Common and Preferred Stock *

Presented below is a summary of the components used to calculate basic and diluted income per share. The Company applies the two-class method of computing income per share, as nonvested share-based awards that contain nonforfeitable rights to 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 table below. Nonvested share-based awards are further discussed in Note 12.



	For the Three Months Ended September 30				For the Nine Months Ended September 30
(In thousands, except per share data)	2015		2014		2015		2014
Basic income per common share:
Net income attributable to Commerce Bancshares, Inc.	$	64,612	$	68,185	$	200,020	$	199,029
Less preferred stock dividends	2,250		1,800		6,750		1,800
Net income available to common shareholders	62,362		66,385		193,270		197,229
Less income allocated to nonvested restricted stock	884		879		2,677		2,537
Net income allocated to common stock	$	61,478	$	65,506	$	190,593	$	194,692
Weighted average common shares outstanding	91,989		95,104		93,874		97,591
Basic income per common share	$	.67	$	.69	$	2.03	$	2.00
Diluted income per common share:
Net income available to common shareholders	$	62,362	$	66,385	$	193,270	$	197,229
Less income allocated to nonvested restricted stock	883		877		2,672		2,530
Net income allocated to common stock	$	61,479	$	65,508	$	190,598	$	194,699
Weighted average common shares outstanding	91,989		95,104		93,874		97,591
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	280		412		300		419
Weighted average diluted common shares outstanding	92,269		95,516		94,174		98,010
Diluted income per common share	$	.66	$	.69	$	2.02	$	1.99

Unexercised stock options and stock appreciation rights of 377 thousand and 152 thousand were excluded in the computation of diluted income per common share for the nine month periods ended September 30, 2015 and 2014, respectively, because their inclusion would have been anti-dilutive.

On June 19, 2014, the Company issued and sold 6,000,000 depositary shares, 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 $25.00 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 net proceeds from the issuance and sale of the Series B Preferred Stock, totaling $144.8 million, were used to fund an accelerated share repurchase (ASR) program. Under this ASR agreement, the Company paid $200.0 million to Morgan Stanley & Co. LLC (Morgan Stanley) and received from Morgan Stanley 3,208,206 shares of the Company’s common stock in June 2014. Final settlement occurred in June 2015, at which time the remaining shares, totaling 1,480,378, 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.

The Company entered into a second ASR agreement in May 2015, under which it paid $100.0 million to Morgan Stanley and received from Morgan Stanley 1,803,427 shares of common stock at that time. Final settlement occurred in August 2015, at which time the remaining shares, totaling 351,620, were received by the Company.

* All prior year share and per share amounts in this note have been restated for the 5% common stock dividend distributed in December 2014.