Commerce Bancshares, Inc. Announces Third Quarter Earnings Per Share of $.75

Commerce Bancshares, Inc. Announces Third Quarter Earnings Per Share of $.75

KANSAS CITY, Mo.--(BUSINESS WIRE)-- Commerce Bancshares, Inc. (NAS: CBSH) announced earnings of $.75 per share for the three months ended September 30, 2012 compared to $.72 per share in the third quarter of 2011, or an increase of 4.2%. Net income for the third quarter amounted to $66.0 million compared to $65.4 million in the same quarter last year and $70.7 million in the prior quarter. For the quarter, the return on average assets totaled 1.28%, the return on average equity was 11.6% and the efficiency ratio was 60.0%.

For the nine months ended September 30, 2012, earnings per share totaled $2.29 compared to $2.13 in the first nine months of 2011, an increase of 7.5%. Net income amounted to $202.5 million for the first nine months of 2012 compared with $194.8 million for the same period last year, or an increase of $7.7 million. The return on average assets for the first nine months of 2012 was 1.32%, the return on average equity was 12.1% and the efficiency ratio was 59.1%.


In announcing these results, David W. Kemper, Chairman and CEO, said, "Although record low interest rates continued to pressure our net interest income, we were pleased to report solid quarterly earnings which benefited from loan growth, low credit losses and good expense management. Compared to the previous quarter, the decline in net interest income was partly due to non-recurring interest received last quarter and a reduction of $6.2 million in interest on our inflation-protected government securities. Also, while non-interest income continued to be affected by recent debit card interchange regulations, commercial card fees grew 21.8% compared to last year and remained strong, while trust fees also increased 7.1%. Non-interest expense was flat compared to the same quarter of last year. Average loans for the quarter grew $209.4 million, or 2.3%, this quarter compared to the previous quarter and resulted from growth in business, personal real estate loans and consumer loans. Average deposits declined by $111.7 million this quarter, or .7%."

Mr. Kemper continued, "Net loan charge-offs for the current quarter totaled $9.1 million, compared to $8.2 million in the previous quarter and $14.9 million in the third quarter of 2011. The increase in net loan charge-offs this quarter resulted from several large commercial loan recoveries totaling $3.6 million which were recorded during the second quarter. Overall commercial and consumer loan charge-offs remained low this quarter. During the current quarter, the provision for loan losses totaled $5.6 million, or $3.5 million less than net loan charge-offs, reflecting improved credit trends in our loan portfolio. Our allowance for loan losses amounted to $175.0 million this quarter, representing 3.2 times our non-performing loans. Total non-performing assets also decreased $8.8 million from the previous quarter to $73.4 million this quarter."

Total assets at September 30, 2012 were $20.9 billion, total loans were $9.6 billion, and total deposits were $16.8 billion. During the quarter the Company repurchased approximately 98,000 shares of Company stock at an average price per share of $39.66.

Commerce Bancshares, Inc. is a registered bank holding company offering a full line of banking services, including investment management and securities brokerage. The Company currently operates in approximately 360 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, and private equity activities.

Summary of Non-Performing Assets and Past Due Loans

(Dollars in thousands)

6/30/2012

9/30/2012

9/30/2011

Non-Accrual Loans

$

62,177

$

55,201

$

75,912

Foreclosed Real Estate

$

20,095

$

18,234

$

23,813

Total Non-Performing Assets

$

82,272

$

73,435

$

99,725

Non-Performing Assets to Loans

.88

%

.76

%

1.10

%

Non-Performing Assets to Total Assets

.40

%

.35

%

.48

%

Loans 90 Days & Over Past Due — Still Accruing

$

11,297

$

12,232

$

20,104

This financial news release, including management's discussion of third quarter results, is posted to the Company's web site at www.commercebank.com.

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

FINANCIAL HIGHLIGHTS

For the Three Months Ended

For the Nine Months Ended

(Unaudited)

June 30,
2012

September 30,
2012

September 30,
2011

September 30,
2012

September 30,
2011

FINANCIAL SUMMARY(In thousands, except per share data)

Net interest income

$

165,105

$

153,811

$

158,630

$

478,653

$

484,313

Taxable equivalent net interest income

171,186

159,934

164,317

496,786

501,575

Non-interest income

100,816

100,922

101,632

296,321

298,882

Investment securities gains, net

1,336

3,180

2,587

8,556

5,870

Provision for loan losses

5,215

5,581

11,395

18,961

39,372

Non-interest expense

156,340

153,391

153,746

460,192

461,219

Net income attributable to Commerce Bancshares, Inc.

70,733

66,006

65,352

202,538

194,839

Cash dividends

20,216

20,165

19,526

60,819

59,636

Net total loan charge-offs (recoveries)

8,214

9,082

14,895

28,461

48,872

Business

(3,600

)

202

889

(3,288

)

4,338

Real estate — construction and land

116

(102

)

1,215

234

4,326

Real estate — business

1,839

(25

)

1,429

3,309

2,832

Consumer credit card

5,930

6,277

7,103

18,380

24,631

Consumer

1,974

1,791

3,232

6,396

9,474

Revolving home equity

943

314

72

1,617

783

Real estate — personal

679

267

673

1,015

1,974

Overdraft

333

358

282

798

514

Per common share:

Net income — basic

$

.80

$

.75

$

.72

$

2.29

$

2.14

Net income — diluted

$

.80

$

.75

$

.72

$

2.29

$

2.13

Cash dividends

$

.230

$

.230

$

.219

$

.690

$

.657

Diluted wtd. average shares o/s

87,672

87,192

89,737

87,804

90,724

RATIOS

Average loans to deposits (1)

55.26

%

56.89

%

58.29

%

55.89

%

60.27

%

Return on total average assets

1.38

%

1.28

%

1.32

%

1.32

%

1.37

%

Return on total average equity

12.80

%

11.57

%

12.15

%

12.13

%

12.41

%

Non-interest income to revenue (2)

37.91

%

39.62

%

39.05

%

38.24

%

38.16

%

Efficiency ratio (3)

58.53

%

59.99

%

58.71

%

59.14

%

58.57

%

AT PERIOD END

Book value per share based on total equity

$

25.47

$

26.33

$

23.95

Market value per share

$

37.90

$

40.33

$

33.10

Allowance for loan losses as a percentage of loans

1.90

%

1.82

%

2.07

%

Tier I leverage ratio

9.73

%

10.00

%

9.74

%

Tangible common equity to assets ratio (4)

10.16

%

10.47

%

9.72

%

Common shares outstanding

87,588,533

87,608,391

88,924,563

Shareholders of record

4,184

4,146

4,224

Number of bank/ATM locations

361

362

363

Full-time equivalent employees

4,702

4,707

4,762

OTHER QTD INFORMATION

High market value per share

$

41.00

$

42.74

$

41.90

Low market value per share

$

36.17

$

37.71

$

31.65

(1)

Includes loans held for sale.

(2)

Revenue includes net interest income and non-interest income.

(3)

The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

(4)

The tangible common equity ratio is calculated as stockholders' equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended

For the Nine Months Ended

(Unaudited)
(In thousands, except per share data)

June 30,
2012

September 30,
2012

September 30,
2011

September 30,
2012

September 30,
2011

Interest income

$

174,624

$

163,194

$

170,835

$

507,784

$

524,748

Interest expense

9,519

9,383

12,205

29,131

40,435

Net interest income

165,105

153,811

158,630

478,653

484,313

Provision for loan losses

5,215

5,581

11,395

18,961

39,372

Net interest income after provision for loan losses

159,890

148,230