[CBSH] Commerce Bancshares Thesis 2026: Midwest Super Regional Drives Diversified Fee Income Capital Return

Key Takeaways

• CBSH FY2025 revenue ~$1.65-1.78B (+4-8% YoY) with adj. EPS ~$4.05-4.45 reflecting continued ~$32-34B aggregate average earning assets + ~3.5-3.8% aggregate net interest margin + ~$0.65-0.72B aggregate Net Interest Income + ~$0.55-0.62B aggregate Non-Interest Income (Trust + Wealth Management + Bank Card + Deposit Account fees) under continued Chairman + CEO John W. Kemper since January 2024 (~22-month tenure as Commerce Bancshares CEO; selected post-January 2024 succeeded David W. Kemper retirement after ~33-year tenure as CEO from 1991-2024; selected primary fourth-generation Kemper family leadership at Commerce Bancshares).
• Diversified Fee Income Pipeline (~$0.55-0.62B revenue): ~$0.55-0.62B aggregate Non-Interest Income (~33-35% revenue mix; selected primary Trust Fee + Bank Card Transaction + Deposit Account + Capital Markets + Brokerage Service Fee aggregate); selected primary Trust + Wealth Management ~$70B+ aggregate AUM/AUA (selected primary Private Banking + Trust + Investment Management + selected various aggregate Family Office service); selected various aggregate Bank Card Transaction Fee ~$0.18-0.22B (selected primary Commercial Card + Consumer Credit Card + Debit Card interchange) + selected various aggregate Deposit Account Service Fee ~$0.10-0.12B + selected various aggregate Capital Markets + Brokerage + Mortgage Banking Revenue.
• Midwest Super Regional Loan + Deposit Pipeline (~$1.05-1.20B Net Interest Income): ~$1.05-1.20B aggregate Net Interest Income (~62-67% revenue mix); selected primary ~$32-34B aggregate average earning assets + selected various aggregate ~$26-28B aggregate loans (Commercial + Commercial Real Estate + Consumer + Personal Banking + Residential Mortgage) + selected various aggregate ~$29-31B aggregate deposits (selected primary ~$13-15B aggregate non-interest-bearing deposits + selected various aggregate ~$16-18B aggregate interest-bearing deposits) + selected various aggregate Missouri + Kansas + Illinois + Oklahoma + Colorado footprint (~150+ branches + selected various aggregate ~ATM network) + selected various aggregate ~3.5-3.8% aggregate net interest margin.
• Capital position + balance sheet: ~$1.075 aggregate annual dividend (~25-28% aggregate payout ratio; ~1.7-1.9% aggregate dividend yield; selected ~57+ year aggregate dividend increase track record — Dividend Aristocrat; longest active streak in US banking); ~$50-150M aggregate FY2025 buybacks; aggregate capital return ~$190-290M FY2025; CET1 ratio ~16.5-17.5% (top-quartile vs US bank peers); aggregate Tier 1 leverage ~10.5-11.0%; aggregate stock dividend (5% annual stock dividend record); investment-grade A2/A credit rating; ~130-131M diluted shares.
• FY2026 thesis catalysts: Diversified Fee Income pipeline (~$0.55-0.62B + $70B+ Trust/Wealth AUM/AUA) + Midwest Super Regional Loan + Deposit pipeline ($32-34B earning assets + ~3.5-3.8% NIM) + ~57+ year dividend increase track + 5% annual stock dividend + ~16.5-17.5% CET1 capital fortress + fourth-generation Kemper family leadership continuity.

Company Background

Commerce Bancshares, Inc. (NASDAQ: CBSH) is a US Midwest super regional bank holding company, founded 1865 as Kansas City Savings Association (~160-year heritage; selected primary one of oldest continuously operating banks in US Midwest). Selected post-1865-2025 selected various aggregate ~$0+ aggregate cumulative M&A + organic franchise expansion across Missouri + Kansas + Illinois + Oklahoma + Colorado; selected primary fourth-generation Kemper family leadership at Commerce Bancshares (selected primary James M. Kemper Jr. + Jonathan Kemper + David W. Kemper [CEO 1991-2024] + John W. Kemper [CEO January 2024-present]); HQ Kansas City Missouri; ~5,000-5,200 employees; selected various aggregate ~150+ branch network across Missouri + Kansas + Illinois + Oklahoma + Colorado.

CBSH operates as 1 primary segment (Consumer + Commercial + Wealth banking). Net Interest Income ~$1.05-1.20B (~62-67% revenue mix; selected primary Commercial + Commercial Real Estate + Consumer + Personal Banking + Residential Mortgage lending). Non-Interest Income ~$0.55-0.62B (~33-35% revenue mix; selected primary Trust + Wealth Management + Bank Card + Deposit Account fees + Capital Markets + Brokerage + Mortgage Banking). Geographic mix: Missouri ~45-50% + Kansas ~15-20% + Illinois ~10-15% + Oklahoma ~5-10% + Colorado ~5-10% + Other ~5-10%.

Capital position: ~$1.075 aggregate annual dividend (~25-28% aggregate payout ratio; ~1.7-1.9% aggregate dividend yield; selected ~57+ year aggregate dividend increase track record — Dividend Aristocrat; longest active streak in US banking); ~$50-150M aggregate FY2025 buybacks; aggregate capital return ~$190-290M FY2025; CET1 ratio ~16.5-17.5%; investment-grade A2/A credit rating; ~130-131M diluted shares.

Diversified Fee Income Pipeline (~$0.55-0.62B Revenue)

The Diversified Fee Income pipeline is CBSH's foundation thesis: ~$0.55-0.62B aggregate Non-Interest Income (~33-35% revenue mix; selected primary Trust Fee + Bank Card Transaction + Deposit Account + Capital Markets + Brokerage Service Fee aggregate); selected primary Trust + Wealth Management ~$70B+ aggregate AUM/AUA (selected primary Private Banking + Trust + Investment Management + selected various aggregate Family Office service); selected various aggregate Bank Card Transaction Fee ~$0.18-0.22B (selected primary Commercial Card + Consumer Credit Card + Debit Card interchange) + selected various aggregate Deposit Account Service Fee ~$0.10-0.12B + selected various aggregate Capital Markets + Brokerage + Mortgage Banking Revenue. Selected primary CBSH Non-Interest Income mix: ~33-35% (top-quartile fee income mix vs US regional bank peer median ~22-25%).

FY2025 Diversified Fee Income dynamics ($0.55-0.62B aggregate revenue): selected continued post-2024 ~+5-8% aggregate Non-Interest Income growth (Trust + Wealth Management AUM/AUA appreciation + Bank Card Transaction volume + selected various aggregate Capital Markets + Brokerage activity) + ~$0.55-0.62B aggregate Non-Interest Income + selected various aggregate ~$70B+ aggregate Trust + Wealth Management AUM/AUA + selected various aggregate Commercial Card + Consumer Credit Card interchange. Selected post-2024 ~$0.55-0.85 incremental annual EPS contribution as Diversified Fee Income pipeline drives incremental return on tangible common equity.

FY2026 catalyst: continued Diversified Fee Income pipeline + ~$0.55-0.85 incremental annual EPS contribution under continued John W. Kemper leadership (~22-month tenure). Selected aggregate ~$0.58-0.65B aggregate Non-Interest Income + selected various ~+5-7% aggregate growth + selected various aggregate ~$74-78B+ aggregate Trust + Wealth Management AUM/AUA + selected various aggregate Bank Card Transaction Fee growth + selected various aggregate Capital Markets + Brokerage + Mortgage Banking Revenue. Risks: US Bancorp (USB, ~$70-80B Mcap; super regional) + PNC Financial (PNC, ~$70-80B; super regional) + Truist Financial (TFC, ~$60-70B; super regional) + Northern Trust (NTRS, ~$20-25B; Trust + Wealth) + Cullen/Frost Bankers (CFR, ~$8-9B; Texas super regional + comparable Trust mix) + Bank of Hawaii (BOH, ~$2-3B; super regional) + selected various aggregate Trust + Wealth Management + Bank Card competitive displacement + Trust + Wealth AUM/AUA market sensitivity considerations.

Midwest Super Regional Loan + Deposit Pipeline (~$1.05-1.20B Net Interest Income)

The Midwest Super Regional Loan + Deposit pipeline is CBSH's primary growth thesis: ~$1.05-1.20B aggregate Net Interest Income (~62-67% revenue mix); selected primary ~$32-34B aggregate average earning assets + selected various aggregate ~$26-28B aggregate loans (Commercial + Commercial Real Estate + Consumer + Personal Banking + Residential Mortgage) + selected various aggregate ~$29-31B aggregate deposits (selected primary ~$13-15B aggregate non-interest-bearing deposits + selected various aggregate ~$16-18B aggregate interest-bearing deposits) + selected various aggregate Missouri + Kansas + Illinois + Oklahoma + Colorado footprint (~150+ branches + selected various aggregate ~ATM network) + selected various aggregate ~3.5-3.8% aggregate net interest margin.

FY2025 Midwest Super Regional dynamics: selected primary ~$32-34B aggregate average earning assets + selected various aggregate ~3.5-3.8% aggregate net interest margin + selected various aggregate ~$26-28B aggregate loans + selected various aggregate ~$29-31B aggregate deposits + selected various aggregate ~$13-15B aggregate non-interest-bearing deposits (~42-48% aggregate non-interest-bearing deposit mix; top-quartile vs US regional bank peer median ~22-27%) + selected various aggregate Missouri + Kansas + Illinois + Oklahoma + Colorado footprint. Selected post-2024 ~$0.85-1.05 incremental annual EPS contribution as Midwest Super Regional Loan + Deposit pipeline drives incremental Net Interest Income.

FY2026 catalyst: continued Midwest Super Regional pipeline + ~$0.85-1.05 incremental EPS contribution. Selected aggregate ~$33-35B aggregate average earning assets + selected various aggregate ~3.5-3.8% aggregate net interest margin + selected various aggregate ~+2-4% aggregate loan growth + selected various aggregate ~+2-4% aggregate deposit growth + selected various aggregate Missouri + Kansas + Illinois + Oklahoma + Colorado footprint. Risks: US Bancorp + PNC Financial + Truist Financial + Fifth Third Bancorp (FITB, ~$25-30B; super regional) + Huntington Bancshares (HBAN, ~$22-26B; super regional) + Cullen/Frost Bankers + Regions Financial (RF, ~$20-22B; super regional) + UMB Financial (UMBF, ~$5-7B; Kansas City peer) + selected various aggregate Midwest regional bank competitive displacement + Federal Reserve interest rate cycle considerations + commercial real estate cycle considerations + deposit beta considerations.

Capital Position + Balance Sheet

Capital position + balance sheet: ~$1.075 aggregate annual dividend (~25-28% aggregate payout ratio; ~1.7-1.9% aggregate dividend yield; selected ~57+ year aggregate dividend increase track record — Dividend Aristocrat; longest active streak in US banking) + ~$50-150M aggregate FY2025 buybacks + aggregate capital return ~$190-290M FY2025 + CET1 ratio ~16.5-17.5% (top-quartile vs US bank peers) + aggregate Tier 1 leverage ~10.5-11.0% + aggregate stock dividend (5% annual stock dividend record) + investment-grade A2/A credit rating + ~130-131M diluted shares + selected various aggregate ~$3.0-3.5B aggregate tangible common equity.

FY2026 catalyst: continued ~$200-310M aggregate annual capital return + selected continued ~1.7-1.9% aggregate dividend yield + selected continued ~$1.075-1.15 aggregate annual dividend (post-FY2025 ~58+ year continued dividend increase track record) + selected continued ~16.5-17.5% CET1 + selected various aggregate ~$50-150M aggregate annual buybacks + selected continued 5% annual stock dividend record. Selected ~25-28% aggregate payout ratio + selected investment-grade A2/A credit rating support continued capital return + organic loan + deposit growth + tuck-in M&A capacity.

Key Core Metrics

• FY2025 revenue ~$1.65-1.78B (+4-8% YoY) vs $1.61B FY2024; adj. EPS ~$4.05-4.45
• 1 primary segment: Consumer + Commercial + Wealth banking
• Structure: Net Interest Income ~62-67% ($1.05-1.20B) + Non-Interest Income ~33-35% ($0.55-0.62B)
• Geographic mix: Missouri ~45-50% + Kansas ~15-20% + Illinois ~10-15% + Oklahoma ~5-10% + Colorado ~5-10%
• Branches: ~150+ Missouri + Kansas + Illinois + Oklahoma + Colorado
• Average earning assets: ~$32-34B FY2025
• Net interest margin: ~3.5-3.8%
• Loans: ~$26-28B aggregate (Commercial + CRE + Consumer + Mortgage)
• Deposits: $29-31B aggregate ($13-15B non-interest-bearing; ~42-48% NIB mix)
• Trust + Wealth Management AUM/AUA: ~$70B+ aggregate
• Bank Card Transaction Fee: ~$0.18-0.22B (Commercial + Consumer + Debit interchange)
• Deposit Account Service Fee: ~$0.10-0.12B
• ~57+ year aggregate dividend increase track record (Dividend Aristocrat; longest active streak in US banking)
• 5% annual stock dividend record
• CET1 ratio ~16.5-17.5% (top-quartile US bank peer)
• Tier 1 leverage ~10.5-11.0%
• ~130-131M diluted shares; ~$190-290M total capital return FY2025
• Dividend ~$1.075 annual (~25-28% payout; ~1.7-1.9% yield; ~57+ year increase track)
• ~$50-150M aggregate FY2025 buybacks
• Investment-grade A2/A credit rating
• Fourth-generation Kemper family leadership (James M. Kemper Jr. → Jonathan Kemper → David W. Kemper [1991-2024] → John W. Kemper [January 2024-present])

Market Evaluation

CBSH FY2026 market evaluation: at ~$55-65 share price + ~130-131M diluted shares = ~$7-9B market cap; ~$1.075 aggregate annual dividend + ~1.7-1.9% aggregate dividend yield. Selected primary CBSH peers: US Bancorp (USB, ~$70-80B Mcap; super regional) + PNC Financial (PNC, ~$70-80B; super regional) + Truist Financial (TFC, ~$60-70B; super regional) + Fifth Third Bancorp (FITB, ~$25-30B; super regional) + Huntington Bancshares (HBAN, ~$22-26B; super regional) + Regions Financial (RF, ~$20-22B; super regional) + Northern Trust (NTRS, ~$20-25B; Trust + Wealth) + Cullen/Frost Bankers (CFR, ~$8-9B; Texas super regional + comparable Trust mix) + UMB Financial (UMBF, ~$5-7B; Kansas City peer) + Bank of Hawaii (BOH, ~$2-3B; super regional) + selected various aggregate US regional bank companies. Selected CBSH ~14-17x P/E (premium super regional with diversified fee income mix + capital fortress + Dividend Aristocrat) + selected ~1.9-2.2x P/TBV + selected ~1.7-1.9% dividend yield + selected aggregate ~$1.75-1.86B aggregate FY2026 revenue + selected aggregate ~$4.30-4.65 aggregate FY2026 EPS + selected aggregate ~$200-310M aggregate FY2026 capital return + selected aggregate Diversified Fee Income + Midwest Super Regional pipeline. FY2026 base case: ~$1.75-1.86B aggregate revenue + ~$4.30-4.65 adj. EPS + ~$200-310M aggregate capital return. Bull case: Diversified Fee Income acceleration (Trust + Wealth AUM/AUA to ~$78-82B + Bank Card Transaction Fee growth) + Federal Reserve interest rate cuts (deposit beta tailwind + ~3.7-3.9% aggregate net interest margin recovery) + Midwest Super Regional loan + deposit growth acceleration drives ~$1.82-1.92B aggregate revenue + ~$4.55-4.95 EPS. Bear case: US Bancorp + PNC + Truist + Fifth Third + Huntington + Cullen/Frost + UMB Financial competitive intensification + Federal Reserve interest rate cycle considerations + commercial real estate cycle considerations + deposit beta considerations + Trust + Wealth AUM/AUA market sensitivity considerations + post-January 2024 John W. Kemper succession planning considerations drives ~$1.60-1.70B revenue + ~$3.65-4.00 EPS. The thesis depends on Diversified Fee Income + Midwest Super Regional Loan + Deposit + ~57+ year dividend increase track record + ~16.5-17.5% CET1 capital fortress.