Welcome to the Commerce Bancshares and FineMark Holdings Acquisition Conference Call. I would now like to hand the conference call over to Matt Burkemper, Director of Finance and Corporate Development at Commerce Bancshares Inc. Please go ahead. Thank you. Before we start, note that today's presentation includes forward-looking statements, including statements about future financial and operating results, benefits, synergies, costs from the proposed transaction, and other opportunities management expects. Any such forward-looking statements are intended to be subject to the safe harbor provided by federal securities laws and regulations. Forward-looking statements involve assumptions, risks, and uncertainties. Please review the cautionary note regarding forward-looking statements on slides two and three of the investor presentation. This call will be recorded and made available on the investor relations website at investor.commercebank.com, where it will remain for 30 days. Now I'll turn the call over to John Kemper, President and CEO of Commerce Bancshares. Okay, thank you very much, Matt, and good morning, everyone. Thank you for joining us today. As Matt said, this is John Kemper. I'm the President and CEO of Commerce Bancshares. Joining me on the call today are Chuck Kim, our Chief Financial Officer, and Matt Burkemper, who you just heard from, our Director of Finance and Corporate Development. Earlier this morning, we issued a joint press release announcing our agreement to acquire FineMark Holdings Inc, which is the holding company of FineMark National Bank & Trust, a highly respected private bank and trust company. This is, I think, a unique opportunity to expand our presence in some high-growth markets and to further leverage our already substantial wealth management platform. First, just a little bit about FineMark, and I'm referencing here slides five, six, and seven of the investor presentation. Fine Mark National Bank & Trust, it was founded in 2007 in Fort Myers, Florida. Fine Mark is very much a relationship-focused private bank and trust company with nearly $8 billion in assets under management and or assets under administration and $4 billion in banking assets. Fine Mark has a concierge-style service model and some really deep expertise in serving high-net-worth clients, including multi-generational families and also professional athletes through their sports management division. Their model, I think it's fair to say, aligns very closely with Commerce's own values and approach. Fine Mark provides a comprehensive suite of wealth management and banking services, including private banking, investment management, lending, and trust services. Since its founding in 2007, FineMark has now grown and expanded its presence to comprise 13 offices in Florida, Arizona, and South Carolina. I think there are a long list of reasons why this partnership creates value for both organizations. I would just highlight a few here as being at the top of the list. First, for Commerce, we will solidify our established wealth management and private banking presence in Florida while also strategically expanding our footprint into some other very attractive high-growth markets in Arizona and in South Carolina. Second is the importance of fee-based revenues in both of our banks' models. Very much like Commerce, FineMark brings a strong mix of non-interest revenue through their asset management business. In fact, about 43% of their total revenue is non-interest revenue. That is in the last 12 months. Third, I would highlight a loan portfolio and a similarly conservative approach to lending and credit underwriting. FineMark, in fact, has a pristine credit history with only 13 basis points of cumulative net charge-offs over the last 10 years. For FineMark, Commerce Bank and Commerce Trust will provide scale and resources to enable continued growth by delivering technology, stronger product and service suite, marketing resources, a strong back office, and of course, a bigger, very well-positioned balance sheet. You can see on slide eight that on a combined basis, our organizations will have over $84 billion of total wealth assets under administration, about $52 billion of assets under management, and $36 billion of total bank assets. As things stand right now, that would make us, on a combined basis, the 16th largest bank-managed trust company in the United States. I think notably and importantly, we plan to retain the FineMark brand under a co-branding strategy, ensuring continuity for clients and for associates at FineMark. I have to say we're also just so pleased to be able to welcome Joseph Caddy, who's the Chairman and CEO of FineMark, who will step into the role of Chairman of Commerce Trust and continue to lead the FineMark division of Commerce Bank. Through Joe's leadership and his really impressive vision, he and his team have built, I think, a remarkable franchise, and we look forward to what we can accomplish together. This announcement is a result of, I think, quite a disciplined approach to M&A, building relationships with the right potential partners over long periods of time. In so many ways, FineMark checks all the boxes for us. We are so excited to work alongside them and to become one team. With that, I will now turn it over to Chuck. Chuck's going to walk through some of the financial details of the deal. Thanks, John. As John mentioned, this is a really exciting opportunity to leverage the strengths of both organizations into a leading wealth management and banking franchise in markets with a lot of growth potential. If you take a look at the right side of slide four, we believe the financial metrics are very compelling. The EPS accretion at 6% once the cost saves are phased in is attractive for a balance sheet of this size, and the tangible book value earned back at 1.6 years is an attractive use of our capital compared to other alternatives. On a pro forma basis, our capital levels will remain strong with a CET1 ratio of 17%, and we will have a long runway for loan growth with our loan-to-deposit ratio of 70%. Turning to the transaction terms on slide nine, this is a 100% stock transaction. FineMark shareholders will receive 0.69 shares of Commerce stock for each share of FineMark. Based on our June 13th, 2025 closing price, this equates to a per-share value of $4,187 and a total transaction value of approximately $585 million. The multiples are attractive on a relative basis as measured by both price to tangible book value and price to forward earnings, including cost savings. Additionally, we believe there will be low integration risk because of our similar approach to wealth management and underwriting discipline. These figures reflect a transaction that is both financially attractive and conservatively modeled. Turning to slide 15, we've assumed $15 million in fully phased-in pre-tax cost savings, representing just 15% of FineMark's non-interest expense. We have not modeled revenue synergies, although we believe there's meaningful upside. Conservatively, we're expecting pre-tax one-time merger expenses of approximately $57 million, which are modeled as fully realized intangible book value at closing. Fair value adjustments include pre-tax interest-rate-related write-downs of $146 million on FineMark's loan portfolio, $35 million on the available-for-sale securities, and $8 million on the held-to-maturity securities. Those will all be accreted back through earnings. The fair value estimates are based on the current interest rate environment, of course, subject to change based on the underlying rate environment at closing. After completion of a very thorough credit due diligence process, which included third-party review and coverage of nearly 90% of the commercial loan portfolio, we expect to mark the portfolio at 99 basis points, which is about 12.5% higher than the 88 basis points FineMark reported in Q1. We did model the mark between PCD/non-PCD split with the non-PCD double dip of $15 million accreting back over five years. We anticipate closing the transaction on January 1, 2026, subject to regulatory approvals and FineMark's shareholder approval. With that, back to you, John. Okay, Chuck, thanks very much. Hopefully, you can see that, at least from our perspective, this deal pencils out very well for both sets of shareholders. At the same time, this acquisition is very much about more than just the numbers. I think this is a partnership rooted in shared values and some complementary strengths and also a commitment to long-term success. We are excited to welcome the FineMark team and their clients to Commerce. Their culture, their people, their client-first mindset, I think, are all a natural fit here. We believe this combination will enhance our ability to drive sustainable growth. We're optimistic that this transaction will deliver meaningful long-term value to our shareholders, our customers, and our team members. With that, this concludes our prepared remarks. We'd like to open up the call for any questions. We will now begin the question and answer session. If you have a question, please press star one on your telephone keypad. If you wish to remove yourself from the queue, press star one again. Due to time constraints, participants are allowed one question and one follow-up question if needed. Your first question comes from Chris McGrady with KBW. Please go ahead. Hey, how's it going? This is Andrew Leischner on for Chris McGrady. Hi, Andrew. Yeah, so just to start off, can you speak about the background of the deal and how the relationship between you and FineMark came to be? Thanks. Sure. Yeah, this is not something that we do every day. I think it's been a very intentional and measured process in a way. I would say we've been proactively building this relationship with the FineMark team for almost five years at this point. I think we've really come to know each other very well, have a shared appreciation of the operating model that we're stepping into and partnering with, and have a really great sense for the talent on the team. This has been a long time coming, and we're really happy to be where we are right now. Okay, great. Just as my follow-up, given FineMark's loan portfolio composition being a little heavier, one to four family, how should we think about the pro forma asset sensitivity once the deal closes? Thanks. Sure. Yeah, I would just say you're right about that characterization, which is pretty typical for a private bank. It would look very similar to our own private bank, in fact, in terms of what that loan composition looks like. Of course, we're going to be marking the assets, so we'll accrete back a lot of that mark through earnings. Chuck, any commentary you want to offer on that? Sure. I would say, yeah, that's exactly right. We're really unlocking a lot of the value that's tied up in that loan portfolio with the rate mark, and we'll be accreting that back. We think there is definitely some asset sensitivity. There will be a lot of loans and securities repricing between now and the end of the year, helping FineMark expand the margin. I think you're on target with that. Your next question comes from the line of Casey Hare with Autonomous. Please go ahead. Yeah, thanks. Good morning, everyone. Appreciate you guys hosting this call. It's good to hear everyone's voice. I guess first question on just M&A appetite going forward. We're obviously used to you being a largely organic story. I think this is your first bank deal since 2013. FineMark does seem like a unique asset. Just wondering, are we entering a new chapter where M&A is going to be a more prominent part of the strategy, or is this more of a one-off type transaction? Thank you. Yeah, great question. And you're right. As I said, this is not something that we have done on a very regular basis, at least in recent years, but we just feel that this is such a great fit with our overall franchise and what we're trying to do. Backing up a little bit, I would say that M&A is always in the toolkit. It's something that we actively think about and pursue over time. In terms of our overall posture, nothing really has changed. We take the long-game approach. We work to cultivate these relationships over time. As we've tried to communicate over time, the types of partners that we are interested in are commercial or wealth-focused banks. The wealth-focused part is a great attribute to have. We're focused in geographies where we've expanded in recent years, so places like Dallas, Houston, Nashville, Denver. As I mentioned, we already had a presence in southwest Florida, so this was a great way to really be able to double down there and grow our scale. Not a lot has changed. We will continue to look at deals. I mean, just in terms of sizing, we've historically looked at banks that have been in the neighborhood of what FineMark's size is. Great. As my follow-up, on slide 15, you guys talk about FineMark profitability at a 90 b p ROA in 2026 to inform your EPS accretion. That's a significant step up from current profitability. I think it was around 40 b ps or so in the latest quarter. Just wanted some color on what is the key driver. My guess is NIM, but the key driver to get to a 90-basis point ROA next year. Sure, I'll take that one. We built the forecast, or actually, FineMark' management built the forecast at the cash flow level, which our team validated, and we feel very comfortable with, and we think is conservatively forecasted. Much of the margin expansion, as I mentioned before in the previous question specifically, is asset repricing on short-term assets. We expect to see there was good improvement in the first quarter of FineMark' margin. We expect that to continue through the year as you get repricing of their bond portfolio and parts of the loan portfolio. It should continuously expand throughout the rest of this year and get us into next year with some improved asset yields. We modeled it with interest rates staying exactly where they are, so there is no benefit to further rate increases to the extent we see those, and we still feel comfortable. I think you also see FineMark being successful at growing their loan portfolio, and we modeled continued growth in the loan portfolio and slight growth in the deposit portfolio from 2025 to 2026. All of those create the margin expansion, a little bit of growth in fee income on the asset management side to give us that $40 million in net income in 2026. Thank you. Your next question comes from the line of Manan Gosalia with Morgan Stanley. Please go ahead. Hey, good morning, all. Thanks for doing the call. [How 'you doing?] I wanted to ask about the rationale for doing an all-stock deal. You guys clearly have a lot of excess capital, so I wanted to get a sense of why do all-stock and whether this gives you an opportunity to accelerate buybacks to offset some of the dilution that you've seen here. Yeah, I think from both parties' perspective, leading with the all-stock transaction was deemed to be favorable. In our case, we feel like we've got a pretty strong currency and good to be able to use that currency to drive the kind of financial modeling and payback that Chuck was describing. We thought that made a lot of sense. As you pointed out, we did start from an excess capital perspective, at least by many people's estimation. In a way, being able to use a little bit of that extra capital in a way that generates a very quick payback we thought made a lot of sense. Anything you'd add, Chuck? No, I think that covers it. Okay. Great. Just to follow up on the prior question, the $40 million net income number on standalone FineMark, the delta between what they earned over the last couple of years and the $40 million, that entire delta is in the NII line. Is that correct? Yeah, I would say mostly in the NII line. There's some growth on the non-interest income side that's consistent with what they've had in the past. It's a pretty healthy growth. Got it. Thank you. Your next question comes from the line of David Long with Raymond James. Please go ahead. Good morning, guys. Question as it relates to loan portfolio and securities portfolio upon closing. Do you expect any loan sales or restructurings or securities sales or restructurings tied to the transaction? Sure. All of those things are under evaluation. Don't really expect any loan sales, but we'll be looking at the bond portfolio to see what makes sense between now and closing. That's certainly on the table. Got it. And then follow-up question as it relates to the core conversion. Do you have a tentative date or a planned date for that? No, we don't have a defined date, but kind of we're working with 12 months after the financial close. Great. Thank you. Your next question comes from the line of Timur Braziler with Wells Fargo. Please go ahead. Hi, good morning. Thinking about the entrance to the new geographies, the build-out in Florida, just the opportunity from a growth standpoint going forward, do you envision kind of the growth being more on the balance sheet lending opportunities within those markets? Will it remain focused on the wealth management component? You called out the sports management piece in the deck and in the prepared remarks. Can you just talk us to the opportunity that still remains in that vertical specifically? Sure. Yeah, great question. I think in FineMark, we found a model kind of earnings profile and business mix that we really admire. The opportunity is to grow along the trajectory they're already on. In terms of the mix of business, we would, of course, love to grow assets under management. We'd grow the bank balance sheet alongside that, but really, it's in service of taking care of our customers with, as we've said, a very high-touch and comprehensive model. Again, I think we would accelerate on the growth that we're already on. South Florida is a great market. It's a market where, honestly, Commerce already has a lot of familiarity just because we have so many clients who are down there already kind of splitting their time between some of our legacy markets and South Florida. Obviously, it's a terrific market in terms of demographics for the kind of clients that we want to take care of. I'd say much the same thing about Scottsdale, where we have a lot of clients and also similarly attractive demographics. We're excited about the growth possibilities in South Carolina as well. You mentioned the sports vertical, one that is really intriguing to us and has been a very nice niche for growth for FineMark. It's honestly not one that Commerce has a lot of historic familiarity with, but obviously a very attractive segment of customers who are making a fair amount of money and also have complicated needs. A real opportunity, we think, to add value. We're excited to learn more about that and to see what we can do in that niche to drive growth. Great. Thanks. As my follow-up, I've been getting a couple of questions on just capital return for the remainder of the year. Would the deal tend to close on January 1? Just how are you thinking about the stock dividend potentially later this year? Would that still be on the typical type of a timeline? Would that be adjusted in consideration for this deal? Would it be paid kind of after? Just your thoughts on capital return until this deal closes? We're pretty consistent with what we do in terms of capital return. We've done that stock dividend for a long time, and people really like it. One thing we are is pretty consistent. In terms of dividend policy, I think, again, consistent growth in the dividend and low single digits. You did not specifically ask about the buyback, I do not think, but hitting that for a minute, I think we've obviously been out of the market most of the second quarter, but I think we'll ease back in in the second half of the year. Great. Thank you. Your next question comes from the line of Nathan Race with Piper Sandler. Please go ahead. Hey, guys. Good morning. Congrats on the deal, and thanks for taking the questions. John, going back to your earlier point around some of the growth opportunities in the FineMark geographies, curious, as to your point, you mentioned the private banking franchises are pretty similar between Commerce and FineMark, but curious if you guys are anticipating the cost savings being reinvested into some commercial hires, just given your point on some of the underlying growth opportunities that exist across their geographies. Yeah, that's a great question. Yes, the short answer to Nate is, yeah, I do think there will be some opportunities to expand on the margin on commercial relationships. Honestly, sometimes the line is a little bit fuzzy. I mean, it may be a commercial relationship based on a personal relationship with somebody who's already in the private bank. The short answer is, yes, I do think there will be opportunity to find commercial growth in some of these markets. Having an in through relationships and the legacy FineMark operations in these markets gives us a great running start. Just given that FineMark is about 12% of your asset base, it does not move the needle too much in terms of the balance sheet size, but just curious if you see the addition of these markets kind of accelerating some of the company's pro forma organic growth opportunities. Historically, Commerce has been in the low single-digit range. Just curious if you think that can maybe accelerate with some of the entrance into the FineMark territories. Yeah, I think it's a little bit early to say, but that possibility certainly exists. Even if you're just looking at the private bank side of the equation, I mean, FineMark has been a pretty healthy grower over time, and we expect that momentum to continue. Okay. Great. I appreciate all the color. Thank you. Thank you. This concludes the Commerce Bancshares Conference Call. Once again, a replay along with the presentation slides will be available on the Commerce Investor Relations page. A replay of the call will also be available. If anyone has any additional questions, please contact Matt Burkemper with the Commerce Bank Investor Relations team at 314-746-7485. Thank you for your participation in today's conference call.