Parent Company Condensed Financial Statements

12 Months Ended

Dec. 31, 2020

Condensed Financial Information Disclosure [Abstract]

Parent Company Condensed Financial Statements

Following are the condensed financial statements of Commerce Bancshares, Inc. (Parent only) for the periods indicated:


Condensed Balance Sheets
	December 31
(In thousands)	2020		2019
Assets
Investment in consolidated subsidiaries:
Bank	$	3,077,713	$	2,687,692
Non-banks	67,710		71,290
Cash	171,943		301,913

Investment securities:
Available for sale debt	4,795		1,399
Equity	3,135		2,969

Note receivable due from bank subsidiary	50,000		50,000
Advances to subsidiaries, net of borrowings	31,907		26,097
Deferred tax assets	10,990		9,973
Other assets	26,222		23,528
Total assets	$	3,444,415	$	3,174,861
Liabilities and stockholders’ equity
Pension obligation	$	17,548	$	13,028

Other liabilities	29,820		27,149
Total liabilities	47,368		40,177
Stockholders’ equity	3,397,047		3,134,684
Total liabilities and stockholders’ equity	$	3,444,415	$	3,174,861


Condensed Statements of Income
	For the Years Ended December 31
(In thousands)	2020		2019		2018
Income
Dividends received from consolidated bank subsidiary	$	210,001	$	500,000	$	200,000


Earnings of consolidated subsidiaries, net of dividends	148,435		(79,641)		233,785
Interest and dividends on investment securities	1,802		1,698		10,698
Management fees charged to subsidiaries	33,472		36,776		37,688
Investment securities gains (losses)	53		3,572		(4,581)
Net interest income on advances and note to subsidiaries	233		1,208		1,299
Other	4,282		4,700		2,390
Total income	398,278		468,313		481,279
Expense
Salaries and employee benefits	31,277		32,882		33,588
Professional fees	1,977		2,050		2,383
Data processing fees paid to affiliates	2,765		3,142		3,341


Other	11,850		13,106		10,881
Total expense	47,869		51,180		50,193
Income tax benefit	(3,648)		(4,098)		(2,456)
Net income	$	354,057	$	421,231	$	433,542


Condensed Statements of Cash Flows
	For the Years Ended December 31
(In thousands)	2020		2019		2018
Operating Activities
Net income	$	354,057	$	421,231	$	433,542
Adjustments to reconcile net income to net cash provided by operating activities:
Earnings of consolidated subsidiaries, net of dividends	(148,435)		79,641		(233,785)
Other adjustments, net	5,504		2,491		2,505
Net cash provided by operating activities	211,126		503,363		202,262
Investing Activities

(Increase) decrease in investment in subsidiaries, net	3		(12)		—
Proceeds from sales of investment securities	—		3,856		41,638
Proceeds from maturities/pay downs of investment securities	1,410		1,150		1,988
Purchases of investment securities	(4,863)		(63)		(125)

Increase in advances to subsidiaries, net	(5,810)		(6,230)		(5,296)
Net purchases of building improvements and equipment	(94)		(235)		(133)
Net cash provided by (used in) investing activities	(9,354)		(1,534)		38,072
Financing Activities
Preferred stock redemption	(150,000)		—		—
Purchases of treasury stock	(54,163)		(134,904)		(75,231)
Accelerated share repurchase agreements	—		(150,000)		—
Issuance of stock under equity compensation plans	(11)		(8)		(10)

Cash dividends paid on common stock	(120,818)		(113,466)		(100,238)
Cash dividends paid on preferred stock	(6,750)		(9,000)		(9,000)
Net cash used in financing activities	(331,742)		(407,378)		(184,479)
Increase (decrease) in cash	(129,970)		94,451		55,855
Cash at beginning of year	301,913		207,462		151,607
Cash at end of year	$	171,943	$	301,913	$	207,462
Income tax receipts, net	$	(3,663)	$	(2,337)	$	(1,965)

Dividends paid by the Parent to its shareholders were substantially provided from Bank dividends. The Bank may distribute common dividends without prior regulatory approval, provided that the dividends do not exceed the sum of net income for the current year and retained net income for the preceding two years, subject to maintenance of minimum capital requirements. The Parent charges fees to its subsidiaries for management services provided, which are allocated to the subsidiaries based primarily on total average assets. The Parent makes cash advances to its private equity subsidiary for general short-term cash flow purposes. Advances may be made to the Parent by its subsidiary bank holding company for temporary investment of idle funds. Interest on such advances is based on market rates.

In 2017, the Bank borrowed $50.0 million from the Parent as part of its strategy to manage FDIC insurance premiums. The note has a rolling 13 month maturity, and the interest rate is a variable rate equal to the one year treasury rate.

For the past several years, the Parent has maintained a $20.0 million line of credit for general corporate purposes with the Bank. The Parent has not borrowed under this line during the past three years.

At December 31, 2020, the fair value of the investment securities held by the Parent consisted of investments of $4.8 million in corporate bonds and $2.8 million in preferred stock with readily determinable fair values, and $300 thousand in equity securities that do not have readily determinable fair values.