Common and Preferred Stock

12 Months Ended

Dec. 31, 2019

Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract]

Common and Preferred Stock*

On December 18, 2019, the Company distributed a 5% stock dividend on its $5 par common stock for the 26th 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 11 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)	2019		2018		2017
Basic income per common share:
Net income attributable to Commerce Bancshares, Inc.	$	421,231	$	433,542	$	319,383
Less preferred stock dividends	9,000		9,000		9,000
Net income available to common shareholders	412,231		424,542		310,383
Less income allocated to nonvested restricted stock	4,019		4,558		3,848
Net income allocated to common stock	$	408,212	$	419,984	$	306,535
Weighted average common shares outstanding	113,784		116,352		116,375
Basic income per common share	$	3.59	$	3.61	$	2.63
Diluted income per common share:
Net income available to common shareholders	$	412,231	$	424,542	$	310,383
Less income allocated to nonvested restricted stock	4,012		4,547		3,838
Net income allocated to common stock	$	408,219	$	419,995	$	306,545
Weighted average common shares outstanding	113,784		116,352		116,375
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	282		361		410
Weighted average diluted common shares outstanding	114,066		116,713		116,785
Diluted income per common share	$	3.58	$	3.60	$	2.62

Unexercised stock appreciation rights of 356 thousand, 235 thousand and 167 thousand were excluded from the computation of diluted income per share for the years ended December 31, 2019, 2018 and 2017, respectively, because their inclusion would have been anti-dilutive.

On August 7, 2019, the Company entered into an accelerated share repurchase ("ASR") agreement with Morgan Stanley & Co. LLC (Morgan Stanley). Under this ASR agreement, the Company paid $150.0 million to Morgan Stanley and received from Morgan Stanley 1,994,327 shares of the Company’s common stock, representing approximately 75% of the estimated total number of shares to be delivered by Morgan Stanley at the conclusion of the program. Final settlement occurred on December 30, 2019 at which time the remaining shares, totaling 438,009, were received by the Company. The specific number of shares that the Company ultimately repurchased was based on the volume-weighted-average price per share of the Company’s common stock during the repurchase period.

In the Annual Meeting of the Shareholders, held on April 17, 2019, a proposal to increase the shares of Company common stock authorized for issuance under its articles of incorporation was approved. The approval increased the authorized shares from 120,000,000 to 140,000,000.

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 November 2019 approved future purchases of 5,000,000 shares of the Company's common stock. At December 31, 2019, 4,430,958 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)	2019		2018		2017
Shares outstanding at January 1	111,129		106,615		101,461
Issuance of stock:
Awards and sales under employee and director plans	329		416		403
5% stock dividend	5,359		5,305		5,078
Other purchases of treasury stock	(4,670	)	(1,194	)	(315	)
Other	(15	)	(13	)	(12	)
Shares outstanding at December 31	112,132		111,129		106,615

* 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 2019.