cbsh-20210120
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
Form 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 20, 2021

Commerce Bancshares, Inc.
(Exact name of registrant as specified in its charter)

Missouri 0-2989 43-0889454
(State of Incorporation) (Commission File Number) (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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
     ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
     ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
     ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
     ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of classTrading symbol(s)Name of exchange on which registered
$5 Par Value Common StockCBSHNASDAQ Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
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. ☐




Item 2.02 Results of Operations and Financial Condition
A copy of the press release issued January 20, 2021 by Commerce Bancshares, Inc. announcing Fourth Quarter 2020 earnings is furnished under Item 2.02 of this Current Report on Form 8-K as Exhibit 99.1. Additionally, a slide presentation for investors and analysts is being furnished as Exhibit 99.2 to this Current Report on Form 8-K.
The information in this Current Report on Form 8-K, including the exhibits, is furnished pursuant to Item 2.02 and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, the information in this Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of Commerce Bancshares, Inc. under the Securities Act of 1933, as amended.
All information included in this Current Report on Form 8-K is available on the Company’s Internet site at http://www.commercebank.com.

Item 9.01 Financial Statements and Exhibits

Exhibits
99.1    Press release dated January 20, 2021
99.2     Slide presentation for investors and analysts dated January 20, 2021
104    The XBRL tags on the cover page of this Form 8-K are embedded within the Inline XBRL document.


SIGNATURE
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 hereunto duly authorized.
 COMMERCE BANCSHARES, INC.
 By:  /s/ Paul A. Steiner  
  Paul A. Steiner
  
Controller
(Chief Accounting Officer) 
Date: January 20, 2021


Exhibit 99.1
Exhibit 99.1
commercebancshares914a01a0.jpg
CBSH
                   1000 Walnut Street / Suite 700 / Kansas City, Missouri 64106 / 816.234.2000
releaselogoa01a01a051.jpg
FOR IMMEDIATE RELEASE:
Wednesday, January 20, 2021

COMMERCE BANCSHARES, INC. REPORTS
FOURTH QUARTER EARNINGS PER SHARE OF $1.11

    Commerce Bancshares, Inc. announced earnings of $1.11 per share for the three months ended December 31, 2020, compared to $.88 per common share in the same quarter last year and $1.06 per common share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. (net income) for the fourth quarter of 2020 amounted to $129.9 million, compared to $106.9 million in the fourth quarter of 2019 and $132.4 million in the prior quarter. For the quarter, the return on average assets was 1.63%, the return on average equity was 15.49%, and the efficiency ratio was 56.7%.

For the year ended December 31, 2020, earnings per common share totaled $2.91 compared to $3.41 in 2019. Net income attributable to Commerce Bancshares, Inc. amounted to $354.1 million in 2020 compared to $421.2 million last year. For the current year, the return on average assets was 1.20%, and the return on average common equity was 10.64%.

In announcing these results, John Kemper, Chief Executive Officer, said, “Commerce had a strong quarter to close out 2020. While economic uncertainty remains top of mind, overall economic conditions, most notably unemployment, continued to improve in the fourth quarter at a pace that exceeded economic forecasts. These factors, coupled with a forecast projecting an economic recovery, resulted in a decrease in the allowance for credit losses. Our portfolio of private equity investments saw unrealized gains recorded this quarter, partially offsetting unrealized losses recorded in the first half of 2020 and reflecting improvement in the overall economy. Although net interest margins continue to be pressured from a challenging interest rate environment, our fee-based businesses are rebounding from mid-year lows and provide us with a source of revenue diversification. Bank card and deposit account fees grew from last quarter with an increase in spending activity. Loan fees and sales, driven by our mortgage banking business, continued to be strong this quarter and increased 161 percent compared to the fourth quarter of 2019. Trust fees reached another record quarter, reflecting not only higher market values, but also the results of investments we’ve made across our wealth business. Non-interest expense grew .6% compared to the same quarter last year and remained well-controlled. Compared to the previous quarter, average deposits grew $843.3 million, or 3.4%, well surpassing our expectations. While deposit balances grew this quarter, loan demand was mixed. Average loan balances in construction, business real estate, and personal real estate grew, while lower demand for business loans kept total average loan balances relatively flat.”

Mr. Kemper continued, “This quarter, net loan charge-offs totaled $8.0 million, compared to $7.6 million in the prior quarter and $15.2 million in the fourth quarter of 2019. The ratio of annualized net loan charge-offs to average loans was .19% in the current quarter, .18% in the prior quarter and .42% in the fourth quarter of last year. Net loan charge-offs on commercial loans

Exhibit 99.1
totaled $572 thousand this quarter compared to $194 thousand in the prior quarter. Non-performing assets decreased this quarter from $40.3 million to $26.6 million. At December 31, 2020, the allowance for credit losses on loans decreased to $220.8 million.”

Total assets at December 31, 2020 were $32.9 billion, total loans were $16.3 billion, and total deposits were $26.9 billion. During the fourth quarter of 2020, the Company distributed a 5% stock dividend on its common stock. The Company also paid a cash dividend of $.257 per share, as restated for the 5% stock dividend.

Commerce Bancshares, Inc. is a regional bank holding company offering a full line of banking services, including payment solutions, investment management and securities brokerage. Commerce Bank, a subsidiary of Commerce Bancshares, Inc., leverages more than 150 years of proven strength and experience to help individuals and businesses solve financial challenges. In addition to offering payment solutions across the U.S., Commerce Bank currently operates full service banking facilities across the Midwest including the St. Louis and Kansas City metropolitan areas, Springfield, Central Missouri, Central Illinois, Wichita, Tulsa, Oklahoma City, and Denver. It also maintains commercial offices in Dallas, Houston, Cincinnati, Nashville, Des Moines, Indianapolis, and Grand Rapids. Commerce delivers high-touch service and sophisticated financial solutions at regional branches, commercial offices, ATMs, online, mobile and through a 24/7 customer service line.

This financial news release, including management's discussion of fourth quarter results, is posted to the Company's web site at www.commercebank.com.
* * * * * * * * * * * * * * *
For additional information, contact
Matthew Burkemper, Investor Relations
at 8000 Forsyth, Mailstop: CBIR-1
Clayton, MO 63105
or by telephone at (314) 746-7485
Web Site: http://www.commercebank.com
Email: [email protected]




Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS
 For the Three Months EndedFor the Year Ended
(Unaudited)
(Dollars in thousands, except per share data)		December 31,
2020		September 30,
2020		December 31,
2019		December 31,
2020		December 31,
2019
FINANCIAL SUMMARY
Net interest income$209,763 $215,962 $202,659 $829,847 $821,293 
Non-interest income135,117 129,572 143,461 505,867 524,703 
Total revenue
344,880 345,534 346,120 1,335,714 1,345,996 
Investment securities gains (losses), net12,307 16,155 (248)11,032 3,626 
Provision for credit losses(4,403)3,101 15,206 137,190 50,438 
Non-interest expense196,310 190,858 195,174 768,378 767,398 
Income before taxes
165,280 167,730 135,492 441,178 531,786 
Income taxes33,084 34,375 28,214 87,293 109,074 
Non-controlling interest (income) expense2,307 907 398 (172)1,481 
Net income attributable to Commerce Bancshares, Inc.
129,889 132,448 106,880 354,057 421,231 
Preferred stock dividends— 7,466 2,250 11,966 9,000 
Net income available to common shareholders
$129,889 $124,982 $104,630 $342,091 $412,231 
Earnings per common share:  
Net income — basic$1.11 $1.06 $.89 $2.91 $3.42 
Net income — diluted$1.11 $1.06 $.88 $2.91 $3.41 
Effective tax rate20.30 %20.61 %20.88 %19.78 %20.57 %
Tax equivalent net interest income$213,017 $219,118 $206,156 $842,790 $835,421 
Average total interest earning assets (1)
$30,297,922 $29,352,970 $24,372,575 $28,143,048 $24,034,631 
Diluted wtd. average shares outstanding116,507,841 116,444,157 117,611,663 116,584,015 119,769,634 
RATIOS  
Average loans to deposits (2)
64.05 %66.23 %71.73 %67.73 %71.54 %
Return on total average assets1.63 1.71 1.65 1.20 1.67 
Return on average common equity (3)
15.49 15.21 13.90 10.64 14.06 
Non-interest income to total revenue39.18 37.50 41.45 37.87 38.98 
Efficiency ratio (4)
56.68 55.00 56.29 57.19 56.87 
Net yield on interest earning assets2.80 2.97 3.36 2.99 3.48 
EQUITY SUMMARY  
Cash dividends per common share$.257 $.257 $.236 $1.029 $.943 
Cash dividends on common stock$30,178 $30,174 $27,933 $120,818 $113,466 
Cash dividends on preferred stock (7)
$— $7,466 $2,250 $11,966 $9,000 
Book value per common share (5)
$29.03 $28.23 $25.43 
Market value per common share (5)
$65.70 $53.61 $64.70 
High market value per common share$68.09 $59.13 $65.38 
Low market value per common share$52.10 $50.50 $51.96 
Common shares outstanding (5)
117,138,431 117,109,209 117,738,126 
Tangible common equity to tangible assets (6)
9.92 %10.11 %10.99 %
Tier I leverage ratio9.45 %9.39 %11.38 %
OTHER QTD INFORMATION 
Number of bank/ATM locations306 308 316 
Full-time equivalent employees4,766 4,825 4,858 
(1)Excludes allowance for credit losses on loans and unrealized gains/(losses) on available for sale debt securities.
(2)Includes loans held for sale.
(3)Annualized net income available to common shareholders divided by average total equity less preferred stock.
(4)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.
(5)As of period end.
(6)The tangible common equity ratio is calculated as stockholders’ equity reduced by preferred stock, goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).
(7)For the period ended September 30, 2020, preferred stock dividends includes $5.2 million related to the preferred stock redemption. The $5.2 million is the excess of the redemption costs over the book value of the preferred stock and is considered a dividend.
All share and per share amounts have been restated to reflect the 5% stock dividend distributed in December 2020.

Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 For the Three Months EndedFor the Year Ended
(Unaudited)
(In thousands, except per share data)		December 31,
2020		September 30,
2020		June 30,
2020		March 31,
2020		December 31,
2019		December 31,
2020		December 31,
2019
Interest income$214,726 $223,114 $213,323 $221,485 $226,665 $872,648 $924,685 
Interest expense4,963 7,152 10,266 20,420 24,006 42,801 103,392 
Net interest income209,763 215,962 203,057 201,065 202,659 829,847 821,293 
Provision for credit losses(4,403)3,101 80,539 57,953 15,206 137,190 50,438 
Net interest income after credit losses
214,166 212,861 122,518 143,112 187,453 692,657 770,855 
NON-INTEREST INCOME   
Bank card transaction fees39,979 37,873 33,745 40,200 41,079 151,797 167,879 
Trust fees41,961 40,769 37,942 39,965 40,405 160,637 155,628 
Deposit account charges and other fees24,164 23,107 22,279 23,677 24,974 93,227 95,983 
Capital market fees3,826 3,194 3,772 3,790 2,536 14,582 8,146 
Consumer brokerage services3,996 4,011 3,011 4,077 4,139 15,095 15,804 
Loan fees and sales9,031 9,769 4,649 3,235 3,465 26,684 15,767 
Other12,160 10,849 12,117 8,719 26,863 43,845 65,496 
Total non-interest income135,117 129,572 117,515 123,663 143,461 505,867 524,703 
INVESTMENT SECURITIES GAINS (LOSSES), NET
12,307 16,155 (4,129)(13,301)(248)11,032 3,626 
NON-INTEREST EXPENSE   
Salaries and employee benefits129,983 127,308 126,759 128,937 126,901 512,987 492,927 
Net occupancy11,570 12,058 11,269 11,748 12,218 46,645 47,157 
Equipment4,526 4,737 4,755 4,821 4,859 18,839 19,061 
Supplies and communication4,193 4,141 4,427 4,658 4,851 17,419 20,394 
Data processing and software24,323 23,610 23,837 23,555 23,934 95,325 92,899 
Marketing5,028 4,926 3,801 5,979 3,951 19,734 21,914 
Other16,687 14,078 12,664 14,000 18,460 57,429 73,046 
Total non-interest expense196,310 190,858 187,512 193,698 195,174 768,378 767,398 
Income before income taxes165,280 167,730 48,392 59,776 135,492 441,178 531,786 
Less income taxes33,084 34,375 9,661 10,173 28,214 87,293 109,074 
Net income132,196 133,355 38,731 49,603 107,278 353,885 422,712 
Less non-controlling interest expense (income)
2,307 907 (1,132)(2,254)398 (172)1,481 
Net income attributable to Commerce Bancshares, Inc.
129,889 132,448 39,863 51,857 106,880 354,057 421,231 
Less preferred stock dividends— 7,466 2,250 2,250 2,250 11,966 9,000 
Net income available to common shareholders
$129,889 $124,982 $37,613 $49,607 $104,630 $342,091 $412,231 
Net income per common share — basic$1.11 $1.06 $.32 $.42 $.89 $2.91 $3.42 
Net income per common share — diluted$1.11 $1.06 $.32 $.42 $.88 $2.91 $3.41 
OTHER INFORMATION
Return on total average assets1.63 %1.71 %.54 %.80 %1.65 %1.20 %1.67 %
Return on average common equity (1)
15.49 15.21 4.77 6.48 13.90 10.64 14.06 
Efficiency ratio (2)
56.68 55.00 58.10 59.17 56.29 57.19 56.87 
Effective tax rate20.30 20.61 19.51 16.40 20.88 19.78 20.57 
Net yield on interest earning assets2.80 2.97 2.94 3.33 3.36 2.99 3.48 
Tax equivalent net interest income$213,017 $219,118 $206,253 $204,402 $206,156 $842,790 $835,421 
(1)Annualized net income available to common shareholders divided by average total equity less preferred stock.
(2)The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.


Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - PERIOD END
(Unaudited)
(In thousands)		December 31,
2020		September 30,
2020		December 31,
2019
ASSETS   
Loans
     Business $6,546,087 $6,683,413 $5,565,449 
     Real estate — construction and land1,021,595 1,009,729 899,377 
     Real estate — business3,026,117 2,993,192 2,833,554 
     Real estate — personal2,820,030 2,753,867 2,354,760 
     Consumer1,950,502 2,006,360 1,964,145 
     Revolving home equity307,083 324,203 349,251 
     Consumer credit card655,078 647,893 764,977 
     Overdrafts3,149 2,270 6,304 
Total loans16,329,641 16,420,927 14,737,817 
Allowance for credit losses on loans(220,834)(236,360)(160,682)
Net loans
16,108,807 16,184,567 14,577,135 
Loans held for sale45,089 39,483 13,809 
Investment securities:
Available for sale debt securities12,449,264 11,539,061 8,571,626 
Trading debt securities35,321 25,805 28,161 
Equity securities4,363 4,203 4,209 
Other securities156,745 122,532 137,892 
Total investment securities
12,645,693 11,691,601 8,741,888 
Federal funds sold and short-term securities purchased under agreements to resell
— 2,275 — 
Long-term securities purchased under agreements to resell
850,000 850,000 850,000 
Interest earning deposits with banks1,747,363 1,171,697 395,850 
Cash and due from banks437,563 357,616 491,615 
Premises and equipment — net371,083 377,853 370,637 
Goodwill138,921 138,921 138,921 
Other intangible assets — net11,207 7,183 9,534 
Other assets567,248 632,621 476,400 
Total assets
$32,922,974 $31,453,817 $26,065,789 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Deposits:   
Non-interest bearing$10,497,598 $10,727,827 $6,890,687 
Savings, interest checking and money market14,604,456 12,983,505 11,621,716 
Certificates of deposit of less than $100,000529,802 556,870 626,157 
Certificates of deposit of $100,000 and over1,314,889 1,433,577 1,381,855 
Total deposits
26,946,745 25,701,779 20,520,415 
Federal funds purchased and securities sold under agreements to repurchase
2,098,383 1,653,064 1,850,772 
Other borrowings802 782 2,418 
Other liabilities477,072 791,928 553,712 
Total liabilities
29,523,002 28,147,553 22,927,317 
Stockholders’ equity:   
Preferred stock— — 144,784 
Common stock589,352 563,978 563,978 
Capital surplus2,436,288 2,140,410 2,151,464 
Retained earnings73,000 326,890 201,562 
Treasury stock(32,970)(69,050)(37,548)
Accumulated other comprehensive income331,377 343,435 110,444 
Total stockholders’ equity
3,397,047 3,305,663 3,134,684 
Non-controlling interest2,925 601 3,788 
Total equity
3,399,972 3,306,264 3,138,472 
Total liabilities and equity
$32,922,974 $31,453,817 $26,065,789 


Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCE SHEETS
(Unaudited)
(In thousands)		For the Three Months Ended
December 31, 2020September 30, 2020June 30, 2020March 31, 2020December 31, 2019
ASSETS:
Loans:
Business$6,580,300 $6,709,200 $6,760,827 $5,493,657 $5,362,020 
Real estate — construction and land1,032,891 974,346 895,648 924,086 901,367 
Real estate — business3,029,799 2,989,652 2,962,076 2,853,632 2,820,189 
Real estate — personal2,778,462 2,722,300 2,582,484 2,390,716 2,283,530 
Consumer1,981,033 1,992,314 1,944,265 1,950,491 1,961,631 
Revolving home equity316,895 329,361 343,210 350,256 347,527 
Consumer credit card638,161 646,185 663,911 727,569 749,056 
Overdrafts3,762 2,689 2,912 4,044 18,322 
Total loans
16,361,303 16,366,047 16,155,333 14,694,451 14,443,642 
Allowance for credit losses on loans(235,484)(240,286)(171,616)(139,482)(159,776)
Net loans16,125,819 16,125,761 15,983,717 14,554,969 14,283,866 
Loans held for sale30,577 24,728 6,363 12,875 15,363 
Investment securities:
U.S. government and federal agency obligations
774,640 770,361 776,240 802,556 826,702 
Government-sponsored enterprise obligations
69,133 102,749 114,518 134,296 184,973 
State and municipal obligations1,967,408 1,767,526 1,285,427 1,222,595 1,207,584 
Mortgage-backed securities
6,646,345 6,259,926 5,325,720 4,685,782 4,685,794 
Asset-backed securities1,819,467 1,520,988 1,342,518 1,182,556 1,258,297 
Other debt securities
533,646 514,166 406,665 321,733 331,167 
Unrealized gain on debt securities329,477 368,154 281,457 191,275 149,591 
Total available for sale debt securities12,140,116 11,303,870 9,532,545 8,540,793 8,644,108 
Trading debt securities
28,040 27,267 31,981 34,055 32,518 
Equity securities4,221 4,193 4,137 4,273 4,200 
Other securities 130,145 120,253 139,250 144,096 141,501 
Total investment securities12,302,522 11,455,583 9,707,913 8,723,217 8,822,327 
Federal funds sold and short-term securities purchased under agreements to resell
355 337 92 326 714 
Long-term securities purchased under agreements to resell849,998 849,994 850,000 850,000 849,986 
Interest earning deposits with banks1,082,644 1,024,435 1,755,068 601,420 390,134 
Other assets1,291,907 1,389,683 1,461,528 1,368,464 1,315,395 
Total assets$31,683,822 $30,870,521 $29,764,681 $26,111,271 $25,677,785 
LIABILITIES AND EQUITY:
Non-interest bearing deposits
$10,275,735 $9,801,562 $8,843,408 $6,615,108 $6,552,862 
Savings1,234,481 1,193,079 1,111,397 952,709 924,282 
Interest checking and money market12,198,928 11,731,494 11,441,694 10,777,400 10,618,347 
Certificates of deposit of less than $100,000
542,212 573,207 605,136 622,840 626,944 
Certificates of deposit of $100,000 and over
1,339,301 1,447,968 1,346,069 1,299,443 1,434,309 
Total deposits25,590,657 24,747,310 23,347,704 20,267,500 20,156,744 
Borrowings:
Federal funds purchased and securities sold under agreements to repurchase
2,028,457 1,855,971 1,991,971 1,990,051 1,836,982 
Other borrowings1,013 1,225 345,162 161,698 94,471 
Total borrowings2,029,470 1,857,196 2,337,133 2,151,749 1,931,453 
Other liabilities727,569 899,890 763,524 466,980 458,094 
Total liabilities28,347,696 27,504,396 26,448,361 22,886,229 22,546,291 
Equity3,336,126 3,366,125 3,316,320 3,225,042 3,131,494 
Total liabilities and equity$31,683,822 $30,870,521 $29,764,681 $26,111,271 $25,677,785 


Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE RATES
(Unaudited)For the Three Months Ended
December 31, 2020September 30, 2020June 30, 2020March 31, 2020December 31, 2019
ASSETS: 
Loans: 
Business (1)
3.01 %2.95 %2.91 %3.50 %3.59 %
Real estate — construction and land3.72 3.74 3.95 4.78 5.05 
Real estate — business3.51 3.53 3.71 4.16 4.22 
Real estate — personal3.44 3.56 3.69 3.83 3.85 
Consumer4.07 4.19 4.48 4.78 4.76 
Revolving home equity3.37 3.29 3.50 4.61 4.76 
Consumer credit card11.60 11.40 11.76 12.26 12.11 
Overdrafts— — — — — 
Total loans3.69 3.69 3.80 4.39 4.47 
Loans held for sale3.54 4.25 8.03 6.15 5.32 
Investment securities: 
U.S. government and federal agency obligations
2.63 3.71 .46 2.09 2.16 
Government-sponsored enterprise obligations
2.23 2.17 3.51 4.19 2.17 
State and municipal obligations (1)
2.44 2.53 2.97 3.11 3.05 
Mortgage-backed securities
1.37 1.95 2.17 2.37 2.72 
Asset-backed securities1.59 1.90 2.25 2.63 2.62 
Other debt securities2.19 2.35 2.49 2.94 2.82 
Total available for sale debt securities1.70 2.18 2.18 2.54 2.69 
Trading debt securities (1)
1.40 1.66 2.93 2.52 2.81 
Equity securities (1)
50.71 47.15 48.42 46.78 49.40 
Other securities (1)
10.03 6.74 4.36 5.31 6.58 
Total investment securities1.81 2.24 2.24 2.61 2.78 
Federal funds sold and short-term securities purchased under agreements to resell
1.12 — — 2.47 2.22 
Long-term securities purchased under agreements to resell
5.24 5.26 5.08 3.53 2.26 
Interest earning deposits with banks.10 .10 .10 .86 1.61 
Total interest earning assets2.86 3.07 3.09 3.66 3.75 
LIABILITIES AND EQUITY: 
Interest bearing deposits: 
Savings.09 .09 .09 .11 .11 
Interest checking and money market.07 .10 .13 .30 .35 
Certificates of deposit of less than $100,000
.51 .71 .93 1.15 1.16 
Certificates of deposit of $100,000 and over
.47 .69 1.08 1.62 1.79 
Total interest bearing deposits.12 .18 .25 .45 .52 
Borrowings: 
Federal funds purchased and securities sold under agreements to repurchase
.06 .09 .12 .96 1.20 
Other borrowings— — .82 .82 2.05 
Total borrowings.06 .09 .22 .95 1.25 
Total interest bearing liabilities.11 %.17 %.25 %.52 %.61 %
Net yield on interest earning assets2.80 %2.97 %2.94 %3.33 %3.36 %
(1) Stated on a tax equivalent basis using a federal income tax rate of 21%.








Exhibit 99.1
COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CREDIT QUALITY
 For the Three Months EndedFor the Year Ended
(Unaudited)
(In thousands, except per share data)		December 31, 2020September 30, 2020June 30, 2020March 31, 2020December 31, 2019December 31, 2020December 31, 2019
ALLOWANCE FOR CREDIT LOSSES ON LOANS
Balance at beginning of period$236,360 $240,744 $171,653 $160,682 $160,682 $160,682 $159,932 
     Adoption of ASU 2016-13— — — (21,039)— (21,039)— 
     Provision for credit losses on loans(7,510)3,200 77,491 42,868 15,206 116,049 50,438 
     Net charge-offs (recoveries):
        Commercial portfolio:
     Business
581 208 3,249 (373)3,036 3,665 4,102 
     Real estate — construction and land
(2)(1)— — — (3)(117)
     Real estate — business
(7)(13)(6)(21)35 (47)(60)
572 194 3,243 (394)3,071 3,615 3,925 
        Personal banking portfolio:
     Consumer credit card
5,975 7,263 3,584 9,157 8,829 25,979 35,421 
     Consumer
1,160 211 1,362 1,711 2,838 4,444 8,554 
     Overdraft
335 200 316 426 507 1,277 1,523 
     Real estate — personal
(18)(198)(71)(4)6 (291)56 
     Revolving home equity
(8)(86)(34)(38)(45)(166)209 
7,444 7,390 5,157 11,252 12,135 31,243 45,763 
     Total net loan charge-offs 8,016 7,584 8,400 10,858 15,206 34,858 49,688 
Balance at end of period$220,834 $236,360 $240,744 $171,653 $160,682 $220,834 $160,682 
LIABILITY FOR UNFUNDED LENDING COMMITMENTS$38,307 $35,200 $35,299 $32,250 $1,075 
NET CHARGE-OFF RATIOS (1)
Commercial portfolio:
     Business.04 %.01 %.19 %(.03 %).22 %.06 %.08 %
     Real estate — construction and land— — — — — — (.01)
     Real estate — business— — — — — — — 
.02 .01 .12 (.02).13 .04 .04 
Personal banking portfolio:
     Consumer credit card3.72 4.47 2.17 5.06 4.68 3.88 4.63 
     Consumer.23 .04 .28 .35 .57 .23 .44 
     Overdraft35.43 29.59 43.65 42.37 10.98 38.11 16.55 
     Real estate — personal— (.03)(.01)— — (.01)— 
     Revolving home equity(.01)(.10)(.04)(.04)(.05)(.05).06 
.52 .52 .37 .83 .90 .56 .87 
Total.19 %.18 %.21 %.30 %.42 %.22 %.35 %
CREDIT QUALITY RATIOS
Non-performing assets to total loans.16 %.25 %.14 %.07 %.07 %
Non-performing assets to total assets.08 .13 .08 .04 .04 
Allowance for credit losses on loans to total loans(2)
1.35 1.44 1.47 1.14 1.09 
NON-PERFORMING ASSETS
  Non-accrual loans:
     Business$22,524 $37,295 $19,034 $7,356 $7,489 
     Real estate — construction and land— 1 1 2 2 
     Real estate — business2,230 1,063 1,921 1,532 1,030 
     Real estate — personal1,786 1,911 1,679 1,743 1,699 
   Total 26,540 40,270 22,635 10,633 10,220 
  Foreclosed real estate93 57 422 422 365 
Total non-performing assets$26,633 $40,327 $23,057 $11,055 $10,585 
Loans past due 90 days and still accruing interest$22,190 $14,436 $24,583 $16,520 $19,859 
(1) As a percentage of average loans (excluding loans held for sale).
(2) Excluding PPP loans, the allowance for credit losses on loans to total loans was 1.48% and 1.59% as of December 31, 2020 and September 30, 2020, respectively.

                                                Exhibit 99.1
COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2020
For the quarter ended December 31, 2020, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $129.9 million, compared to $132.4 million in the previous quarter and $106.9 million in the same quarter last year. The decrease in net income over the previous quarter was primarily the result of lower net interest income and net securities gains and higher non-interest expense, partly offset by a decrease in the provision for credit losses and higher non-interest income. The provision for credit losses decreased this quarter, compared to the prior quarter, due to a decrease in the estimate of the allowance for credit losses. Net interest income decreased $6.2 million this quarter mostly due to lower interest earned on the available for sale debt securities portfolio, including a $3.5 million adjustment to premium amortization on mortgage-backed securities for prepayment speed changes and a $2.1 million decrease in inflation income on our Treasury inflation-protected securities (TIPs). Excluding the premium amortization adjustment and TIPs inflation income, the net yield on interest earnings assets declined eight basis points. Average loans were flat compared to the previous quarter, while average available for sale debt securities grew $836.2 million, and average deposits increased $843.3 million. For the quarter, the return on average assets was 1.63%, the return on average common equity was 15.49%, and the efficiency ratio was 56.7%.

Balance Sheet Review
During the 4th quarter of 2020, average loans totaled $16.4 billion, and decreased $4.7 million from the prior quarter, and grew $1.9 billion, or 13.3%, over the same quarter last year. Period end loans declined $91.3 million compared to the prior quarter and grew $1.6 billion compared to December 31, 2019. Compared to the previous quarter, average balances of construction and land, personal real estate, and business real estate loans grew $58.5 million, $56.2 million, and $40.1 million, respectively. This growth was mostly offset by a decline in business loans of $128.9 million. The period end balance of Paycheck Protection Program (PPP) loans (included in business loans) declined $147.4 million during the 4th quarter and totaled $1.4 billion at December 31, 2020. Growth in personal real estate loan balances was due to continued strong demand for residential mortgage loans in this low interest rate environment. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $136.0 million, compared to $98.9 million in the prior quarter.

Total average available for sale debt securities increased $836.2 million over the previous quarter to $12.1 billion, at fair value. The increase in investment securities was mainly the result of growth in mortgage-backed, asset-backed, and state and municipal securities. During the quarter, purchases of securities totaled $1.8 billion with a weighted average yield of approximately 1.27%. Sales, maturities and pay downs were $851.6 million. At December 31, 2020, the duration of the investment portfolio was 3.3 years, and maturities and pay downs of approximately $2.0 billion are expected to occur during the next 12 months.

Total average deposits increased $843.3 million this quarter compared to the previous quarter. The increase in deposits resulted from growth in demand ($474.2 million), interest checking and money market ($467.4 million), and savings deposits ($41.4 million), partly offset by a decline in certificates of deposit ($139.7 million). Compared to the previous quarter, total average commercial, consumer and wealth deposits (including private banking) grew $505.6 million, $138.4 million and $240.3 million, respectively. The average loans to deposits
ratio was 64.1% in the current quarter and 66.2% in the prior quarter. The Company’s average borrowings, which includes customer repurchase agreements, were $2.0 billion in the 4th quarter of 2020 and $1.9 billion in the prior quarter.

Net Interest Income
Net interest income in the 4th quarter of 2020 amounted to $209.8 million, a decrease of $6.2 million compared to the previous quarter. On a tax equivalent basis, net interest income for the current quarter decreased $6.1 million from the previous quarter to $213.0 million. The decrease in net interest income was mainly due to lower income earned on investment securities, partially offset by lower interest expense on interest bearing deposits. The Company recorded a $3.5 million adjustment to premium amortization on mortgage-backed securities for prepayment speed changes, which lowered interest income this quarter. The net yield on earning assets (tax equivalent) decreased to 2.80%, compared to 2.97% in the prior quarter.

Compared to the previous quarter, interest income on loans (tax equivalent) decreased $248 thousand, mostly as a result of lower yields on loans, mainly personal real estate and consumer loans, coupled with a decline in business loan average balances. Growth in average construction and land and personal real estate loan balances and higher yields on business loans resulted in higher net interest income and partially offset the impact of lower yields. The average tax-equivalent yield on the loan portfolio was 3.69% in both the current and previous quarters.

Interest income on investment securities (tax equivalent) decreased $8.0 million from the previous quarter, due to lower rates partly offset by higher average balances. Interest income on mortgage-backed securities declined in part due to the aforementioned premium amortization adjustment, while interest income earned on U.S. government and federal agency securities decreased, as TIPs inflation income declined $2.1 million this quarter. The yield on total investment securities was 1.81% in the current quarter, compared to 2.24% in the previous quarter.

The average rate paid on deposits totaled 12 basis points in the 4th quarter of 2020, compared to 18 basis points in the prior quarter. Interest expense on deposits decreased $2.1 million this quarter compared to the previous quarter mainly due to lower rates paid on money market and certificate of deposit accounts. The overall rate paid on interest bearing liabilities was .11% in the current quarter, compared to .17% in the prior quarter.

Non-Interest Income
In the 4th quarter of 2020, total non-interest income amounted to $135.1 million, a decrease of $8.3 million, or 5.8%, compared to the same period last year and increased $5.5 million, or 4.3%, compared to the prior quarter. The decrease in non-interest income from the same period last year was mainly due to the sale of our corporate trust business in 2019, which resulted in a one-time gain of $11.5 million. This decrease was partly offset by growth in loan fees and sales, trust fees and capital market fees. Excluding the one-time gain from the sale of our corporate trust business, non-interest income this quarter grew $3.1 million or 2.4% compared to the same period last year.

Total net bank card fees in the current quarter decreased $1.1 million, or 2.7%, from the same period last year, and increased $2.1 million, or 5.6%, compared to the prior quarter. Net corporate card fees decreased $774 thousand, or 3.5%, from the same quarter of last year mainly due to lower transaction volume, partly offset by lower rewards expense. Net debit card fees

COMMERCE BANCSHARES, INC.                                 Exhibit 99.1
Management Discussion of Fourth Quarter Results
December 31, 2020
decreased $639 thousand, or 6.1%, mainly due to lower interchange income and higher network expense. Net merchant income increased $181 thousand, or 3.6%, while net credit card fees increased $133 thousand, or 3.8%. Total net bank card fees this quarter were comprised of fees on corporate card ($21.3 million), debit card ($9.8 million), merchant ($5.2 million) and credit card ($3.6 million) transactions.

In the current quarter, trust fees increased $1.6 million, or 3.9%, over the same period last year, resulting mostly from higher private client fee income. Compared to the same period last year, deposit account fees decreased $810 thousand, or 3.2%, mainly due to lower overdraft and return item fees, partly offset by an increase in corporate cash management fees. Additionally, capital market fees grew $1.3 million, or 50.9%, while loan fees and sales, mostly mortgage banking revenue, grew $5.6 million, or 160.6%, over amounts recorded in the same quarter last year. Other non-interest income decreased from the same period last year due to the corporate trust sale gain mentioned previously and declines in cash sweep fees and swap fees of $2.0 million and $1.8 million, respectively. For the 4th quarter of 2020, non-interest income comprised 39.2% of the Company’s total revenue.

Investment Securities Gains and Losses
The Company recorded net securities gains of $12.3 million in the current quarter, compared to gains of $16.2 million in the prior quarter and losses of $248 thousand in the 4th quarter of 2019. Net securities gains in the current quarter primarily resulted from unrealized gains of $8.0 million in the Company’s private equity investment portfolio and gains of $4.1 million on the sales of mortgage-backed securities.

Non-Interest Expense
Non-interest expense for the current quarter amounted to $196.3 million, compared to $195.2 million in the same period last year and $190.9 million in the prior quarter. The increase in non-interest expense compared to the same period last year was mainly due to higher salaries and employee benefits and marketing expense, partially offset by lower other non-interest expense.

Compared to the 4th quarter of last year, salaries and employee benefits expense increased $3.1 million, or 2.4%, driven mainly by growth in incentive compensation expense, partially offset by lower benefits costs. Full-time equivalent employees totaled 4,766 and 4,858 at December 31, 2020 and 2019, respectively.
For the current quarter compared to the same quarter of last year, marketing expense increased $1.1 million. Net occupancy costs declined $648 thousand due to lower building maintenance and real estate taxes. Supplies and communication expense decreased $658 thousand due to lower supplies, postage and bank card issuance expense. Other non-interest expense decreased mainly due to a $2.3 million decrease in travel and entertainment expense.

Income Taxes
The effective tax rate for the Company was 20.3% in the current quarter, 20.6% in the previous quarter, and 20.9% in the 4th quarter of 2020.





Credit Quality
Net loan charge-offs in the 4th quarter of 2020 amounted to $8.0 million, compared to $7.6 million in the prior quarter and $15.2 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .19% in the current quarter, .18% in the previous quarter, and .42% in the 4th quarter of last year. Compared to the prior quarter, net loan charge-offs on commercial loans increased $378 thousand to $572 thousand, while net loan charge-offs on personal banking loans increased $54 thousand to $7.4 million.

In the 4th quarter of 2020, annualized net loan charge-offs on average consumer credit card loans were 3.72%, compared to 4.47% in the previous quarter, and 4.68% in the same quarter last year. Consumer loan net charge-offs were .23% of average consumer loans in the current quarter, .04% in the prior quarter and .57% in the same quarter last year.

This quarter, the provision for credit losses on loans decreased $10.7 million and was $15.5 million lower than net loan charge-offs. Actual fourth quarter economic data and the economic forecast used to estimate the allowance for credit losses in December showed improving economic conditions compared to the forecast utilized in September, which resulted in a decrease in the allowance for credit losses as of December 31, 2020, and also reduced the provision for credit losses this quarter, compared to the prior quarter. At December 31, 2020, the allowance for credit losses on loans totaled $220.8 million, or 1.35% of total loans and 1.48% of total loans excluding PPP loans. Additionally, the liability for unfunded lending commitments at December 31, 2020 was $38.3 million, an increase of $3.1 million over the liability at September 30, 2020.

At December 31, 2020, total non-performing assets amounted to $26.6 million, a decrease of $13.7 million from the previous quarter. Non-performing assets are comprised of non-accrual loans and foreclosed real estate ($26.5 million and $93 thousand, respectively). At December 31, 2020, the balance of non-accrual loans, which represented .16% of loans outstanding, included business loans of $22.5 million, business real estate loans of $2.2 million, and personal real estate loans of $1.8 million. Loans more than 90 days past due and still accruing interest totaled $22.2 million at December 31, 2020.

Other
During the 4th quarter of 2020, the Company distributed a 5% stock dividend on its common stock and paid a cash dividend of $.257 per common share (as restated for the stock dividend), representing an 8.9% increase over the same period last year.

Forward Looking Information
This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements.

COMMERCE BANCSHARES, INC. EARNINGS HIGHLIGHTS 4th Quarter 2020

 
CAUTIONARY STATEMENT 2 A number of statements we will be making in our presentation and in the accompanying slides are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements of the Corporation’s plans, goals, objectives, expectations, projections, estimates and intentions. These forward- looking statements involve significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Factors that could cause the Corporation’s actual results to differ materially from such forward- looking statements made herein or by management of the Corporation are set forth in the Corporation’s 2019 Annual Report on Form 10-K, 3RD Quarter 2020 Report on Form 10-Q and the Corporation’s Current Reports on Form 8-K.

 
$1.11 EPS 3 • Allowance for credit losses on loans to total loans decreased to 1.35% – Decreased to 1.48% excluding Paycheck Protection Program (“PPP”) loans. • Net charge-offs to total loans of .19% and Non-performing assets to total loans of .16%. • Loans on deferral of .6% of total loans. • Non-interest income to total revenue of 39.2%. • Non-interest income up 4.3% over Q3. • QTD average loans flat to Q3 at $16.4B. • QTD average deposits increased by $843MM in Q4 compared to Q3. • Tangible common equity to tangible assets of 9.92%. • Net interest margin decreased 17 bps from Q3 to 2.80% (8 bps excluding adjustments4). • Wealth management client assets increased in Q4 by 11.9% to $61.2MM. Highlights Well-positioned in a challenging environment 4Q2020 EARNINGS HIGHLIGHTS $148.6 million PPNR1 $15.5 million decrease Allowance for Credit Losses on Loans $129.9 million Income Available to Common 15.49% ROACE $1.2 billion Deposit Growth3 1 See the non-GAAP reconciliation on page 13; 2 Compared to 3Q2020; 3 Compared to 3Q2020, based on period-end balances; 4 Adjustments include a -$3.5 million adjustment to premium amortization on mortgage-backed securities for prepayment speed changes and a -$2.1 million decrease in inflation income on our Treasury inflation-protected securities. 1.63% ROAA

 
Average Balances Change vs. $ in millions 4Q20 3Q20 4Q19 Highlights Commercial1 $10,643.0 $(30.2) $1,559.4 • Linked quarter reflects lower business loans offset by higher construction and business real estate • YoY reflects PPP Consumer 5,718.3 25.5 358.2 • Linked quarter reflects higher personal real estate partially offset by lower auto, credit card, home equity Total Loans $16,361.3 $(4.7) $1,917.6 Investment Securities $12,302.5 $846.9 $3,480.2 • Reflects net purchase activity Interest Earning Deposits with Banks $1,082.6 $58.2 $692.5 • Reflects liquidity from deposit growth Deposits $25,590.7 $843.3 $5,433.9 • 3.4% quarterly growth, 27% annual growth Equity $3,336.1 $(30.0) $204.6 • Linked quarter reflects Q3 redemption of preferred stock Book Value per Common Share2 $29.03 $0.80 $3.60 • 2.8% quarterly growth, 14.2% annual growth BALANCE SHEET HIGHLIGHTS 4 1 PPP average balances were $1,476.2 million and $1,505.7 million as of December 31, 2020 and September 30, 2020, respectively 2 For the quarters ended December 31, 2020

 
$13.6 $14.9 $15.3 $6.6 $9.8 $10.3 3Q204Q19 4Q20 $20.2 $24.7 $25.6 +27% $9.1 $10.6 $10.6 $5.4 $5.7 $5.7 3Q204Q19 4Q20 $14.5 $16.3 $16.3 +13% BALANCE SHEET 5 Loans Consumer Loans Commercial Loans Loan Yield Deposits QTD Average Balances $ billions Non-Interest Bearing Interest Bearing Deposit Interest Bearing Deposit Yield QTD Average Balances $ billions 4.47% 3.69% 3.69% 0.52% 0.18% 0.12%

 
Change vs. $ in millions 4Q20 3Q20 4Q19 Highlights Net Interest Income $209.8 $(6.2) $7.1 • Linked quarter (LQ) decline due to lower earning asset yields partially offset by lower deposit costs and larger balance sheet. Non-Interest Income $135.1 $5.5 $(8.3) • LQ increase in bank card, trust fees and mortgage loan sales. • Excluding the one-time gain of the corporate trust business sale in Q419, non-interest income grew $3.1MM, or 2.4%. Non-Interest Expense $196.3 $5.5 $1.1 • Increase of 2.9% over LQ, .6% over prior year. • LQ increase due to higher incentive compensation. Pre-Tax, Pre-Provision Net Revenue1 $148.6 $(6.1) $(2.4) Investment Securities Gains (Losses), Net $12.3 $(3.8) $12.6 • Q4 fair value gains on private equity portfolio and MBS sale gains. Provision for Credit Losses $(4.4) $(7.5) $(19.6) • Declines primarily driven by improvement in economic forecast Net-Income Available to Common Shareholders $129.9 $4.9 $25.3 4Q20 3Q20 4Q19 Net Income per Common Share – Diluted $1.11 $1.06 $.88 Efficiency Ratio 56.68% 55.00% 56.29% • Continued expense discipline Net Yield on Interest Earning Assets 2.80% 2.97% 3.36% • Lower earning asset yields partially offset by lower deposit costs. INCOME STATEMENT HIGHLIGHTS 61 See the non-GAAP reconciliation on page 13

 
7 PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) $143 $151 $203 $195 4Q2019 $346 $130 $155 $216 $191 3Q2020 $346 $135 $149 $210 $196 4Q2020 $345 Non-Interest Income (+) Net Interest Income (+) Non-Interest Expense (-) Pre-Tax, Pre-Provision Net Revenue (=) 4Q2020 Comparison vs. 4Q2019 -1.6% vs. 3Q2020 -3.9% See the non-GAAP reconciliation on page 13

 
Average Loan to Deposit Ratio3 SOUND CAPITAL AND LIQUIDITY POSITION 8 Total Risk-Based Capital Ratio1 1S&P Global Market Intelligence, Information as of September 30, 2020 2Period-end balances, as of December 31, 2020 3Includes loans held for sale, for the quarter ended December 31, 2020 15.8% 15.3% 15.1% 15.0% 14.7% 14.6% 14.3% 14.2% 14.2% 14.2% 14.1% 13.8% 13.8% 13.7% 13.5% 12.9% 12.9% 12.8% 12.4% 12.2% UBSI SFNC UMPQ OZK FULT CFR PB CBSH VLY FCNC.A PNFP BXS UMBF BOKF ASB WBS HWC ONB WTFC FNB Peer Median: 14.1% Core Deposits $25.1 Billion2 Large, stable deposit base and low loan to deposit ratio Loan to Deposit Ratio Total Deposits 64% Average Loan to Deposit Ratio190%Peer Average Commerce 93%7% Core Deposits - Non-Interest Bearing - Interest Checking - Savings and Money Market Certificates of Deposit

 
$15.2 $7.6 $8.0$8.3 $10.4 4Q19 3Q20 4Q20 MAINTAINING STRONG CREDIT QUALITY 9 Net Loan Charge-Offs (NCOs) $ in millions NCOs- CBSH NCOs - Peer Average NCO/Average Loans1 - CBSH $160.7 $236.4 $220.8 $143.0 $301.8 4Q203Q204Q19 Allowance for Credit Losses on Loans (ACL) $ in millions ACL - CBSH ACL - Peer Average ACL / Total Loans - CBSH $10.2 $40.3 $26.5 $121.1 $150.7 3Q204Q19 4Q20 Non-Performing Loans (NPLs) $ in millions NPLs - CBSH NPLs - Peer Average 15.7x 5.9x 8.3x 1.5x 2.7x 4Q19 3Q20 4Q20 Allowance for Credit Losses on Loans (ACL) to NPLs ACL / NPLs - CBSH ACL / NPLs - Peer Average Percentages are illustrative and not to scale; Peer Banks include: ASB, BOKF, BXS CFR, FCNC.A, FNB, FULT, HWC, ONB, OZK, PB, PNFP, SFNC, UBSI, UMBF, UMPQ, VLY, WBS, WTFC 1As a percentage of average loans (excluding loans held for sale) NPLs / Total Loans - CBSH NCO/Average Loans1 – Peer Average .07% NPLs / Total Loans – Peer Average .25% .16% .65% .71% ACL / Total Loans – Peer Average 1.09% 1.44% 1.35% .73% 1.42% .42% .18% .19%.18% .18%

 
IMPACT OF CECL: ALLOCATION OF ALLOWANCE 10 Methodology and Variables • CECL model utilizes 3rd party baseline forecast • Key variables include: GDP, disposable income, unemployment rate, various interest rates, CPI inflation rate, HPI, CREPI and market volatility CECL allowances reflect the economic and market outlook due to COVID-19 * Note: The Liability for unfunded lending commitments is included in Other liabilities on the consolidated balance sheets. December 31, 2019 Incurred Model September 30, 2020 CECL Model December 31, 2020 CECL Model $ in millions Allowance for Loan Losses % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Allowance for Credit Losses (ACL) % of Outstanding Loans Business $ 44.3 .80% $ 78.7 1.18% $ 63.7 .97% Bus R/E 25.9 .91% 31.3 1.05% 30.1 .99% Construction 21.6 2.40% 18.4 1.83% 27.7 2.72% Commercial total $ 91.8 .99% $ 128.4 1.20% $ 121.5 1.15% Consumer 15.9 .81% 18.2 .90% 15.2 .78% Consumer CC 48.0 6.27% 79.2 12.23% 74.0 11.30% Personal R/E 3.1 .13% 8.7 .32% 8.3 .29% Revolving H/E .6 .18% 1.8 .55% 1.5 .48% Overdrafts 1.2 19.51% .1 2.56% .3 8.29% Consumer total $ 68.9 1.27% $ 108.0 1.88% $ 99.3 1.73% Allowance for credit losses on loans $ 160.7 1.09% $ 236.4 1.44% $ 220.8 1.35% Liability for unfunded lending commitments 1.1 35.2 38.3 Total allowance for credit losses $ 161.8 $ 271.6 $ 259.1

 
PROVIDING RELIEF TO OUR CUSTOMERS Active deferral exposure reduced as pandemic continues 11 Payment Relief Requests 1Deferrals are defined as modifications, payment deferrals, forbearance agreements, or change in terms, % of Portfolio calculated on Total Loans (excluding PPP loans); 2 No direct consumer credit exposure Active deferrals1 as of September 30, 2020 Active deferrals1 as of December 31, 2020 Loan Type Number of Requests % of Portfolio (by $ amount) Total Amount of Requests Number of Requests % of Portfolio (by $ amount) Total Amount of Requests Commercial 11 .5% $48MM 8 .6% $57MM Mortgage 111 1.0% $25MM 86 .7% $18MM Consumer Card 73 .1% $0.5MM 93 .1% $0.6MM Installment 553 .8% $11MM 500 .6% $8MM Med/HSF2 76 .1% $0.2MM 109 .1% $0.3MM TOTAL 824 .6% $85MM 796 .6% $84MM

 
LOAN PORTFOLIO: LIMITED EXPOSURE TO PANDEMIC-SENSITIVE INDUSTRIES 12 While we expect nearly every industry to be impacted to some degree by Coronavirus-related disruptions, we have identified eight industries that will be most impacted. Highest Impacted Industries $ in millions 9/30 $ in millions 12/31 % of Loan Portfolio 12/31 Hospitals $758 $729 4.9% Multifamily / Student Housing 608 550 3.7% CRE Retail 389 387 2.6% Senior Living 310 311 2.1% Hotels 291 303 2.0% Energy 150 173 1.1% Retail Stores 141 111 .7% Restaurants 67 67 .4% Total $2,714 $2,631 17.5% 18% 82% Highest Impacted Industries All Other Loans Industry breakdowns represent outstanding balances, excluding PPP loans, as of December 31, 2020, segmented by NAICS codes Loan Portfolio Outstandings

 
NON-GAAP RECONCILIATIONS 13 For The Three Months Ended (DOLLARS IN THOUSANDS) Dec. 31, 2020 Sept. 30, 2020 Dec. 31, 2019 A Net Interest Income $ 209,763 $ 215,962 $ 202,659 B Non-Interest Income $ 135,117 $ 129,572 $ 143,461 C Non-Interest Expense $ 196,310 $ 190,858 $ 195,174 Pre-Provision Net Revenue (A+B-C) $ 148,570 $ 154,676 $ 150,946 Pre-tax, Pre-provision Net Revenue