# Commerce Bancshares (CBSH) — Financial Analysis

**Exchange:**   
**Coverage as of:** 2026-Q2  
**Updated:** 2026-06-17  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/cbsh/thesis · /memo/cbsh

## Financial Snapshot

---
source: coverage-next-full
step: 04
ticker: CBSH
company: Commerce Bancshares
date: 2026-06-14
---

### Step 04 — Financial Quality & Adversarial Research Sweep: Commerce Bancshares (CBSH)

---

#### 1. Financial Statement Quality Assessment

##### Income Statement Quality

**Quality: HIGH**

CBSH's income statement is clean and consistent. Key observations: [S1][S2]

- NII growth is driven by genuine volume and rate improvement, not aggressive asset growth or risk-taking
- Provision for loan losses ($68M in FY2025) is modest relative to the loan portfolio (~$17.5B) and tracks actual charge-off experience — no signs of under-reserving
- Non-interest income breakdown shows diversified fee streams; no concentrated one-time items inflating reported results
- The bank has not engaged in aggressive securities portfolio restructuring or AOCI manipulation visible in the filings

**AOCI Watch:** Rising rates 2022–2023 created significant unrealized losses on securities portfolios industry-wide (the "SVB problem"). CBSH's tangible book value held up better than many peers due to shorter securities duration and stronger operational earnings. AOCI position has improved as rates stabilize. [S1]

##### Balance Sheet Quality

**Quality: HIGH**

| Metric | FY2024 | Industry Context |
|--------|--------|------------------|
| NPL Ratio | 0.11% | Industry avg ~0.5–0.8% |
| NCO Ratio | 0.23% | Industry avg ~0.35–0.50% |
| Reserve/Loans (ALLL/Loans) | ~0.9–1.1% | Adequate given credit quality |
| Loan/Deposit Ratio | ~65% | Conservative; ample liquidity |
| CET1 | 17.17% | Well above regulatory minimum (4.5%) |
| TCE/TA | ~11.1% | Strong; top quartile |

The loan portfolio is conservatively structured: predominantly C&I and owner-occupied CRE rather than speculative construction or high-leverage buyout loans. The bank has avoided the large office CRE exposure that has plagued New York and San Francisco-focused lenders. [S1]

##### Cash Flow Quality

**Quality: HIGH**

CBSH consistently generates operating cash flows well in excess of net income (earnings quality characteristic). The primary use of excess capital is: (1) dividends (58-year growth streak), (2) share repurchases, and (3) selective acquisitions (FineMark). The bank has not needed to issue equity for capital needs — its CET1 ratio is generated organically. [S1]

---

#### 2. Accounting Adjustments

| Adjustment | Amount | Direction | Rationale |
|-----------|--------|-----------|-----------|
| CECL reserve adequacy | No adjustment | — | Reserve appears adequate vs. actual loss history |
| AOCI normalization | N/A | — | AOCI losses partially reversed; no adjustment needed for through-cycle view |
| Purchase accounting amortization (FineMark) | +$10–15M/yr | Add back | Non-cash; distorts reported non-interest expense |
| SBC expense | ~$20–25M/yr | No adjustment | Stock-based comp in banking is modest; retain as expense |

**Adjusted Net Income (FY2025):** ~$575–580M vs. reported $566M (approximately 1.5–2.5% adjustment for FineMark intangible amortization)

---

#### 3. Adversarial Research Sweep

*Note: No earnings call transcripts used. Adversarial research based on SEC filings, press releases, legal databases, short reports, and web research.*

##### 3.1 Short Interest
Short interest in CBSH is minimal — consistently below 1.5% of float. No active short campaigns or bearish activist positions identified in available public sources. [S4]

##### 3.2 Regulatory / Legal Matters
- **No material enforcement actions** identified in the 10-K or public records
- **OFR / CFPB compliance:** CBSH mentions general consumer compliance risk in 10-K risk factors, consistent with its card and consumer banking operations. No specific consent orders or enforcement matters identified
- **CRA Rating:** "Satisfactory" per most recent OCC examination — adequate for expansion purposes (FineMark approval)
- The bank's 10-K notes ongoing litigation arising from ordinary banking operations; no individually material cases disclosed

##### 3.3 Known Concerns / Controversies
- **Family governance:** Three generations of Kemper family active (David W. Kemper as Executive Chairman, John W. Kemper as CEO, Jonathan M. Kemper as Director). This structure is a disclosed risk but has not generated shareholder activism. Say-on-Pay at 91% approval signals alignment. [S3]
- **FineMark acquisition premium:** The $585M all-stock deal for $3.9B in assets implies a ~15% premium to book. CBSH's stock fell modestly on deal announcement, reflecting market skepticism about acquisition value creation for a historically organic bank
- **Missouri market saturation:** CBSH has the largest branch network in Missouri but the state's population growth rate is below the US average. Long-term organic growth limited by market demographics

##### 3.4 Analyst / Public Criticism
- Consensus is overwhelmingly Hold with 7 of 8 analysts neutral. Main critique: the stock's premium P/TBV (~2.0x vs. ~1.5x peer average) limits upside relative to peer banks. "Show me" story on FineMark integration
- No short reports, investigative journalism pieces, or accounting concerns identified in research

##### 3.5 ESG / Reputational Flags
- No material ESG controversies identified
- Board diversity: 4 of 12 directors are women (33%); 10 of 12 are independent (83%) — above average for banks of this size
- No significant environmental litigation or social media controversy

---

#### 4. Financial Quality Summary

| Dimension | Grade | Notes |
|-----------|-------|-------|
| Earnings quality | A | Clean, consistent, no one-time inflation |
| Balance sheet quality | A+ | Best-in-class credit quality; fortress capital |
| Cash flow conversion | A | FCF consistently exceeds net income |
| Accounting transparency | A | Standard bank GAAP; no complex structures |
| Governance red flags | B+ | Family control is disclosed; not acute risk |
| Legal/regulatory risk | A | No material enforcement actions |

---

#### Source Index

| ID | Source | Reference |
|----|--------|-----------|
| S1 | SEC EDGAR 10-K FY2025 + XBRL | CBSH_financials/xbrl/xbrl_summary.md |
| S2 | StockAnalysis.com | CBSH_financials/other/stockanalysis_summary.md |
| S3 | Proxy statement 2025 | CBSH_financials/proxy/governance_and_compensation.md |
| S4 | Web research / adversarial sweep | Tavily search, Jun 2026 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CBSH/fundamental

## Navigation

- Overview: /stocks/cbsh
- Financials (this page): /stocks/cbsh/financials
- Thesis: /stocks/cbsh/thesis
- Investment Memo: /memo/cbsh
- Coverage universe: /stocks