Commerce Bancshares, Inc. Announces First Quarter Earnings Per Share of $.67

Commerce Bancshares, Inc. Announces First Quarter Earnings Per Share of $.67

KANSAS CITY, Mo.--(BUSINESS WIRE)-- Commerce Bancshares, Inc. (Nasdaq: CBSH) announced earnings of $.67 per share for the three months ended March 31, 2013 compared to $.70 per share in the first quarter of 2012, or a decrease of 4.3%.Net income for the first quarter amounted to $61.0 million, compared to $65.8 million in the same quarter last year.For the quarter, the return on average assets totaled 1.13%, the return on average equity was 11.4% and the efficiency ratio was 61.8%.

In announcing these results, David W. Kemper, Chairman and CEO, said, "We continued to see solid growth in both our loan and deposit balances.Compared to the previous quarter, average loans increased $248 million, or 10.4% annualized, while average deposits grew by $735 million.Loan growth came from both consumer and commercial lending activities.Low interest rates, affecting both loans and investments, coupled with a decline in interest on our inflation-protected government securities of $4.8 million, resulted in a decline in net interest income of $10.9 million from the previous quarter.However, this decrease in net interest income was somewhat offset by a decline in credit costs of $5.0 million and a decline in non-interest expense of $3.2 million as a result of lower compensation costs and continuous expense control efforts.Furthermore, we continued to see strong revenue growth from our corporate card, merchant and trust fee businesses which grew by 19%, 12% and 10%, respectively, compared to the first quarter of last year.


Mr. Kemper continued, "Net loan charge-offs for the current quarter totaled $7.8 million, compared to $11.2 million in the first quarter of 2012 and $10.8 million in the previous quarter.Consumer net loan charge-offs declined slightly this quarter compared to the previous quarter and totaled $8.5 million, while commercial loans recorded net recoveries of $686 thousand.During the current quarter, the provision for loan losses totaled $3.3 million, or $4.5 million less than net loan charge-offs, reflecting lower commercial loan loss trends and continued positive delinquency results.Our allowance for loan losses amounted to $168.0 million this quarter, representing 3.8 times our non-performing loans.Total non-performing assets also decreased $5.9 million from the previous quarter to $58.9 million this quarter."

Total assets at March 31, 2013 were $22.2 billion, total loans were $10.0 billion, and total deposits were $18.5 billion.During the quarter, the Company repurchased approximately 808,000 shares of its common stock at an average price per share of $37.13.

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)

12/31/2012

3/31/2013

3/31/2012

Non-Accrual Loans

$51,410

$44,739

$68,875

Foreclosed Real Estate

$13,453

$14,191

$18,585

Total Non-Performing Assets

$64,863

$58,930

$87,460

Non-Performing Assets to Loans

.66

%

.59

%

.95

%

Non-Performing Assets to Total Assets

.29

%

.27

%

.43

%

Loans 90 Days & Over Past Due — Still Accruing

$15,347

$15,015

$16,428

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

For additional information, contact
Jeffery Aberdeen, Controller
at PO Box 419248, Kansas City, MO
or by telephone at (816) 234-2081
Web Site:http://www.commercebank.com
Email:mymoney@commercebank.com

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS

For the Three Months Ended

(Unaudited)

December 31,
2012

March 31,
2013

March 31,
2012

FINANCIAL SUMMARY(In thousands, except per share data)

Net interest income

$161,253

$150,343

$159,737

Taxable equivalent net interest income

168,428

156,708

165,666

Non-interest income

103,309

99,877

94,583

Investment securities gains (losses), net

(3,728

)

(2,165

)

4,040

Provision for loan losses

8,326

3,285

8,165

Non-interest expense

158,277

155,037

150,461

Net income attributable to Commerce Bancshares, Inc.

66,791

61,017

65,799

Cash dividends

150,789

20,435

20,438

Net total loan charge-offs (recoveries)

10,826

7,785

11,165

Business

791

(50

)

110

Real estate — construction and land

(517

)

(532

)

220

Real estate — business

1,799

(104

)

1,495

Consumer credit card

6,095

6,048

6,173

Consumer

1,731

1,709

2,631

Revolving home equity

187

139

360

Real estate — personal

411

373

69

Overdraft

329

202

107

Per common share:

Net income — basic

$.73

$.67

$.70

Net income — diluted

$.72

$.67

$.70

Cash dividends

$1.648

$.225

$.219

Diluted wtd. average shares o/s

90,999

90,444

92,984

RATIOS

Average loans to deposits (1)

55.53

%

54.65

%

55.53

%

Return on total average assets

1.25

%

1.13

%

1.29

%

Return on total average equity

11.62

%

11.38

%

12.04

%

Non-interest income to revenue (2)

39.05

%

39.92

%

37.19

%

Efficiency ratio (3)

59.62

%

61.76

%

58.91

%

AT PERIOD END

Book value per share based on total equity

$23.76

$24.02

$23.64

Market value per share

$35.06

$40.83

$38.59

Allowance for loan losses as a percentage of loans

1.75

%

1.68

%

1.96

%

Tier I leverage ratio

9.14

%

8.92

%

9.70

%

Tangible common equity to assets ratio (4)

9.25

%

9.26

%

10.12

%

Common shares outstanding

91,414,306

90,739,038

93,012,999

Shareholders of record

4,135

4,127

4,213

Number of bank/ATM locations

362

359

360

Full-time equivalent employees

4,708

4,725

4,713

OTHER QTD INFORMATION

High market value per share

$38.70

$40.89

$39.31

Low market value per share

$34.69

$35.40

$35.78

(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

(Unaudited)

(In thousands, except per share data)

December 31,
2012

March 31,
2013

March 31,
2012

Interest income

$170,185

$158,745

$169,966

Interest expense

8,932

8,402

10,229

Net interest income

161,253

150,343

159,737

Provision for loan losses

8,326

3,285

8,165

Net interest income after provision for loan losses

152,927

147,058

151,572

NON-INTEREST INCOME

Bank card transaction fees

41,542

38,550

34,733

Trust fees

24,351

25,169

22,814

Deposit account charges and other fees

20,301

18,712

19,336

Capital market fees

4,075

4,391

6,871

Consumer brokerage services

2,619

2,686

2,526

Loan fees and sales

1,412

1,473

1,561

Other

9,009

8,896

6,742

Total non-interest income

103,309

99,877

94,583

INVESTMENT SECURITIES GAINS (LOSSES), NET

Impairment (losses) reversals on securities

(356

)

1,389

5,587

Noncredit-related losses (reversals) on securities not expected to be sold

93

(1,831

)

(5,907

)

Net impairment losses

(263

)

(442

)

(320

)

Realized gains (losses) on sales and fair value adjustments

(3,465

)

(1,723

)

4,360

Investment securities gains (losses), net

(3,728

)

(2,165

)

4,040

NON-INTEREST EXPENSE

Salaries and employee benefits

94,553

90,881

89,543

Net occupancy

11,581

11,235

11,260

Equipment

4,983

4,683

5,189

Supplies and communication

5,641

5,589

5,613

Data processing and software

18,768

18,951

17,469

Marketing

2,715

3,359

3,822

Deposit insurance

2,692

2,767

2,520

Other

17,344

17,572

15,045

Total non-interest expense

158,277

155,037

150,461

Income before income taxes

94,231

89,733

99,734

Less income taxes

27,628

28,925

32,920

Net income

66,603

60,808

66,814

Less non-controlling interest expense (income)

(188

)

(209

)

1,015

Net income attributable to Commerce Bancshares, Inc.

$66,791

$61,017

$65,799

Net income per common share — basic

$.73

$.67

$.70

Net income per common share — diluted

$.72

$.67

$.70

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

December 31,
2012

March 31,
2013

March 31,
2012

ASSETS

Loans

$9,831,384

$9,982,686

$9,247,971

Allowance for loan losses

(172,532

)

(168,032

)