $3.0 million due to lower average balances of $199.9 million and a 105 basis point decline in the average rate paid. Interest expense on customer repurchase agreements decreased $2.2 million due to a 57 basis point decline in the average rate paid, partly offset by

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growth of $211.3 million in the average balance. The overall average rate incurred on all interest bearing liabilities was 1.89% and 2.21% in the first quarters of 2025 and 2024, respectively.

Summaries of average assets and liabilities and the corresponding average rates earned/paid appear on the last page of this discussion.

Non-Interest Income


	Three Months Ended March 31						Increase (Decrease)
(Dollars in thousands)	2025			2024			Amount		% change
Trust fees	$	56,592		$	51,105		$	5,487	10.7	%
Bank card transaction fees	45,593			46,930			(1,337)		(2.8)
Deposit account charges and other fees	26,622			24,151			2,471		10.2
Capital market fees	5,112			3,892			1,220		31.3
Consumer brokerage services	4,785			4,408			377		8.6
Loan fees and sales	3,404			3,141			263		8.4
Other	16,841			15,221			1,620		10.6
Total non-interest income	$	158,949		$	148,848		$	10,101	6.8	%
Non-interest income as a % of total revenue*	37.1		%	37.4		%

* Total revenue includes net interest income and non-interest income.

The table below is a summary of net bank card transaction fees for the three month periods ended March 31, 2025 and 2024.


	Three Months Ended March 31
(Dollars in thousands)	2025		2024		$ change		% change
Net debit card fees	$	10,288	$	10,405	$	(117)	(1.1)	%
Net credit card fees	3,608		3,772		(164)		(4.3)
Net merchant fees	5,767		5,247		520		9.9
Net corporate card fees	25,930		27,506		(1,576)		(5.7)
Total bank card transaction fees	$	45,593	$	46,930	$	(1,337)	(2.8)	%

For the first quarter of 2025, total non-interest income amounted to $158.9 million compared to $148.8 million in the same quarter last year, which was an increase of $10.1 million, or 6.8%. The increase was mainly due to higher trust fees, deposit account fees, capital market fees and other income. Trust fees increased $5.5 million, or 10.7%, mainly due to growth of $5.1 million in private client trust fees. Bank card transaction fees for the current quarter declined $1.3 million, or 2.8%, from the same period last year. Net corporate card fees declined $1.6 million mainly due to lower interchange income, partly offset by lower rewards expense. Net merchant fees increased $520 thousand mainly due to higher fees and lower network expense. Net credit and debit card fees decreased $164 thousand and $117 thousand, respectively, mainly due to lower interchange fees. Compared to the first quarter of last year, deposit account fees increased $2.5 million, or 10.2%, mainly due to higher corporate cash management fees of $2.6 million. Capital market fees increased $1.2 million, or 31.3%, mainly due to higher underwriting and trading securities income, while consumer brokerage fees increased $377 thousand, or 8.6%, mainly due to higher advisory fees. Other non-interest income increased $1.6 million, or 10.6%, mainly due to an increase of $2.4 million in gains on the sales of assets, partly offset by a decrease of $538 thousand in fair value adjustments recorded on the Company's deferred compensation plan, which is held in a trust and recorded as both an asset and liability, affecting both other income and other expense.

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Investment Securities Gains (Losses), Net


	Three Months Ended March 31
(In thousands)	2025		2024
Net gains (losses) on sales of available for sale debt securities	$	4	$	(8,470)


Net gains (losses) on equity securities	(97)		142
Net gains (losses) on sales of private equity investments	1,027		969
Fair value adjustments on private equity investments	(8,525)		7,100



Total investment securities gains (losses), net	$	(7,591)	$	(259)

Net gains and losses on investment securities, which were recognized in earnings during the three months ended March 31, 2025 and 2024, are shown in the table above. Net securities losses of $7.6 million were reported in the first quarter of 2025, compared to net losses of $259 thousand in the same period last year. The net losses in the first quarter of 2025 were mainly comprised of net losses in fair value of $8.5 million recorded on private equity investments, partly offset by net gains of $1.0 million on sales of private equity investments. The net losses on investment securities for the same quarter last year were primarily comprised of net losses of $8.5 million realized on the sale of available for sale securities, mostly offset by net gains in fair value of $7.1 million and a gain of $969 thousand on the sale of an investment, both in the Company's private equity investment portfolio. The portion of private equity activity attributable to minority interests is reported as non-controlling interest in the consolidated statements of income and resulted in income of $1.5 million during the first three months of 2025 and expense of $1.5 million during the first three months of 2024.

Non-Interest Expense


	Three Months Ended March 31				Increase (Decrease)
(Dollars in thousands)	2025		2024		Amount		% change
Salaries and employee benefits	$	153,078	$	151,801	$	1,277	.8	%
Data processing and software	32,238		31,153		1,085		3.5
Net occupancy	14,020		13,574		446		3.3
Professional and other services	10,026		8,648		1,378		15.9
Marketing	5,843		4,036		1,807		44.8
Equipment	5,248		5,010		238		4.8
Supplies and communication	5,046		4,744		302		6.4
Deposit insurance	3,744		8,017		(4,273)		(53.3)
Other	9,133		18,714		(9,581)		(51.2)
Total non-interest expense	$	238,376	$	245,697	$	(7,321)	(3.0)	%

Non-interest expense for the first quarter of 2025 amounted to $238.4 million, a decrease of $7.3 million, or 3.0%, compared to expense of $245.7 million in the first quarter of last year. The decrease in expense from the same period last year was mainly due to lower deposit insurance expense and litigation settlement expense, partly offset by higher marketing expense, professional and other services expense, salaries expense and data processing and software expense. Salaries and employee benefits expense increased $1.3 million, or .8%, mainly due to higher incentive compensation expense of $811 thousand and full-time salaries expense of $578 thousand, partly offset by lower medical expense of $970 thousand. Full-time equivalent employees totaled 4,662 at March 31, 2025, compared to 4,721 at March 31, 2024. Data processing and software expense increased $1.1 million, or 3.5%, mainly due to higher costs for service providers and software. Net occupancy increased $446 thousand, 3.3%, mainly due to higher demolition costs. Professional and other services expense increased $1.4 million, or 15.9%, and marketing expense increased $1.8 million, or 44.8%. Deposit insurance expense decreased $4.3 million due to a $4.0 million accrual adjustment recorded in 2024 for a one-time FDIC special assessment to replenish the Deposit Insurance Fund. Other non-interest expense decreased $9.6 million, or 51.2%, mainly due to a $10.0 million litigation settlement recorded in 2024 that did not reoccur.

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Provision and Allowance for Credit Losses on Loans and Liability for Unfunded Lending Commitments


	Three Months Ended
(In thousands)	Mar. 31, 2025		Dec. 31, 2024		Mar. 31, 2024
ALLOWANCE FOR CREDIT LOSSES ON LOANS


Balance at beginning of period	$	162,742	$	160,839	$	162,395
Provision for credit losses on loans	15,095		12,557		6,947
Net loan charge-offs (recoveries):
Commercial:
Business	46		335		23
Real estate-construction and land	—		—		—
Real estate-business	377		50		(141)
Commercial net loan charge-offs (recoveries)	423		385		(118)
Personal Banking:
Real estate-personal	72		8		24
Consumer	2,852		3,237		1,983
Revolving home equity	(3)		(3)		(4)
Consumer credit card	6,967		6,557		6,435
Overdrafts	495		470		557
Personal banking net loan charge-offs (recoveries)	10,383		10,269		8,995
Total net loan charge-offs (recoveries)	10,806		10,654		8,877
Balance at end of period	$	167,031	$	162,742	$	160,465
LIABILITY FOR UNFUNDED LENDING COMMITMENTS


Balance at beginning of period	$	18,935	$	17,984	$	25,246
Provision for credit losses on unfunded lending commitments	(608)		951		(2,160)
Balance at end of period	18,327		18,935		23,086
ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LIABILITY FOR UNFUNDED LENDING COMMITMENTS	$	185,358	$	181,677	$	183,551


	Three Months Ended
	Mar. 31, 2025		Dec. 31, 2024		Mar. 31, 2024
Annualized net loan charge-offs (recoveries)*:
Commercial:
Business	—	%	.02	%	—	%
Real estate-construction and land	—		—		—
Real estate-business	.04		.01		(.02)
Commercial net loan charge-offs (recoveries)	.02		.01		—
Personal Banking:
Real estate-personal	.01		—		—
Consumer	.56		.62		.38
Revolving home equity	—		—		—
Consumer credit card	5.04		4.59		4.60
Overdrafts	34.26		33.22		29.11
Personal banking net loan charge-offs (recoveries)	.70		.67		.60
Total annualized net loan charge-offs (recoveries)	.25	%	.25	%	.21	%

* as a percentage of average loans (excluding loans held for sale)

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The following schedule provides a breakdown of the allowance for credit losses on loans (ACL) by loan class and the percentage of the allowance for credit losses to the related loan class at period end.


(Dollars in thousands)	Mar. 31, 2025				Dec. 31, 2024				Mar. 31, 2024
	Credit Loss Allowance Allocation		% of ACL to Loan Category		Credit Loss Allowance Allocation		% of ACL to Loan Category		Credit Loss Allowance Allocation		% of ACL to Loan Category
Business	$	45,669	.73	%	$	43,826	.72	%	$	43,810	.73	%
RE — construction and land	29,284		2.06		30,164		2.14		31,437		2.10
RE — business	31,747		.87		32,779		.90		30,217		.81
RE — personal	13,475		.44		11,632		.38		12,266		.40
Consumer	14,967		.71		11,772		.57		11,849		.56
Revolving home equity	1,857		.52		1,707		.48		1,801		.56

Consumer credit card	29,904		5.26		30,717		5.15		28,940		5.13
Overdrafts	128		4.09		145		1.29		145		.30

Total	$	167,031	.96	%	$	162,742	.95	%	$	160,465	.93	%

To determine the amount of the allowance for credit losses on loans and the liability for unfunded lending commitments, the Company has an established process which assesses the risks and losses expected in its portfolios. This process provides an allowance based on estimates of allowances for pools of loans and unfunded lending commitments, as well as a second, smaller component based on certain individually evaluated loans and unfunded lending commitments. The Company's policies and processes for determining the allowance for credit losses on loans and the liability for unfunded lending commitments are discussed in Note 1 to the consolidated financial statements and in the " Allowance for Credit Losses" discussion within Critical Accounting Estimates and Related Policies in Item 7 of the 2024 Annual Report on Form 10-K.

Net loan charge-offs in the first quarter of 2025 amounted to $10.8 million, compared to $10.7 million in the prior quarter and $8.9 million in the first quarter of last year. Comp ared to the same period last year, total net loan charge-offs in the first quarter of 2025 increased $1.9 million and increased $152 thousand over the previous quarter. The increase over the prior year was mainly driven by increases of $869 thousand, $532 thousand, and $518 thousand in consumer, consumer credit card, and business real estate loan net charge-offs, respectively. The increase over the previous quarter was driven by increases in net charge-offs on consumer credit card and business real estate loans, largely offset by decreases in net charge-offs on consumer and business loans.

For the three months ended March 31, 2025, annualized net charge-offs on average consumer credit card loans were 5.04%, compared to 4.59% in the previous quarter and 4.60% in the same period last year. Consumer loan annualized net charge-offs in the current quarter amounted to .56%, compared to .62% in the prior quarter and .38% in the same period last year. In the first quarter of 2025 , total annualized net loan charge-offs were .25%, compared to .25% in the previous quarter and .21% in the same period last year.

For the three months ended March 31, 2025, the provision for credit losses on loans was $15.1 million, which was an $8.1 million increase over the $6.9 million provision recorded in the same period last year. The increase resulted from the provision recorded for the first three months of 2024 including a reduction of the allowance for credit losses on loans, while the provision for credit losses in the first three months of 2025 includes an increase in the allowance for credit losses on loans. The provision for credit losses on loans for the three months ended March 31, 2025 increased $2.5 million increase over the $12.6 million provision recorded for the three months ending December 31, 2024. Changes in the provision are driven by changes in the estimate for the allowance for credit losses on loans.

At March 31, 2025, the allowance for credit losses on loans increased by $4.3 million, compared to the allowance for credit losses on loans at December 31, 2024. The forecast utilized to estimate the allowance for credit losses at March 31, 2025 reflected a slight decline in key macroeconomic variables, causing the allowance to increase. In the commercial loan portfolio, the increase in the allowance related to the decline in forecast variables was mostly offset by improvements in the volume of loans classified as substandard or requiring additional qualitative factors due to the type of industry. The allowance for the personal banking loan portfolio increased $4.4 million compared to December 31, 2024 due to the changes in the forecast assumptions, in addition to lower prepayment speeds in the personal real estate loan portfolio and increased loss experience in the consumer loan portfolio, partially offset by decreases in outstanding loan balances in the consumer credit card portfolio. The allowance for credit losses on loans was $167.0 million at March 31, 2025 and was .96%, .95% and .93% of total loans at March 31, 2025, December 31, 2024 and March 31, 2024, respectively.

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In the current quarter, the provision for credit losses on unfunded lending commitments was a benefit of $608 thousand, compared to a benefit of $2.2 million for the three months ended March 31, 2024. At March 31, 2025, the liability for unfunded lending commitments was $18.3 million, compared to $18.9 million at December 31, 2024 and $23.1 million at March 31, 2024. The liability decreased primarily due to decreases in unfunded lending commitment balances, coupled with improvement in loss rate assumptions for the Company's construction loans. The Company's unfunded lending commitments primarily relate to construction loans, and the Company's estimate for credit losses in its unfunded lending commitments utilizes the same model and forecast as its estimate for credit losses on loans. See Note 2 for further discussion of the model inputs utilized in the Company's estimate of credit losses.

The Company considers the allowance for credit losses on loans and the liability for unfunded commitments adequate to cover losses expected in the loan portfolio, including unfunded commitments, at March 31, 2025.

The allowance for credit losses on loans and the liability for unfunded lending commitments are estimates that require significant judgment including projections of the macro-economic environment. The Company utilizes a third-party macro-economic forecast that continuously changes due to economic conditions and events. These changes in the forecast cause fluctuations in the allowance for credit losses on loans and the liability for unfunded lending commitments. The Company uses judgment to assess the macro-economic forecast and internal loss data in estimating the allowance for credit losses on loans and the liability for unfunded lending commitments. These estimates are subject to periodic refinement based on changes in the underlying external and internal data.

Risk Elements of Loan Portfolio

The following table presents non-performing assets and loans which are past due 90 days and still accruing interest. Non-performing assets include non-accruing loans and foreclosed real estate. Loans are placed on non-accrual status when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment. Loans that are 90 days past due as to principal and/or interest payments are generally placed on non-accrual, unless they are both well-secured and in the process of collection, or they are personal banking loans that are exempt under regulatory rules from being classified as non-accrual.


(Dollars in thousands)	March 31, 2025			December 31, 2024







Non-accrual loans	$	22,603		$	18,278
Foreclosed real estate	642			343
Total non-performing assets	$	23,245		$	18,621
Non-performing assets as a percentage of total loans	.13		%	.11		%
Non-performing assets as a percentage of total assets	.07		%	.06		%








Total loans past due 90 days and still accruing interest	$	19,417		$	24,516

Non-accrual loans totaled $22.6 million at March 31, 2025, an increase of $4.3 million from the balance at December 31, 2024. The increase occurred mainly in business real estate non-accrual loans, which increased $3.4 million, as well as business non-accrual loans, which increased $1.0 million. At March 31, 2025, non-accrual loans were comprised of business real estate (81.0%), revolving home equity (8.7%), business (4.9%), personal real estate (4.4%), and construction and land (1.0%) loans. Foreclosed real estate totaled $642 thousand at March 31, 2025, an increase of $299 thousand compared to December 31, 2024. Total loans past due 90 days or more and still accruing interest totaled $19.4 million as of March 31, 2025, a decrease of $5.1 million from December 31, 2024. Balances by class for non-accrual loans and loans past due 90 days and still accruing interest are shown in the "Delinquent and non-accrual loans" section in Note 2 to the consolidated financial statements.

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In addition to the non-performing and past due loans mentioned above, the Company also has identified loans for which management has concerns about the ability of the borrowers to meet existing repayment terms. They are classified as substandard under the Company's internal rating system. The loans are generally secured by either real estate or other borrower assets, reducing the potential for loss should they become non-performing. Although these loans are generally identified as potential problem loans, they may never become non-performing. Such loans totaled $286.9 million at March 31, 2025 compared to $330.3 million at December 31, 2024, resulting in a decrease of $43.5 million, or 13.2%.


(In thousands)	March 31, 2025		December 31, 2024
Potential problem loans:
Business	$	127,854	$	131,527
Real estate – construction and land	2,824		2,662
Real estate – business	156,120		196,030
Real estate – personal	66		96

Total potential problem loans	$	286,864	$	330,315

When borrowers are experiencing financial difficulty, the Company may agree to modify the contractual terms of a loan to a borrower in order to assist the borrower in repaying principal and interest owed to the Company. At March 31, 2025, the Company held $136.3 million of loans that had been modified during the three months ended March 31, 2025. These loans are further discussed in the "Modifications for borrowers experiencing financial difficulty" section in Note 2 to the consolidated financial statements.

Loans with Special Risk Characteristics

Management relies primarily on an internal risk rating system, in addition to delinquency status, to assess risk in the loan portfolio, and these statistics are presented in Note 2 to the consolidated financial statements. However, certain types of loans are considered at high risk of loss due to their terms, location, or special conditions. Additional information about the major types of loans in these categories and their risk features are provided below. Information based on loan-to-value (LTV) ratios was generally calculated with valuations at loan origination date. The Company normally obtains an updated appraisal or valuation at the time a loan is renewed or modified, or if the loan becomes significantly delinquent or is in the process of being foreclosed upon.

Real Estate – Construction and Land Loans

The Company's portfolio of construction and land loans, as shown in the table below, amounted to 8.2% of total loans outstanding at March 31, 2025. The largest component of construction and land loans was commercial construction, which increased $18.6 million during the three months ended March 31, 2025. At March 31, 2025, multi-family residential construction loans totaled approximately $585.7 million, or 48.2%, of the commercial construction loan portfolio, compared to $526.6 million, or 44.0%, at December 31, 2024.


(Dollars in thousands)	March 31, 2025		% of Total		% of Total Loans		December 31, 2024		% of Total		% of Total Loans
Commercial construction	$	1,215,869	85.7	%	7.0	%	$	1,197,278	84.9	%	7.0	%
Residential construction	102,993		7.3		.6		106,884		7.6		.6
Residential land and land development	64,251		4.4		.4		65,342		4.6		.4
Commercial land and land development	36,459		2.6		.2		40,397		2.9		.2
Total real estate - construction and land loans	$	1,419,572	100.0	%	8.2	%	$	1,409,901	100.0	%	8.2	%

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Real Estate – Business Loans

Total business real estate loans were $3.6 billion at March 31, 2025 and comprised 20.9% of the Company's total loan portfolio. These loans include properties such as manufacturing and warehouse buildings, small office and medical buildings, churches, hotels and motels, shopping centers, and other commercial properties. At March 31, 2025, 34.5% of business real estate loans were for owner-occupied real estate properties, which have historically resulted in lower net charge-off rates than non-owner-occupied commercial real estate loans.


(Dollars in thousands)	March 31, 2025		% of Total		% of Total Loans		December 31, 2024		% of Total		% of Total Loans
Owner-occupied	$	1,252,580	34.5	%	7.2	%	$	1,237,265	33.8	%	7.2	%
Office	525,276		14.5		3.0		520,715		14.2		3.0
Industrial	510,597		14.1		2.9		485,250		13.3		2.8
Hotels	297,253		8.2		1.7		334,479		9.1		1.9
Multi-family	284,761		7.8		1.6		310,806		8.5		1.8
Retail	307,694		8.5		1.8		309,431		8.5		1.8
Farm	195,233		5.4		1.1		189,794		5.2		1.1
Senior living	153,036		4.2		.9		183,695		5.0		1.1
Other	102,205		2.8		.7		89,783		2.4		.6
Total real estate - business loans	$	3,628,635	100.0	%	20.9	%	$	3,661,218	100.0	%	21.3	%

Information about the credit quality of the Company's business real estate loan portfolio as of March 31, 2025 and December 31, 2024 is provided in the table below.


(Dollars in thousands)	Pass		Special Mention		Substandard		Non-Accrual		Total
March 31, 2025
Owner-occupied	$	1,194,765	$	24,527	$	29,651	$	3,637	$	1,252,580
Office	467,222		—		58,054		—		525,276
Industrial	510,597		—		—		—		510,597
Hotels	283,382		—		13,871		—		297,253
Multi-family	258,813		15,000		10,948		—		284,761
Retail	307,694		—		—		—		307,694
Farm	191,714		365		3,154		—		195,233
Senior living	98,036		—		40,332		14,668		153,036
Other	99,384		2,821		—		—		102,205
Total	$	3,411,607	$	42,713	$	156,010	$	18,305	$	3,628,635
December 31, 2024
Owner-occupied	$	1,203,019	$	3,362	$	30,598	$	286	$	1,237,265
Office	451,189		11,980		57,546		—		520,715
Industrial	485,250		—		—		—		485,250
Hotels	334,479		—		—		—		334,479
Multi-family	299,825		10,981		—		—		310,806
Retail	308,730		—		701		—		309,431
Farm	185,998		642		3,154		—		189,794
Senior living	65,366		—		103,661		14,668		183,695
Other	89,577		206		—		—		89,783
Total	$	3,423,433	$	27,171	$	195,660	$	14,954	$	3,661,218

Revolving Home Equity Loans

The Company had $356.7 million in revolving home equity loans at March 31, 2025 that were collateralized by residential real estate. Most of these loans (93.3%) are written with terms requiring interest-only monthly payments. These loans are offered in three main product lines: LTV up to 80%, 80% to 90%, and 90% to 100%. As of March 31, 2025, the outstanding

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principal of loans with an original LTV higher than 80% was $30.0 million, or 8.6% of the portfolio, compared to $31.9 million as of December 31, 2024. Total revolving home equity loan balances over 30 days past due were $3.5 million at March 31, 2025 and $5.6 million at December 31, 2024, and the outstanding balance of revolving home equity loans on non-accrual status was $2.0 million at both March 31, 2025 and December 31, 2024. The weighted average FICO score for the total portfolio balance at March 31, 2025 is 774. At maturity, the accounts are re-underwritten, and if they qualify under the Company's credit, collateral and capacity policies, the borrower is given the option to renew the line of credit or convert the outstanding balance to an amortizing loan. If criteria are not met, amortization is required, or the borrower may pay off the loan. During the remainder of 2025 through 2027, approximately 14% of the Company's current outstanding balances are expected to mature. Of these balances, approximately 83% have a FICO score of 700 or higher. The Company does not expect a significant increase in losses as these loans mature, due to their high FICO scores, low LTVs, and low historical loss levels.

Consumer Loans

Within the consumer loan portfolio are several direct and indirect product lines, which include loans for the purchase of automobiles, motorcycles, marine and RVs. Auto loans comprised 36.6% of the consumer loan portfolio at March 31, 2025, and outstanding balances for auto loans were $774.3 million and $776.7 million at March 31, 2025 and December 31, 2024, respectively. The balances over 30 days past due amounted to $10.9 million at March 31, 2025 and $14.4 million at December 31, 2024, respectively, and comprised 1.4% of the outstanding balances of these loans at March 31, 2025 and 1.9% at December 31, 2024. For the three months ended March 31, 2025, $98.0 million of new auto loans were originated, compared to $101.2 million during the first three months of 2024. At March 31, 2025, the automobile loan portfolio had a weighted average FICO score of 755, and net charge-offs on auto loans were 1.1% of average auto loans.

The Company's consumer loan portfolio also includes fixed rate home equity loans, typically for home repair or remodeling, and these loans comprised 10.3% of the consumer loan portfolio at March 31, 2025. Losses on these loans have historically been low, and the Company saw net recoveries of $14 thousand for the first three months of 2025. Private banking loans comprised 37.3% of the consumer loan portfolio at March 31, 2025. The Company's private banking loans are generally well-collateralized, and at March 31, 2025 were secured primarily by assets held by the Company's trust department. The remaining portion of the Company's consumer loan portfolio is comprised of health services financing, motorcycles, marine and RV loans. Net charge-offs on private banking, health services financing, motorcycle and marine and RV loans totaled $823 thousand in the first three months of 2025 and were .3% of the average balances of these loans at March 31, 2025.

Consumer Credit Card Loans

The Company offers low promotional rates on selected consumer credit card products. Out of a portfolio at March 31, 2025 of $568.2 million in consumer credit card loans outstanding, approximately $120.3 million, or 21.2%, carried a low promotional rate. Within the next six months, $52.7 million of these loans are scheduled to convert to the ongoing higher contractual rate. To mitigate some of the risk involved with this credit card product, the Company performs credit checks and detailed analysis of the customer borrowing profile before approving the loan application. Management believes that the risks in the consumer loan portfolio are reasonable and the anticipated loss ratios are within acceptable parameters.


	March 31, 2025		December 31, 2024
FICO score:
Under 600	5.4	%	5.1	%
600 – 659	12.2		11.9
660 – 719	28.9		28.3
720 – 779	26.8		26.3
780 and over	26.7		28.4
Total	100.0	%	100.0	%

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Oil and Gas Energy Lending

The Company's energy lending portfolio is comprised of lending to the petroleum and natural gas sectors and totaled $322.4 million, or 1.9% of total loans at March 31, 2025, a decrease of $15.6 million from December 31, 2024, as shown in the table below.


(In thousands)	March 31, 2025		December 31, 2024		Unfunded commitments at March 31, 2025
Extraction	$	258,642	$	274,265	$	151,489
Mid-stream shipping and storage	28,246		36,801		102,091
Downstream distribution and refining	8,270		9,757		37,798
Support activities	27,290		17,226		9,684
Total energy lending portfolio	$	322,448	$	338,049	$	301,062

Shared National Credits

The Company participates in credits of large, publicly traded companies which are defined by regulation as shared national credits, or SNCs. Regulations define SNCs as loans exceeding $100 million that are shared by three or more financial institutions. The Company typically participates in these loans when business operations are maintained in the local communities or regional markets and opportunities to provide other banking services are present. The balance of SNC loans totaled $1.6 billion at both March 31, 2025 and December 31, 2024. Additional unfunded commitments at March 31, 2025 totaled $2.3 billion.

Income Taxes

Income tax expense was $37.0 million in the first quarter of 2025, compared to $36.6 million in the fourth quarter of 2024 and $31.7 million in the first quarter of 2024. The Company's effective tax rate, including the effect of non-controlling interest, was 21.9% in the first quarter of 2025, compared to 21.2% in the fourth quarter of 2024 and 21.9% in the first quarter of 2024.

Financial Condition

Balance Sheet

Total assets of the Company were $32.4 billion at March 31, 2025 and $32.0 billion at December 31, 2024. Earning assets (excluding the allowance for credit losses on loans and fair value adjustments on available for sale debt securities) amounted to $31.4 billion at March 31, 2025 and $30.9 billion at December 31, 2024, and consisted of 55% in loans and 33% in investment securities at March 31, 2025.

During the first quarter of 2025, average loans totaled $17.2 billion, an increase of $173.0 million, or 1.0%, over the prior quarter, and an increase of $162.6 million over the same quarter last year. Compared to the previous quarter, average balances of business loans and business real estate loans grew $143.0 million and $31.8 million, respectively. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $14.9 million, compared to $21.9 million in the prior quarter.

Total average available for sale debt securities increased $66.1 million over the previous quarter to $9.2 billion, at fair value. The increase in available for sale debt securities was mainly the result of higher average balances of U.S. government and federal agency obligations and other asset-backed securities, partly offset by lower average balances of mortgage-backed securities. During the first quarter of 2025, the unrealized loss on available for sale debt securities decreased $157.7 million to $832.9 million, at period end. Also, during the first quarter of 2025, purchases of available for sale debt securities totaled $507.7 million with a weighted average yield of approximately 4.74%, and maturities and pay downs of available for sale debt securities were $542.3 million. At March 31, 2025, the duration of the available for sale investment portfolio was 4.1 years, and maturities and pay downs of approximately $1.4 billion are expected to occur during the next 12 months.

Total average deposits decreased $83.7 million this quarter compared to the previous quarter. The decrease in deposits mostly resulted from declines of $165.6 million and $158.2 million in average balances of demand deposits and certificates of deposit, respectively, partly offset by higher interest checking and money market deposit average balances of $227.2 million. Compared to the previous quarter, total average commercial deposits declined $264.7 million, while wealth and consumer average deposits grew $145.7 million and $82.2 million, respectively. The average loans to deposits ratio was 69.4% in the

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current quarter and 68.5% in the prior quarter. The Company’s average borrowings, which included average customer repurchase agreements of $2.7 billion, increased $283.4 million to $2.9 billion at March 31, 2025.

Liquidity and Capital Resources

Liquidity Management

The Company’s most liquid assets include balances at the Federal Reserve Bank, federal funds sold, and available for sale debt securities, as follows:


(In thousands)	March 31, 2025		March 31, 2024		December 31, 2024
Liquid assets:
Balances at the Federal Reserve Bank	$	2,756,521	$	1,609,614	$	2,624,553
Federal funds sold	—		—		3,000
Available for sale debt securities	9,264,947		9,141,695		9,136,853
Total	$	12,021,468	$	10,976,309	$	11,764,406

Interest earning balances at the Federal Reserve Bank, which have overnight maturities and are used for general liquidity purposes, totaled $2.8 billion at March 31, 2025 and increased $132.0 million from December 31, 2024. At March 31, 2025, the Company did not have a balance of federal funds sold, which are funds lent to the Company's correspondent bank customers with overnight maturities. The fair value of the available for sale debt portfolio was $9.3 billion at March 31, 2025 and included an unrealized net loss of $832.9 million. The total net unrealized loss included net losses of $743.8 million on mortgage-backed and asset-backed securities and $68.4 million on state and municipal obligations.

The Company's available for sale debt securities portfolio has a diverse mix of high quality and liquid investment securities with a duration of 4.1 years at March 31, 2025. Approximately $1.4 billion of the Company's available for sale debt portfolio is expected to mature or pay down during the next 12 months, and these funds offer substantial resources to meet either new loan demand or offset potential reductions in the Company's deposit funding base. The Company pledges portions of its investment securities portfolio to secure public fund deposits, securities sold under agreements to repurchase, trust funds, letters of credit issued by the FHLB, and borrowing capacity at the FHLB and the Federal Reserve Bank. Total investment securities pledged for these purposes were as follows:


(In thousands)	March 31, 2025		March 31, 2024		December 31, 2024
Investment securities pledged for the purpose of securing:
Federal Reserve Bank borrowings	$	686,733	$	1,990,347	$	840,771
FHLB borrowings and letters of credit	1,498,670		293,345		1,473,691
Securities sold under agreements to repurchase *	2,324,605		2,294,520		2,866,468
Other deposits and swaps	1,791,223		1,975,291		1,755,335
Total pledged securities	6,301,231		6,553,503		6,936,265
Unpledged and available for pledging	2,939,139		2,582,746		2,175,800
Ineligible for pledging	24,577		5,446		24,788
Total available for sale debt securities, at fair value	$	9,264,947	$	9,141,695	$	9,136,853

* Includes securities pledged for collateral swaps outstanding at each period end shown in the table.

The average loans to deposits ratio is a measure of a bank's liquidity, and the Company’s average loans to deposits ratio was 69.4% for the three months ended March 31, 2025. Core customer deposits, defined as non-interest bearing, interest checking, savings, and money market deposit accounts totaled $23.5 billion and represented 90.9% of the Company's total deposits at March 31, 2025. These core deposits are normally less volatile, as they are often with customer relationships tied to other products offered by the Company, promoting long lasting relationships and stable funding sources. Core deposits increased $588.3 million at March 31, 2025 compared to December 31, 2024, primarily due to increases in commercial and consumer deposits of $327.7 million and $149.6 million, respectively. While the Company considers core consumer and wealth management deposits less volatile, corporate deposits could decline if interest rates increase significantly, encouraging corporate customers to increase investing activities, or if the economy deteriorates and companies experience lower cash inflows, reducing deposit balances. If these corporate deposits decline, the Company's funding needs may be met by liquidity supplied by investment security maturities and pay downs expected to total $1.4 billion over the next year, as noted above. In addition, as shown in the table of collateral available for future advances below, the Company has borrowing capacity of $6.1 billion through advances from the FHLB and the Federal Reserve.

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The Company also holds securities sold under agreements to repurchase ("resale agreements") which are an additional source of liquidity. At March 31, 2025, the Company's resale agreements totaled $850.0 million and mature from 2028 through 2030. Under these agreements, the Company lends funds to upstream financial institutions and holds marketable securities, safe-kept by a third-party custodian, as collateral. This collateral totaled $875.2 million in fair value at March 31, 2025.

Certificates of deposit of $100,000 or greater totaled $1.4 billion at March 31, 2025. These deposits are normally considered more volatile and higher costing, and comprised 5.3% of total deposits at March 31, 2025.


(In thousands)	March 31, 2025		March 31, 2024		December 31, 2024
Core deposit base:
Non-interest bearing	$	7,518,243	$	7,513,464	$	8,150,669
Interest checking	8,247,769		6,811,384		7,301,288
Savings and money market	7,727,514		7,651,827		7,453,283
Total	$	23,493,526	$	21,976,675	$	22,905,240

During the third quarter of 2024, the Company issued $100.0 million of short-term brokered certificates of deposit, which all matured by December 31, 2024. The Company may occasionally issue brokered certificates of deposit to test the reliability of this potential funding source. While it is not clear how many brokered certificates of deposit the market would allow the Company to issue, the Company believes brokered certificates of deposits may be an additional, reliable source of liquidity during periods of stress in the banking industry.

Other important components of liquidity are the level of borrowings from third party sources and the availability of future credit. During 2025, the Company's outside borrowings have mainly been comprised of federal funds purchased and repurchase agreements, as follows:


(In thousands)	March 31, 2025		March 31, 2024		December 31, 2024
Borrowings:
Federal funds purchased	$	132,370	$	264,470	$	123,715
Securities sold under agreements to repurchase	2,267,666		2,241,106		2,803,043

Other debt	17,743		2,359		56
Total	$	2,417,779	$	2,507,935	$	2,926,814

Federal funds purchased, which totaled $132.4 million at March 31, 2025, are unsecured overnight borrowings obtained mainly from upstream correspondent banks with which the Company maintains approved lines of credit. At March 31, 2025, the Company had approved lines of credit totaling $4.1 billion. Since these borrowings are unsecured and limited by market trading activity, their availability may be less certain than collateralized sources of borrowings. Retail repurchase agreements are offered to customers wishing to earn interest in highly liquid balances and are used by the Company as a funding source considered to be stable, but short-term in nature. Repurchase agreements are collateralized by securities in the Company's investment portfolio. Total repurchase agreements at March 31, 2025 were comprised of non-insured customer funds totaling $2.3 billion, and securities pledged as collateral for these retail agreements totaled $2.3 billion at March 31, 2025. The Company also borrows on a secured basis through advances from the FHLB. The advances are generally short-term, fixed interest rate borrowings. There were no advances outstanding from the FHLB at March 31, 2025.

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The Company pledges certain assets, including loans and investment securities, to both the FRB and the FHLB as security to establish lines of credit and borrow from these entities. Based on the amount and type of collateral pledged, the FHLB establishes a collateral value from which the Company may draw advances against the collateral. Additionally, this collateral is used to enable the FHLB to issue letters of credit in favor of public fund depositors of the Company. The FRB also establishes a collateral value of assets pledged and permits borrowings from the discount window. The following table reflects the collateral value of assets pledged, borrowings, and letters of credit outstanding, in addition to the estimated future funding capacity available to the Company at March 31, 2025.


	March 31, 2025
(In thousands)	FHLB		Federal Reserve		Total
Total collateral value established by FHLB and FRB	$	3,345,701	$	2,823,169	$	6,168,870

Letters of credit issued	(114,050)		—		(114,050)
Available for future advances	$	3,231,651	$	2,823,169	$	6,054,820

The Company receives outside ratings from both Standard & Poor’s and Moody’s on the consolidated company and its subsidiary bank, Commerce Bank. These ratings are as follows:


	Standard & Poor’s	Moody’s
Commerce Bancshares, Inc.
Issuer rating	A-

Rating outlook	Stable

Commerce Bank
Issuer rating	A	A3
Baseline credit assessment		a2
Short-term rating	A-1	P-1
Rating outlook	Stable	Stable

The Company considers these ratings to be indications of a sound capital base and strong liquidity and believes that these ratings would help ensure the ready marketability of its commercial paper, should the need arise. No commercial paper has been outstanding during the past ten years. The Company has no subordinated or hybrid debt instruments which would affect future borrowing capacity. Because of its lack of significant long-term debt, the Company believes that through its Commercial Tradable Products division or in other public debt markets, it could generate additional liquidity from sources such as jumbo certificates of deposit, privately placed corporate notes or other forms of debt.

The cash flows from the operating, investing and financing activities of the Company resulted in a net decrease in cash, cash equivalents and restricted cash of $102.1 million during the first three months of 2025, as reported in the consolidated statements of cash flows in this report. Operating activities, consisting mainly of net income adjusted for certain non-cash items, provided cash flow of $138.6 million and have historically been a stable source of funds. Investing activities, which occur mainly in the loan and investment securities portfolios, used cash of $373.4 million. Activity in the investment securities portfolio used cash of $225.0 million from purchases of securities under agreements to resell (net of repayments). This decrease in investing cash flows was further supported by a net increase in the loan portfolio, which used cash of $170.6 million. These uses of cash were partly balanced by sales, maturities, and pay downs (net of purchases) of investment securities, which provided cash of $34.6 million. Investing activities are somewhat unique to financial institutions in that, while large sums of cash flow are normally used to fund growth in investment securities, loans, or other bank assets, they are normally dependent on the financing activities described below. Financing activities provided cash of $132.7 million, largely resulting from a net increase of $734.8 million in deposits during the first three months of 2025. This increase was largely offset by federal funds purchases and securities sold under agreements to repurchase, which used cash of $526.7 million. Additionally, purchases of treasury stock and cash dividends (including distributions to non-controlling interest) used cash of $55.2 million and $37.9 million, respectively.

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Capital Management

The Company met all capital adequacy requirements and had regulatory capital ratios in excess of the levels established for well-capitalized institutions at March 31, 2025 and December 31, 2024, as shown in the following table.


(Dollars in thousands)	March 31, 2025			December 31, 2024			Minimum Capital Requirement		Capital Conservation Buffer		Minimum Ratios Requirement including Capital Conservation Buffer		Minimum Ratios for Well-Capitalized Banks *
Risk-adjusted assets	$	23,546,902		$	23,500,396
Tier I common risk-based capital	3,969,930			3,926,446
Tier I risk-based capital	3,969,930			3,926,446
Total risk-based capital	4,155,288			4,108,270
Tier I common risk-based capital ratio	16.86		%	16.71		%	4.50	%	2.50	%	7.00	%	6.50	%
Tier I risk-based capital ratio	16.86			16.71			6.00		2.50		8.50		8.00
Total risk-based capital ratio	17.65			17.48			8.00		2.50		10.50		10.00
Tier I leverage ratio	12.29			12.26			4.00		N/A		4.00		5.00

*Under Prompt Corrective Action requirements

The Company is subject to a 2.5% capital conservation buffer, which is an amount above the minimum ratios under capital adequacy guidelines, and is intended to absorb losses during periods of economic stress. Failure to maintain the buffer will result in constraints on dividends, share repurchases, and executive compensation.

In the first quarter of 2020, the interim final rule of the Federal Reserve Bank and other U.S. banking agencies became effective, providing banks that adopted CECL (ASU 2016-13) during the 2020 calendar year the option to delay recognizing the estimated impact on regulatory capital until after a two year deferral period, followed by a three year transition period. In connection with the adoption of CECL on January 1, 2020, the Company elected to utilize this option. As a result, the two year deferral period for the Company extended through December 31, 2021. Beginning on January 1, 2022, the Company was required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in, which was during the first quarter of 2025.

The Company maintains a treasury stock buyback program under authorizations by its Board of Directors (the Board) and periodically purchases stock in the open market. During the three months ended March 31, 2025, the Company purchased 854,806 shares at an average price of $64.56 in open market purchases and through stock-based compensation transactions. At March 31, 2025, 2,076,842 shares remained available for purchase under the current Board authorization.

The Company's common stock dividend policy reflects its earnings outlook, desired payout ratios, the need to maintain adequate capital levels and alternative investment options. The Company paid a $.275 per share cash dividend on its common stock in the first quarter of 2025, which was a 7.0% increase compared to its 2024 quarterly dividend.

Material Cash Requirements, Commitments, Off-Balance Sheet Arrangements and Contingencies

The Company's material cash requirements include commitments for contractual obligations (both short-term and long-term), commitments to extend credit, and off-balance sheet arrangements. The Company's material cash requirements for the next 12 months are primarily to fund loan growth. Additionally, the Company will utilize cash to fund deposit maturities and withdrawals that may occur in the next 12 months. Other contractual obligations, purchase commitments, lease obligations, and unfunded commitments may require cash payments by the Company within the next 12 months, and these are further discussed in the Company's 2024 Annual Report on Form 10-K. Further discussion of the Company's longer-term material cash obligations and sources for fulfilling those obligations is below.

In the normal course of business, various commitments and contingent liabilities arise that are not required to be recorded on the balance sheet. The most significant of these are loan commitments, which at March 31, 2025 totaled $15.9 billion (including $5.9 billion in unused, approved credit card lines). In addition, the Company enters into standby and commercial letters of credit. The contractual amount of standby and commercial letters of credit totaled $613.5 million and $2.0 million, respectively, at March 31, 2025. As many commitments expire unused or only partially used, these totals do not necessarily reflect future cash requirements. The allowance for these commitments is recorded in the Company’s liability for unfunded lending commitments within other liabilities on its consolidated balance sheets. At March 31, 2025, the liability for unfunded

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lending commitments totaled $18.3 million. See further discussion of the liability for unfunded lending commitments in Note 2 to the consolidated financial statements.

The Company regularly purchases various state tax credits arising from third party property redevelopment. These credits are either resold to third parties at a profit or retained for use by the Company. During the first three months of 2025, purchases and sales of tax credits amounted to $47.0 million and $49.8 million, respectively. Fees from sales of tax credits were $1.9 million for the three months ended March 31, 2025, compared to $2.1 million in the same period last year. At March 31, 2025, the Company expected to fund outstanding purchase commitments of $207.9 million during the remainder of 2025 and had purchase commitments of $334.0 million that it expects to fund from 2026 through 2029.

The Company continued to maintain a strong liquidity position throughout the first three months of 2025. Through the various sources of liquidity described above, the Company maintains a liquidity position that it believes will adequately satisfy its financial obligations.

Segment Results

The table below is a summary of segment pre-tax income results for the first three months of 2025 and 2024.


(Dollars in thousands)	Consumer			Commercial			Wealth			Segment Totals			Other/ Elimination			Consolidated Totals
Three Months Ended March 31, 2025
Net interest income	$	125,385		$	133,115		$	22,159		$	280,659		$	(11,557)		$	269,102
Provision for credit losses	(10,250)			(532)			—			(10,782)			(3,705)			(14,487)
Non-interest income	23,987			69,599			64,039			157,625			1,324			158,949
Investment securities gains (losses), net	—			—			—			—			(7,591)			(7,591)
Non-interest expense	(83,805)			(103,244)			(41,279)			(228,328)			(10,048)			(238,376)
Income before income taxes	$	55,317		$	98,938		$	44,919		$	199,174		$	(31,577)		$	167,597
Three Months Ended March 31, 2024
Net interest income	$	128,157		$	126,687		$	23,198		$	278,042		$	(29,043)		$	248,999
Provision for credit losses	(8,888)			(41)			1			(8,928)			4,141			(4,787)
Non-interest income	24,335			63,802			58,399			146,536			2,312			148,848
Investment securities gains (losses), net	—			—			—			—			(259)			(259)
Non-interest expense	(80,717)			(100,356)			(39,551)			(220,624)			(25,073)			(245,697)
Income before income taxes	$	62,887		$	90,092		$	42,047		$	195,026		$	(47,922)		$	147,104
Increase (decrease) in income before income taxes:
Amount	$	(7,570)		$	8,846		$	2,872		$	4,148		$	16,345		$	20,493
Percent	(12.0)		%	9.8		%	6.8		%	2.1		%	(34.1)		%	13.9		%

Consumer

For the three months ended March 31, 2025, income before income taxes for the Consumer segment decreased $7.6 million, or 12.0%, compared to the first three months of 2024. The decrease in income before income taxes was mainly due to a decline in net interest income of $2.8 million, or 2.2%, and increases in non-interest expense of $3.1 million, or 3.8%, and the provision for credit losses of $1.4 million. Net interest income declined mainly due to a $3.8 million decrease in net allocated funding credits assigned to the Consumer segment's loan and deposit portfolios. This decrease was partly offset by lower deposit interest expense of $870 thousand. Non-interest income decreased $348 thousand, or 1.4%, mainly due to lower net bank card fees (mainly credit and debit card fees). Non-interest expense increased over the same period in the previous year mainly due to higher marketing expense, miscellaneous losses, supplies expense, and allocated support costs for marketing and retail administration and operations. These increases were partly offset by lower FDIC insurance expense and allocated support costs for online banking and information technology. The increase in the provision for credit losses over the first three months of 2024 was mainly due to higher auto and consumer credit card loan net charge-offs.

Commercial

For the three months ended March 31, 2025, income before income taxes for the Commercial segment increased $8.8 million, or 9.8%, compared to the same period in the previous year. T his increase was mainly due to higher net interest income and non-interest income, partly offset by higher non-interest expense and an increase in the provision for credit losses. Net interest income increased $6.4 million, or 5.1%, mainly due to higher net allocated funding credits of $8.0 million, coupled with

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lower interest expense on deposits and borrowings of $7.5 million and $2.1 million, respectively. These increases to income were partly offset by lower loan interest income of $11.7 million. Non-interest income increased $5.8 million, or 9.1%, over the previous year mainly due to growth in deposit account fees (mainly corporate cash management fees), capital market fees (mainly underwriting and trading securities) and higher gains on asset sales. These increases were partly offset by a decrease in net bank card fees (mainly corporate card fees). Non-interest expense increased $2.9 million, or 2.9%, mainly due to higher marketing expense, professional and other services expense and higher allocated support costs for bank operations and branch employee expense. The provision for credit losses increased $491 thousand over the same period last year, mainly due to higher business real estate loan net charge-offs.

Wealth

Wealth segment pre-tax profitability for the three months ended March 31, 2025 increased $2.9 million, or 6.8%, over the same period in the previous year. Net interest income decreased $1.0 million, or 4.5%, mainly due to a $2.9 million decrease in net allocated funding credits. This decrease was partly offset by a $1.1 million increase in loan interest income and an $822 thousand decrease deposit interest expense. Non-interest income increased $5.6 million, or 9.7%, over the prior year largely due to higher private client and institutional trust fees and brokerage fees (mainly advisory fees). Non-interest expense increased $1.7 million, or 4.4%, mainly due to higher salaries and benefits expense and marketing expense. The provision for credit losses increased $1 thousand over the same period last year.

The Other/Elimination category in the preceding table includes the activity of various support and overhead operating units of the Company, in addition to the investment securities portfolio and other items not allocated to the segments. In accordance with the Company’s transfer pricing procedures, the difference between the total provision for credit losses and total net charge-offs/recoveries is not allocated to a business segment and is included in this category. The pre-tax profitability in this category was $16.3 million higher than in the same period last year. Unallocated securities losses were $7.6 million in the first three months of 2025 compared to losses of $259 thousand in 2024. Also, the unallocated provision for credit losses increased $7.8 million, primarily driven by an increase in the provision for credit losses on loans, partly offset by a decrease in the liability for unfunded lending commitments, which are both not allocated to the segments for management reporting purposes. Net charge-offs are allocated to the segment s when incurred for management reporting purposes. The provision for credit losses on loans in the first three months of 2025 was $15.1 million, or $4.3 million higher than net charge-offs, due to an increase in the allowance for credit losses on loans. In the comparable period last year, the provision for credit losses on loans was $6.9 million, or $1.9 million lower than net charge-offs, due to a decrease in the allowance for credit losses on loans. For th e three months ended March 31, 2025, the Company's provision on unfunded lending commitments was a benefit of $608 thousand. Additionally, net interest income increased $17.5 million, while non-interest expense decreased $15.0 million. These increases to pre-tax profitability were slightly offset by lower non-interest income of $988 thousand.

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Impact of Recently Issued Accounting Standards

Income Taxes The FASB issued ASU 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures", in December 2023. The amendments in this Update require additional disclosures regarding the rate reconciliation and income taxes paid. This Update also removed certain existing disclosure requirements. This Update is effective for annual periods beginning January 1, 2025. Early adoption is permitted. The amendments in this Update should be applied on a prospective basis, though retrospective application is permitted. Other than the inclusion of additional disclosures, the adoption is not expected to have a significant effect on the Company's consolidated financial statements.

Income Statement Reporting The FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" in November 2024. The amendments in this Update require new disclosures providing further detail of a company's income statement expense items. This Update is effective for annual periods beginning January 1, 2027, and interim periods beginning January 1, 2028. Early adoption is permitted. The amendments in this Update should be applied on a prospective basis. Other than the inclusion of additional disclosures, the adoption is not expected to have a significant effect on the Company's consolidated financial statements.

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AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS

Three Months Ended March 31, 2025 and 2024


	First Quarter 2025						First Quarter 2024
(Dollars in thousands)	Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid		Average Balance		Interest Income/Expense		Avg. Rates Earned/Paid
ASSETS:
Loans:
Business (A)	$	6,106,185	$	86,564	5.75	%	$	5,873,525	$	88,638	6.07	%
Real estate — construction and land	1,415,349		25,486		7.30		1,472,554		30,754		8.40
Real estate — business	3,667,833		53,203		5.88		3,727,643		58,029		6.26
Real estate — personal	3,045,876		32,145		4.28		3,031,193		29,775		3.95
Consumer	2,082,360		33,466		6.52		2,082,490		33,126		6.40
Revolving home equity	358,684		6,425		7.26		322,074		6,163		7.70
Consumer credit card	560,534		18,647		13.49		562,892		19,750		14.11
Overdrafts	5,860		—		—		7,696		—		—
Total loans	17,242,681		255,936		6.02		17,080,067		266,235		6.27
Loans held for sale	1,584		23		5.89		2,149		40		7.49
Investment securities:
U.S. government and federal agency obligations	2,586,944		26,063		4.09		851,656		4,402		2.08
Government-sponsored enterprise obligations	55,330		328		2.40		55,652		331		2.39
State and municipal obligations (A)	804,363		4,072		2.05		1,330,808		6,519		1.97
Mortgage-backed securities	4,788,102		24,615		2.08		5,902,328		32,088		2.19
Asset-backed securities	1,655,701		14,115		3.46		2,085,050		12,399		2.39
Other debt securities	258,136		1,715		2.69		503,204		2,410		1.93
Trading debt securities (A)	38,298		469		4.97		40,483		533		5.30
Equity securities (A)	57,028		1,128		8.02		12,768		814		25.64
Other securities (A)	233,461		4,519		7.85		221,695		7,189		13.04
Total investment securities	10,477,363		77,024		2.98		11,003,644		66,685		2.44
Federal funds sold	2,089		29		5.63		599		10		6.71
Securities purchased under agreements to resell	788,889		7,418		3.81		340,934		1,634		1.93
Interest earning deposits with banks	2,388,504		26,249		4.46		1,938,381		26,432		5.48
Total interest earning assets	30,901,110		366,679		4.81		30,365,774		361,036		4.78
Allowance for credit losses on loans	(162,186)						(161,891)
Unrealized gain (loss) on debt securities	(935,054)						(1,274,125)
Cash and due from banks	391,436						281,610
Premises and equipment, net	497,057						477,881
Other assets	809,803						956,225
Total assets	$	31,502,166					$	30,645,474
LIABILITIES AND EQUITY:
Interest bearing deposits:
Savings	$	1,294,174	167		.05		$	1,333,983	195		.06
Interest checking and money market	13,906,827		52,236		1.52		13,215,270		55,385		1.69
Certificates of deposit of less than $100,000	991,826		8,932		3.65		976,804		10,191		4.20
Certificates of deposit of $100,000 and over	1,363,655		13,319		3.96		1,595,310		18,096		4.56
Total interest bearing deposits	17,556,482		74,654		1.72		17,121,367		83,867		1.97
Borrowings:
Federal funds purchased	$	128,340	$	1,384	4.37		328,216		$	4,419	5.42
Securities sold under agreements to repurchase	2,723,227		19,224		2.86		2,511,959		21,438		3.43
Other borrowings (B)	616		1		.66		76		—		—
Total borrowings	2,852,183		20,609		2.93		2,840,251		25,857		3.66
Total interest bearing liabilities	20,408,665		95,263		1.89	%	19,961,618		109,724		2.21	%
Non-interest bearing deposits	7,298,686						7,328,603
Other liabilities	421,370						410,310
Equity	3,373,445						2,944,943
Total liabilities and equity	$	31,502,166					$	30,645,474
Net interest margin (FTE)			$	271,416					$	251,312
Net yield on interest earning assets					3.56	%					3.33	%

(A) Stated on a fully taxable-equivalent basis using a federal income tax rate of 21%.

(B) Interest expense capitalized on construction projects in 2024 is not deducted from the interest expense shown above. There was no interest expense capitalized in 2025.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk management focuses on maintaining consistent growth in net interest income within Board-approved policy limits. The Company primarily uses earnings simulation models to analyze net interest income sensitivity to movement in interest rates. The Company performs monthly simulations that model interest rate movements and risk in accordance with changes to its balance sheet composition. For further discussion of the Company’s market risk, see the Interest Rate Sensitivity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s 2024 Annual Report on Form 10-K.

The table below shows the effects of gradual shifts in interest rates over a twelve month period on the Company’s net interest income versus the Company's net interest income in a flat rate scenario. The simulation presents three rising rate scenarios and three falling rate scenarios, and in these scenarios, rates are assumed to change evenly over 12 months, while the balance sheet remains flat.

The Company utilizes this simulation both for monitoring interest rate risk and for liquidity planning purposes. While the future effects of rising and falling rates on deposit balances cannot be known, the Company maintains a practice of running multiple rate scenarios, when relevant, to better understand interest rate risk and its effect on the Company’s performance.


	March 31, 2025				December 31, 2024
(Dollars in millions)	$ Change in Net Interest Income		% Change in Net Interest Income			$ Change in Net Interest Income		% Change in Net Interest Income
300 basis points rising	$	18.4	1.68	%		$	24.8	2.28	%
200 basis points rising	21.2		1.94			25.5		2.34
100 basis points rising	23.2		2.12			25.6		2.35
100 basis points falling	$	(20.7)	(1.89)	%		$	(22.4)	(2.06)	%
200 basis points falling	(37.7)		(3.45)			(41.4)		(3.80)
300 basis points falling	(47.1)		(4.31)			(54.9)		(5.05)

Under the simulation, in the three rising rate scenarios and three falling rate scenarios, interest rate risk is less asset sensitive when compared to the scenarios in the previous quarter. This change was primarily due to lower average interest earning cash balances at the Federal Reserve, partly offset by a decrease in securities sold under agreements to repurchase.

The comparison above provides insight into potential effects of changes in rates on net interest income. The Company believes that its approach to interest rate risk has appropriately considered its susceptibility to both rising and falling rates and has adopted strategies which minimize the impact of interest rate risk.

Item 4. CONTROLS AND PROCEDURES

An evaluation was performed under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of March 31, 2025. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There were no changes in the Company's internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II: OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

The information required by this item is set forth in Part I, Item 1 under Note 17, Legal and Regulatory Proceedings.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth information about the Company's purchases of its $5 par value common stock, its only class of common stock registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.


Period	Total Number of Shares Purchased	Average Price Paid per Share			Total Number of Shares Purchased as part of Publicly Announced Program	Maximum Number that May Yet Be Purchased Under the Program
January 1 - 31, 2025	125,868		$	66.65	125,868	2,805,780
February 1 - 28, 2025	407,404		$	65.98	407,404	2,398,376
March 1 - 31, 2025	321,534		$	61.94	321,534	2,076,842
Total	854,806		$	64.56	854,806	2,076,842

The Company's stock purchases shown above were made under authorizations by the Board of Directors. Under the most recent authorization in April 2024 of 5,000,000 shares, 2,076,842 shares remained available for purchase at March 31, 2025.

Item 5. OTHER INFORMATION

During the three months ended March 31, 2025, none of the officers or directors of the Company adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

Item 6. EXHIBITS

The exhibits filed as part of this report and exhibits incorporated herein by reference to other documents are listed below.

31.1 — Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 — Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 — Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 — Interactive data files in Inline XBRL pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements, tagged as blocks of text and in detail. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

104 — Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	C OMMERCE B ANCSHARES, I NC.



	By	/s/ MARGARET M. ROWE
		Margaret M. Rowe
Date: May 6, 2025		Senior Vice President & Secretary


	By	/s/ PAUL A. STEINER
		Paul A. Steiner
		Controller
Date: May 6, 2025		(Chief Accounting Officer)

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Part I: Financial Information Item 1. Financial Statements Item 2. Management's Discussion and Analysis Of Financial Condition and Item 3. Quantitative and Qualitative Disclosures About Market Risk Item 4. Controls and Procedures Part Ii: Other Information Item 1. Legal Proceedings Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds Item 5. Other Information Item 6. Exhibits

Exhibits

31.1 Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certifications of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

CBSH 10-Q Quarter ended March 31, 2025

Exhibits