Common and Preferred Stock*

On December 17, 2018, the Company distributed a 5% stock dividend on its $5 par common stock for the 25th 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 two-class method requires the calculation of separate income per share amounts for the nonvested share-based awards and for common stock. Income per share attributable to common stock is shown in the following table. Nonvested share-based awards are further discussed in Note 10 on Stock-Based Compensation.

Basic income per share is based on the weighted average number of common shares outstanding during the year. Diluted income per share gives effect to all dilutive potential common shares that were outstanding during the year. Presented below is a summary of the components used to calculate basic and diluted income per common share, which have been restated for all stock dividends.



(In thousands, except per share data)	2018		2017		2016
Basic income per common share:
Net income attributable to Commerce Bancshares, Inc.	$	433,542	$	319,383	$	275,391
Less preferred stock dividends	9,000		9,000		9,000
Net income available to common shareholders	424,542		310,383		266,391
Less income allocated to nonvested restricted stock	4,558		3,848		3,698
Net income allocated to common stock	$	419,984	$	306,535	$	262,693
Weighted average common shares outstanding	110,812		110,833		110,505
Basic income per common share	$	3.79	$	2.77	$	2.38
Diluted income per common share:
Net income available to common shareholders	$	424,542	$	310,383	$	266,391
Less income allocated to nonvested restricted stock	4,547		3,838		3,692
Net income allocated to common stock	$	419,995	$	306,545	$	262,699
Weighted average common shares outstanding	110,812		110,833		110,505
Net effect of the assumed exercise of stock-based awards -- based on the treasury stock method using the average market price for the respective periods	343		391		295
Weighted average diluted common shares outstanding	111,155		111,224		110,800
Diluted income per common share	$	3.78	$	2.76	$	2.37

Unexercised stock appreciation rights of 223 thousand, 159 thousand and 88 thousand were excluded from the computation of diluted income per share for the years ended December 31, 2018, 2017 and 2016, respectively, because their inclusion would have been anti-dilutive.

The Company has 6,000,000 depositary shares outstanding, representing 6,000 shares of 6.00% Series B Non-Cumulative Perpetual Preferred Stock, par value $1.00 per share, having an aggregate liquidation preference of $150.0 million (“Series B Preferred Stock”). Each depositary share has a liquidation preference of $25 per share. Dividends on the Series B Preferred Stock, if declared, accrue and are payable quarterly, in arrears, at a rate of 6.00%. The Series B Preferred Stock qualifies as Tier 1 capital for the purposes of the regulatory capital calculations. In the event that the Company does not declare and pay dividends on the Series B Preferred Stock for the most recent dividend period, the ability of the Company to declare or pay dividends on, purchase, redeem or otherwise acquire shares of its common stock or any securities of the Company that rank junior to the Series B Preferred Stock is subject to certain restrictions under the terms of the Series B Preferred Stock.

The Company maintains a treasury stock buyback program authorized by its Board of Directors. The most recent authorization in October 2015 approved future purchases of 5,000,000 shares of the Company's common stock. At December 31, 2018, 2,249,563 shares of common stock remained available for purchase under the current authorization.

The table below shows activity in the outstanding shares of the Company’s common stock during the past three years. Shares in the table below are presented on an historical basis and have not been restated for the annual 5% stock dividends.



	Years Ended December 31
(In thousands)	2018		2017		2016
Shares outstanding at January 1	106,615		101,461		97,226
Issuance of stock:
Awards and sales under employee and director plans	416		403		397
5% stock dividend	5,305		5,078		4,831
Other purchases of treasury stock	(1,194	)	(315	)	(959	)
Other	(13	)	(12	)	(34	)
Shares outstanding at December 31	111,129		106,615		101,461

* Except as noted in the above table, all share and per share amounts in this note have been restated for the 5% common stock dividend distributed in 2018.