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Commerce Bancshares, Inc. Investor Presentation New York January 26 – 28, 2009

Commerce Bancshares, Inc. Investor Presentation New York January 26 – 28, 2009. Bayard Clark, EVP & CFO Jeffrey Aberdeen, Controller Nicole Hileman, Mgr – M&A. Cautionary Statement.

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Commerce Bancshares, Inc. Investor Presentation New York January 26 – 28, 2009

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  1. Commerce Bancshares, Inc.Investor PresentationNew YorkJanuary 26 – 28, 2009 Bayard Clark, EVP & CFO Jeffrey Aberdeen, Controller Nicole Hileman, Mgr – M&A

  2. Cautionary Statement A number of statements we will be making in our presentation and in the accompanying slides are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements of the Corporation’s plans, goals, objectives, expectations, projections, estimates and intentions. These forward-looking statements involve significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Corporation’s control). Factors that could cause the Corporation’s actual results to differ materially from such forward-looking statements made herein or by management of the Corporation are set forth in the Corporation’s Third Quarter Report on Form 10-Q and the Corporation’s Current Reports on Form 8-K.

  3. About Commerce BancsharesLower Midwest Footprint • $18 billion in assets – 5,217 FTEs • Super-Community Bank – over 360 banking locations • 86% of 2008 profits from five key markets • Denver and Tulsa markets added in 2007 • Adjacent metropolitan markets Des Moines Omaha Peoria Cincinnati Denver Indianapolis Kansas City St. Louis Louisville Wichita Springfld St. Louis & Kansas City Deposit Market Share 2008 US Bancorp 13% BoA 12% Commerce 8% Others 67% Source: FDIC 2008 Deposit Data Nashville Tulsa Oklahoma City

  4. Community Bank Front End Flat organization – quick decisions Employees embrace strong culture Solid multi-developed customer relationships Knowledge of customers and markets reduces risk We compete with a…. Super-Community Bank Platform • A More Nimble Format . . .With Higher Service Focus Super-Regional Back End • Sophisticated payment processing systems • Broad, consumer product offerings • Private banking; trust; capital markets • Competitive on unit costs • A Strategy that Builds Results for Tomorrow • Sales across business lines • Heavy people development and training • Investment in discretionary technology* • Top quartile credit quality metrics • Disciplined approach to acquisitions *Technology expense has grown at a 5yr CAGR of 6.7%.

  5. Commerce… Our Relative Position Against 10 Top Competitors With Branches Within 5 Miles of a Commerce Branch While Virtually Tied for 1st in Total Deposits, Commerce Ranks 4th Highest of Top Ten in Deposits Per Branch Source: FDIC

  6. We provide …. Balanced Customer Solutions 2008 Pre-tax Profit* CUSTOMER SEGMENTS Money Mgmt. / Trust $5 Lending & Risk Mgmt. $40 Payment Systems $220 ($ in Millions) Transaction accounts; Consumer Debit; Merchant Student loans; Bankcard; Mortgage; Consumer Lending Money Market; Mutual Funds; Annuities; Bonds Consumer $125 1% (3%) 49% Commercial & Capital Mkts $103 Treasury Svcs; Int’l; Purchase Card Commercial Lending; Floor plan; Leasing Institutional Trust; Capital Mkts Group LINES OF BUSINESS 17% 29% (7%) Private Banking Private Client/ Institutional; Fixed Income Private Client Transaction Accounts; Corp. Debt; Corp. Trust Trust & Private Bkg $37 3% 9% 2% *2008 includes overhead allocations of $9 million not considered in GAAP segment reports. Numbers in boxes reflect pre-tax contribution as % of total contribution.

  7. Revenue Per Share Growth Has Improved Recently….and has been consistent over time 2002-2005 CAGR Peers = 1.9% CBSH = 6.8% 2005-2008 CAGR Peers = 5.2% CBSH = 7.5% RPS Growth (YOY): *PEERS: Associated, BOK, City National, Colonial, Cullen/Frost, FirstMerit, and Zions 1Forecast 2008 – not actual 2CBSH Actual 2008 Source: Financial Information Systems and CBI Annual Reports

  8. .…’08 Report Revenue Growth *Includes Securities Gains

  9. Diverse Revenue Sources Outsized in Wealth Management and Card Revenue Commerce – YTD 12/31/08 Wealth Mgt11% Other2% Svc Chrgs 11% Peers* Fees & Comm 3% Net Int Margin 61% Wealth Mgt 5% Other 5% Card Inc 12% Svc Chrgs 10% Net Int Margin 71% Fees & Comm 7% Card Inc 3% *Data as of 9/30/08 - Peers Include: BOKF, CYN, ZION, FMER, CFR, ASBC, and CNB NOTE: Excludes Securities Gains Sources: Financial Information Systems, SEC, Company Reports

  10. .…’08 Report Pre-Tax Profit

  11. Commerce Non-interest Expenses, relative to the Peer group, are higher, but align with its growing fee businesses CBSH (Disadvantage) in bp of assets: *PEERS: Associated, BOK, City National, Colonial, Cullen/Frost, FirstMerit, and Zions Source: Financial Information Systems and CBI Annual Reports

  12. Balance Sheet Trends ($ in Millions) $12.9 billion $10.9 billion $11.6 billion $8.9 billion $3.8 billion $3.7 billion $1.6 billion $1.3 billion $3.5 billion *At 12/31/08, 86% of deposits were <$100M

  13. Commerce… How Have We Been Affected?In This Economic Downturn • Strong Demand for Loans • Customer demand for liquidity high as credit tightens. • Strong Competition for Core Deposits • Bank demand for stable, low cost deposits, high as liquidity needs grow and capital markets dry-up. Some irrational pricing. • Decreased reliance on overnight and unsecured borrowings. • Pledged additional collateral with the Fed and FHLB to double “backup” funding facilities (approx. $4B). • Investment portfolio ($4B) has been managed to free as many saleable bonds as possible (approximately $1.6B). • Suspended stock buy-back to add liquidity and capital.

  14. Commerce… Managing with Stable & Diversified Funding $2.9B $1.8B NOTE: No BHC leverage; only Common Equity; no senior, subordinated or hybrid debt.

  15. Commerce… Managing Interest Rate Risk to a Neutral PositionNet Interest Income: 2000 – 2009(E)

  16. Commerce… Managing to Limit Earnings VolatilityBank Duration of Equity (or mismatch): 2000 – 12/2009 Forecasted The duration of equity measures the sensitivity of the value of the Bank (all future cash flows) to changes in rates. In order to protect the Bank against swings in market rates, Commerce manages the Bank’s duration of equity to within a conservative long-term targeted range of 2.00 – 3.50%1 Management relies on “on balance sheet” solutions to manage interest rate risk. 1This targeted range was established over time based on Management’s comfort with levels of short and long-term net interest income risk.

  17. Commerce… Our Loan Portfoliois well diversified – 57% commercial; 43% consumer Annual average *Includes Student Loans held to maturity **Mainly Student Loans

  18. Commerce… Risk Management is An Important Part of Our Culture….

  19. Asset Quality… Selected Large Cap & Peer Banks3rd Quarter

  20. Asset Quality… Commerce May Not Be Immune to Credit Losses in a Sustained Down Cycle Peer Group Concentrations - High Risk Categories % of Total Loan Portfolio Note: City National (California); FirstMerit (Ohio), and Colonial (Florida) are concentrated in troubled residential real estate markets. 1Peer median also includes BOK, Cullen/Frost and TCF Source: Morgan Stanley

  21. Asset Quality… Net Loan Charge-Offs Over Last 5 QuartersConsistently Better than Industry Average CBI Largest 100 Other Banks All Banks

  22. Commerce… Our Challenges and OpportunitiesAreas of Focus for 2009 • Sustain Organic Growth Momentum in Key Business Lines • Refine and deliver the value proposition • Grow our core deposit account base • Leverage payment systems capabilities • Further penetrate wealth customer segment • Develop out of footprint expansion • Better Manage Our Performance • Employ actionable MIS • Deploy enhanced sales management and data mining capabilities • Sharpen risk management skills/risk based pricing* • Focus on productivity, cost control, expense management* • Negotiate through turmoil in both the economy and the financial services industry *Added to the 2009 AOF

  23. Our Plan… Planning for the Future • Company-wide strategic planning initiative to focus on top-line growth begun during 2007, advised by First Manhattan Consulting Group • Full implementation during 2008 • A collection of corporate “areas of focus” that balance growth and profitability/productivity/risk management: • Retail value proposition that drives organic deposit growth • Commercial payment system out of footprint expansion • Wealth management • Asset quality and risk-based pricing • Expense/productivity management

  24. Our Performance… Core Retail Focus Key Long-Term Initiatives • Generate additional Fee Income • Compete with irrational deposit pricing by competitors desperate for funding needs • Grow consumer loan book against housing & economic headwinds • Increased FDIC Insurance Premiums $ in Millions Relative Value over 10 Years Highlights • All non-CD deposit categories exceeded budget • Non-CD balance growth rate 3.8% vs. 1.1% 2005 - 2007 CAGR • Targeted sales campaigns accomplished goal to lift NIM • PMMA promotion attracted $511MM in new money and 5,800 new accounts • Contribution off plan, $28.5MM • DDA balances, $67MM • NIM under plan, $12MM • Lower NSF/OD fees, off 13.5% Challenges YTD 2008 Plan Performance

  25. Our Performance… Core Commercial Focus Key Long-Term Initiatives Challenges • Economic turmoil effecting all facets of line of business • Potential for fee income to be effected by economic slowdown • Problem loans will require increasing amounts of officer time Highlights YTD 2008 Plan Performance • Reprice credit relative to risk • Capitalize on safety/soundness • Work across business lines • Focus on expansion markets • Pre-tax contribution up 10% • Total revenue up 8.9% • Depository fees up 13% • Loans up 8.4% • Deposits up 7.5%

  26. Our Performance… Wealth Management Focus Key Long-Term Initiatives • Decline in the market has reduced 2008 fee income • Achieving our 2008 5% private bank loan growth goal in a tough economy • Implementing important systems projects to support long-term growth initiatives $ in Millions Relative Value over 10 Years Highlights • New asset management sales achieved 16.7% planned growth goal • Asset management sales hit a record high of $7.1MM • YOY Private Bank Core Deposits grow 12% • Joint Wealth Management Sales Program with Commercial LOB implemented • Contribution below budget by $744M, or 1.8% below plan • Deposits up $93MM, or 12% • Fee Income $1.9MM below plan; market pressured • Net New Trust Fee growth ahead of plan at $1.9MM Challenges YTD 2008 Plan Performance

  27. Our Performance… Bankcard Products Focus Key Long-Term Initiatives • Consumer Card Net C/Os continued at elevated levels, projected to be over plan by 10% • Merchant outgoing interchange rate is significantly higher/usage on Reward and World Cards • CCX card spend is 22% under budget $ in Millions Relative Value over 10 Years Highlights • Consumer Direct Mail/Interest Rate Floors growing portfolio • Merchant Retail Sales Volume exceeding plan • Existing Commercial Card Sales are up 20% YOY • Combined Contribution 4% under plan • NIM up 7% - spread driven • Consumer & Merchant Fees up 1% YOY • Comml Card Revenue up $7.5MM, 45% YOY Challenges YTD 2008 Plan Performance

  28. We Invest in Technology toDeliver Expected Customer Interaction Volume Has Grown 26% Since 1999… Now 70% Electronic 1999 2008 6.2MM Average Monthly Transactions 7.9MM OnlineBkg 35% Teller27% Teller42% ATM34% VoiceResponse21% ATM20% PhoneAgent 3% VoiceResponse15% OnlineBkg 1% Avg Monthly Web Visits 1999 – 58M 2008 – 3,434M PhoneAgent 2% Technology Investments nearly 43% of Total FF&E Expenditures in 2008.

  29. Leverage our Human Capital… Comparison of Engagement Scores • Overall engagement score significantly surpassed both mid-cap, as well as all bank indexes 89% 8% 3% 2008 Commerce Bank Engagement Index 89% 8% 3% 2007 87% 9% 3% 2006 2007 Global Workforce Study (U.S. Banking) Engagement Index 68% (all banks) 74% (mid-cap banks) 22% 11% % Favorable % Neutral % Unfavorable

  30. Industry… 2008 Total Return PerformanceTop 25 Banks (by market cap) 112/31/08 2From 1/1/08 to 12/31/08 3Not Weighted NOTE: Total assets for this group range from a high of $2,521B for JPMorgan to a low of $14B for Cullen/Frost. By total assets, Commerce ranks 31st and is the 5th best in total shareholder return among the top 50 banks. Source: Factset

  31. In Summary… Revenue and Earnings Per Share GrowthLast 10 Years

  32. In Conclusion … Our Position Entering 2009 • Relatively, in a better position than most of our competitors. • Did not take TARP. • A strong capital base: nearly 10% common equity to average assets. • Positioned to grow while many competitors focused on damage control. • Our core strategy of relationship business, leading with payment systems solutions, generates high customer satisfaction ratings. • Our risk aversion mindset is attracting new prospects.

  33. In Conclusion … Our Challenges for 2009 • Reduced economic activity and higher unemployment will stress our customers and communities. • Will be a difficult earnings environment for all companies, which will pressure market related fee income and net interest income. • Higher unemployment and lower corporate profits generally increase loan losses. We are budgeting an increase in our loan loss provision.

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