What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-22 · 246 added, 252 removed, 2583 unchanged (16% of the section changed)

8 unchanged sentences

generally accepted accounting principles.

Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 25, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

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Assessment for credit losses related to loans collectively evaluated for impairment

As discussed in Notes 1 and 2 to the consolidated financial statements, the allowance for credit losses related to loans evaluated on a collective basis (the December 31, 2023 collective ACL) was $161.2 million of a total allowance for credit losses of $162.4 million as December 31, 2023.

The allowance for credit losses on loans and leases is measured on a collective (pool) basis whereas loans are aggregated into pools based on similar risk characteristics.

The Company estimates the collective ACL utilizing average historical loss rates, calculated using historical net charge-offs and

outstanding loan balances during a lookback period for each pool.

In certain pools, if the Company’s own historical loss rate is not reflective of loss expectations, the historical loss rate is augmented by industry and peer data.

The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts (forecast adjusted loss rate).

These adjustments increase or decrease the average historical loss rate to reflect expectations of future losses given a single path economic forecast of key macroeconomic variables.

As discussed in Notes 1 and 2 to the consolidated financial statements, the total allowance for credit losses was $162.7 million as of December 31, 2024.

The allowance for credit losses on loans and leases is measured on a collective (pool) basis where loans are aggregated into pools based on similar risk characteristics.

The Company estimates the collective ACL utilizing average historical loss rates, calculated using historical net charge-offs and outstanding loan balances during a lookback period for each pool.

In certain pools, if the Company’s own historical loss rate is not reflective of loss

expectations, the historical loss rate is augmented by industry and peer data.

The calculated average net charge-off rate is then adjusted for current conditions and reasonable and supportable forecasts (forecast adjust loss rate).

These adjustments increase or decrease the average historical loss rate to reflect expectations of further losses given a single path economic forecast of key macroeconomic variables.

The adjustments are based on results from various regression models projecting the impact of the macroeconomic variables to loss rates.

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The forecast adjustment loss rate is applied to the amortized cost of loans over the remaining contractual lives, adjusted for expected prepayments.

The allowance is further adjusted for certain qualitative factors not included in historical loss rates or the macroeconomic forecast, which include changes in portfolio composition and characteristics, underwriting practices, watchlist trends, or significant unique events or conditions.

The allowance is further adjusted for certain qualitative factors not included in historical loss rates or the macroeconomic forecast, which include concentrations, changes in portfolio composition and characteristics, underwriting practices, watchlist trends, or significant unique events or conditions.

We identified the assessment of the December 31, 2024 collective ACL as a critical audit matter.

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We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the collective ACL estimates, including controls over the (1) development and approval of the collective ACL methodology, (2) performance monitoring of the collective ACL methodology and model, (3) identification and determination of the key factors and assumptions used to estimate the collective ACL, (4) development of qualitative adjustments, and (5) analysis of the collective ACL results, trends, and ratios.

We evaluated the Company’s process to develop the collective ACL estimates by testing certain sources of data, factors, and assumptions, and considered the relevance and reliability of such data, factors, and assumptions.

We evaluated the Company’s process to develop the collective ACL results by testing certain sources of data, factors, and assumptions, and considered the relevance and reliability of such data, factors, and assumptions.

We evaluated whether the historical losses in the Company’s portfolio are representative of the credit characteristics of the current portfolio.

We involved credit risk professionals with specialized skills and knowledge, who assisted in:

• evaluating the Company’s collective ACL methodology for compliance with U.S.

generally accepted accounting principles

• evaluating the Company’s collective ACL methodology for compliance with U.S generally accepted accounting principles

• evaluating the collective ACL methodology and model for conceptual soundness by inspecting the methodology and model documentation to determine whether the methodology and model are suitable for intended use

• testing the historical losses period and the reasonable and supportable forecast period by comparing them to the Company’s business environment and relevant industry practices

• evaluating the methodology used to develop the qualitative factors and the effect of those factors on the collective ACL compared with changes in the nature and volume of the entity's financial assets and identified limitations of the underlying quantitative model.

• evaluating the methodology used to develop the qualitative factors and the effect of those factors on the collective ACL compared with changes in the nature and volume of the entity’s loans and leases and identified limitations of the underlying quantitative model.

We assessed the sufficiency of the audit evidence obtained related to the Company’s December 31, 2024 collective ACL by evaluating the cumulative results of the audit procedures, qualitative aspects of the Company’s accounting practices and potential bias in the accounting estimates.

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NON-INTEREST INCOME

Trust fees 214,430 190,954 184,719

Bank card transaction fees

189,784 191,156 176,144

Trust fees 190,954 184,719 188,227

Deposit account charges and other fees

100,336 90,992 94,381

Consumer brokerage services 17,223 19,117 18,362

Capital market fees 19,776 14,100 14,231

Consumer brokerage services

18,141 17,223 19,117

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53,223 53,629 49,117

Deposit insurance

33,163 10,583 9,094

Professional and other services 35,077 36,198 35,805

22,353 24,511 23,827

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19,291 19,420 18,101

Deposit insurance 16,482 33,163 10,583

48,932 41,692 27,246

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Net income $ 534,401 $ 485,177 $ 500,020

Other comprehensive income (loss):

Other comprehensive income (loss), net of tax:

Net unrealized gains (losses) on other securities 172,075 209,914 ( 1,148,089 )

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Unrealized gains (losses) on cash flow hedge derivatives ( 41,111 ) ( 18,052 ) ( 19,337 )

Other comprehensive income (loss)

195,452 ( 1,163,944 ) ( 254,297 )

Other comprehensive income (loss), net of tax 132,501 195,452 ( 1,163,944 )

Comprehensive income (loss) 666,902 680,629 ( 663,924 )

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Purchases of treasury stock ( 186,622 ) ( 186,622 )

Sale of non-controlling interest of subsidiary 659 ( 659 ) —

Cash dividends paid on common stock ($ .916 per share)

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Purchases of treasury stock ( 76,890 ) ( 76,890 )

Sale of non-controlling interest of subsidiary 54 ( 54 ) —

Cash dividends paid on common stock ($ .980 per share)

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Purchases of treasury stock ( 171,407 ) ( 171,407 )

Sale of non-controlling interest of subsidiary 54 ( 54 ) —

Cash dividends paid on common stock ($ 1.029 per share)

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Other changes, net ( 15,986 ) ( 113,481 ) 15,250

Net cash provided by operating activities

Net cash provided by (used in) operating activities

577,859 488,769 559,385

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Distributions received from equity-method investment

1,434 400 13,540

Proceeds from sales of investment securities (A)

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( 170,470 ) ( 76,370 ) ( 186,622 )

Cash dividends paid on common stock

Cash dividends paid on common stock and distributions to non-controlling interest

( 145,093 ) ( 134,734 ) ( 127,466 )

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Loans transferred to foreclosed real estate

1,184 322 457

(A) Available for sale debt securities, equity securities, and other securities.

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These interests include certain investments in entities accounted for using the equity method of accounting, as well as affordable housing limited partnership interests, holdings in its investment portfolio of various asset and mortgage-backed bonds that are issued by securitization trusts, and managed discretionary trust assets that are not included in the accompanying consolidated balance sheets.

Adoption of ASU 2022-02

The Company adopted ASU 2022-02 Financial Instruments—Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023, using the prospective transition method.

This ASU eliminates the troubled debt restructuring recognition and measurement guidance and requires an entity to present gross write-offs by year of origination.

The amendments also enhance disclosure requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty.

With the exception of enhanced disclosures, there was no material impact to the Company's consolidated financial statements from adoption of this ASU.

Since the Company's adoption date, all restructurings are evaluated to determine whether they are modifications to a borrower experiencing financial difficulty.

Loans that were accounted for under the troubled debt restructuring method as of December 31, 2022 will continue to be accounted for under that method until they are paid off or modified.

Cash, Cash Equivalents and Restricted Cash

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Restricted cash is comprised of cash collateral on deposit with another financial institution to secure interest rate swap transactions.

Restricted cash is included in other assets in the consolidated balance sheets and totaled $ 101 thousand and $ 6.7 million at December 31, 2023 and 2022, respectively.

Restricted cash is included in other assets in the consolidated balance sheets and totaled $ 82 thousand and $ 101 thousand at December 31, 2024 and 2023, respectively.

During 2020, the Federal Reserve System, which historically required the Bank to maintain cash balances at the Federal Reserve Bank, reduced the reserve requirement ratios to zero percent effective March 26, 2020.

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Loans are placed on non-accrual status when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment.

Business, construction real estate, business real estate, and personal real estate loans that are contractually 90 days past due as to principal and/or interest payments are generally placed on non-accrual status, unless they are both well-secured and in the process of collection.

Consumer, revolving home equity and credit card loans are exempt under regulatory rules from being classified as non-accrual.

Business, construction real estate, business real estate, and individually significant personal real estate and consumer loans that are contractually 90 days past due as to principal and/or interest payments are generally placed on non-accrual status, unless they are both well-secured and in the process of collection.

Personal real estate, consumer, revolving home equity and credit card loans are generally exempt under regulatory rules from being classified as non-accrual.

When a loan is placed on non-accrual status, any interest previously accrued but not collected is reversed against current interest income, and the loan is charged off to the extent uncollectible.

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Modifications of loans to borrowers in these situations may indicate that the borrower is facing financial difficulty.

Troubled Debt Restructurings

Prior to the Company's adoption of ASU 2022-02, a loan was accounted for as a troubled debt restructuring if the Company, for economic or legal reasons related to the borrower's financial difficulties, granted a concession to the borrower that it would not otherwise consider.

A troubled debt restructuring typically involves (1) modification of terms such as a reduction of the stated interest rate, loan principal, or accrued interest, (2) a loan renewal at a stated interest rate lower than the current market rate for a new loan with similar risk, or (3) debt that was not reaffirmed in bankruptcy.

Business, business real estate, construction and land real estate and personal real estate troubled debt restructurings with impairment charges were placed on non-accrual status.

The Company measured the impairment loss of a troubled debt restructuring at the time of modification based on the present value of expected future cash flows.

Subsequent to modification, troubled debt restructurings were subject to the Company’s allowance for credit loss model, which is discussed below and in Note 2, Loans and Allowance for Credit Losses.

Troubled debt restructurings that are performing under their contractual terms continue to accrue interest, which is recognized in current earnings.

Loans that were accounted as troubled debt restructurings at of December 31, 2022 will continue to be accounted for under that method until they are either paid off or modified.

Loans Held For Sale

Loans held for sale include student loans and certain fixed rate residential mortgage loans.

Historically, loans held for sale included student loans and certain fixed rate residential mortgage loans.

These loans are typically classified as held for sale upon origination based upon management's intent to sell the production of these loans.

The student loans are carried at the lower of aggregate cost or fair value, and their fair value is determined based on sale contract prices.

During 2024, the Company sold its remaining portfolio of student loans.

When offered, the student loans were carried at the lower of aggregate cost or fair value, and their fair value was determined based on sale contract prices.

The mortgage loans are carried at fair value under the elected fair value option.

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Securities are periodically evaluated for credit losses in accordance with the guidance provided in Accounting Standards Codification (ASC) 326.

Further discussion of this evaluation is provided in " Allowance for Credit Losses on Available for Sale Debt Securities" below.

Further discussion of this

evaluation is provided in " Allowance for Credit Losses on Available for Sale Debt Securities" below.

Gains and losses realized upon sales of securities are calculated using the specific identification method and are included in investment securities gains (losses), net, in the consolidated statements of income.

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The assets are initially recorded at fair value less estimated selling costs, establishing a new cost basis.

Initial valuation adjustments are charged to the allowance for

credit losses.

Initial valuation adjustments are charged to the allowance for credit losses.

Fair values are estimated primarily based on appraisals, third-party price opinions, or internally developed pricing models.

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Core deposit intangibles are generally amortized over periods of 8 to 14 years, representing their estimated lives, using accelerated methods.

Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income, considering appropriate prepayment assumptions.

Mortgage servicing rights are amortized in proportion to and over the period of

estimated net servicing income, considering appropriate prepayment assumptions.

Core deposit intangibles are reviewed for impairment whenever events or changes in circumstances indicate their carrying amount may not be recoverable.

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Mortgage servicing rights, while initially recorded at fair value, are subsequently amortized and carried at the lower of the initial capitalized amount (net of accumulated amortization), or estimated fair value.

The Company evaluates its mortgage servicing rights for impairment on a quarterly basis, using estimated prepayment speeds of the underlying mortgage loans serviced and stratifications based on the risk characteristics of the underlying loans.

The Company evaluates its mortgage servicing rights for impairment on a quarterly basis, using estimated prepayment speeds of the underlying mortgage loans serviced and stratification based on the risk characteristics of the underlying loans.

A valuation allowance has been established, through a charge to earnings, to the extent the amortized cost exceeds the estimated fair value.

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The Company’s contracts with customers are generally short term in nature, with a duration of one year or less, and most contracts are cancellable by either the Company or its customer without penalty.

Performance obligations for customer contracts are generally satisfied at a single point in time, typically when the transaction is

complete and the customer has received the goods or service, or over time.

Performance obligations for customer contracts are generally satisfied at a single point in time, typically when the transaction is complete and the customer has received the goods or service, or over time.

For performance obligations satisfied over time, the Company recognizes the value of the goods or services transferred to the customer when the performance obligations have been transferred and received by the customer.

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In such transactions, revenue and the related costs to provide services is presented on a net basis in the financial statements.

These transactions primarily relate to fees earned from bank card and related network and rewards costs, the sales of annuities and certain limited insurance products, and beginning in August 2023, commissions on sales of consumer brokerage transactions and products.

Most of the Company's derivative contracts are accounted for as free-standing instruments.

These instruments are carried at fair value, and changes in fair value are recognized in current earnings.

These transactions primarily relate to fees earned from bank card and related network and rewards costs and beginning in August 2023, commissions on sales of consumer brokerage transactions and products.

The Company's derivative contracts are carried at fair value, and changes in fair value are recognized in current earnings.

They include interest rate swaps and caps, which are offered to customers to assist in managing their risks of adverse changes in interest rates.

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The funded status of the plan is recognized as an other asset or other liability in the consolidated balance sheets, and changes in that funded status are recognized in the year in which the changes occur through other comprehensive income.

Plan assets and

benefit obligations are measured as of the fiscal year end of the plan.

Plan assets and benefit obligations are measured as of the fiscal year end of the plan.

The measurement of the projected benefit obligation and pension expense involve actuarial valuation methods and the use of various actuarial and economic assumptions.

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Amounts written off —

Balance, December 31, 2023

Balance at December 31, 2024 $ 34,361

Management believes all loans to directors and executive officers have been made in the ordinary course of business with normal credit terms, including interest rate and collateral considerations, and do not represent more than a normal risk of collection.

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Key Assumption December 31, 2024 December 31, 2023

Overall economic forecast • The US economy is projected to slow at the start of 2024, but not enter a recession

Overall economic forecast • The US economy will continue to grow

• Expansionary fiscal policy and less immigration cause the labor market to tighten, pushing the unemployment rate lower

• The US economy is projected to slow at the start of 2024, but not enter a recession

• Impacts of tighter monetary and fiscal policy creates uncertainty

• Consumer spending is expected to decrease

• Continued high inflation and higher cost of borrowing create a mild recession in 2023 with stalled job growth and possible job losses

• Assumes interest rate hikes will taper

Reasonable and supportable period and related reversion period • Reasonable and supportable period of one year

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• Reasonable and supportable period of one year

• Reversion to historical average loss rates within two quarters using straight-line method

• Reversion to historical average loss rates within two quarters using a straight-line method

Forecasted macro-economic variables • Unemployment rate ranges from 4.2% to 4.3% during the reasonable and supportable forecast period

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• BBB corporate yield from 5.3% to 5.9%

• Prime rate from 7.6% to 7.7%

• Housing Price Index from 305.4 to 307.4

Prepayment assumptions Commercial loans

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• Changes in the composition of the loan portfolios

• Certain stressed industries within the portfolio

• Certain portfolios sensitive to unusually high rate of inflation and supply chain issues

• Certain industries experiencing stress or emerging concerns within the portfolio

• Loans downgraded to special mention, substandard, or non-accrual status

• Consumer auto portfolio

• Certain portfolios where the model assumptions do not capture all identified loss risk

Added qualitative factors related to:

• Changes in the composition of the loan portfolios

• Certain portfolios sensitive to pandemic economic uncertainties

• Uncertainty related to unusually high rate of inflation and supply chain issues

• Certain stressed industries within the portfolio

• Certain portfolios sensitive to unusually high rate of inflation and supply chain issues

• Loans downgraded to special mention, substandard, or non-accrual status

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The forecasted macro-economic environment continuously changes which can cause fluctuations in estimated expected credit losses.

The current forecast projects the economy will slow at the start of 2024.

It is expected that fiscal policy will tighten in 2024 and consumer spending will decrease.

The labor market is expected to soften slowly, creating lower household income growth at a time when excess savings have decreased.

The impacts of tighter fiscal policy and decreased consumer spending creates significant uncertainty in the forecast.

The impacts of the market's response to unusual events or trends including high inflation, supply chain stresses, trends in health conditions, and changes in the geopolitical environment could significantly modify economic projections used in the estimation of the allowance for credit losses.

The current forecast projects the economy will continue to see a low unemployment rate.

The Federal Reserve's path of monetary policy is less certain given the upcoming change in US presidential administration as a result of the November 2024 election.

Updated information on inflation and labor market trends could impact the Federal Reserve's decision on the timing and degree of rate reductions.

The market's response to these events along with other economic, political, and social developments regionally, nationally and even globally could significantly modify economic projections used in the estimation of the allowance for credit losses.

Potential changes in any one economic variable may or may not affect the overall allowance because a variety of economic variables and inputs are considered in estimating allowance, and changes in those variables and inputs may not occur at the same rate, may not be consistent across product types and may have offsetting impacts to other changing variables and inputs.

A summary of the activity in the allowance for credit losses on loans and the liability for unfunded lending commitments during the years ended December 31, 2024 and 2023 follows:

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Balance at December 31, 2022

$ 31,743 $ 1,377 $ 33,120

Provision for credit losses on unfunded lending commitments ( 7,834 ) ( 40 ) ( 7,874 )

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Substandard — 2,663 — — — — — 2,663

Non-accrual 220 — — — — — — 220

Total Real estate-construction:

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$ 1,634,580 $ 851,719 $ 583,555 $ 294,635 $ 217,822 $ 272,205 $ 2,164,520 $ 6,019,036

Gross write-offs for the year ended December 31, 2023

$ — $ 2,260 $ 57 $ 41 $ — $ — $ 1,393 $ 3,751

Real estate-construction

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$ 479,557 $ 594,946 $ 295,841 $ 41,418 $ 498 $ 2,834 $ 31,670 $ 1,446,764

Gross write-offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ — $ —

Real estate- business

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$ 827,233 $ 1,090,271 $ 538,762 $ 451,344 $ 332,346 $ 384,918 $ 94,432 $ 3,719,306

Gross write-offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ 134 $ — $ 134

Commercial loans

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$ 2,941,370 $ 2,536,936 $ 1,418,158 $ 787,397 $ 550,666 $ 659,957 $ 2,290,622 $ 11,185,106

Gross write-offs for the year ended December 31, 2023 $ — $ 2,260 $ 57 $ 41 $ — $ 134 $ 1,393 $ 3,885

The credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided as of December 31, 2024 and 2023 below:

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$ 459,022 $ 454,064 $ 535,702 $ 712,276 $ 257,360 $ 598,997 $ 8,620 $ 3,026,041

Gross write-offs for the year ended December 31, 2023

$ — $ 18 $ — $ — $ — $ 23 $ — $ 41

Current to 90 days past due $ 518,619 $ 340,104 $ 258,348 $ 127,208 $ 56,394 $ 51,302 $ 722,595 $ 2,074,570

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$ 519,010 $ 340,314 $ 258,542 $ 127,232 $ 56,448 $ 51,723 $ 724,454 $ 2,077,723

Gross write-offs for the year ended December 31, 2023 $ 926 $ 2,891 $ 1,939 $ 770 $ 376 $ 370 $ 1,051 $ 8,323

Revolving home equity

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Over 90 days past due — — — — — — 870 870

Non-accrual — — — — — — 1,977 $ 1,977

Total Revolving home equity:

$ — $ — $ — $ — $ — $ — $ 319,894 $ 319,894

Gross write-offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ 11 $ 11

Consumer credit card

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$ — $ — $ — $ — $ — $ — $ 589,913 $ 589,913

Gross write-offs for the year ended December 31, 2023 $ — $ — $ — $ — $ — $ — $ 24,105 $ 24,105

Current to 90 days past due $ 6,802 $ — $ — $ — $ — $ — $ — $ 6,802

Over 90 days past due 220 — — — — — — 220

Total Overdrafts:

$ 6,802 $ — $ — $ — $ — $ — $ — $ 6,802

Gross write-offs for the year ended December 31, 2023 $ 3,803 $ — $ — $ — $ — $ — $ — $ 3,803

Personal banking loans

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$ 984,834 $ 794,378 $ 794,244 $ 839,508 $ 313,808 $ 650,720 $ 1,642,881 $ 6,020,373

Gross write-offs for the year ended December 31, 2023 $ 4,729 $ 2,909 $ 1,939 $ 770 $ 376 $ 393 $ 25,167 $ 36,283

Collateral-dependent loans

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December 31, 2024 December 31, 2023

(In thousands) Business Assets Real Estate Oil & Gas Assets Total Business Assets Oil & Gas Assets Total

(In thousands) Real Estate Total Business Assets Real Estate Oil & Gas Assets Total

Business $ — $ — $ 1,183 $ — $ 1,238 $ 2,421

Real estate - business 14,667 14,667 — — — —

Personal Banking:

Revolving home equity 1,977 1,977 — 1,977 — 1,977

Total $ 16,644 $ 16,644 $ 1,183 $ 1,977 $ 1,238 $ 4,398

Other Personal Banking loan information

As noted above, the credit quality of Personal Banking loans is monitored primarily on the basis of aging/delinquency, and this information is provided in the table in the above section on "Credit quality indicators." In addition, FICO scores are obtained and updated on a quarterly basis for most of the loans in the Personal Banking portfolio.

This is a published credit score designed to measure the risk of default by taking into account various factors from a borrower's financial history and is considered supplementary information utilized by the Company, as management does not consider this information in evaluating the allowance for credit losses on loans.

The Bank normally obtains a FICO score at the loan's origination and renewal dates, and updates are obtained on a quarterly basis.

Excluded from the table below are certain personal real estate loans for which FICO scores are not obtained because the loans generally pertain to commercial customer activities and are often underwritten with other collateral considerations.

These loans totaled $ 168.9 million at December 31, 2023 and $ 179.2 million at December 31, 2022.

The table also excludes consumer loans related to the Company's patient healthcare loan

program, which totaled $ 211.3 million at December 31, 2023 and $ 197.5 million at December 31, 2022.

As the healthcare loans are guaranteed by the hospital, customer FICO scores are not obtained for these loans.

The personal real estate loans and consumer loans excluded below totaled less than 7 % of the Personal Banking portfolio.

For the remainder of loans in the Personal Banking portfolio, the table below shows the percentage of balances outstanding at December 31, 2023 and 2022 by FICO score.

Personal Banking Loans

% of Loan Category

Real Estate - Personal Consumer Revolving Home Equity Consumer Credit Card

December 31, 2023

2.0 % 2.5 % 1.9 % 4.7 %

2.3 4.3 3.3 12.1

8.5 12.9 10.9 29.2

21.9 28.2 22.4 27.0

65.3 52.1 61.5 27.0

100.0 % 100.0 % 100.0 % 100.0 %

December 31, 2022

1.4 % 2.2 % 1.5 % 3.4 %

2.2 4.2 2.8 11.4

8.1 14.5 9.7 30.8

23.7 26.7 21.4 27.1

64.6 52.4 64.6 27.3

100.0 % 100.0 % 100.0 % 100.0 %

Modifications for borrowers experiencing financial difficulty

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Other consumer loans modified to borrowers experiencing financial difficulty consist of various other workout arrangements with consumer customers.

The following tables present the amortized cost at December 31, 2023 of loans that were modified during the year ended December 31, 2023.

The following tables present the amortized cost at December 31, 2024 of loans that were modified during the year ended December 31, 2024 and the amortized cost at December 31, 2023 of loans that were modified during the year ended December 31, 2023.

For the Year Ended December 31, 2024

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Total $ 169,185 $ 9,739 $ 3,273 $ — $ 66 $ 182,263 1.1 %

For the Year Ended December 31, 2023

(Dollars in thousands)

Term Extension Payment Delay Interest Rate Reduction Interest/Fees Forgiven Other

Total % of Total Loan Category

December 31, 2023

Business $ 28,179 $ — $ — $ — $ — $ 28,179 0.5 %

Real estate – business 105,549 — — — — 105,549 2.8

Personal Banking:

Real estate – personal 383 4,203 — — — 4,586 0.2

Consumer 30 68 92 — 85 275 —

Consumer credit card — — 2,535 346 — 2,881 0.5

Total $ 134,141 $ 4,271 $ 2,627 $ 346 $ 85 $ 141,470 0.8 %

The estimate of lifetime expected losses utilized in the allowance for credit losses model is developed using average historical experience on loans with similar risk characteristics, which includes losses from modifications of loans to borrowers experiencing financial difficulty.

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If an accruing loan made to a borrower experiencing financial difficulty is modified and subsequently deemed uncollectible, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The following tables summarize the financial impact of loan modifications and payment deferrals during the year ended December 31, 2023.

The following tables summarize the financial impact of loan modifications and payment deferrals during the years ended December 31, 2024 and December 31, 2023.

Term Extension

For the Year Ended December 31, 2023

For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Business Extended maturity by a weighted average of 7 months.

Extended maturity by a weighted average of 7 months.

Real estate – business Extended maturity by a weighted average of 10 months.

Extended maturity by a weighted average of 13 months.

Personal Banking:

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Payment Delay

For the Year Ended December 31, 2023

For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Personal Banking:

Real estate – personal Deferred certain payments by a weighted average of 16 years .

Consumer Deferred certain payments by a weighted average of 71 months .

Deferred certain payments by a weighted average of 20 years .

Consumer Deferred certain payments by 19 years .

Deferred certain payments by a weighted average of 71 months .

Interest Rate Reduction

For the Year Ended December 31, 2023

For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Personal Banking:

Consumer Reduced weighted-average contractual interest rate from average 22% to 6%.

Consumer credit card Reduced weighted-average contractual interest rate from average 22% to 6%.

Consumer Reduced contractual interest rate from average 21% to 6%.

Reduced contractual interest rate from average 22% to 6%.

Consumer credit card Reduced contractual interest rate from average 21% to 6%.

Reduced contractual interest rate from average 22% to 6%.

Forgiveness of Interest/Fees

For the Year Ended December 31, 2023

For the Year Ended December 31, 2024 For the Year Ended December 31, 2023

Personal Banking:

Consumer credit card — Approximately $33 thousand of interest and fees forgiven.

The Company had commitments of $ 28.4 million at December 31, 2023 to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified the terms of loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current reporting period.

The following table provides the amortized cost basis of loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2023 and were modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through December 31, 2023.

The Company had commitments of $ 14.9 million and $ 28.4 million at December 31, 2024 and December 31, 2023, respectively, to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified the terms of loans in the form of an interest rate reduction;

an other-than-insignificant payment delay;

forgiveness of principal, interest, or fees;

or a term extension during the current reporting period.

The following tables provide the amortized cost basis at December 31, 2024 of loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2024 and were modified within the 12 months preceding the payment default, as well as the amortized cost basis at December 31, 2023 of loans to borrowers experiencing financial difficulty that had a payment default during the year ended December 31, 2023 and had been modified within the 12 months preceding the payment default.

For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.

In addition to the loans below, the Company charged off $ 2.2 million and $ 729 thousand of business and consumer loans, respectively, during the year ended December 31, 2023 that were modified during the period.

For the Year Ended December 31, 2024

(Dollars in thousands)

Term Extension Payment Delay Interest Rate Reduction Total

December 31, 2024

Real estate – business $ 14,668 $ — $ — $ 14,668

Personal Banking:

Real estate – personal — 3,818 — 3,818

Consumer — — 23 23

Consumer credit card — — 595 595

Total $ 14,668 $ 3,818 $ 618 $ 19,104

For the Year Ended December 31, 2023

(Dollars in thousands)

Payment Delay Interest Rate Reduction Interest/Fees Forgiven Total

5 unchanged sentences

Total $ 1,357 $ 356 $ 154 $ 1,867

The following table presents the amortized cost basis at December 31, 2023 of loans that have been modified on or after January 1, 2023 (the date we adopted ASU 2022-02) through December 31, 2023.

The following tables present the amortized cost basis at December 31, 2024 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months, as well as the amortized cost basis at December 31, 2023 of loans to borrowers experiencing financial difficulty that had been modified within the previous 12 months.

(In thousands)

9 unchanged sentences

Total $ 162,333 $ 3,104 $ 16,826 $ 182,263

Troubled debt restructuring disclosures prior to the Company's adoption of ASU 2022-02

Restructured loans are those extended to borrowers who are experiencing financial difficulty and who have been granted a concession.

Restructured loans are placed on non-accrual status if the Company does not believe it probable that amounts due under the contractual terms will be collected.

Commercial performing restructured loans are primarily comprised of certain business, construction and business real estate loans classified as substandard but renewed at rates judged to be non-market.

These loans are performing in accordance with their modified terms, and because the Company believes it probable that all amounts due under the modified terms of the agreements will be collected, interest on these loans is being recognized on an accrual basis.

Troubled debt restructurings also include certain credit card and other small consumer loans under various debt management and assistance programs.

Modifications to these loans generally involve removing the available line of credit, placing loans on amortizing status, and lowering the contractual interest rate.

Certain personal real estate, revolving home equity, and consumer loans were classified as consumer bankruptcy troubled debt restructurings because they were not reaffirmed by the borrower in bankruptcy proceedings.

Interest on these loans is being recognized on an accrual basis, as the borrowers are continuing to make payments.

Other consumer loans classified as troubled debt restructurings consist of various other workout arrangements with consumer customers.

(In thousands) December 31, 2022

Accruing loans:

Assistance programs

Other consumer

Non-accrual loans

Total troubled debt restructurings

The table below shows the balance of troubled debt restructurings by loan classification at December 31, 2022, in addition to the outstanding balances of these restructured loans which the Company considers to have been in default at any time during the 12 months prior to December 31, 2022.

For purposes of this disclosure, the Company considers "default" to mean 90 days or more past due as to interest or principal.

(In thousands) December 31, 2022 Balance 90 days past due at any time during previous 12 months

Real estate – construction and land

(In thousands)

Current 30-89 Days

Past Due Total

December 31, 2023

Business $ 26,941 $ 1,238 $ — $ 28,179

Real estate – business 102,388 3,161 — 105,549

1 unchanged sentence

Real estate – personal 3,303 751 532 4,586

Revolving home equity

Consumer 233 28 14 275

Consumer credit card 2,071 456 354 2,881

Total troubled debt restructurings

$ 198,671 $ 1,139

For those loans on non-accrual status also classified as restructured, the modification did not create any further financial effect on the Company as those loans were already recorded at net realizable value.

For those performing commercial loans classified as restructured, there were no concessions involving forgiveness of principal or interest and, therefore, there was no financial impact to the Company as a result of modification to these loans.

However, the effects of modifications to loans under various debt management and assistance programs were estimated at December 31, 2022 to decrease interest income by approximately $ 661 thousand on an annual, pre-tax basis, compared to amounts contractually owed.

Performing consumer loans where the debt was not reaffirmed in bankruptcy did not result in a concession, as no changes to loan terms occurred in that process.

Other modifications to consumer loans mainly involve extensions and other small modifications that did not include the forgiveness of principal or interest.

The allowance for credit losses related to troubled debt restructurings on non-accrual status is determined by individual evaluation, including collateral adequacy, using the same process as loans on non-accrual status which are not classified as troubled debt restructurings.

Those performing loans classified as troubled debt restructurings are accruing loans which management expects to collect under contractual terms.

Performing commercial loans having no other concessions granted other than being renewed at non-market interest rates are judged to have similar risk characteristics as non-troubled debt

commercial loans and are collectively evaluated based on internal risk rating, loan type, delinquency, historical experience and current economic factors.

Performing personal banking loans classified as troubled debt restructurings resulted from the borrower not reaffirming the debt during bankruptcy and have had no other concession granted, other than the Bank's future limitations on collecting payment deficiencies or in pursuing foreclosure actions.

As such, they have similar risk characteristics as non-troubled debt personal banking loans and are evaluated collectively based on loan type, delinquency, historical experience and current economic factors.

If a troubled debt restructuring defaults and is already on non-accrual status, the allowance for credit losses continues to be based on individual evaluation, using discounted expected cash flows or the fair value of collateral.

If an accruing, troubled debt restructuring defaults, the loan's risk rating is downgraded to non-accrual status and the loan's related allowance for credit losses is determined based on individual evaluation, or if necessary, the loan is charged off and collection efforts begin.

The Company had $ 12.6 million commitments at December 31, 2022 to lend additional funds to borrowers with restructured loans.

Total $ 134,936 $ 5,634 $ 900 $ 141,470

Loans held for sale

3 unchanged sentences

At December 31, 2024, the fair value of these loans was $ 3.0 million, and the unpaid principal balance was $ 2.9 million.

The Company also designates certain student loan originations as held for sale.

The borrowers are credit-worthy students who are attending colleges and universities.

The loans are intended to be sold in the secondary market, and the Company maintains contracts with Sallie Mae to sell the loans within 210 days after the last disbursement to the student.

These loans are carried at lower of cost or fair value, which at December 31, 2023 totaled $ 2.2 million.

At December 31, 2024, none of the loans held for sale were on non-accrual status or 90 days past due and still accruing.

14 unchanged sentences

Federal Home Loan Bank stock 10,120 10,640

Equity method investments — 1,434

Private equity investments 184,386 176,667

2 unchanged sentences

(1) Accrued interest receivable totaled $ 35.0 million and $ 28.9 million at December 31, 2024 and December 31, 2023, respectively, and was included within other assets on the consolidated balance sheet.

The Company has elected to measure equity securities with no readily determinable fair value at cost minus impairment, if any, plus or minus changes resulting from observable price changes for the identical or similar investment of the same issuer.

This portfolio includes the Company's 823,447 shares of Visa Class B common stock, which are held by Commerce Bancshares, Inc.

(the Company's parent company).

These shares have a carrying value of zero , as there have not been observable price changes in orderly transactions for identical or similar investments of the same issuer.

During the year-ended December 31, 2023, the Company did not record any impairment or significant other adjustments to the carrying amount of its portfolio of equity securities with no readily determinable fair value.

At Visa, Inc.’s (“Visa”) annual meeting of shareholders on January 23, 2024, shareholders approved Proposal 4 – Approval and Adoption of the Class B Exchange Offer Program Certificate Amendments as described in Visa's 2024 Proxy Statement.

This proposal authorizes Visa to enable the release and public sale of portions of Visa’s Class B common stock in a measured and programmatic fashion through a series of exchange offers.

On January 24, 2024, the Company’s holdings of 823,447 shares of Visa Class B common stock were redenominated as Visa Class B-1 common stock pursuant to Visa’s Eighth Restated Certificate of Incorporation.

On January 29, 2024, Visa filed Form S-4 Registration Statement with the Securities and Exchange Commission, which proposes an offer to exchange any and all issued and outstanding shares of Class B-1 common stock for a combination of shares of Class B-2 common stock and shares of Class C common stock.

As of February 22, 2024, the Form S-4 Registration Statement was not yet effective.

The Company is currently evaluating the proposed exchange offer.

Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, equity method investments, and investments in portfolio concerns held by the Company's private equity subsidiary.

FRB stock and FHLB stock are held for debt and regulatory purposes.

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is based on total assets of the Company (subject to a cap) and the level of borrowings from the FHLB.

Most of the Company’s investment securities are classified as available for sale debt securities, and this portfolio is discussed in more detail below.

The Company’s equity securities are also discussed below.

Other investment securities include Federal Reserve Bank (FRB) stock, Federal Home Loan Bank (FHLB) stock, and investments in portfolio concerns held by the Company’s private equity subsidiary.

FRB stock and FHLB stock are held for liquidity management and regulatory purposes.

Investment in FRB stock is based on the capital structure of the investing bank, and investment in FHLB stock is tied to the asset size of the borrowing bank and the level of borrowings from the FHLB.

These holdings are carried at cost.

These adjustments are included in non-interest income on the Company's consolidated statements of income.

The private equity investments are carried at estimated fair value.

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in other comprehensive income (OCI).

A summary of the available for sale debt securities by maturity groupings as of December 31, 2023 is shown in the following table.

The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security at December 31, 2023.

Yields on tax exempt securities have not been adjusted for tax exempt status.

The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and GNMA, in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages.

The Company’s private equity investments are carried at estimated fair value.

Equity Securities

The Company’s equity securities portfolio includes mutual funds, common stock, and preferred stock with readily determinable fair values as well as equity securities with no readily determinable fair value.

At March 31, 2024, this portfolio included the Company’s 823,447 shares of Visa Inc.

(“Visa”) Class B-1 common stock (formerly Class B common stock), which were held by Commerce Bancshares, Inc.

The Company’s Visa Class B-1 shares had a carrying value of zero at March 31, 2024, as there had not been observable price changes in orderly transactions for identical or similar investments of the same issuer.

On April 8, 2024, Visa announced the commencement of a public offering to permit the exchange of its Class B-1 common stock for a combination of shares of its Class B-2 common stock and its Class C common stock (“Exchange Offer”).

The Company tendered all of its Visa Class B-1 shares pursuant to the Exchange Offer.

On May 3, 2024, the Exchange Offer closed, and in exchange for its 823,447 shares of Visa Class B-1 common stock, the Company received 411,723 shares of Visa Class B-2 common stock (which will be convertible under certain circumstances, as further described below, into Visa’s publicly traded Class A common stock at an initial rate of 1.5875 shares of Class A common for each share of Class B-2 common stock, subject to adjustment) and 163,404 shares of Visa Class C common stock which automatically convert into four shares of Visa's Class A common stock (subject to future adjustments for any stock splits, recapitalizations or similar transactions) upon any transfer to a person other than a Visa member or an affiliate of a Visa member.

As a condition of participating in the exchange, the Company entered into a Makewhole Agreement with Visa that provides for cash payments to Visa to the extent (if any) that future adjustments to the conversion ratio for the Visa Class B-2 common stock to Class A common stock cause such ratio to fall below zero.

Changes to the conversion ratio occur when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain covered litigation that pre-dated Visa’s initial public offering, for which Visa has been effectively indemnified by Visa USA members through reductions to the conversion ratio for its Class B-1 common stock.

The purpose of the Makewhole Agreement is to preserve the economic benefit of these adjustments to the Class B-1 conversion ratio for the benefit of Visa’s Class A and Class C common stockholders following the exchange.

As further described in Visa’s related Issuer Tender Offer Statement on Schedule TO and Prospectus, each dated April 8, 2024, publicly filed with the U.

Securities and Exchange Commission, both the Makewhole Agreement and the related escrow fund and transfer restrictions on Visa’s Class B-1 common stock and the new Class B-2 common stock will terminate whenever the covered litigation is ultimately resolved, at which future date outstanding shares of Visa Class B-2 common stock will be convertible into shares of its Class A common stock at the then-applicable conversion ratio.

As a result of the exchange, the Company elected the measurement alternative approach for its Visa Class C common stock and marked the stock to fair value, recording a gain based on the conversion privilege of the Visa Class C common stock and the closing price of Visa Class A common stock.

During the second quarter of 2024, the Company sold 436 thousand shares of Visa Class A common stock at an average price of $ 274.91 , resulting in proceeds of $ 119.8 million.

During the third quarter of 2024, the Company sold 218 thousand Visa Class A shares at an average price of $ 260.56 , resulting of proceeds of $ 56.8 million.

As of September 30, 2024, the Company had sold all of the Visa Class C shares it received from the Visa Exchange Offer.

The Company’s Visa Class B-2 common stock will continue to be carried at cost of $ 0 as the Company elected the measurement alternative approach for these shares as well, and there are not observable price changes in orderly transactions for identical or similar investments of the same issuer for the Visa Class B-2 shares held by the Company.

Changes in equity investments with no readily determinable fair value for the year ended December 31, 2024 were as follows:

For the Year Ended December 31

(In thousands) 2024

Balance at beginning of period $ 6,978

Observable upward price adjustments 178,227

Observable downward price adjustments ( 416 )

Impairment charges —

Sales of securities and other activity ( 175,706 )

Balance at end of period $ 9,083

Net gains and losses for the Company's equity securities portfolio during the year ended December 31, 2024 were as follows:

For the Year Ended December 31

(In thousands) 2024

Net gains (losses) recognized during the period on equity securities $ 178,092

Net (gains) losses recognized during the period on equity securities sold during the period ( 176,755 )

Net unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date $ 1,337

Available for sale debt securities portfolio

The majority of the Company’s investment portfolio is comprised of available for sale debt securities, which are carried at fair value with changes in fair value reported in accumulated other comprehensive income (AOCI).

The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as FHLMC, FNMA, and Government National Mortgage Association (GNMA), in addition to non-agency mortgage-backed securities, which have no guarantee but are collateralized by commercial and residential mortgages.

Also included are certain other asset-backed securities, which are primarily collateralized by credit cards, automobiles, student loans, and commercial loans.

These securities differ from traditional debt securities primarily in that they may have uncertain maturity dates and are priced based on estimated prepayment rates on the underlying collateral.

A summary of the available for sale debt securities by maturity groupings as of December 31, 2024 is shown below.

In the table below, the weighted average yield for the year ended December 31, 2024 is calculated based on amortized cost and has not been tax equated.

(Dollars in thousands)

86 unchanged sentences

The entire available for sale debt securities portfolio included $ 8.1 billion of securities that were in a loss position at December 31, 2024, compared to $ 9.6 billion at December 31, 2023.

The total amount of unrealized loss on these securities was $ 1.2 billion at December 31, 2023, a decrease of $ 280.1 million compared to the unrealized loss at December 31, 2022.

The total amount of unrealized loss on these securities was $ 994.5 million at December 31, 2024, a decrease of $ 226.0 million compared to the unrealized loss at December 31, 2023.

Securities with significant unrealized losses are discussed in the " Allowance for credit losses on available for sale debt securities " section above.

43 unchanged sentences

Equity securities:

Gains realized on sales — 17 —

Fair value adjustments, net

( 487 ) ( 943 ) 187

Gains (losses) on equity securities, net 178,092 ( 487 ) ( 926 )

Gains realized on sales

4 unchanged sentences

Total investment securities gains (losses), net $ 7,823 $ 14,985 $ 20,506

Subsequent to the successful close of the Exchange Offer in May 2024, the Company approved and executed a plan to reposition a portion of its available for sale debt securities portfolio during the second quarter of 2024 through the sale of securities with an amortized cost of $ 1.2 billion.

The securities that the Company sold had a yield of approximately 2.1 %, which resulted in a loss of $ 179.1 million, and the Company reinvested $ 928.8 million of the proceeds into U.S.

Treasury securities yielding approximately 4.6 %.

Pledged securities

At December 31, 2024, securities totaling $ 6.9 billion in fair value were pledged to secure public fund deposits, securities sold under agreements to repurchase, trust funds, and borrowings at the FRB and FHLB, compared to $ 7.5 billion at December 31, 2023.

Securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties approximated $ 208 thousand, while the remaining securities were pledged under agreements pursuant to which the secured parties may not sell or re-pledge the collateral.

At December 31, 2024, the Company had no securities pledged under agreements pursuant to which the collateral may be sold or re-pledged by the secured parties.

Except for obligations of various government-sponsored enterprises such as FNMA, FHLB and FHLMC, no investment in a single issuer exceeds 10 % of stockholders’ equity.

13 unchanged sentences

Repairs and maintenance expense of $ 18.3 million, $ 18.5 million, and $ 17.7 million for 2024, 2023 and 2022, respectively, was included in occupancy expense and equipment expense.

Interest expense capitalized on constructions projects totaled $ 903 thousand, $ 1.4 million, and $ 29 thousand in 2023, 2022 and 2021, respectively.

Interest expense capitalized on constructions projects totaled $ 2 thousand, $ 903 thousand, and $ 1.4 million in 2024, 2023 and 2022, respectively.

The decrease from prior year was primarily driven by the completion of a large office building construction project in March 2023.

Right of use leased assets are comprised mainly of operating leases for branches, office space, ATM locations, and certain equipment, as described in Note 6.

32 unchanged sentences

$ 138,921 $ 3,600 $ 705 $ 10,929

Acquisition 7,618 — — —

Originations, net of disposals — — — 340

Amortization — — ( 247 ) ( 1,148 )

Impairment recovery — — — 304

Balance at December 31, 2023

146,539 3,600 458 10,121

Acquisition 7,618 — — —

Originations, net of disposals — — — 762

17 unchanged sentences

The Company's operating leases are primarily for branches, office space, ATM locations, and certain equipment.

As of December 31, 2023, the right-of-use asset for operating leases, reported within premises and equipment, net , and lease liability, reported within other liabilities , recognized on the Company's consolidated balance sheets totaled $ 26.5 million and $ 26.9

million, respectively, compared to right-of-use assets of $ 24.9 million and lease liability of $ 25.2 million at December 31, 2022.

As of December 31, 2024, the right-of-use asset for operating leases, reported within premises and equipment, net , and lease liability, reported within other liabilities , recognized on the Company's consolidated balance sheets totaled $ 30.7 million and $ 31.2 million, respectively, compared to right-of-use assets of $ 26.5 million and lease liability of $ 26.9 million at December 31, 2023.

Total lease cost for the year ended December 31, 2024 was $ 8.5 million, compared to $ 8.3 million for the year ended December 31, 2023.

2 unchanged sentences

However, the renewal options are generally not included in the leased asset or liability because the option exercises are uncertain.

The maturities of operating leases are included in the table below.

The maturities of operating leases at December 31, 2024 are included in the table below.

(in thousands) Operating Leases (1)

3 unchanged sentences

Present value of lease liabilities $ 31,175

(1) Excludes $ 743 thousand of legally binding minimum lease payments for operating leases signed but not yet commenced.

(1) Excludes $ 3.3 million of legally binding minimum lease payments for operating leases signed but not yet commenced.

The following table presents the average lease term and discount rate of operating leases.

13 unchanged sentences

The Company also leases office space to third parties, and these leases are classified as operating leases.

The leases may include options to renew or to expand the leased space, and currently the leases have remaining terms of 1 month to 15 years.

The leases may include options to renew or to expand the leased space, and currently the leases have remaining terms of 3 months to 14 years.

The following table provides the components of lease income.

3 unchanged sentences

Operating leases (1)

16,816 13,036

Total lease income $ 53,984 $ 44,163

(1) Includes rent from Tower Properties, a related party, of $ 76 thousand for the years ended both December 31, 2023 and 2022.

(1) Includes rent from Tower Properties, a related party, of $ 78 thousand and $ 76 thousand for the years ended December 31, 2024 and 2023.

The following table presents the components of the net investments in direct financing and sales-type leases.

5 unchanged sentences

Total net investment included within business loans $ 879,641 $ 867,020

The maturities of lease receivables are included in the table below.

The maturities of lease receivables at December 31, 2024 are included in the table below.

(in thousands) Direct Financing and Sale-Type Leases Operating Leases Total

63 unchanged sentences

Accrued expenses 10,124 10,531

Equity-based compensation 8,082 7,491

Deferred compensation 8,477 7,894

Equity-based compensation 8,364 8,082

Cash flow hedges 5,630 —

Other 497 812

4 unchanged sentences

Land, buildings, and equipment 23,359 21,016

Cash flow hedges 9,468 19,747

Intangible assets 7,596 7,545

Private equity investments 5,446 6,888

Cash flow hedges — 9,468

Other 8,949 7,235

22 unchanged sentences

Gross increases – tax positions in prior period 8 25

Gross decreases – tax positions in prior period ( 2 ) —

Gross increases – current-period tax positions 295 336

53 unchanged sentences

Actual return on plan assets

8,307 ( 14,492 )

Employer contributions

5 unchanged sentences

$ ( 3,220 ) $ ( 4,107 )

The unfunded pension benefit obligation decreased $ 3.3 million from the prior year primarily due to the plan assets earning $ 4.3 million more than expected.

This decrease was slightly offset by a decrease in the discount rate from 5.19 % to 4.98 %.

The unfunded pension benefit obligation decreased $ 887 thousand from the prior year primarily due to an increase in the discount rate from 4.98 % to 5.27 %.

The accumulated benefit obligation, which represents the liability of a plan using only benefits as of the measurement date, was $ 89.8 million and $ 93.9 million for the combined plans on December 31, 2024 and 2023, respectively.

38 unchanged sentences

Government-sponsored enterprise obligations (a)

1,039 — 1,039 —

State and municipal obligations 3,513 — 3,513 —

36 unchanged sentences

(d) This category represents investments in individual common stocks and equity funds.

These holdings are diversified, largely across the technology services, financial services, electronic technology, healthcare technology, and retail trade industries.

The investment policy of the pension plan is designed for growth in principal, within limits designed to safeguard against significant losses within the portfolio.

These holdings are diversified, largely across the electronic technology, technology services, financial services, healthcare technology, and retail trade industries.

The investment policy of the pension plan is designed for conservation of principal, within limits designed to safeguard against significant losses within the portfolio.

The policy sets guidelines, which may change from time to time, regarding the types and percentages of investments held.

8 unchanged sentences

The 10-year annualized return for the Company’s pension plan was 4.3 %.

During 2023, the plan’s assets gained 10.3 % of their value, compared to a loss of 12.0 % in 2022.

During 2024, the plan’s assets gained 2.9 % of their value, compared to a gain of 10.3 % in 2023.

Returns for any plan year may be affected by changes in the stock market and interest rates.

33 unchanged sentences

( 7,313 ) 47.96

( 341,424 ) 36.27

Outstanding at December 31, 2024

24 unchanged sentences

1,276 362 462

As of December 31, 2023, there was $ 34.0 million of unrecognized compensation cost related to unvested SARs and stock awards.

As of December 31, 2024, there was $ 33.7 million of unrecognized compensation cost related to nonvested SARs and stock awards.

This cost is expected to be recognized over a weighted average period of approximately 3.0 years.

39 unchanged sentences

The Consumer segment consists of various consumer loan and deposit products offered through its retail branch network of approximately 140 locations.

This segment also includes indirect and other consumer loan financing businesses, along with debit and credit card loan and fee businesses.

In order to reflect a change in the Company's management of its portfolio of residential mortgage loans that it retains, the Company began including those loans in the Consumer segment on January 1, 2023.

These loans had previously been included in the Other/Elimination column.

As a result of this change, loans of approximately $ 1.9 billion were reclassified from the Other/Elimination column into the Consumer segment and prior periods presented below were restated to also reflect this change.

This segment also includes residential mortgage, indirect and other consumer loan financing businesses, along with debit and credit card loan and fee businesses.

The Commercial segment provides corporate lending (including the Small Business Banking product line within the branch network), leasing, and international services, along with business and governmental deposit products and commercial cash management services.

This segment also includes both merchant and commercial bank card products as well as the Capital Markets Group, which sells fixed income securities and provides securities safekeeping and accounting services to its business and correspondent bank customers.

This segment also includes both merchant and commercial bank card products as well as the Commercial Tradable Products division, which sells fixed-income securities, underwrites municipal bonds and provides securities safekeeping and accounting services to its business and correspondent bank customers.

The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment management, and brokerage services.

2 unchanged sentences

This information is based on internal management accounting procedures and methods, which have been developed to reflect the underlying economics of the businesses.

These methodologies are applied in connection with funds transfer pricing and assignment of overhead costs among segments.

These methodologies are applied in connection with funds transfer pricing and assignment of overhead costs

among segments.

Funds transfer pricing was used in the determination of net interest income.

6 unchanged sentences

The funds transfer pricing process attempts to remove interest rate risk from valuation, allowing management to compare profitability under various rate environments.

The Company’s chief executive officer is its chief operating decision maker ("CODM").

The CODM is the primary individual in control of resource allocation, and the allocation determinations are made in consultation with the Company’s executive management committee, of which the CODM is a member.

The Company’s CODM primarily utilizes net income before taxes to evaluate each segment’s performance and allocate resources (including employees, financial, or capital resources), primarily through the Company’s annual budgeting process and periodic segment performance reviews.

To manage operations and make decisions regarding resource allocations, the CODM is regularly provided and reviews total non-interest expense at a consolidated level and total non-interest expense for each segment.

The following tables present selected financial information by segment and reconciliations of combined segment totals to consolidated totals.

2 unchanged sentences

If appropriate, these changes are reflected in prior year information presented below.

Net interest income allocated among the segments prior to 2024 has been restated to reflect a funds transfer pricing methodology change implemented on January 1, 2024 for all deposit types, except certificates of deposit.

The new methodology moves from a rolling pool to a profitability range methodology.

The new methodology more accurately reflects the profitability of affected deposits relative to current rates and removes most interest rate risk from business segments.

Additionally, the Company changed its management of its portfolio of residential mortgage loans that it retains, and as a result, the Company began including those loans in the Consumer segment on January 1, 2023.

These loans had previously been included in the Other/Elimination column.

As a result of this change, loans of approximately $ 1.9 billion were reclassified from the Other/Elimination column into the Consumer segment in 2023 and prior periods presented below were restated to also reflect this change.

Segment Income Statement Data

(In thousands)

Segment Totals

Other/Elimination

39 unchanged sentences

$ 363,648 $ 401,518 $ 187,192 $ ( 319,980 ) $ 632,378

Non-interest expense for the Consumer, Commercial, and Wealth segments above is primarily comprised of salaries, incentives, benefits, and allocated overhead costs for service and support.

Non-interest expense for the segments also includes expenses for data processing and software, occupancy, and professional and other services.

The segment activity, as shown above, includes both direct and allocated items.

2 unchanged sentences

Included in this category’s net interest income are earnings of the investment portfolio, which are not allocated to a segment.

Additionally, in 2023, interest expense on the Company's brokered deposits, which matured in the fourth quarter of 2023, is included in this column, as the Company's brokered deposits were not allocated to a segment.

Additionally, interest expense on the Company's brokered deposits, is included in this column, as the Company's brokered deposits are not allocated to a segment.

Segment Balance Sheet Data

(In thousands) Consumer Commercial Wealth Segment Totals Other/Elimination Consolidated Totals

(In thousands) Consumer Commercial Wealth Other/Elimination Consolidated Totals

Average balances for 2024:

20 unchanged sentences

Common Stock*

On December 19, 2023, the Company distributed a 5 % stock dividend on its $ 5 par common stock for the 30th consecutive year.

On December 18, 2024, the Company distributed a 5 % stock dividend on its $ 5 par common stock for the 31st consecutive year.

All per common share data in this report has been restated to reflect the stock dividend.

The Company applies the two-class method of computing income per share, as nonvested share-based awards that pay nonforfeitable common stock dividends are considered securities which participate in undistributed earnings with common stock.

The Company applies the two-class method of computing income per share, as nonvested share-based awards that pay non-forfeitable common stock dividends are considered securities which participate in undistributed earnings with common stock.

The two-class method requires the calculation of separate income per share amounts for the nonvested share-based awards and for common stock.

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Other Non-Interest Income from Contracts with Customers

Other non-interest income from contracts with customers consists mainly of various transaction-driven revenue streams such as ATM fees, check sales and wire fees, cash sweep commissions, and gains on sales of tax credits.

Performance obligations for these services consist mainly of the execution of a single transaction at a single point in time.

92 unchanged sentences

treasury bills, bonds and notes, including inflation-protected securities, are valued using quoted prices from active markets.

Valuations for stripped coupon and principal issues are derived from yield curves generated from various dealer contacts and live data sources.

• Government-sponsored enterprise obligations

58 unchanged sentences

Assets held in trust for deferred compensation plan

Assets held in an outside trust for the Company’s deferred compensation plan consist of investments in mutual funds.

Assets held in a third party trust for the Company’s deferred compensation plan consist of investments in mutual funds.

The fair value measurements are based on quoted prices in active markets and classified as Level 1.

11 unchanged sentences

Included in other comprehensive income * 15 — 15

Investment securities called

( 1,000 ) — ( 1,000 )

Discount accretion

4 unchanged sentences

Capitalized interest/dividends

— ( 112 ) ( 112 )

Balance at December 31, 2024

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Included in other comprehensive income * 57 — 57

Investment securities called ( 1,000 ) — ( 1,000 )

Discount accretion 49 — 49

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$ 14,683 $ — $ — $ 14,683 $ ( 2,382 )

Foreclosed assets

20 — — 20 ( 50 )

Long-lived assets

3 unchanged sentences

$ 1,517 $ — $ — $ 1,517 $ ( 1,662 )

Mortgage servicing rights

10,929 — — 10,929 304

Long-lived assets

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Nonrecurring adjustments to the carrying value of loans based on fair value measurements at December 31, 2024 and 2023 are shown in the table above.

Mortgage servicing rights

The Company initially measures its mortgage servicing rights at fair value and amortizes them over the period of estimated net servicing income.

They are periodically assessed for impairment based on fair value at the reporting date.

Mortgage servicing rights do not trade in an active market with readily observable prices.

Accordingly, the fair value is estimated based on a valuation model which calculates the present value of estimated future net servicing income.

The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds, market discount rates, cost to service, float earnings rates, and other ancillary income, including late fees.

The fair value measurements are classified as Level 3.

Foreclosed assets

Foreclosed assets consist of loan collateral which has been repossessed through foreclosure.

This collateral is comprised of commercial and residential real estate and other non-real estate property, including auto, marine and recreational vehicles.

Foreclosed assets are recorded as held for sale initially at the lower of the loan balance or fair value of the collateral less estimated selling costs.

Subsequent to foreclosure, valuations are updated periodically, and the assets may be marked down further, reflecting a new cost basis.

Fair value measurements may be based upon appraisals, third-party price opinions, or internally developed pricing methods.

These measurements are classified as Level 3.

Long-lived assets

42 unchanged sentences

Securities sold under agreements to repurchase 2,803,043 — — 2,806,428 2,806,428

Other borrowings 1,366 — 1,366 — 1,366

Derivative instruments 26,963 — 26,905 58 26,963

67 unchanged sentences

2.75 % July 1, 2025 July 1, 2031

The premium paid for the floors totaled $ 90.2 million, which includes $ 54.4 million paid during 2023.

At December 31, 2023, the maximum length of time over which the Company is hedging its exposure to lower rates is approximately 7 years.

The premium paid for the floors totaled $ 90.2 million, and at December 31, 2024, the maximum length of time over which the Company is hedging its exposure to lower rates is approximately 6.5 years.

These interest rate floors qualified and were designated as cash flow hedges and were assessed for effectiveness using regression analysis.

12 unchanged sentences

These forward TBA contracts are also considered to be derivatives and are settled in cash at the security settlement date.

In late 2022, the Company temporarily paused sales of these loans and halted entering into the forward contracts, as lower demand for mortgage loans coupled with volatility in the TBA market made it difficult to effectively hedge the Company's mortgage loan production.

The Company resumed sales during the first quarter of 2023.

The fair values of the Company’s derivative instruments, whose notional amounts are listed above, are shown in the table below.

2 unchanged sentences

The Company's policy is to present its derivative assets and derivative liabilities on a gross basis in its consolidated balance sheets, and these are reported in other assets and other liabilities.

Certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swaps, such that in the table below, the positive fair values of cleared swaps were reduced by $ 27.8 million at December 31, 2022.

There was no reduction to negative fair values of cleared swaps at December 31, 2022.

There was no reduction to positive or negative fair values of cleared swaps at December 31, 2023.

In prior years, certain collateral posted to and from the Company's clearing counterparty has been applied to the fair values of the cleared swap.

There was no reduction to positive or negative fair values of cleared swaps at December 31, 2024 and December 31, 2023.

Asset Derivatives Liability Derivatives

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Additional information about the Company's repurchase agreements is included in Note 8.

The Company is party to agreements commonly known as collateral swaps.

These agreements involve the exchange of collateral under simultaneous repurchase and resale agreements with the same financial institution counterparty.

These repurchase and resale agreements have the same principal amounts, inception dates, and maturity dates and have been offset against each other in the consolidated balance sheets, as permitted under the netting provisions of ASC 210-20-45.

The collateral swaps totaled $ 200.0 million at December 31, 2022.

There were no collateral swaps outstanding at December 31, 2023.

The following table shows the extent to which resale agreement assets and repurchase agreement liabilities with the same counterparty have been offset on the consolidated balance sheets, in addition to the extent to which they could potentially be offset.

Also shown is collateral received or pledged, which consists of marketable securities.

The collateral amounts in the table are limited to the outstanding balances of the related asset or liability (after offsetting is applied);

The collateral amounts in the

table are limited to the outstanding balances of the related asset or liability (after offsetting is applied);

thus amounts of excess collateral are not shown.

22 unchanged sentences

government and federal agency obligations $ 170,293 $ — $ — $ 170,293

Government-sponsored enterprise obligations 8,749 — — 8,749

Agency mortgage-backed securities 1,833,840 27,264 17,200 1,878,304

26 unchanged sentences

This amount will be accreted into income over the remaining life of the respective commitments.

Excluding amounts conveyed to others, commitments outstanding under these letters of credit were $ 601.8 million, which represents the maximum potential future payments guaranteed by the Company at December 31, 2023.

The contractual amount of these letters of credit, which represents the maximum potential future payments guaranteed by the Company, was $ 585.1 million at December 31, 2024.

Commercial letters of credit act as a means of ensuring payment to a seller upon shipment of goods to a buyer.

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These payments, with the exception of dividend payments, relate to property management services, including construction oversight, on three Company-owned office buildings and related parking garages in downtown Kansas City.

The Company ended its property management services contract with Tower as of December 31, 2024.

(In thousands) 2024 2023 2022

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No construction loans were outstanding during 2024, 2023 and 2022.

Tower leases office space in the Kansas City bank headquarters building owned by the Company.

Tower leased office space in the Kansas City bank headquarters building owned by the Company during 2022, 2023, and 2024.

Rent paid to the Company totaled $ 81 thousand in 2024, $ 82 thousand in 2023, and $ 82 thousand in 2022, at $ 17.69 , $ 17.50 and $ 17.44 per square foot, for years 2024, 2023, and 2022, respectively.

Tower was no longer a lessee of the Company as of January 1, 2025.

Directors of the Company and their beneficial interests have deposit accounts with the Bank and may be provided with cash management and other banking services, including loans, in the ordinary course of business.

46 unchanged sentences

44,520 41,549 44,352

Professional fees

Professional and other services

3,495 3,580 2,740

1 unchanged sentence

3,316 3,347 3,173

Donation to related charitable foundation

15,390 16,264 15,595

1 unchanged sentence

71,721 64,740 65,860

Income tax benefit

Income tax (benefit) expense

35,520 ( 2,695 ) ( 4,941 )

9 unchanged sentences

Other adjustments, net ( 165,330 ) 5,749 2,557

Net cash provided by operating activities

Net cash provided by (used in) operating activities

169,580 279,239 286,991

2 unchanged sentences

— 4,348 ( 9 )

Proceeds from sales of investment securities

Proceeds from maturities/pay downs of investment securities

14 unchanged sentences

( 139,503 ) ( 134,734 ) ( 127,466 )

Net cash used in financing activities

Net cash provided by (used in) financing activities

( 310,910 ) ( 211,627 ) ( 314,096 )

5 unchanged sentences

$ 357,046 $ 322,573 $ 233,261

Income tax receipts, net

Income tax payments (receipts), net

$ 34,975 $ ( 3,254 ) $ ( 587 )

9 unchanged sentences

The Parent has not borrowed under this line during the past three years.

The Parent plans to fund an additional $ 69.4 million relating to private equity investments over the next several years.

The Parent has commitments to fund an additional $ 50.8 million relating to private equity investments over the next several years.

The investments are made directly by the Parent and through non-bank subsidiaries.

1 unchanged sentence

The Parent also holds 411,723 shares of Visa Class B-2 common stock, which are discussed in Note 3.

During 2024, the Parent sold Visa Class A common stock resulting in proceeds of $ 176.6 million, also discussed in Note 3.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data