StockSelector.com
  Research, Select, & Monitor Sunday, August 25, 2019 3:59:54 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Commerce Bancshares Inc.$55.46($1.86)(3.24%)

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Commerce Bancshares, Inc. Reports Record Fourth Quarter Earnings of $94 Million
   Thursday, January 18, 2018 7:00:01 AM ET

Commerce Bancshares, Inc. (CBSH ) announced record earnings of $.86 per common share for the three months ended December 31, 2017 compared to $.65 per share in the same quarter last year and $.67 per share in the prior quarter. Net income attributable to Commerce Bancshares, Inc. for the fourth quarter amounted to $94.4 million, compared to $71.6 million in the fourth quarter of 2016 and $74.6 million in the prior quarter. There were several extraordinary items which occurred in the 4th quarter, including a previously announced $25 million contribution of appreciated stock to the Commerce Bancshares Foundation and a one-time bonus to certain employees of approximately $3.3 million. These two items combined with adjustments for the new corporate tax legislation added $.12 per share for this period. For the quarter, the return on average assets was 1.50%, the return on average common equity was 14.2%, and the efficiency ratio was 67.9%.



For the year ended December 31, 2017, earnings per common share totaled $2.89 compared to $2.49 in 2016, or an increase of 16.1%. Net income attributable to Commerce Bancshares, Inc. for the year ended December 31, 2017 increased 16.0% to $319.4 million compared to $275.4 million last year. For the current year, the return on average assets was 1.28%, and the return on average common equity was 12.5%.

In announcing these results, David W. Kemper, Chairman and CEO, said, "Core earnings were strong this quarter driven by growth in net interest income, higher fee income, solid expense control and continued low credit losses. Our net interest margin continued to expand, driven by increased rates on both our loan and investment portfolios, while deposit costs remained stable. We saw strong growth from both our trust and commercial card businesses, which increased 12.9% and 14.3%, respectively, over the same quarter in the prior year. Non-interest expense increased just 2.3% over the same quarter last year when adjusted for the one-time bonus and foundation contribution, as we continue to focus on expenses. This quarter total average loans increased $183.0 million, or 5.3% annualized over the prior quarter, driven by growth in construction, business, business real estate, consumer and consumer credit card lending activities."

Mr. Kemper added, "Credit quality remains strong, and capital and liquidity levels continue to be among the best in the banking industry. For the current quarter, net loan charge-offs totaled $11.0 million, up slightly over the prior quarter. This small increase was due mainly to growth in net loan charge-offs in business loans, offset by lower automobile loan net charge-offs. The ratio of annualized net loan charge-offs to average loans was .32% this quarter compared to .31% last quarter. Non-performing assets decreased this quarter to $12.7 million, or a decline of $2.0 million from the prior quarter. During the current quarter, the provision for loan losses exceeded net loan charge-offs by $1.7 million, and the allowance for loan losses amounted to $159.5 million, or 1.14% of period end loans."

Total assets at December 31, 2017 were $24.8 billion, total loans were $14.0 billion, and total deposits were $20.4 billion. During the fourth quarter of 2017, the Company distributed a 5% stock dividend on its common stock. This quarter the Company also paid an annualized 6% cash dividend on its preferred stock and a cash dividend of $.214 per common share, as restated for the 5% stock dividend.

Commerce Bancshares, Inc. is a regional bank holding company offering a full range of financial products to consumers and commercial customers including personal banking, lending, mortgage banking, wealth management, brokerage and capital markets services. The Company currently operates in approximately 330 locations in the central United States and has a nationwide presence in the commercial payments industry.

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

For additional information, contact Jeffery Aberdeen, Controller at 1000 Walnut Street, Suite 700 Kansas City, MO 64106 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                                                                                                          For the Year Ended
(Unaudited)                                                               December 31,                            September 30,                           December 31,                                               December 31,                            December 31,
(Dollars in thousands, except per share                                                                             2017                                                       2017                                                       2016                                                       2017                                                       2016
data)
-------------------------------------------------------- -------------------- -------------------- -----------------------------------   -------------------- -----------------------------------   -------------------- -----------------------------------                        -----------------------------------   -------------------- -----------------------------------
FINANCIAL SUMMARY                                                                                                                                                                                                                                                                                                          
Net interest income                                                                                        $190,008                                $182,591                                $173,202                                                   $733,679                                                   $680,049
Non-interest income                                                                                         124,212              122,242              119,479                                 486,604              474,392  
                                                                                                   ------------------------------------- -------------------- ------------------------------------- -------------------- -------------------------------------                      ------------------------------------- -------------------- -------------------------------------
    Total revenue                                                                                           314,220                                                    304,833                                                    292,681                                                  1,220,283                                                  1,154,441
Investment securities gains (losses), net                                                                    27,209                                                     (3,037 )                                                    3,651                                                     25,051                                                        (53 )
Provision for loan losses                                                                                    12,654                                                     10,704                                                     10,400                                                     45,244                                                     36,318
Non-interest expense                                                                                        213,688              184,572              181,261                                 769,684              717,065  
                                                                                                   ------------------------------------- -------------------- ------------------------------------- -------------------- -------------------------------------                      ------------------------------------- -------------------- -------------------------------------
    Income before taxes                                                                                     115,087                                                    106,520                                                    104,671                                                    430,406                                                    401,005
Income taxes                                                                                                 20,104                                                     32,294                                                     32,297                                                    110,506                                                    124,151
Non-controlling interest expense (income)                                                                       628                 (338 )                                   795                                     517                1,463  
                                                                                                   ------------------------------------- -------------------- ------------------------------------- -------------------- -------------------------------------                      ------------------------------------- -------------------- -------------------------------------
    Net income attributable to Commerce Bancshares, Inc.                                                     94,355                                                     74,564                                                     71,579                                                    319,383                                                    275,391
Preferred stock dividends                                                                                     2,250                2,250                2,250                                   9,000                9,000  
                                                                                                   ------------------------------------- -------------------- ------------------------------------- -------------------- -------------------------------------                      ------------------------------------- -------------------- -------------------------------------
    Net income available to common shareholders                                                             $92,105              $72,314              $69,329                                $310,383             $266,391  
                                                                                                   ===================================== ==================== ===================================== ==================== =====================================                      ===================================== ==================== =====================================
Earnings per common share:
  Net income -- basic                                                                              $.86                                                       $.68                                                       $.65                                                      $2.90                                                      $2.50
  Net income -- diluted                                                                            $.86                                                       $.67                                                       $.65                                                      $2.89                                                      $2.49
Effective tax rate                                                                                            17.56 %                                                    30.22 %                                                    31.09 %                                                    25.71 %                                                    31.07 %
Tax equivalent net interest income                                                                         $197,917                                                   $190,497                                                   $181,301                                                   $766,601                                                   $711,433
Average total interest earning assets (1)                                                              $ 23,851,260                                               $ 23,790,684                                               $ 23,775,165                                               $ 23,957,929                                               $ 23,378,121
Diluted wtd. average shares outstanding                           105,976,402          105,981,083          105,586,262                             105,927,203          105,523,631  
======================================================== ==================== ==================== ===================================== ==================== ===================================== ==================== =====================================                      ===================================== ==================== =====================================
RATIOS
Average loans to deposits (2)                                                                                 68.15 %                                                    66.96 %                                                    64.24 %                                                    66.18 %                                                    63.71 %
Return on total average assets                                                                                 1.50                                                       1.19                                                       1.14                                                       1.28                                                       1.12
Return on average common equity (3)                                                                           14.17                                                      11.35                                                      11.48                                                      12.46                                                      11.33
Non-interest income to total revenue                                                                          39.53                                                      40.10                                                      40.82                                                      39.88                                                      41.09
Efficiency ratio (4)                                                                                          67.91                                                      60.44                                                      61.82                                                      62.97                                                      61.98
Net yield on interest earning assets                                     3.29                 3.18                 3.03                                    3.20                 3.04  
======================================================== ==================== ==================== ===================================== ==================== ===================================== ==================== =====================================                      ===================================== ==================== =====================================
EQUITY SUMMARY
Cash dividends per common share                                                                               $.214                                                      $.214                                                      $.204                                                      $.857                                                      $.816
Cash dividends on common stock                                                                              $22,897                                                    $22,906                                                    $21,776                                                    $91,619                                                    $87,070
Cash dividends on preferred stock                                                                            $2,250                                                     $2,250                                                     $2,250                                                     $9,000               $9,000  
                                                                                                                                                                                                                                                                                    ===================================== ==================== =====================================
Book value per common share (5)                                                                              $24.14                                                     $23.99                                                     $22.12
Market value per common share (5)                                                                            $55.84                                                     $55.02                                                     $55.06
High market value per common share                                                                           $57.91                                                     $56.42                                                     $56.40
Low market value per common share                                                                            $52.07                                                     $49.43                                                     $43.21
Common shares outstanding (5)                                                                           106,615,043                                                106,706,732                                                106,534,010
Tangible common equity to tangible assets (6)                                                                  9.84 %                                                     9.72 %                                                     8.66 %
Tier I leverage ratio                                                   10.39 %                                 10.16 %                                  9.55 %
======================================================== ==================== ==================== ===================================== ==================== ===================================== ==================== =====================================
OTHER QTD INFORMATION
Number of bank/ATM locations                                                                                    327                                                        334                                                        336
Full-time equivalent employees                                          4,800                4,811                4,784  
======================================================== ==================== ==================== ===================================== ==================== ===================================== ==================== =====================================
(1)   Excludes allowance for loan losses and unrealized
                         gains/(losses) on available for sale securities.
(2)                      Includes loans held for sale.
(3)                      Annualized net income available to common shareholders divided
                         by average total equity less preferred stock.
(4)                      The efficiency ratio is calculated as non-interest expense
                         (excluding intangibles amortization) as a percent of revenue.
(5)                      As of period end.
(6)                      The tangible common equity ratio is calculated as stockholders’
                         equity reduced by preferred stock, 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 Year Ended
(Unaudited)                                                        December 31,                    September 30,                     June 30,                        March 31,                     December 31,                                       December 31,                     December 31,
(In thousands, except per share data)                                                                        2017                                               2017                                               2017                                               2017                                               2016                                               2017                                                2016
----------------------------------------------------- -------------------- -------------------- ----------------------------  -------------------- ----------------------------  -------------------- ----------------------------  -------------------- ----------------------------  -------------------- ----------------------------                       ----------------------------  -------------------- ------------------------------
Interest income                                                                                 $201,572                        $194,244                        $193,594                        $187,997                        $181,498                                           $777,407                          $713,052
Interest expense                                                                                  11,564       11,653       10,787        9,724        8,296                          43,728         33,003  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
Net interest income                                                                              190,008                                            182,591                                            182,807                                            178,273                                            173,202                                            733,679                                              680,049
Provision for loan losses                                                                         12,654       10,704       10,758       11,128       10,400                          45,244         36,318  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
  Net interest income after provision for loan losses                                            177,354      171,887      172,049      167,145      162,802                         688,435        643,731  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
NON-INTEREST INCOME
Bank card transaction fees                                                                        47,717                                             44,521                                             44,999                                             43,204                                             45,338                                            180,441                                              181,879
Trust fees                                                                                        35,405                                             34,620                                             33,120                                             32,014                                             31,360                                            135,159                                              121,795
Deposit account charges and other fees                                                            22,598                                             22,659                                             22,861                                             21,942                                             22,134                                             90,060                                               86,394
Capital market fees                                                                                1,743                                              1,755                                              2,156                                              2,342                                              2,679                                              7,996                                               10,655
Consumer brokerage services                                                                        3,576                                              3,679                                              3,726                                              3,649                                              3,409                                             14,630                                               13,784
Loan fees and sales                                                                                3,099                                              3,590                                              4,091                                              3,168                                              2,583                                             13,948                                               11,412
Other                                                                                             10,074       11,418       12,131       10,747       11,976                          44,370         48,473  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
  Total non-interest income                                                                      124,212      122,242      123,084      117,066      119,479                         486,604        474,392  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
INVESTMENT SECURITIES GAINS (LOSSES), NET                                                         27,209                                             (3,037 )                                            1,651                                               (772 )                                            3,651                                             25,051                                                  (53 )
NON-INTEREST EXPENSE
Salaries and employee benefits                                                                   115,741                                            111,382                                            108,829                                            112,369                                            108,639                                            448,321                                              427,310
Net occupancy                                                                                     11,280                                             11,459                                             11,430                                             11,443                                             11,529                                             45,612                                               46,290
Equipment                                                                                          4,692                                              4,491                                              4,776                                              4,609                                              4,884                                             18,568                                               19,141
Supplies and communication                                                                         6,118                                              5,517                                              5,446                                              5,709                                              5,645                                             22,790                                               24,135
Data processing and software                                                                      23,093                                             22,700                                             23,356                                             23,097                                             23,390                                             92,246                                               92,722
Marketing                                                                                          3,937                                              4,676                                              4,488                                              3,224                                              3,431                                             16,325                                               16,032
Deposit insurance                                                                                  3,444                                              3,479                                              3,592                                              3,471                                              3,443                                             13,986                                               13,327
Community service                                                                                 25,511                                              3,006                                              2,916                                              2,944                                                822                                             34,377                                                3,906
Other                                                                                             19,872       17,862       19,761       19,964       19,478                          77,459         74,202  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
  Total non-interest expense                                                                     213,688      184,572      184,594      186,830      181,261                         769,684        717,065  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
Income before income taxes                                                                       115,087                                            106,520                                            112,190                                             96,609                                            104,671                                            430,406                                              401,005
Less income taxes                                                                                 20,104       32,294       33,201       24,907       32,297                         110,506        124,151  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
Net income                                                                                        94,983                                             74,226                                             78,989                                             71,702                                             72,374                                            319,900                                              276,854
Less non-controlling interest expense (income)                                                       628         (338 )                            29          198          795                             517          1,463  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
Net income attributable to Commerce Bancshares, Inc.                                              94,355                                             74,564                                             78,960                                             71,504                                             71,579                                            319,383                                              275,391
Less preferred stock dividends                                                                     2,250        2,250        2,250        2,250        2,250                           9,000          9,000  
                                                                                                -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- -------------------- -------------------- -------- --------------------                      -------- -------------------- -------------------- ---------- --------------------
Net income available to common shareholders                                                      $92,105      $72,314      $76,710      $69,254      $69,329                        $310,383       $266,391  
                                                                                                ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ====================                      ======== ==================== ==================== ========== ====================
Net income per common share -- basic                                                    $.86         $.68         $.71         $.65         $.65                           $2.90          $2.50  
                                                                                                ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ====================                      ======== ==================== ==================== ========== ====================
Net income per common share -- diluted            $.86         $.67         $.71         $.65         $.65                           $2.89          $2.49  
===================================================== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ====================                      ======== ==================== ==================== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                   
OTHER INFORMATION
Return on total average assets                                                                      1.50 %                                             1.19 %                                             1.26 %                                             1.15 %                                             1.14 %                                             1.28 %                                               1.12 %
Return on average common equity (1)                                                                14.17                                              11.35                                              12.48                                              11.74                                              11.48                                              12.46                                                11.33
Efficiency ratio (2)                                                                               67.91                                              60.44                                              60.24                                              63.14                                              61.82                                              62.97                                                61.98
Effective tax rate                                                                                 17.56                                              30.22                                              29.60                                              25.83                                              31.09                                              25.71                                                31.07
Net yield on interest earning assets                                                                3.29                                               3.18                                               3.19                                               3.14                                               3.03                                               3.20                                                 3.04
Tax equivalent net interest income                        $197,917     $190,497     $190,865     $187,322     $181,301     $766,601       $711,433  
===================================================== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ======== ==================== ==================== ========== ====================
(1)   Annualized net income available to common shareholders divided
                         by average total equity less preferred stock.
(2)                      The efficiency ratio is calculated as non-interest expense
                         (excluding intangibles amortization) as a percent of revenue.
                          
                                                                                                                                       COMMERCE BANCSHARES, INC. and SUBSIDIARIES
                                                                                                                                        CONSOLIDATED BALANCE SHEETS - PERIOD END
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)                                                                               December 31,                              September 30,                             December 31,
(In thousands)                                                                                                                      2017                                                                            2017                                                                            2016
------------------------------------------------------------------------ -------------------- -------------------- -----------------------------------   -------------------- -------------------- -----------------------------------   -------------------- -------------------- -----------------------------------
ASSETS                                                                                                                                                          
Loans
    Business                                                                                                           $  4,958,554                                                                    $  4,834,037                                                                    $  4,776,365
    Real estate -- construction and land                                                                        968,820                                                                         921,609                                                                         791,236
    Real estate -- business                                                                                   2,697,452                                                                       2,700,174                                                                       2,643,374
    Real estate -- personal                                                                                   2,062,787                                                                       2,029,302                                                                       2,010,397
    Consumer                                                                                                              2,104,487                                                                       2,113,438                                                                       1,990,801
    Revolving home equity                                                                                                   400,587                                                                         391,308                                                                         413,634
    Consumer credit card                                                                                                    783,864                                                                         752,379                                                                         776,465
    Overdrafts                                                                                                                7,123                  3,245                 10,464  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Total loans                                                                                                              13,983,674             13,745,492             13,412,736  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Allowance for loan losses                                                                                                  (159,532 )                                (157,832 )                                (155,932 )
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
   Net loans                                                                                                             13,824,142             13,587,660             13,256,804  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Loans held for sale                                                                                                          21,398                                                                          17,337                                                                          14,456
Investment securities:
   Available for sale                                                                                                     8,774,280                                                                       9,109,287                                                                       9,649,203
   Trading                                                                                                                   18,269                                                                          24,605                                                                          22,225
   Non-marketable                                                                                                           100,758                 99,268                 99,558  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total investment securities                                                                                           8,893,307              9,233,160              9,770,986  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Federal funds sold and short-term securities purchased under                                                                 42,775                                                                          32,630                                                                          15,470
agreements to resell
Long-term securities purchased under agreements to resell                                                                   700,000                                                                         700,000                                                                         725,000
Interest earning deposits with banks                                                                                         30,631                                                                         105,422                                                                         272,275
Cash and due from banks                                                                                                     438,439                                                                         461,724                                                                         494,690
Land, buildings and equipment -- net                                                                            335,110                                                                         335,348                                                                         337,705
Goodwill                                                                                                                    138,921                                                                         138,921                                                                         138,921
Other intangible assets -- net                                                                                    7,618                                                                           7,388                                                                           6,709
Other assets                                                                                                                401,074                359,551                608,408  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total assets                                                                                                       $ 24,833,415           $ 24,979,141           $ 25,641,424  
                                                                                                                   ===== ========== ==================== ==================== ==================== ===== ========== ==================== ==================== ==================== ===== ========== ====================
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
   Non-interest bearing                                                                                                $  7,158,962                                                                    $  7,536,127                                                                    $  7,429,398
   Savings, interest checking and money market                                                                           11,499,620                                                                      11,091,200                                                                      11,430,789
   Time open and C.D.’s of less than $100,000                                                    634,646                                                                         657,891                                                                         713,075
   Time open and C.D.’s of $100,000 and over                                                   1,132,218              1,158,555              1,527,833  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total deposits                                                                                                       20,425,446             20,443,773             21,101,095  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Federal funds purchased and securities sold under agreements to                                                           1,507,138                                                                       1,408,984                                                                       1,723,905
repurchase
Other borrowings                                                                                                              1,758                                                                         102,553                                                                         102,049
Other liabilities                                                                                                           180,889                319,354                213,243  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total liabilities                                                                                                    22,115,231             22,274,664             23,140,292  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
Stockholders’ equity:
   Preferred stock                                                                                                          144,784                                                                         144,784                                                                         144,784
   Common stock                                                                                                             535,407                                                                         510,015                                                                         510,015
   Capital surplus                                                                                                        1,815,360                                                                       1,548,318                                                                       1,552,454
   Retained earnings                                                                                                        221,374                                                                         440,261                                                                         292,849
   Treasury stock                                                                                                           (14,473 )                                                                        (9,895 )                                                                       (15,294 )
   Accumulated other comprehensive income                                                                                    14,108                 67,061                 10,975  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total stockholders’ equity                                                                 2,716,560                                                                       2,700,544                                                                       2,495,783
Non-controlling interest                                                                                                      1,624                  3,933                  5,349  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total equity                                                                                                          2,718,184              2,704,477              2,501,132  
                                                                                                                   ------------------------------------- -------------------- -------------------- ------------------------------------- -------------------- -------------------- -------------------------------------
    Total liabilities and equity                                                 $ 24,833,415           $ 24,979,141           $ 25,641,424  
======================================================================== ==================== ==================== ===== ========== ==================== ==================== ==================== ===== ========== ==================== ==================== ==================== ===== ========== ====================
                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                             COMMERCE BANCSHARES, INC. and SUBSIDIARIES
                                                                                                                                                                                       AVERAGE BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)                                                                                                                                                                                             For the Three Months Ended
(In thousands)
                                                                                       December 31,                            September 30,                             June 30,                                March 31,                             December 31,
                                                                                                              2017                                                       2017                                                       2017                                                       2017                                                       2016
                                                                        -------------------- -----------------------------------   -------------------- -----------------------------------   -------------------- -----------------------------------   -------------------- -----------------------------------   -------------------- ------------------------------------
ASSETS:                                                                                                                                                                                                                                                                          
Loans:
    Business                                                                                                          $  4,818,419                                               $  4,777,222                                               $  4,827,439                                               $  4,906,672                                                $  4,731,405
    Real estate -- construction and land                                                                       948,043                                                    887,596                                                    862,479                                                    828,017                                                     821,048
    Real estate -- business                                                                                  2,720,356                                                  2,710,453                                                  2,701,144                                                  2,645,531                                                   2,559,028
    Real estate -- personal                                                                                  2,044,651                                                  2,017,264                                                  2,003,997                                                  2,012,456                                                   1,985,606
    Consumer                                                                                                             2,100,762                                                  2,070,398                                                  1,997,761                                                  1,974,894                                                   1,978,154
    Revolving home equity                                                                                                  394,231                                                    395,212                                                    399,730                                                    405,432                                                     415,429
    Consumer credit card                                                                                                   756,544                                                    739,692                                                    731,471                                                    747,783                                                     757,618
    Overdrafts                                                                                                               5,295                4,373                4,505                4,185                 5,501  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total loans                                                                                                             13,788,301           13,602,210           13,528,526           13,524,970            13,253,789  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
    Allowance for loan losses                                                                                             (157,026 )                              (156,909 )                              (157,003 )                              (155,328 )                               (154,040 )
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Net loans                                                                                                               13,631,275           13,445,301           13,371,523           13,369,642            13,099,749  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Loans held for sale                                                                                                         18,158                                                     21,227                                                     18,341                                                     11,972                                                      10,765
Investment securities:
    U.S. government and federal agency obligations                                                                         917,664                                                    917,808                                                    910,821                                                    913,474                                                     811,524
    Government-sponsored enterprise obligations                                                                            452,104                                                    456,668                                                    450,362                                                    450,489                                                     445,544
    State and municipal obligations                                                                                      1,630,660                                                  1,699,365                                                  1,771,674                                                  1,783,103                                                   1,784,407
    Mortgage-backed securities                                                                                           3,949,933                                                  3,718,697                                                  3,708,124                                                  3,760,294                                                   3,656,695
    Asset-backed securities                                                                                              1,622,778                                                  2,025,415                                                  2,335,344                                                  2,359,644                                                   2,417,367
    Other marketable securities                                                                                            356,319                                                    327,634                                                    326,398                                                    332,643                                                     333,236
    Unrealized gain on investment securities                                                                               111,930              116,873              102,935               62,986               155,818  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
      Total available for sale securities                                                                                9,041,388                                                  9,262,460                                                  9,605,658                                                  9,662,633                                                   9,604,591
    Trading securities                                                                                                      20,401                                                     21,149                                                     21,062                                                     25,165                                                      21,717
    Non-marketable securities                                                                                               97,704              102,995              101,790              100,740               105,420  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total investment securities                                                                                              9,159,493            9,386,604            9,728,510            9,788,538             9,731,728  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Federal funds sold and short-term securities purchased under                                                                27,017                                                     23,807                                                     13,115                                                      9,887                                                       8,336
agreements to resell
Long-term securities purchased under agreements to resell                                                                  699,999                                                    662,490                                                    665,655                                                    725,001                                                     724,998
Interest earning deposits with banks                                                                                       270,222                                                    211,219                                                    139,061                                                    207,845                                                     201,367
Other assets                                                                                                             1,157,289            1,122,230            1,106,528            1,139,402             1,153,982  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total assets                                                                                                          $ 24,963,453         $ 24,872,878         $ 25,042,733         $ 25,252,287          $ 24,930,925  
                                                                                                                  ===== ========== ==================== ==================== ===== ========== ==================== ==================== ===== ========== ==================== ==================== ===== ========== ==================== ==================== ====== ========== ====================
                                                                                                                                                                                                                                                                                                                                                               
LIABILITIES AND EQUITY:
    Non-interest bearing deposits                                                                                     $  7,257,102                                               $  7,135,703                                               $  7,065,849                                               $  7,246,698                                                $  7,307,407
    Savings                                                                                                                821,908                                                    829,197                                                    831,038                                                    795,695                                                     773,304
    Interest checking and money market                                                                                  10,416,221                                                 10,387,212                                                 10,667,042                                                 10,603,988                                                  10,512,268
    Time open & C.D.’s of less than $100,000                                                    644,951                                                    667,710                                                    688,047                                                    705,135                                                     722,775
    Time open & C.D.’s of $100,000 and over                                                   1,119,352            1,326,290            1,510,001            1,671,125             1,333,764  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total deposits                                                                                                          20,259,534           20,346,112           20,761,977           21,022,641            20,649,518  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Borrowings:
    Federal funds purchased and securities sold under agreements to                                                      1,625,828                                                  1,500,987                                                  1,363,031                                                  1,356,316                                                   1,284,916
    repurchase
    Other borrowings                                                                                                        42,060              101,904              105,311              102,011               101,412  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total borrowings                                                                                                         1,667,888                                                  1,602,891                                                  1,468,342                                                  1,458,327                                                   1,386,328
Other liabilities                                                                                                          312,172              251,714              203,139              234,144               346,900  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total liabilities                                                                                                       22,239,594           22,200,717           22,433,458           22,715,112            22,382,746  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Equity                                                                                                                   2,723,859            2,672,161            2,609,275            2,537,175             2,548,179  
                                                                                                                  ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- ------------------------------------- -------------------- --------------------------------------
Total liabilities and equity                                                    $ 24,963,453         $ 24,872,878         $ 25,042,733         $ 25,252,287          $ 24,930,925  
======================================================================= ==================== ==================== ===== ========== ==================== ==================== ===== ========== ==================== ==================== ===== ========== ==================== ==================== ===== ========== ==================== ==================== ====== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                        COMMERCE BANCSHARES, INC. and SUBSIDIARIES
                                                                                                                                                                                       AVERAGE RATES
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                    
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)                                                                                                                                                                                        For the Three Months Ended
                                                                                      December 31,                          September 30,                           June 30,                              March 31,                           December 31,
                                                                                                             2017                                                     2017                                                     2017                                                     2017                                                     2016
                                                                        -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------  -------------------- ----------------------------------
ASSETS:                                                                                                                                                                                                                                                                  
Loans:
    Business (1)                                                                                                            3.32 %                                                   3.25 %                                                   3.21 %                                                   3.02 %                                                   2.91 %
    Real estate -- construction and land                                                                        4.41                                                     4.31                                                     4.30                                                     3.85                                                     3.64
    Real estate -- business                                                                                     3.90                                                     3.85                                                     3.74                                                     3.63                                                     3.61
    Real estate -- personal                                                                                     3.72                                                     3.72                                                     3.72                                                     3.74                                                     3.69
    Consumer                                                                                                                4.07                                                     4.02                                                     3.94                                                     3.89                                                     3.85
    Revolving home equity                                                                                                   4.06                                                     4.03                                                     3.84                                                     3.64                                                     3.50
    Consumer credit card                                                                                                   11.90                                                    12.03                                                    11.90                                                    11.66                                                    11.38
    Overdrafts                                                                                                    --     --     --     --     --  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total loans                                                                                                                 4.18               4.13               4.06               3.92               3.85  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Loans held for sale                                                                                                         5.55                                                     5.36                                                     5.75                                                     6.64                                                     5.77
Investment securities:
    U.S. government and federal agency obligations                                                                          2.60                                                     1.40                                                     2.52                                                     2.09                                                     2.18
    Government-sponsored enterprise obligations                                                                             1.69                                                     1.61                                                     1.59                                                     1.58                                                     1.54
    State and municipal obligations (1)                                                                                     3.60                                                     3.57                                                     3.61                                                     3.65                                                     3.57
    Mortgage-backed securities                                                                                              2.38                                                     2.36                                                     2.35                                                     2.38                                                     2.40
    Asset-backed securities                                                                                                 1.94                                                     1.82                                                     1.72                                                     1.63                                                     1.52
    Other marketable securities (1)                                                                                         2.86               2.73               2.76               2.82               2.95  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
      Total available for sale securities                                                                                   2.53                                                     2.35                                                     2.42                                                     2.38                                                     2.36
    Trading securities (1)                                                                                                  2.63                                                     2.51                                                     2.70                                                     2.77                                                     2.40
    Non-marketable securities (1)                                                                                           8.08               6.46              11.49              21.08               5.42  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total investment securities                                                                                                 2.59               2.39               2.52               2.58               2.39  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Federal funds sold and short-term securities purchased under                                                                1.35                                                     1.30                                                     1.13                                                      .94                                                      .72
agreements to resell
Long-term securities purchased under agreements to resell                                                                   2.36                                                     2.28                                                     2.22                                                     2.12                                                     1.86
Interest earning deposits with banks                                                                                        1.18               1.24               1.04                .77                .56  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total interest earning assets                                                                                               3.48               3.37               3.37               3.30               3.17  
                                                                                                                  ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                       
LIABILITIES AND EQUITY:
Interest bearing deposits:
    Savings                                                                                                                  .12                                                      .12                                                      .12                                                      .13                                                      .12
    Interest checking and money market                                                                                       .17                                                      .16                                                      .15                                                      .14                                                      .13
    Time open & C.D.’s of less than $100,000                                                      .40                                                      .40                                                      .39                                                      .37                                                      .37
    Time open & C.D.’s of $100,000 and over                                                       .88                .83                .75                .67                .60  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total interest bearing deposits                                                                                              .24                .24                .23                .21                .19  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Borrowings:
    Federal funds purchased and securities sold under agreements to                                                          .83                                                      .75                                                      .60                                                      .46                                                      .30
    repurchase
    Other borrowings                                                                                                        3.59               3.53               3.47               3.53               3.54  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total borrowings                                                                                                             .90                .93                .81                .67                .54  
                                                                                                                  -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------- --------------------
Total interest bearing liabilities                                                                                           .31 %                                 .31 %                                 .29 %                                 .26 %                                 .22 %
                                                                                                                  ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                       
Net yield on interest earning assets                                                  3.29 %                                3.18 %                                3.19 %                                3.14 %                                3.03 %
======================================================================= ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ==================== ==================== ============== ====================
(1)   Stated on a tax equivalent basis using a federal income tax
                         rate of 35%.
                          
                                                                                                                                                                                                                          COMMERCE BANCSHARES, INC. and SUBSIDIARIES
                                                                                                                                                                                                                                     CREDIT QUALITY
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                   For the Three Months Ended                                                                                                                                                               For the Year Ended
(Unaudited)                                                             December 31,                        September 30,                          June 30,                               March 31,                            December 31,                                              December 31,                           December 31,
(In thousands, except per share data)                                                                             2017                                                   2017                                                    2017                                                      2017                                                      2016                                                      2017                                                      2016
-------------------------------------------------------- -------------------- -------------------- -------------------------------   -------------------- -------------------------------   -------------------- ----------------------------------   -------------------- ----------------------------------   -------------------- ----------------------------------                        ----------------------------------   -------------------- ----------------------------------
ALLOWANCE FOR LOAN LOSSES                                                                                                                                                                                                                                                                                                                                
Balance at beginning of period                                                                        $ 157,832                                              $ 157,832                                                 $ 157,832                                                 $ 155,932                                                 $ 154,532                                                 $ 155,932                                                 $ 151,532
    Provision for losses                                                                                 12,654                                                 10,704                                                    10,758                                                    11,128                                                    10,400                                                    45,244                                                    36,318
    Net charge-offs (recoveries):
      Commercial portfolio:
        Business                                                                                            768                                                    195                                                       318                                                        97                                                       268                                                     1,378                                                       616
        Real estate -- construction and land                                                    (87 )                                                 (362 )                                                    (207 )                                                    (535 )                                                    (882 )                                                  (1,191 )                                                  (3,712 )
        Real estate -- business                                                                 (48 )                              (106 )                                  (10 )                                  (39 )                                   97                (203 )                               (1,281 )
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
                                                                                                            633             (273 )                                  101                (477 )                                 (517 )                                  (16 )                               (4,377 )
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
    Personal banking portfolio:
      Consumer credit card                                                                                7,724                                                  7,631                                                     7,750                                                     7,148                                                     6,506                                                    30,253                                                    25,430
      Consumer                                                                                            2,184                                                  3,057                                                     2,642                                                     2,096                                                     2,427                                                     9,979                                                     9,047
      Overdraft                                                                                             376                                                    445                                                       292                                                       435                                                       379                                                     1,548                                                     1,339
      Real estate -- personal                                                                   (56 )                                                 (137 )                                                    (131 )                                                      19                                                       (38 )                                                    (305 )                                                      (6 )
     Revolving home equity                                                                                   93              (19 )                                  104                   7                 243                 185                 485  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
                                                                                                         10,321           10,977              10,657               9,705               9,517              41,660              36,295  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
    Total net loan charge-offs                                                                           10,954           10,704              10,758               9,228               9,000              41,644              31,918  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
Balance at end of period                                        $ 159,532        $ 157,832           $ 157,832           $ 157,832           $ 155,932                              $ 159,532           $ 155,932  
======================================================== ==================== ==================== ==== ======= ==================== ==================== ==== ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ====================                      ======= ======= ==================== ==================== ======= ======= ====================
NET CHARGE-OFF RATIOS*
Commercial portfolio:
    Business                                                                                                .06 %                                                  .02 %                                                     .03 %                                                     .01 %                                                     .02 %                                                     .03 %                                                     .01 %
    Real estate -- construction and land                                                       (.04 )                                                 (.16 )                                                    (.10 )                                                    (.26 )                                                    (.43 )                                                    (.14 )                                                    (.48 )
    Real estate -- business                                                                    (.01 )                              (.02 )                       --                (.01 )                                  .02                                   (.01 )                                 (.05 )
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
                                                                                                            .03             (.01 )                       --                (.02 )                                 (.03 )                                          --                (.06 )
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
Personal banking portfolio:
    Consumer credit card                                                                                   4.05                                                   4.09                                                      4.25                                                      3.88                                                      3.42                                                      4.07                                                      3.39
    Consumer                                                                                                .41                                                    .59                                                       .53                                                       .43                                                       .49                                                       .49                                                       .46
    Overdraft                                                                                             28.17                                                  40.37                                                     26.00                                                     42.15                                                     27.41                                                     33.71                                                     28.42
    Real estate -- personal                                                                    (.01 )                                                 (.03 )                                                    (.03 )                                          --                                                      (.01 )                                                    (.02 )                                          --
    Revolving home equity                                                                                   .09             (.02 )                                  .10                 .01                 .23                                    .05                 .12  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
                                                                                                            .77              .83                 .83                 .77                 .74                                    .80                 .72  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------                      ------------------------------------ -------------------- ------------------------------------
Total                                                                 .32 %                               .31 %                                  .32 %                                  .28 %                                  .27 %                                                     .31 %                                  .25 %
======================================================== ==================== ==================== ================================= ==================== ================================= ==================== ==================================== ==================== ==================================== ==================== ====================================                      ==================================== ==================== ====================================
CREDIT QUALITY RATIOS
Non-performing assets to total loans                                                                        .09 %                                                  .11 %                                                     .10 %                                                     .11 %                                                     .11                    %
Non-performing assets to total assets                                                                       .05                                                    .06                                                       .06                                                       .06                                                       .06
Allowance for loan losses to total loans                             1.14             1.15                1.16                1.16                1.16  
======================================================== ==================== ==================== ================================= ==================== ================================= ==================== ==================================== ==================== ==================================== ==================== ====================================
NON-PERFORMING ASSETS
  Non-accrual loans:
    Business                                                                                          $   5,947                                              $   6,821                                                 $   6,330                                                 $   7,935                                                 $   8,682
    Real estate -- construction and land                                                          5                                                    533                                                       544                                                       585                                                       564
    Real estate -- business                                                                   2,736                                                  2,346                                                     1,833                                                     1,764                                                     1,634
    Real estate -- personal                                                                   2,461                                                  2,863                                                     3,504                                                     3,368                                                     3,403
    Consumer                                                                                                834            1,077               1,151               1,151      --  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
  Total                                                                                                  11,983           13,640              13,362              14,803              14,283  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
 Foreclosed real estate                                                                                     681            1,063                 515                 387                 366  
                                                                                                   --------------------------------- -------------------- --------------------------------- -------------------- ------------------------------------ -------------------- ------------------------------------ -------------------- ------------------------------------
Total non-performing assets                                                                           $  12,664        $  14,703           $  13,877           $  15,190           $  14,649  
                                                                                                   ---- ------- -------------------- -------------------- ---- ------- -------------------- -------------------- ------- ------- -------------------- -------------------- ------- ------- -------------------- -------------------- ------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                          
Loans past due 90 days and still accruing interest              $  18,127        $  16,464           $  14,630           $  14,908           $  16,396  
======================================================== ==================== ==================== ==== ======= ==================== ==================== ==== ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ==================== ==================== ======= ======= ====================
*as a percentage of average loans (excluding loans held for
sale)
 
 

COMMERCE BANCSHARES, INC. Management Discussion of Fourth Quarter Results December 31, 2017

For the quarter ended December 31, 2017, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $94.4 million, compared to $74.6 million in the previous quarter and $71.6 million in the same quarter last year. In the current quarter, the Company recorded contribution expense of $25.0 million for the donation of appreciated securities to a related foundation. This donation was offset by a $24.4 million gain recorded on the donated securities and the recognition of $9.3 million in tax benefits on this transaction. This contribution represents a continuation of a strategy employed in previous quarters this year. The Company also announced that as of December 31, 2017, one-time discretionary bonuses totaling $3.3 million would be paid to approximately 75% of all employees. Also, as part of the enactment of the new tax legislation, tax benefits of $6.8 million were recorded, mostly as a result of revaluing deferred tax assets and liabilities to the new lower tax rates.

Quarterly average loans increased $183.0 million over the previous quarter, while average deposits decreased $86.6 million. Compared to the previous quarter, net interest income increased $7.4 million, while non-interest income grew $2.0 million. Non-interest expense, exclusive of the foundation contribution and one-time bonuses, increased 1.8% over the prior quarter. The provision for loan losses totaled $12.7 million, up $2.0 million over the previous quarter. For the current quarter, the return on total average assets was 1.50%, the return on average common equity was 14.2%, and the efficiency ratio was 67.9%.

Balance Sheet Review

During the 4th quarter of 2017, average loans totaled $13.8 billion, up 5.3% (annualized) over the prior quarter, and grew $541.9 million, or 4.1%, over the same period last year. Compared to the previous quarter, average construction and business loans grew $60.4 million and $41.2 million, respectively. Together, business real estate and personal real estate loans increased a combined $37.3 million, while consumer loans increased $30.4 million this quarter. Growth in construction loans was solid this quarter as advances on existing projects continued, while growth in business loans resulted from several large new borrowers. Line of credit utilization was mostly in line with the prior quarter at approximately 36% of total approved lines of credit. The increase in consumer loans was mainly due to growth of $19.1 million in patient health care loans, coupled with growth in private banking loans. During the current quarter, the Company sold certain fixed rate personal real estate loans totaling $48.0 million, compared to $64.1 million in the prior quarter.

During the 4th quarter of 2017, total average available for sale investment securities decreased $221.1 million to $9.0 billion, at fair value. The decline in investment securities was mainly the result of lower average balances of asset-backed and municipal securities due to sales, paydowns and maturities of these securities that were not re-invested, offset by higher average balances of mortgage-backed securities. Purchases of securities this quarter totaled $669.8 million and were offset by sales, maturities and pay downs of $913.4 million. At December 31, 2017, the duration of the investment portfolio was 3.0 years, and maturities and pay downs of approximately $1.4 billion are expected to occur during the next 12 months.

Total average deposits decreased $86.6 million, or 1.7% (annualized), this quarter compared to the previous quarter. The decrease in average deposits resulted mainly from a decline in certificates of deposit (decrease of $229.7 million), money market (decrease of $35.7 million), and personal demand (decrease of $52.0 million). These declines were offset by growth in business demand (increase of $210.1 million), and interest checking (increase of $64.8 million) deposit accounts. Compared to the previous quarter, total average consumer and private banking deposits decreased $15.7 million and $69.6 million, respectively, while commercial deposits grew slightly. The average loans to deposits ratio was 68.2% in the current quarter and 67.0% in the prior quarter. The Company’s average borrowings totaled $1.7 billion, an increase of $65.0 million over the prior quarter’s balance, mostly due to higher customer repurchase agreement balances.

Net Interest Income

Net interest income (tax equivalent) in the 4th quarter of 2017 amounted to $197.9 million compared with $190.5 million in the previous quarter, an increase of $7.4 million. Net interest income (tax equivalent) for the current quarter increased $16.6 million, or 9.2%, compared to the 4th quarter of last year. During the current quarter, the net yield on earning assets (tax equivalent) was 3.29%, compared with 3.18% in the previous quarter and 3.03% in the same period last year. The increase in net interest income (tax equivalent) in the current quarter compared to the prior quarter was due mainly to growth in interest on loans, a slight decline in interest expense, and an increase in inflation income of $2.7 million on the Company’s treasury inflation-protected securities (TIPS). Excluding the effects of inflation income on both the current and prior quarters, the net interest margin would have increased 7 basis points.

Compared to the previous quarter, interest on loans (tax equivalent) increased $3.6 million, as a result of higher loan yields and average balances on most loan products. The average yield on the loan portfolio increased 5 basis points this quarter to 4.18%, compared to 4.13% in the previous quarter.

Interest on investment securities (tax equivalent) increased $3.2 million over the previous quarter, due to growth in inflation income mentioned above, but offset by lower average securities balances, especially in asset-backed and municipal securities. The adjustment for premium amortization expense on changing prepayment speeds for mortgage-backed securities increased interest income $655 thousand this quarter, due to a higher overall interest rate environment. Total inflation income on TIPS totaled $3.2 million in the current quarter and $447 thousand in the previous quarter. The yield on total investment securities was 2.59% in the current quarter compared to 2.39% in the prior quarter.

Interest costs on deposits remained low and totaled 24 basis points in the 4th quarter of 2017, unchanged from the prior quarter. Interest expense on deposits declined $124 thousand this quarter compared with the previous quarter due mainly to lower average balances of certificates of deposit. Borrowing costs increased $35 thousand this quarter mostly due to higher average rates paid on customer repurchase agreements. The overall rate paid on interest-bearing liabilities was .31%, the same as in the prior quarter.

Non-Interest Income

In the 4th quarter of 2017, total non-interest income amounted to $124.2 million, an increase of $4.7 million, or 4.0%, compared to the same period last year. Also, current quarter non-interest income increased $2.0 million compared to the prior quarter. The increase in non-interest income over the same period last year was mainly due to growth in trust, bank card, deposit, and loan fee income, but was offset by lower swap and capital market fee income.

Total bank card fees in the current quarter increased $2.4 million, or 5.2%, over the same period last year and increased $3.2 million compared to the prior quarter. The increase over the same period last year was mainly the result of growth in corporate card fees of $3.1 million and higher debit and credit card fee income, but was offset by a decline in merchant fees of $1.0 million. As reported in prior quarters, the decline in merchant fees resulted from the loss of several large customers over the last twelve months. Total bank card fees this quarter were comprised of fees on corporate card ($24.9 million), debit card ($10.2 million), merchant ($5.9 million) and credit card ($6.7 million) transactions.

In the current quarter, trust fees increased $4.0 million, or 12.9%, over the same period last year, resulting mainly from growth in both private client and institutional trust fee income. Compared to the same period last year, deposit account fees increased $464 thousand, or 2.1%, due to growth in both deposit and overdraft fees, partially offset by lower corporate cash management fees.

During the 4th quarter of 2017, cash sweep fees grew 20.3% to $2.0 million compared to the same period last year, and loan fees and sales grew $516 thousand, or 20.0%, on increased sales of residential mortgages. Swap fee income, however, declined $2.0 million on lower origination volume and capital market fees declined $936 thousand on lower sales volumes, mainly to correspondent bank customers. Non-interest income comprised 39.5% of the Company’s total revenue this quarter.

Investment Securities Gains and Losses

The Company recorded net securities gains of $27.2 million this quarter, compared with net losses of $3.0 million last quarter and net gains of $3.7 million in the same period last year. Net securities gains in the current quarter resulted mainly from unrealized fair value gains of $2.2 million in the Company’s private equity investment portfolio, and a gain of $24.4 million related to the Company’s contribution of appreciated securities mentioned above. The Company also sold certain equity securities for a gain of $10.1 million this quarter, offset by sales of other investment securities at a loss of $9.7 million.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $213.7 million compared to $181.3 million in the same period last year. Excluding the effects of the contribution of appreciated securities to a related foundation and the one-time discretionary bonus, non-interest expense grew 2.3%, and was up slightly over the prior quarter. The increase over the same period last year was mainly due to higher costs for salaries and benefits and the contribution of appreciated securities (expense of $25.0 million this quarter), but was offset by lower operating costs such as occupancy, data processing, and other bank card network costs.

Compared to the 4th quarter of last year, salaries and benefits expense increased $7.1 million, or 6.5%. Salaries expense grew $6.3 million, mainly due to higher incentive compensation costs, including the discretionary bonus of $3.3 million mentioned above. Benefits expense totaled $16.0 million, reflecting an increase of 5.3% mainly due to higher medical costs. Growth in full-time salaries expense compared to the previous year resulted mainly from increased staffing costs in commercial and consumer, information technology and other supporting business units. Full-time equivalent employees totaled 4,800 and 4,784 at December 31, 2017 and 2016, respectively.

The decline in occupancy costs of 2.2% was mainly due to demolition costs for a branch facility in the 4th quarter of 2016, which did not recur in the current quarter. Data processing costs declined $297 thousand this quarter mainly due to lower bank card processing costs of $1.3 million offset by higher software costs. Other bank card network related costs (included in other non-interest expense) declined $1.0 million, but were offset by an increase in rewards expense of $416 thousand. The decline in total bank card related expense was mainly the result of a new vendor contract negotiated in the 3rd quarter of 2017. Compared to the same period last year, supplies and communication and marketing costs increased $473 thousand and $506 thousand, respectively. The $25.0 million donation of appreciated securities to a related foundation this quarter increased community service costs by $24.7 million, but resulted in a pre-tax loss of $638 thousand (due to a related offsetting securities gain) and tax benefits of $9.3 million. The Company has completed this donation strategy, contributing over $32 million in 2017, which will not be repeated in future years.

Income Taxes

The effective tax rate for the Company was 17.6% in the current quarter, 30.2% in the previous quarter, and 31.09% in the 4th quarter of 2016. Included in the current quarter were income tax benefits of $9.3 million related to the $25.0 million contribution of appreciated securities. In addition, an income tax benefit of $6.8 million was recorded, mainly to reflect the reduction in income tax rates on the Company’s deferred tax assets and liabilities as a result of the enactment of the new federal tax reform legislation in December 2017. The Company’s effective tax rate in 2018 is likely to be reduced to a range of 19-21% as a result of this new tax legislation.

Credit Quality

Net loan charge-offs in the 4th quarter of 2017 amounted to $11.0 million, compared to $10.7 million in the prior quarter and $9.0 million in the same period last year. The ratio of annualized net loan charge-offs to total average loans was .32% in the current quarter, compared to .31% in the previous quarter and .27% in the 4th quarter of last year. During the 4th quarter of 2017, the Company recorded net loan charge-offs on commercial loans of $633 thousand, compared to net loan recoveries of $273 thousand in the prior quarter. Net loan charge-offs on personal banking loans totaled $10.3 million in the current quarter and $11.0 million in the previous quarter.

In the 4th quarter of 2017, annualized net loan charge-offs on average consumer credit card loans were 4.05%, compared to 4.09% in the previous quarter and 3.42% in the same period last year. Consumer loan net charge-offs were .41% of average consumer loans in the current quarter, .59% in the prior quarter and .49% in the same quarter last year. This quarter, the provision for loan losses exceeded net loan charge-offs by $1.7 million, and at December 31, 2017, the allowance totaled $159.5 million, or 1.14% of total loans.

At December 31, 2017, total non-performing assets amounted to $12.7 million, a decrease of $2.0 million from the previous quarter. Non-performing assets are comprised of non-accrual loans and foreclosed real estate ($12.0 million and $681 thousand, respectively). At December 31, 2017, the balance of non-accrual loans, which represented .09% of loans outstanding, included business loans of $5.9 million, business real estate loans of $2.7 million, personal real estate loans of $2.5 million and consumer loans of $834 thousand. Loans more than 90 days past due and still accruing interest totaled $18.1 million at December 31, 2017.

Other

During the 4th quarter of 2017, the Company distributed a 5% stock dividend on its common stock. The Company paid a cash dividend of $.214 per common share and also paid an annualized 6% cash dividend on its preferred stock. The Company purchased 114,822 shares of treasury stock during the current quarter at an average price of $56.18.

Forward Looking Information

This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180118005226r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180118005226/en/

SOURCE: Commerce Bancshares, Inc.

Commerce Bancshares, Inc. 
Jeffery Aberdeen, 816-234-2081 
Controller 
mymoney@commercebank.com 
http://www.commercebank.com 


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2019 StockSelector.com. All rights reserved.