CBSH · Commerce Bancshares, Inc.

Commerce Bancshares, Inc. realized a significant $99 million pre-tax gain from Visa Inc.'s acceptance of its tendered 411,723 shares of Visa Class B-2 common stock, exchanged for Visa Class B-3 and Class C common stock under the Exchange Offer announced on April 27, 2026. The gain was calculated by marking the received Visa Class C shares to fair value, using the May 8, 2026, closing price of Visa Class A common stock at $318.79 per share, reflecting the conversion privilege. This non-operating gain enhances near-term earnings without altering core banking operations. Concurrently, the Company approved repositioning part of its available-for-sale debt securities portfolio by selling securities with an amortized cost of $911 million yielding approximately 2.5%, anticipating a $95 million pre-tax loss. The strategy involves reinvesting proceeds into higher-yielding assets at around 4.0%, aimed at increasing net interest income, mitigating earnings volatility from interest rate changes, and improving balance sheet quality and flexibility. The offsetting nature of the $99 million gain and $95 million loss results in an approximately neutral impact on the Common Equity Tier 1 ratio, preserving capital strength. Future fair value marking of Visa Class C shares will continue using Visa Class A prices, introducing some equity market linkage, while actual repositioning outcomes depend on market conditions and Visa stock performance.