Commerce Bancshares, Inc.

What they do

The company, through its wholly-owned subsidiary Commerce Bank, provides retail, mortgage banking, corporate, investment, trust, and asset management services to individuals, businesses, and municipalities. It operates 140 branch facilities in Missouri, Kansas, central Illinois, Oklahoma, and Colorado, plus commercial offices in several other states, and a commercial payments business with national sales coverage. Non-banking subsidiaries engage in private equity investment, securities brokerage, underwriting, specialty lending, and leasing.

Revenue drivers

• Net interest income — Core earnings driver; reached $315.1 million in Q2 2026, up $15.2 million from the prior quarter, driven by net interest margin expansion to 3.77%.
• Trust fees — Largest non-interest income source; totaled $71.5 million in Q2 2026, up 28.7% year-over-year, supported by assets under administration growth of 3.4% quarter-over-quarter.
• Bank card transaction fees — Second-largest fee line; $48.1 million in Q2 2026, up 5.6% from the prior quarter, reflecting continued consumer spending volume.
• Deposit account charges and other fees — Contributed $29.3 million in Q2 2026, up from $26.2 million in the same quarter last year, a steady fee stream from retail and commercial deposit accounts.

Recent performance

For Q2 2026, the company reported diluted EPS of $1.10, up from $1.09 in Q2 2025 and $0.96 in Q1 2026; net income was $159.8 million. For the six months ended June 30, 2026, EPS was $2.06 and net income was $301.4 million. Total assets at June 30, 2026 were $35.27 billion, with deposits of $27.88 billion and loans of $20.83 billion. The return on average assets was 1.84% in Q2 2026, and the efficiency ratio was 58.40%. Net loan charge-offs annualized to 0.19% of average loans.

Strategy

Management targets core revenue growth by expanding customer relationships, pursuing controlled expansion in new markets (notably through the FineMark acquisition), and investing in technology and customer satisfaction. The company completed a repositioning of part of its available-for-sale securities portfolio in Q2 2026, selling Treasury inflation-protected securities to increase portfolio yield and support a more durable net interest margin. It also emphasizes disciplined capital management, repurchasing approximately 2.1 million shares for $110 million in Q2 2026 while maintaining strong capital levels. The company continues to evaluate acquisitions that are culturally similar and have experienced management or market presence.

Risks

• Interest rate risk — Fluctuations in interest rates could compress net interest margin or reduce demand for loans, directly affecting the largest revenue component.
• Economic conditions in primary markets — A downturn in the lower Midwest economy, including Missouri, Kansas, Illinois, Oklahoma, and Colorado, could increase loan losses and reduce fee income.
• Integration risk from FineMark acquisition — The all-stock acquisition of FineMark adds exposure to Florida, Arizona, and South Carolina, with integration and performance risks, including liquidation of its securities portfolio and deposit runoff.
• Regulatory and legislative changes — Changes in banking regulation, capital requirements, or consumer protection laws could increase compliance costs or limit business activities.

Outlook

Management expects continued net interest margin expansion and loan growth, citing solid performance and lower funding costs. The securities portfolio repositioning is intended to improve the consistency and durability of net interest income over time. Fee revenue is expected to remain supported by strength in trust and bank card businesses. The company plans to maintain disciplined capital management, including share repurchases and dividend increases.