<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
-----------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NO. 0-2989
COMMERCE BANCSHARES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MISSOURI 43-0889454
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION
NO.)
1000 WALNUT, KANSAS CITY, MO 64106
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
(816) 234-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X
Yes------- No -------
As of August 2, 1996, the registrant had outstanding 35,762,025 shares of its
$5 par value common stock, registrant's only class of common stock.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I: FINANCIAL INFORMATION
In the opinion of management, the consolidated financial statements of
Commerce Bancshares, Inc. and Subsidiaries as of June 30, 1996 and December
31, 1995 and the related notes include all material adjustments which were
regularly recurring in nature and necessary for fair presentation of the
financial condition and the results of operations for the periods shown.
The consolidated financial statements of Commerce Bancshares, Inc. and
Subsidiaries and management's discussion and analysis of financial condition
and results of operations are presented in the schedules as follows:
Schedule 1: Comparison of Key Ratios and Selected Market Data
Schedule 2: Consolidated Balance Sheets
Schedule 3: Consolidated Statements of Income
Schedule 4: Statements of Changes in Stockholders' Equity
Schedule 5: Consolidated Statements of Cash Flows
Schedule 6: Notes to Consolidated Financial Statements
Schedule 7: Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II: OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On June 7, 1996, the Company approved an Amended and Restated Shareholders
Rights Agreement dealing with the Preferred Stock Purchase Rights ("Rights")
which were declared as a dividend for each share of Common Stock, $5.00 par
value of the Company ("Common Stock") on August 23, 1988. The material changes
made to such Rights are as follows: (1) the threshold at which an acquiring
person will trigger the Rights was lowered from 20% to 15%; (2) the Agreement
was extended until 2006, (3) the Rights were adjusted and a dividend declared
and distribution made to increase the number of rights to one Right per share
of Common Stock outstanding, (4) a business combination will trigger the
Rights only in the event that the acquiring person has control of the Board of
Directors of the Company at the time of the transaction, and (5) in addition,
at any time after the Rights are triggered, but before an acquiring person
acquires beneficial ownership of more than 50%, the Board of Directors has the
option to exchange the Rights for other securities of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of Commerce Bancshares, Inc. was held on
April 17, 1996. Proxies for the meeting were solicited pursuant to Regulation
14 of the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's nominees as listed in the proxy statement. The five
nominees for the five directorships (constituting one-third of the Board of
Directors) being elected at this meeting received the following votes:
<TABLE>
<CAPTION>
VOTES
NAME OF DIRECTOR VOTES FOR ABSTAIN
---------------- ---------- -------
<S> <C> <C>
W. Thomas Grant II..................................... 29,283,093 136,936
James B. Hebenstreit................................... 29,299,391 120,638
James M. Kemper, Jr.................................... 29,280,589 139,440
John H. Robinson, Jr................................... 29,279,257 140,772
Dolph C. Simons, Jr.................................... 29,286,348 133,681
</TABLE>
At the same meeting, the shareholders approved, as set forth in the proxy
statement for the meeting, the adoption of an amendment to the Articles of
Incorporation to increase the authorized shares of Common Stock from
60,000,000 shares with a par value of $5.00 per share to 80,000,000 shares
with a par value of $5.00 per
1
<PAGE>
share. The amendment to the Articles of Incorporation was approved with a vote
of 26,730,493 shares (representing 90.8% of the shares present or represented
and entitled to vote) voting in favor; 2,287,753 shares voting against;
345,783 shares abstaining; and 56,000 shares representing broker non-votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(3) Articles of Incorporation and By-Laws:
(a) Restated Articles of Incorporation, as amended
(b) Restated By-Laws
(4) Instruments defining the rights of security holders, including
indentures:
(b) Shareholder Rights Plan contained in an Amended and Restated
Rights Agreement was filed on Form 8-A12G/A dated June 7, 1996,
and the same is hereby incorporated by reference.
(c) Form of Rights Certificate and Election to Exercise was filed on
Form 8-A12G/A dated June 7, 1996, and the same is hereby
incorporated by reference.
(d) Form of Certificate of Designation of Preferred Stock was filed
on Form 8-A12G/A dated June 7, 1996, and the same is hereby
incorporated by reference.
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Commerce Bancshares, Inc.
/s/ J. Daniel Stinnett
By __________________________________
J. Daniel Stinnett
Vice President & Secretary
Date: August 9, 1996
/s/ Jeffery D. Aberdeen
By __________________________________
Jeffery D. Aberdeen
Controller
(Chief Accounting Officer)
Date: August 9, 1996
2
<PAGE>
SCHEDULE 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
COMPARISON OF KEY RATIOS AND SELECTED MARKET DATA
(UNAUDITED)
COMPARISON OF KEY RATIOS
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
RATIOS--THREE MONTHS ENDED JUNE 30:
(Based on average balance sheets):
Loans to deposits................................................. 66.95% 69.46%
Non-interest bearing deposits to total deposits................... 19.02 19.67
Equity to loans................................................... 16.63 16.07
Equity to deposits................................................ 11.14 11.16
Equity to total assets............................................ 9.47 9.43
Return on total assets............................................ 1.25 1.19
Return on realized stockholders' equity........................... 13.32 12.50
Return on total stockholders' equity.............................. 13.18 12.66
RATIOS--SIX MONTHS ENDED JUNE 30:
(Based on average balance sheets):
Loans to deposits................................................. 66.69% 67.95%
Non-interest bearing deposits to total deposits................... 19.21 19.67
Equity to loans................................................... 16.83 16.27
Equity to deposits................................................ 11.23 11.06
Equity to total assets............................................ 9.50 9.38
Return on total assets............................................ 1.20 1.22
Return on realized stockholders' equity........................... 12.98 12.50
Return on total stockholders' equity.............................. 12.67 12.99
(Based on end-of-period data):
Tier I capital ratio.............................................. 13.32 12.60
Total capital ratio............................................... 14.50 13.81
Leverage ratio.................................................... 8.52 8.55
Efficiency ratio.................................................. 62.29 63.58
</TABLE>
SELECTED MARKET DATA*
JUNE 30, 1996
<TABLE>
<CAPTION>
COMMERCE BANK
PRIMARY MARKET
LOCATIONS SITES ASSETS DEPOSITS LOANS
-------------- ----- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
St. Louis Region........................ 72 $3,115,031 $2,716,252 $1,830,448
Kansas City Region...................... 61 2,813,071 2,147,433 1,426,324
Springfield/Joplin...................... 34 1,021,993 934,661 639,658
Peoria/Bloomington...................... 23 924,567 755,053 421,234
Wichita................................. 22 747,240 598,545 364,878
Columbia................................ 17 369,505 338,866 286,699
St. Joseph.............................. 3 313,232 274,309 188,669
Manhattan/Hays.......................... 8 259,072 221,095 106,318
</TABLE>
- --------
*Balances have not been reduced for inter-company activity.
3
<PAGE>
SCHEDULE 2
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Loans, net of unearned income.......................... $5,269,915 $5,317,813
Allowance for loan losses.............................. (98,667) (98,537)
---------- ----------
NET LOANS.......................................... 5,171,248 5,219,276
---------- ----------
Investment securities:
Available for sale................................... 2,652,762 2,552,264
Trading account...................................... 13,956 9,369
Other non-marketable................................. 32,915 33,120
---------- ----------
TOTAL INVESTMENT SECURITIES........................ 2,699,633 2,594,753
---------- ----------
Federal funds sold and securities purchased under
agreements to resell.................................. 378,295 523,302
Cash and due from banks................................ 654,830 774,852
Land, buildings and equipment--net..................... 206,842 210,033
Customers' acceptance liability........................ 1,732 9,435
Other assets........................................... 210,389 242,300
---------- ----------
TOTAL ASSETS....................................... $9,322,969 $9,573,951
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand.......................... $1,560,726 $1,828,950
Savings and interest bearing demand.................. 3,964,674 3,891,801
Time open and C.D.'s of less than $100,000........... 2,198,986 2,253,390
Time open and C.D.'s of $100,000 and over............ 224,127 218,951
---------- ----------
TOTAL DEPOSITS..................................... 7,948,513 8,193,092
Federal funds purchased and securities sold under
agreements to repurchase.............................. 436,992 362,903
Long-term debt and other borrowings.................... 14,349 14,562
Accrued interest, taxes and other liabilities.......... 49,173 110,176
Acceptances outstanding................................ 1,732 9,435
---------- ----------
TOTAL LIABILITIES.................................. 8,450,759 8,690,168
---------- ----------
Stockholders' equity:
Preferred stock, $1 par value.
Authorized and unissued 2,000,000 shares............ -- --
Common stock, $5 par value.
Authorized 80,000,000 shares; issued 37,565,369
shares............................................. 187,827 187,827
Capital surplus...................................... 81,368 84,415
Retained earnings.................................... 660,697 618,388
Treasury stock of 1,424,063 shares in 1996 and
861,951 shares in 1995, at cost..................... (52,765) (32,980)
Unearned employee benefits........................... (737) (716)
Unrealized securities gain (loss)--net of tax........ (4,180) 26,849
---------- ----------
TOTAL STOCKHOLDERS' EQUITY......................... 872,210 883,783
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $9,322,969 $9,573,951
========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SCHEDULE 3
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED JUNE MONTHS ENDED JUNE
30 30
----------------- -----------------
1996 1995 1996 1995
-------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans................. $113,910 $117,699 $229,426 $217,115
Interest on investment securities.......... 39,732 41,611 78,408 82,808
Interest on federal funds sold and
securities purchased under agreements to
resell.................................... 6,064 1,334 13,946 2,317
-------- -------- -------- --------
TOTAL INTEREST INCOME.................. 159,706 160,644 321,780 302,240
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing demand...... 31,825 29,777 64,136 56,190
Time open and C.D.'s of less than
$100,000................................ 29,682 30,168 60,866 54,355
Time open and C.D.'s of $100,000 and
over.................................... 2,984 2,943 6,045 5,146
Interest on federal funds purchased and
securities sold under agreements to
repurchase................................ 5,067 6,530 10,848 11,804
Interest on long-term debt and other
borrowings................................ 233 338 456 570
-------- -------- -------- --------
TOTAL INTEREST EXPENSE................. 69,791 69,756 142,351 128,065
-------- -------- -------- --------
NET INTEREST INCOME.................... 89,915 90,888 179,429 174,175
Provision for loan losses.................. 5,428 1,930 10,981 4,763
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES........................... 84,487 88,958 168,448 169,412
-------- -------- -------- --------
NON-INTEREST INCOME
Trust income............................... 8,845 7,929 17,938 15,703
Deposit account charges and other fees..... 13,800 11,120 26,212 21,246
Trading account profits and commissions.... 1,432 1,346 3,158 2,714
Net gains on securities transactions....... 690 241 1,914 427
Miscellaneous credit card income........... 6,279 5,466 12,046 10,265
Other income............................... 7,614 5,797 14,188 12,132
-------- -------- -------- --------
TOTAL NON-INTEREST INCOME.............. 38,660 31,899 75,456 62,487
-------- -------- -------- --------
OTHER EXPENSE
Salaries and employee benefits............. 41,154 39,650 82,311 76,796
Net occupancy expense on bank premises..... 5,261 5,034 10,653 9,888
Equipment expense.......................... 3,885 3,457 7,438 6,707
Supplies and communication expense......... 6,279 6,005 12,333 11,310
Data processing expense.................... 5,236 4,955 10,167 9,846
Federal deposit insurance expense.......... 283 4,312 436 8,246
Marketing expense.......................... 2,458 2,408 6,054 4,401
Other operating expense.................... 14,409 12,763 28,181 23,000
-------- -------- -------- --------
TOTAL OTHER EXPENSE.................... 78,965 78,584 157,573 150,194
-------- -------- -------- --------
Income before income taxes................. 44,182 42,273 86,331 81,705
Less income taxes.......................... 15,264 15,514 30,130 29,923
-------- -------- -------- --------
NET INCOME............................. $ 28,918 $ 26,759 $ 56,201 $ 51,782
======== ======== ======== ========
Net income per common and common equivalent
share..................................... $ .79 $ .70 $ 1.53 $ 1.38
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding............. 36,586 38,426 36,807 37,506
======== ======== ======== ========
Cash dividends per common share............ $ .190 $ .171 $ .380 $ .342
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SCHEDULE 4
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NUMBER UNEARNED NET
OF SHARES COMMON CAPITAL RETAINED TREASURY EMPLOYEE UNREALIZED
ISSUED STOCK SURPLUS EARNINGS STOCK BENEFITS GAIN (LOSS) TOTAL
---------- -------- ------- -------- -------- -------- ----------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1996. 37,565,369 $187,827 $84,415 $618,388 $(32,980) $(716) $ 26,849 $883,783
Net income............. 56,201 56,201
Year-to-date change in
fair value of
investment securities. (31,029) (31,029)
Purchase of treasury
stock................. (25,871) (25,871)
Sales under option and
benefit plans......... (3,038) 5,952 2,914
Issuance of stock under
restricted stock award
plan.................. (9) 134 (125) --
Restricted stock award
amortization.......... 104 104
Cash dividends paid
($.380 per share) .... (13,892) (13,892)
---------- -------- ------- -------- -------- ----- -------- --------
BALANCE JUNE 30, 1996... 37,565,369 $187,827 $81,368 $660,697 $(52,765) $(737) $ (4,180) $872,210
========== ======== ======= ======== ======== ===== ======== ========
Balance January 1, 1995. 33,970,106 $169,851 $54,575 $576,331 $(12,148) $(295) $(60,116) $728,198
Net income............. 51,782 51,782
Year-to-date change in
fair value of
investment securities. 78,705 78,705
Purchase of treasury
stock................. (17,289) 7 (17,282)
Sales under option and
benefit plans......... (1,915) 4,378 2,463
Purchase acquisition... (435) 5,315 4,880
Pooling acquisition,
net................... 2,674,299 13,371 (4,872) 32,360 7,625 38 48,522
Issuance of stock under
restricted stock award
plan.................. 2 604 (606) --
Restricted stock award
amortization.......... 65 65
Cash dividends paid
($.342 per share)..... (13,123) (13,123)
---------- -------- ------- -------- -------- ----- -------- --------
Balance June 30, 1995... 36,644,405 $183,222 $47,355 $647,350 $(11,515) $(829) $ 18,627 $884,210
========== ======== ======= ======== ======== ===== ======== ========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
SCHEDULE 5
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
--------------------
1996 1995
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................... $ 56,201 $ 51,782
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses.............................. 10,981 4,763
Provision for depreciation and amortization............ 15,263 14,787
Accretion of investment security discounts............. (2,826) (2,870)
Amortization of investment security premiums........... 11,400 13,152
Net gains on sales of investment securities (A)........ (1,914) (427)
Net increase in trading account securities............. (8,794) (3,496)
(Increase) decrease in interest receivable............. (1,739) 9,537
Increase (decrease) in interest payable................ (4,433) 2,772
Other changes, net..................................... 23,089 933
--------- ---------
Net cash provided by operating activities............ 97,228 90,933
--------- ---------
INVESTING ACTIVITIES:
Net cash paid in acquisitions............................ -- (33,226)
Cash paid in sale of branch.............................. (13,595) --
Proceeds from sales of investment securities (A)......... 352,418 443,501
Proceeds from maturities of investment securities (A).... 176,897 316,130
Purchases of investment securities (A)................... (685,165) (267,741)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell......... 145,007 (126,750)
Net (increase) decrease in loans......................... 34,452 (309,348)
Purchases of premises and equipment...................... (9,663) (11,717)
Sales of premises and equipment.......................... 3,064 3,766
--------- ---------
Net cash provided by investing activities............ 3,415 14,615
--------- ---------
FINANCING ACTIVITIES:
Net decrease in non-interest bearing demand, savings
and interest bearing demand deposits.................... (185,290) (288,256)
Net increase (decrease) in time open and C.D.'s.......... (41,173) 110,150
Net increase in federal funds purchased and securities
sold under
agreements to repurchase................................ 74,089 110,326
Repayment of long-term debt.............................. (244) (5,572)
Purchases of treasury stock.............................. (56,492) (17,117)
Exercise of stock options by employees................... 2,337 2,179
Cash dividends paid on common stock...................... (13,892) (13,123)
--------- ---------
Net cash used by financing activities................ (220,665) (101,413)
--------- ---------
Increase (decrease) in cash and cash equivalents..... (120,022) 4,135
Cash and cash equivalents at beginning of year........... 774,852 565,805
--------- ---------
Cash and cash equivalents at June 30................. $ 654,830 $ 569,940
========= =========
</TABLE>
- --------
(A) Available for sale and other non-marketable securities, excluding trading
account securities.
Cash payments of income taxes for the six month period were $34,344,000 in
1996 and $16,027,000 in 1995. Interest paid on deposits and borrowings for the
six month period was $146,642,000 in 1996 and $125,293,000 in 1995.
See accompanying notes to financial statements.
7
<PAGE>
SCHEDULE 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The accompanying consolidated financial statements include the accounts of
Commerce Bancshares, Inc. and all majority-owned subsidiaries (the Company).
All significant intercompany accounts and transactions have been eliminated.
Certain reclassifications were made to 1995 data to conform to current year
presentation.
The significant accounting policies followed in the preparation of the
quarterly financial statements are the same as those disclosed in the 1995
Annual Report to stockholders to which reference is made.
2. ALLOWANCE FOR LOAN LOSSES
The following is a summary of the allowance for loan losses (in thousands):
<TABLE>
<CAPTION>
FOR THE FOR THE
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
--------------- ---------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance, beginning of period.................... $98,666 $92,055 $98,537 $87,179
------- ------- ------- -------
Additions:
Provision for loan losses..................... 5,428 1,930 10,981 4,763
Allowance for loan losses of acquired banks... -- 8,195 -- 12,932
------- ------- ------- -------
Total additions............................. 5,428 10,125 10,981 17,695
------- ------- ------- -------
Deductions:
Loan losses................................... 7,280 4,969 14,597 9,173
Less recoveries on loans...................... 1,853 2,010 3,746 3,520
------- ------- ------- -------
Net loan losses............................. 5,427 2,959 10,851 5,653
------- ------- ------- -------
Balance, June 30................................ $98,667 $99,221 $98,667 $99,221
======= ======= ======= =======
</TABLE>
At June 30, 1996, interest income was not being recognized on an accrual
basis for loans with an outstanding balance of $17,100,000.
3. INVESTMENT SECURITIES
Investment securities, at fair value, consist of the following at June 30,
1996 and December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------- ------------
<S> <C> <C>
Available for sale:
U.S. government and
federal agency
obligations.............. $1,811,650 $1,707,111
State and municipal
obligations.............. 118,882 128,043
CMO's and asset-backed
securities............... 642,526 670,522
Other debt securities..... 36,367 10,982
Equity securities......... 43,337 35,606
Trading account securities.. 13,956 9,369
Other non-marketable
securities................. 32,915 33,120
---------- ----------
Total investment
securities............. $2,699,633 $2,594,753
========== ==========
</TABLE>
4. INCOME PER COMMON SHARE
Income per share data is based on the weighted average number of common
shares and common equivalent shares outstanding during the interim periods.
All per share data in this report has been restated to reflect the 5% stock
dividend distributed on December 15, 1995.
8
<PAGE>
SCHEDULE 7
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1996
(UNAUDITED)
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and related notes and with the statistical
information and financial data appearing in this report as well as the
Company's 1995 Annual Report on Form 10-K. Results of operations for the six
month period ended June 30, 1996 are not necessarily indicative of results to
be attained for any other period.
SUMMARY
The Company's consolidated net income for the first six months of 1996
totaled $56.2 million; a $4.4 million or 9% increase over the same period in
1995. Earnings per share increased to $1.53 in the first six months of 1996
compared to $1.38 in the first six months of 1995. Net interest income
increased $5.3 million and non-interest income increased $13.0 million,
partially offset by increases of $7.4 million in other expense and $6.2
million in the provision for loan losses. When the effects of the four banks
acquired in March through May of 1995 are excluded, non-interest income
increased by 17%, while other expense, excluding intangible amortization and
F.D.I.C. insurance reductions, increased only 5%.
Return on average assets for the first six months of 1996 was 1.20% compared
to 1.22% in the first six months of 1995. Return on average stockholders'
equity for the first six months of 1996 was 12.67% compared to 12.99% for the
first six months of 1995. This decrease was partially due to the unrealized
loss in fair value of available for sale investment securities during the
first six months of 1995. The Company's efficiency ratio (other expense/net
interest income plus non-interest income excluding net gains on securities
transactions) was 62.29% for the first six months of 1996 compared to 63.58%
for the first six months of 1995.
Consolidated net income increased $2.2 million over the second quarter of
1995 mainly due to a $6.8 million increase in non-interest income partially
offset by a $3.5 million increase in the provision for loan losses. Net income
increased $1.6 million over the first quarter of 1996 mainly due to a $1.9
million increase in non-interest income. Earnings per share was $.79 in the
second quarter of 1996, a 12.9% increase over the second quarter of 1995 and a
6.8% increase over the first quarter of 1996.
In the second quarter of 1996, ten affiliate banks in Missouri, Kansas and
Illinois were merged to form two banks, thus better serving those customers at
over 100 sites in Missouri/Kansas and over 20 sites in Illinois.
The Company sold a branch in Illinois in March 1996 and a branch in Missouri
in August 1996. These sales did not have a material effect on the financial
statements of the Company.
INTEREST INCOME AND EARNING ASSETS
Total interest income increased $19.5 million, or 6.5%, compared to the
first six months of 1995 mainly due to an increase of $661.1 million in
average earning asset balances, (which caused an increase of $27.0 million in
tax equivalent interest income). Excluding banks acquired in 1995, total
interest income increased 1.2% in the first six months of 1996 over the same
period in 1995. The average tax equivalent yield was 7.75% for the first six
months of 1996 and 7.93% for the first six months of 1995.
Loans, the highest yielding category of earning assets, were 63% of average
earning assets for the first six months of 1996. Loan interest income
increased $12.3 million, or 5.7%, over the first six months of 1995 due to
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.)
an increase of $359.6 million in average loan balances. Most of the increase
in average balances is attributable to bank acquisitions. Interest income on
investment securities decreased $4.4 million from the first six months of 1995
mainly due to a decrease of $114.8 million in average balances invested in
CMO's and asset-backed securities. Interest income on federal funds sold and
securities purchased under agreements to resell increased $11.6 million over
the first six months of 1995 mainly due to an increase of $440.9 million in
average balances invested.
The average tax equivalent yield was 7.72% in the second quarter of 1996
compared to 8.04% in the second quarter of 1995 and 7.79% in the first quarter
of 1996. Total interest income decreased $938 thousand from the second quarter
of 1995 mainly due to lower average tax equivalent yields earned on loans
partially offset by an increase in average balances invested in federal funds
sold and resell agreements. Total interest income decreased $2.4 million from
the first quarter of 1996 due to lower average balances invested in federal
funds sold and resell agreements and lower average rates earned on loans,
partially offset by higher average balances invested in U.S. government and
federal agency securities.
Summaries of average earning assets and liabilities and the corresponding
average rates earned/paid appear on pages 12 through 15.
RISK ELEMENTS OF LOAN PORTFOLIO
Non-performing assets include impaired loans (non-accrual loans and loans 90
days delinquent and still accruing interest) and foreclosed real estate. Loans
are placed on non-accrual status when management does not expect to collect
payments consistent with acceptable and agreed upon terms of repayment
(generally, loans that are 90 days past due as to principal and/or interest
payments). These loans were made primarily to borrowers in Missouri, Kansas
and Illinois. The following table presents non-performing assets.
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans........................ $17,100 $16,234
Past due 90 days and still accruing
interest................................ 16,862 15,690
------- -------
Total impaired loans..................... 33,962 31,924
Foreclosed real estate................... 1,603 1,955
------- -------
Total non-performing assets.......... $35,565 $33,879
======= =======
Non-performing assets to total loans..... .67% .64%
Non-performing assets to total assets.... .38% .35%
</TABLE>
The subsidiary banks issue Visa and MasterCard credit cards, and the balance
of these consumer loans generated through credit card sales drafts and cash
advances was $513.4 million at June 30, 1996. Because credit card loans
traditionally have a higher than average ratio of net charge-offs to loans
outstanding, management requires that a specific allowance for losses on
credit card loans be maintained, which was $11.0 million, or 2.2% of credit
card loans at June 30, 1996. The risk presented by the above loans and
foreclosed real estate is not considered by management to be materially
adverse in relation to normal credit risks generally taken by lenders.
PROVISION FOR LOAN LOSSES
Management records the provision for loan losses, on an individual bank
basis, in amounts that result in an allowance for loan losses sufficient to
cover all potential net charge-offs and risks believed to be inherent in the
loan portfolio of each bank. Management's evaluation includes such factors as
past loan loss experience as
10
<PAGE>
related to current loan portfolio mix, evaluation of actual and potential
losses in the loan portfolio, prevailing regional and national economic
conditions that might have an impact on the portfolio, regular reviews and
examinations of the loan portfolio conducted by internal loan reviewers
supervised by the Parent, reviews and examinations by bank regulatory
authorities, and other factors that management believes deserve current
recognition. As a result of these factors, the provision for loan losses
increased $6.2 million compared to the first six months of 1995, increased
$3.5 million over the second quarter of 1995 and decreased $125 thousand
compared to the first quarter of 1996. The allowance for loan losses as a
percentage of loans outstanding was 1.87% at June 30, 1996, compared to 1.85%
at year-end 1995 and 1.83% at June 30, 1995. Management believes that the
allowance for loan losses, which is a general reserve, is adequate to cover
actual and potential losses in the loan portfolio under current conditions.
Other than as previously noted, management is not aware of any significant
risks in the current loan portfolio due to concentrations of loans within any
particular industry, nor of any separate types of loans within a particular
category of non-performing loans that are unusually significant as to possible
loan losses when compared to the entire loan portfolio. Net charge-offs on
loans totaled $10.9 million for the first six months of 1996 compared to $5.7
million for the first six months of 1995. Net charge-offs were $5.4 million
for the second quarter of 1996 compared to $3.0 million for the second quarter
of 1995 and $5.4 million for the first quarter of 1996.
INTEREST EXPENSE AND RELATED LIABILITIES
Total interest expense (net of capitalized interest) increased $14.3
million, or 11.2%, compared to the first six months of 1995 due mainly to
higher average interest-bearing liabilities. The average cost of funds was
4.16% for the first six months of 1996 and 4.10% for the first six months of
1995. Excluding banks acquired in 1995, total interest expense increased 4.3%
in the first six months of 1996 compared to the first six months of 1995.
Average core deposits (deposits excluding short-term certificates of deposit
over $100,000) for the first six months of 1996 were $7.87 billion, an
increase of 9.7% over the same period last year. Core deposits supported 94%
of average earning assets in 1996. Interest on deposits increased $15.4
million over the first six months of 1995. Interest expense on the Company's
Premium Money Market deposits and long-term C.D.'s of less than $100,000
increased $10.2 million and $7.0 million, respectively, due mainly to higher
average balances. Interest expense on federal funds purchased and securities
sold under agreements to repurchase decreased $956 thousand from the first six
months of 1995 due to a decrease in average rates paid.
Total interest expense in the second quarter of 1996 was unchanged from the
second quarter of 1995, as rate decreases were offset by increases in
balances, and was $2.8 million lower than the first quarter of 1996 due to
lower average rates paid on deposits. The average cost of funds was 4.09% for
the second quarter of 1996 compared to 4.24% for the second quarter of 1995
and 4.22% for the first quarter of 1996.
NON-INTEREST INCOME
Non-interest income increased $13.0 million in the first six months of 1996
compared to the first six months of 1995. Deposit account charges and other
fees increased $5.0 million partially due to fee restructuring and added cash
management fees. In addition, trust income increased $2.2 million,
miscellaneous credit card income increased $1.8 million and gains on
securities transactions increased $1.5 million. Excluding banks acquired in
1995, total non-interest income (excluding securities gains) increased $9.0
million in the first six months of 1996 compared to the first six months of
1995.
Non-interest income increased $6.8 million over the second quarter of 1995
due to increases of $2.7 million in deposit account charges and other fees,
$916 thousand in trust income and $862 thousand in gains on loan sales.
Compared to the first quarter of 1996, non-interest income increased $1.9
million, with increases of $1.4 million in deposit account charges and other
fees and $692 thousand in gains on loan sales.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.)
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
SIX MONTHS 1996 SIX MONTHS 1995
------------------------------- -------------------------------
INTEREST AVG. RATES INTEREST AVG. RATES
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
---------- -------- ---------- ---------- -------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Loans:
Business (including
foreign) (A).......... $1,684,056 $ 66,226 7.91% $1,625,307 $ 67,851 8.42%
Construction and
development........... 170,460 7,462 8.80 127,071 6,026 9.56
Real estate--business.. 701,763 30,148 8.64 665,806 29,838 9.04
Real estate--personal.. 985,777 38,817 7.92 916,550 34,875 7.67
Personal banking....... 1,259,151 54,539 8.71 1,207,634 51,852 8.66
Credit card............ 498,535 32,942 13.29 397,803 27,460 13.92
---------- -------- ----- ---------- -------- -----
Total loans......... 5,299,742 230,134 8.73 4,940,171 217,902 8.89
---------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,751,479 53,544 6.15 1,761,859 53,783 6.16
State & municipal
obligations (A)....... 119,157 4,705 7.94 107,391 4,071 7.64
CMO's and asset-backed
securities............ 640,239 20,105 6.32 755,081 23,595 6.30
Trading account
securities (A)........ 7,389 201 5.46 3,261 106 6.54
Other marketable
securities (A)........ 41,197 1,399 6.83 82,007 2,508 6.17
Other non-marketable
securities............ 34,178 254 1.49 23,320 298 2.58
---------- -------- ----- ---------- -------- -----
Total investment
securities......... 2,593,639 80,208 6.22 2,732,919 84,361 6.22
---------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under
agreements to resell... 516,512 13,946 5.43 75,660 2,317 6.18
---------- -------- ----- ---------- -------- -----
Total interest
earning assets..... 8,409,893 324,288 7.75 7,748,750 304,580 7.93
-------- ----- -------- -----
Less allowance for loan
losses................. (98,638) (93,529)
Unrealized gain (loss)
on investment
securities............. 33,304 (51,000)
Cash and due from banks. 636,617 572,182
Land, buildings and
equipment--net......... 209,111 201,222
Other assets............ 202,212 193,907
---------- ----------
Total assets........ $9,392,499 $8,571,532
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 305,777 3,623 2.38 $ 306,510 3,898 2.56
Interest bearing
demand................ 3,651,096 60,513 3.33 3,202,548 52,292 3.29
Time open & C.D.'s of
less than $100,000.... 2,229,595 60,866 5.49 2,130,456 54,355 5.14
Time open & C.D.'s of
$100,000 and over..... 233,295 6,045 5.21 200,886 5,146 5.17
---------- -------- ----- ---------- -------- -----
Total interest
bearing deposits... 6,419,763 131,047 4.11 5,840,400 115,691 3.99
---------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 455,409 10,848 4.79 439,118 11,804 5.42
Long-term debt and
other borrowings...... 14,615 521 7.17 16,957 575 6.84
---------- -------- ----- ---------- -------- -----
Total borrowings.... 470,024 11,369 4.86 456,075 12,379 5.47
---------- -------- ----- ---------- -------- -----
Total interest
bearing
liabilities........ 6,889,787 142,416 4.16% 6,296,475 128,070 4.10%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,526,573 1,429,960
Other liabilities....... 83,955 41,122
Stockholders' equity.... 892,184 803,975
---------- ----------
Total liabilities
and equity......... $9,392,499 $8,571,532
========== ==========
Net interest margin
(T/E).................. $181,872 $176,510
======== ========
Net yield on interest
earning assets......... 4.35% 4.59%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
12
<PAGE>
ANALYSIS OF VARIANCE IN NET INTEREST MARGIN (T/E) DUE TO VOLUMES AND RATES
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 VS 1995
----------------------------
INCREASE OR
(DECREASE)
DUE TO CHANGE
IN
---------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME RATE(B) (DECREASE)
------- ------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
VARIANCE IN INTEREST INCOME ON:
Loans:
Business (including foreign) (A)................. $ 2,472 $(4,097) $(1,625)
Construction and development..................... 2,063 (627) 1,436
Real estate--business............................ 1,616 (1,306) 310
Real estate--personal............................ 2,640 1,302 3,942
Personal banking................................. 2,218 469 2,687
Credit card...................................... 6,973 (1,491) 5,482
------- ------- -------
Total loans.................................... 17,982 (5,750) 12,232
------- ------- -------
Investment securities:
U.S. government & federal agency................. (318) 79 (239)
State & municipal obligations (A)................ 447 187 634
CMO's and asset-backed securities................ (3,598) 108 (3,490)
Trading account securities (A)................... 134 (39) 95
Other marketable securities (A).................. (1,252) 143 (1,109)
Other non-marketable securities.................. 139 (183) (44)
------- ------- -------
Total investment securities.................... (4,448) 295 (4,153)
------- ------- -------
Federal funds sold and securities purchased under
agreements to resell............................. 13,468 (1,839) 11,629
------- ------- -------
Total interest income.......................... 27,002 (7,294) 19,708
------- ------- -------
VARIANCE IN INTEREST EXPENSE ON:
Interest bearing deposits:
Savings.......................................... (9) (266) (275)
Interest bearing demand.......................... 10,498 (2,277) 8,221
Time open & C.D.'s of less than $100,000......... 2,641 3,870 6,511
Time open & C.D.'s of $100,000 and over.......... 839 60 899
------- ------- -------
Total interest bearing deposits................ 13,969 1,387 15,356
------- ------- -------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase.................. 124 (1,080) (956)
Long-term debt and other borrowings.............. (80) 26 (54)
------- ------- -------
Total borrowings............................... 44 (1,054) (1,010)
------- ------- -------
Total interest expense......................... 14,013 333 14,346
------- ------- -------
Change in net interest margin (T/E)............... $12,989 $(7,627) $ 5,362
======= ======= =======
Percentage increase in net interest margin (T/E)
over the same period of the prior year........... 3.04%
=======
</TABLE>
- --------
(A) Stated on a tax equivalent basis.
(B) Changes not solely due to volume or rate changes are allocated to rate.
Management believes this allocation method, applied on a consistent basis,
provides meaningful comparisons between the respective periods.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.)
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
THREE MONTHS ENDED JUNE 30, 1996 AND MARCH 31, 1996
<TABLE>
<CAPTION>
SECOND QUARTER 1996 FIRST QUARTER 1996
------------------------------- -------------------------------
INTEREST AVG. RATES INTEREST AVG. RATES
AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/
BALANCE EXPENSE PAID BALANCE EXPENSE PAID
---------- -------- ---------- ---------- -------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Loans:
Business (including
foreign) (A).......... $1,686,451 $32,884 7.84% $1,681,661 $33,342 7.97%
Construction and
development........... 169,600 3,674 8.71 171,320 3,788 8.89
Real estate--business.. 702,606 15,107 8.65 700,920 15,041 8.63
Real estate--personal.. 990,822 19,287 7.83 980,732 19,530 8.01
Personal banking....... 1,253,783 27,076 8.69 1,264,519 27,463 8.74
Credit card............ 502,800 16,234 12.99 494,270 16,708 13.60
---------- ------- ----- ---------- ------- -----
Total loans......... 5,306,062 114,262 8.66 5,293,422 115,872 8.80
---------- ------- ----- ---------- ------- -----
Investment securities:
U.S. government &
federal agency........ 1,789,272 27,311 6.14 1,713,686 26,233 6.16
State & municipal
obligations (A)....... 117,785 2,348 8.02 120,529 2,357 7.87
CMO's and asset-backed
securities............ 632,794 9,942 6.32 647,684 10,163 6.31
Trading account
securities (A)........ 7,861 113 5.78 6,917 88 5.09
Other marketable
securities (A)........ 45,595 734 6.47 36,799 665 7.27
Other non-marketable
securities............ 33,940 173 2.05 34,416 81 .95
---------- ------- ----- ---------- ------- -----
Total investment
securities......... 2,627,247 40,621 6.22 2,560,031 39,587 6.22
---------- ------- ----- ---------- ------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 453,629 6,064 5.38 579,395 7,882 5.47
---------- ------- ----- ---------- ------- -----
Total interest
earning assets..... 8,386,938 160,947 7.72 8,432,848 163,341 7.79
------- ----- ------- -----
Less allowance for loan
losses................. (99,054) (98,222)
Unrealized gain on
investment securities.. 14,220 52,388
Cash and due from banks. 615,730 657,504
Land, buildings and
equipment--net......... 208,242 209,980
Other assets............ 196,892 207,532
---------- ----------
Total assets........ $9,322,968 $9,462,030
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 305,729 1,789 2.35 $ 305,825 1,834 2.41
Interest bearing
demand................ 3,664,421 30,036 3.30 3,637,771 30,477 3.37
Time open & C.D.'s of
less than $100,000.... 2,213,390 29,682 5.39 2,245,800 31,184 5.58
Time open & C.D.'s of
$100,000 and over..... 234,170 2,984 5.13 232,420 3,061 5.30
---------- ------- ----- ---------- ------- -----
Total interest
bearing deposits... 6,417,710 64,491 4.04 6,421,816 66,556 4.17
---------- ------- ----- ---------- ------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 429,469 5,067 4.75 481,349 5,781 4.83
Long-term debt and
other borrowings...... 14,470 263 7.32 14,760 258 7.02
---------- ------- ----- ---------- ------- -----
Total borrowings.... 443,939 5,330 4.83 496,109 6,039 4.90
---------- ------- ----- ---------- ------- -----
Total interest
bearing
liabilities........ 6,861,649 69,821 4.09% 6,917,925 72,595 4.22%
------- ----- ------- -----
Non-interest bearing
demand deposits........ 1,507,302 1,545,844
Other liabilities....... 71,369 96,541
Stockholders' equity.... 882,648 901,720
---------- ----------
Total liabilities
and equity......... $9,322,968 $9,462,030
========== ==========
Net interest margin
(T/E).................. $91,126 $90,746
======= =======
Net yield on interest
earning assets......... 4.37% 4.33%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
14
<PAGE>
ANALYSIS OF VARIANCE IN NET INTEREST MARGIN (T/E) DUE TO VOLUMES AND RATES
THREE MONTHS ENDED JUNE 30, 1996 AND MARCH 31, 1996
<TABLE>
<CAPTION>
CURRENT QUARTER VS
PRIOR QUARTER
----------------------------
INCREASE OR
(DECREASE)
DUE TO CHANGE
IN
---------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME RATE(B) (DECREASE)
------- ------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
VARIANCE IN INTEREST INCOME ON:
Loans:
Business (including foreign) (A)................. $ 95 $ (553) $ (458)
Construction and development..................... (38) (76) (114)
Real estate--business............................ 36 30 66
Real estate--personal............................ 201 (444) (243)
Personal banking................................. (233) (154) (387)
Credit card...................................... 288 (762) (474)
------- ------- -------
Total loans.................................... 349 (1,959) (1,610)
------- ------- -------
Investment securities:
U.S. government & federal agency................. 1,158 (80) 1,078
State & municipal obligations (A)................ (54) 45 (9)
CMO's and asset-backed securities................ (234) 13 (221)
Trading account securities (A)................... 12 13 25
Other marketable securities (A).................. 159 (90) 69
Other non-marketable securities.................. (1) 93 92
------- ------- -------
Total investment securities.................... 1,040 (6) 1,034
------- ------- -------
Federal funds sold and securities purchased under
agreements to resell............................. (1,708) (110) (1,818)
------- ------- -------
Total interest income.......................... (319) (2,075) (2,394)
------- ------- -------
VARIANCE IN INTEREST EXPENSE ON:
Interest bearing deposits:
Savings.......................................... (1) (44) (45)
Interest bearing demand.......................... 578 (1,019) (441)
Time open & C.D.'s of less than $100,000......... (449) (1,053) (1,502)
Time open & C.D.'s of $100,000 and over.......... 19 (96) (77)
------- ------- -------
Total interest bearing deposits................ 147 (2,212) (2,065)
------- ------- -------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase.................. (637) (77) (714)
Long-term debt and other borrowings.............. (5) 10 5
------- ------- -------
Total borrowings............................... (642) (67) (709)
------- ------- -------
Total interest expense......................... (495) (2,279) (2,774)
------- ------- -------
Change in net interest margin (T/E)............... $ 176 $ 204 $ 380
======= ======= =======
Percentage increase in net interest margin (T/E) over the prior
quarter.......................................................... .42%
=======
</TABLE>
- --------
(A) Stated on a tax equivalent basis.
(B) Changes not solely due to volume or rate changes are allocated to rate.
Management believes this allocation method, applied on a consistent basis,
provides meaningful comparisons between the respective periods.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.)
OTHER EXPENSE
Other expense increased $7.4 million in the first six months of 1996
compared to the first six months of 1995. Salaries and benefits increased $5.5
million in this comparison partly as a result of staff at banks acquired in
1995. Excluding employees at banks acquired in 1995, full-time equivalent
employees decreased slightly in the first six months of 1996 compared to the
first six months of 1995. In addition, marketing expense increased $1.7
million, supplies and communication expense increased $1.0 million and
amortization of goodwill and core deposit premium increased $1.0 million.
These effects were partially offset by a $7.8 million decrease in F.D.I.C.
insurance expense due to a decrease in the assessment rate. Excluding the
expenses of banks acquired in 1995, total other expense decreased $2.1 million
in the first six months of 1996 compared to the same period in 1995.
Other expense increased $381 thousand compared to the second quarter of
1995. Various increases, including a $1.5 million increase in salaries and
employee benefits, were largely offset by a $4.0 million reduction in F.D.I.C.
insurance expense. Compared to the first quarter of 1996, other expense
increased $357 thousand. A $1.1 million reduction in marketing expense
partially offset increases in other categories.
LIQUIDITY AND CAPITAL RESOURCES
The liquid assets of the Parent company consist primarily of short-term
investments and equity securities, most of which are readily marketable. The
fair value of these investments was $73.5 million at June 30, 1996 compared to
$90.1 million at December 31, 1995. Included in the fair values were
unrealized net gains of $11.9 million at June 30, 1996 and $11.0 million at
December 31, 1995. The Parent company liabilities totaled $40.9 million at
June 30, 1996, compared to $44.3 million at December 31, 1995. The 1995
liabilities included a $31.0 million liability recorded at year end 1995 for a
significant treasury stock purchase settling in 1996. The 1996 liabilities
included $29.9 million advanced mainly from subsidiary bank holding companies
in order to combine resources for short-term investment in liquid assets. The
Parent company had no short-term borrowings from affiliate banks or long-term
debt during 1996. The Parent company's commercial paper, which management
believes is readily marketable, has a P1 rating from Moody's and an A1 rating
from Standard & Poor's. The Company is also rated A by Thomson BankWatch with
a corresponding short-term rating of TBW-1. This credit availability should
provide adequate funds to meet any outstanding or future commitments of the
Parent.
The liquid assets held by bank subsidiaries include federal funds sold and
securities purchased under agreements to resell and available for sale
securities, which consist mainly of U.S. government and federal agency
securities and CMO's and asset-backed securities. These liquid assets had a
fair value of $2.95 billion at June 30, 1996 and $3.03 billion at December 31,
1995. The available for sale bank portfolio included an unrealized net loss in
fair value of $26.2 million at June 30, 1996 compared to an unrealized net
gain of $30.1 million at December 31, 1995.
In February 1996, the Board of Directors authorized the Company to purchase
up to 2,000,000 shares of common stock in either the open market or privately
negotiated transactions, to be used for employee benefit programs and stock
dividends. At June 30, 1996, the Company had acquired 697,496 shares under
this authorization.
The Company (on a consolidated basis) had an equity to asset ratio of 9.50%
based on 1996 average balances. As shown in the following table, the Company's
capital exceeded the minimum risk-based capital and leverage requirements of
the regulatory agencies.
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk-Adjusted Assets...................... $5,895,369 $6,045,112
Tier I Capital............................ 785,507 756,452
Total Capital............................. 854,911 829,784
Tier I Capital Ratio...................... 13.32% 12.51%
Total Capital Ratio....................... 14.50% 13.73%
Leverage Ratio............................ 8.52% 8.27%
</TABLE>
16
<PAGE>
The Company's cash and cash equivalents (defined as "Cash and due from
banks") were $654.8 million at June 30, 1996, a decrease of $120.0 million
from December 31, 1995. Contributing to the net cash outflow were a net
decrease of $185.3 million in demand deposits and $56.5 million in purchases
of treasury stock. In addition, purchases of investment securities were $685.2
million, partially offset by $529.3 million in proceeds realized from sales
and maturities. Partially offsetting these net outflows were a $145.0 million
net decrease in short-term investments in federal funds sold and resell
agreements and $97.2 million generated from operating activities. Total assets
and core deposits decreased slightly, $251.0 million and $247.2 million,
respectively, compared to December 31, 1995 balances.
The Company has various commitments and contingent liabilities which are
properly not reflected on the balance sheet. Loan commitments (excluding lines
of credit related to credit card loan agreements) totaled approximately $2.01
billion, standby letters of credit totaled $130.1 million, and commercial
letters of credit totaled $30.8 million at June 30, 1996. The Company has
little risk exposure in off-balance-sheet derivative contracts. The notional
value of these contracts (interest rate and foreign exchange rate contracts)
was $152.3 million at June 30, 1996. The current credit exposure (or
replacement cost) across all off-balance-sheet derivative contracts covered by
the risk-based capital standards was $4.8 million at June 30, 1996. Management
does not anticipate any material losses to arise from these contingent items
and believes there are no material commitments to extend credit that represent
risks of an unusual nature.
17
<PAGE>
INDEX TO EXHIBITS
3 - Articles of Incorporation and By-Laws:
(a) Restated Articles of Incorporation, as amended
(b) Restated By-Laws
4 - Instruments defining the rights of security holders, including
indentures:
(b) Shareholder Rights Plan contained in an Amended and Restated
Rights Agreement filed on Form 8-A12G/A dated June 7, 1996,
and the same is hereby incorporated by reference
(c) Form of Rights Certificate and Election to Exercise was
filed on Form 8-A12G/A dated June 7, 1996, and the same is
hereby incorporated by reference
(d) Form of Certificate of Designation of Preferred Stock was
filed on Form 8-A12G/A dated June 7, 1996, and the same is
hereby incorporated by reference
27 - Financial Data Schedule
<PAGE>
Exhibit 3(a)
RESTATED ARTICLES OF INCORPORATION
OF
COMMERCE BANCSHARES, INC.
A Missouri Corporation
ARTICLE I
The name of this corporation is Commerce Bancshares, Inc.
ARTICLE II
The address of the corporation's registered office is in
care of T. Alan Peschka, 1000 Walnut Street, Kansas City,
Missouri, and the name of the corporation's registered agent at
such address is Commerce Bank of Kansas City, National
Association.
ARTICLE III
The total number of shares of all classes of stock which the
corporation shall have authority to issue is 14,000,000 shares,
consisting of
(i) 2,000,000 shares of Preferred Stock of the par value of
$1 per share, and
(ii) 12,000,000 shares of Common Stock of the par value of
$5 per share.
The voting powers, designations, preferences and relative
participating, optional or other special rights, and the
qualifications, limitations, or restrictions thereof, of the
classes of stock of the corporation which are fixed by these
Articles of Incorporation, and the authority vested in the Board
of Directors to fix by resolution or resolutions providing for
the issue of preferred stock the voting powers, if any,
designations, preferences and relative, participating, optional
or other special rights, and the qualifications, limitations or
restrictions thereof, of the shares of Preferred Stock which are
not fixed by these Articles of Incorporation are as follows:
(a) The Preferred Stock may be issued from time to time in
one or more series of any number of shares, provided that the
aggregate number of shares issued and not canceled of any and all
such series shall not exceed the total number of shares of
Preferred Stock hereinabove authorized. Each series of Preferred
Stock shall be distinctively designated by letter or descriptive
words. All series of Preferred Stock shall rank equally and be
identical in all respects except as permitted by the provisions
of paragraph (b) of this Article III. Different series of
Preferred Stock shall not be construed to constitute different
classes of shares for the purpose of voting by classes.
<PAGE>
(b) Authority is hereby vested in the Board of Directors
from time to time to issue the Preferred Stock as Preferred Stock
of any series and in connection with the creation of each such
series to fix by resolution or resolutions providing for the
issue of shares thereof the voting powers, if any, the
designation, preferences and relative, participating, optional or
other special rights, and the qualifications, limitations or
restrictions thereof, of such series to the full extent now or
hereafter permitted by these Articles of Incorporation and the
laws of the State of Missouri, in respect of the matters set
forth in the following subparagraphs (1) to (9), inclusive:
(1) the distinctive designation of such series and the
number of shares which shall constitute such series, which
number may be increased or decreased (but not below the
number of shares thereof then outstanding) from time to time
by action of the Board of Directors;
(2) the dividend rate of such series and any
limitations, restrictions or conditions on the payment of
dividends, subject to paragraph (c) of this Article III;
(3) the price or prices at which, and the terms and
conditions on which, the shares of such series may be
redeemed by the corporation;
(4) the amount or amounts payable upon the shares of
such series in the event of any liquidation, dissolution or
winding up of the corporation;
(5) whether or not the shares of such series shall be
entitled to the benefit of a sinking fund to be applied to
the purchase or redemption of shares of such series and, if
so entitled, the amount of such fund and the manner of its
application;
(6) whether or not the shares of such series shall be
made convertible into, or exchangeable for, shares of any
other class or classes of stock of the corporation or shares
of any other series of Preferred Stock, and, if made so
convertible or exchangeable, the conversion price or prices,
or the rate or rates of exchange, and the adjustments
thereof, if any, at which such conversion or exchange may be
made, and any other terms and conditions of such conversion
or exchange;
(7) whether or not the shares of such series shall
have any voting powers and, if voting powers are so granted,
the extent of such voting powers;
(8) whether or not the shares of such series shall be
entitled to the benefit of conditions and restrictions upon
the creation of indebtedness of the corporation or any
subsidiary, upon the issue of any additional Preferred Stock
(including additional shares of such series or of any other
series), and upon the payment of dividends (in addition to
those provided in paragraphs (c) and (d) of this Article
III) or the making of other distributions on, and the
purchase, redemption or other acquisition by the corporation
or any subsidiary of, any outstanding stock of the
corporation; and
<PAGE>
(9) such other preferences, rights, restrictions and
qualifications as shall not be inconsistent herewith.
(c) The holders of Preferred Stock of each series shall be
entitled to receive, when and as declared by the Board of
Directors, dividends in cash at the rate for such series fixed by
the Board of Directors as provided in paragraph (b) of this
Article III, and no more, payable quarterly on the first days of
January, April, July and October or of such other months as may
be designated by the Board of Directors (each of the quarterly
periods ending on the first day of January, April, July and
October in each year, or on the first days of such other months,
respectively, being hereinafter called a dividend period), in
each case from the date of cumulation (as defined in paragraph
(h) of this Article III) of such series. Except as may otherwise
be provided in the resolution or resolutions providing for the
issue of any given series of Preferred Stock, dividends on
Preferred Stock shall be cumulative (whether or not there shall
be net profits or net assets of the corporation legally available
for the payment of such dividends) so that, if at any time full
cumulative dividends (as defined in paragraph (h) of this Article
III) upon the Preferred Stock of all series to the end of the
last completed dividend period shall not have been paid or
declared and a sum sufficient for payment thereof set apart, the
amount of the deficiency shall be fully paid, but without
interest, or dividends in such amount shall have been declared on
each such series and a sum sufficient for the payment thereof
shall have been set apart for such payment, before any sum or
sums shall be set aside for or applied to the purchase or
redemption of Preferred Stock of any series (either pursuant to
any applicable sinking fund provisions or any redemption
authorized pursuant to paragraph (g) of this Article III or
otherwise) or set aside for or applied to the purchase of Common
Stock and before any dividend shall be paid or any other
distribution made upon the Common Stock (other than a dividend
payable in Common Stock); provided, however, that any moneys
deposited in the sinking fund provided for any series of
Preferred Stock in the resolution or resolutions providing for
the issue of shares of said series, in compliance with the
provisions of such sinking fund and of this paragraph (c), may
thereafter be applied to the purchase or redemption of Preferred
Stock in accordance with the terms of such sinking fund whether
or not at the time of such application full cumulative dividends
upon the outstanding Preferred Stock of all series to the end of
the last completed dividend period shall have been paid or
declared and set apart for payment. All dividends declared upon
the Preferred Stock of the respective series outstanding shall be
declared pro rata, so that the amounts of dividends declared per
share on the Preferred Stock of different series shall in all
cases bear to each other the same ratio that accrued dividends
per share on the shares of such respective series bear to each
other.
(d) Before any sum or sums shall be set aside for or
applied to the purchase of Common Stock and before any dividends
shall be paid or any distribution ordered or made upon the Common
Stock (other than a dividend payable in Common Stock), the
corporation shall comply with the sinking fund provisions, if
any, of any resolution or resolutions providing for the issue of
any series of Preferred Stock any shares of which shall at the
time be outstanding.
(e) Subject to the provisions of paragraph (c) and (d) of
this Article III, the holders of Common Stock shall be entitled,
to the exclusion of the holders of Preferred Stock of any and all
series, to receive such dividends as from time to time may be
declared by the Board of Directors.
<PAGE>
(f) In the event of any liquidation, dissolution or winding
up of the corporation, the holders of Preferred Stock of each
series then outstanding shall be entitled to be paid out of the
assets of the corporation available for distribution to its
stockholders, whether from capital, surplus or earnings, before
any payment shall be made to the holders of Common Stock, an
amount determined as provided in paragraph (b) of this Article
III for every share of their holdings of Preferred Stock of such
series. If upon any liquidation, dissolution or winding up of
the corporation the assets of the corporation available for
distribution to its stockholders shall be insufficient to pay the
holders of Preferred Stock of all series the full amounts to
which they respectively shall be entitled, the holders of
Preferred Stock of all series shall share ratably in any
distribution of assets according to the respective amounts which
would be payable in respect of the shares of Preferred Stock held
by them upon such distribution if all amounts payable on or with
respect to Preferred Stock of all series were paid in full. In
the event of any liquidation, dissolution or winding up of the
corporation, after payment shall have been made to the holders of
Preferred Stock of the full amount to which they shall be
entitled as aforesaid, the holders of Common Stock shall be
entitled, to the exclusion of the holders of Preferred Stock of
any and all series, to share, ratably according to the number of
shares of Common Stock held by them, in all remaining assets of
the corporation available for distribution to its stockholders.
Neither the merger or consolidation of the corporation into or
with another corporation nor the merger or consolidation of any
other corporation into or with the corporation, nor the sale,
transfer or lease of all or substantially all of the assets of
the corporation, shall be deemed to be a liquidation, dissolution
or winding up of the corporation.
(g) Subject to any requirements which may be applicable to
the redemption of any given series of Preferred Stock as provided
in any resolution or resolutions providing for the issue of such
series of Preferred Stock, the Preferred Stock of all series, or
of any series thereof, or any part of any series thereof, at any
time outstanding, may be redeemed by the corporation at its
election expressed by resolution of the Board of Directors, at
any time or from time to time, upon not less than 30 days'
previous notice to the holders of record of Preferred Stock to be
redeemed, given by mail in such manner as may be prescribed by
resolution or resolutions of the Board of Directors:
(1) if such redemption shall be otherwise than by the
application of moneys in any sinking fund referred to in
paragraph (d) of this Article III, at the redemption price,
fixed as provided in paragraph (b) of this Article III, at
which shares of Preferred Stock of the particular series may
then be redeemed at the option of the corporation, and
(2) if such redemption shall be by the application of
moneys in any sinking fund referred to in paragraph (d) of
this Article III, at the redemption price, fixed as provided
in paragraph (b) of this Article III, at which shares of
Preferred Stock of the particular series may then be
redeemed for such sinking fund;
provided, however, that, before any Preferred Stock of any series
shall be redeemed at said redemption price thereof specified in
clause (1) of this paragraph (g), all moneys at the time in the
sinking fund, if any, for Preferred Stock of that series shall
first be applied, as nearly as may be, to the purchase or
redemption of Preferred Stock of that series as provided in the
resolution or
<PAGE>
resolutions of the Board of Directors providing for such sinking
fund. If less than all the outstanding shares of Preferred Stock
of any series are to be redeemed, the redemption may be made
either by lot or pro rata in such manner as may be prescribed by
resolution of the Board of Directors. The corporation may, if it
shall so elect, provide moneys for the payment of the redemption
price by depositing the amount thereof for the account of the
holders of Preferred Stock entitled thereto with a bank or trust
company doing business in Kansas City, Missouri and having
capital and surplus of at least $5,000,000. The date upon which
such deposit may be made by the corporation (hereinafter called
the "date of deposit") shall be prior to the date fixed as the
date of redemption but not earlier than the date on which notice
thereof shall be given. In any such case there shall be included
in the notice of redemption a statement of the date of deposit
and of the name and address of the bank or trust company with
which the deposit has been or will be made. On and after the
date fixed in any such notice of redemption as the date of
redemption (unless default shall be made by the corporation in
providing moneys for the payment of the redemption price pursuant
to such notice) or, if the corporation shall have made such
deposit on or before the date specified therefor in the notice,
then on and after the date of deposit, all rights of the holders
of the Preferred Stock to be redeemed as stockholders of the
corporation, except the right to receive the redemption price as
hereinafter provided, and, in the case of such deposit, any
conversion rights not theretofore expired, shall cease and
terminate. Such conversion rights, however, in any event shall
cease and terminate upon the date fixed for redemption or upon
any earlier date fixed by the Board of Directors pursuant to
paragraph (b) of this Article III for termination of such
conversation rights. Anything herein contained to the contrary
notwithstanding, said redemption price shall include an amount
equal to accrued dividends on the Preferred Stock to be redeemed
to the date fixed for the redemption thereof and the corporation
shall not be required to declare or pay on such Preferred Stock
to be redeemed, and the holders thereof shall not be entitled to
receive, any dividends in addition to those thus included in the
redemption price, provided, however, that the corporation may pay
in regular course any dividends thus included in the redemption
price either to the holders of record on the record date fixed
for the determination of stockholders entitled to receive such
dividends (in which event anything to the contrary
notwithstanding, the amount so deposited need not include any
dividends so paid or to be paid) or as a part of the redemption
price upon surrender of the certificates for the shares redeemed.
At any time on or after the date fixed as aforesaid for such
redemption or, if the corporation shall elect to deposit the
moneys for such redemption as herein provided, then at any time
on or after the date of deposit, and without awaiting the date
fixed as aforesaid for such redemption, the respective holders of
record of the Preferred Stock to be redeemed shall be entitled to
receive the redemption price upon actual delivery to the
corporation, or, in the event of such deposit, to the bank or
trust company with which such deposit shall be made, of
certificates for the shares to be redeemed, such certificates, if
required, to be properly stamped for transfer and duly endorsed
in blank or accompanied by proper instruments of assignment and
transfer thereof duly executed in blank. Any funds deposited as
aforesaid which shall not be required for such redemption,
because of the exercise of any right of conversion or otherwise
subsequent to the date of such deposit, shall be returned to the
corporation forthwith. Any moneys so deposited which shall remain
unclaimed by the holders of such Preferred Stock at the end of
four years after the redemption date shall be paid by such bank
or trust company to the corporation, after which such holders
shall be deemed to be unsecured creditors of the corporation for
a period of two years (after which all rights of such holders as
unsecured creditors or otherwise shall cease) and any interest
accrued on
<PAGE>
moneys so deposited shall belong to the corporation and shall be
paid to it from time to time. Preferred stock redeemed pursuant
to the provisions of this paragraph (g) shall be canceled and
shall thereafter have the status of authorized and unissued
shares of Preferred Stock.
(h) The term "date of cumulation" as used with reference to
any series of Preferred Stock shall be deemed to mean the date
fixed by the Board of Directors as the date of cumulation of such
series at the time of the creation thereof or, if no date shall
have been so fixed, the date on which shares of such series are
first issued. Whenever used with reference to any share of any
series of Preferred Stock, the term "full cumulative dividends"
shall be deemed to mean (whether or not in any dividend period,
or any part thereof, in respect of which such term is used there
shall have been net profits or net assets of the corporation
legally available for the payment of such dividends) that amount
which shall be equal to dividends at the full rate fixed for such
series as provided in paragraph (b) of this Article III for the
period of time elapsed from the date of cumulation of such series
to the date as of which full cumulative dividends are to be
computed (including an amount equal to the dividend at such rate
for any fraction of a dividend period included in such period of
time); and the term "accrued dividends" shall be deemed to mean
full cumulative dividends to the date as of which accrued
dividends are to be computed, less the amount of all dividends
paid, or deemed paid as hereinafter in this paragraph (h)
provided, upon said share. In the event of the issue of
additional shares of Preferred Stock of any series after the
original issue of shares of Preferred Stock of such series, all
dividends paid or accrued on Preferred Stock of such series prior
to the date of issue of such additional Preferred Stock shall be
deemed to have been paid on the additional Preferred Stock so
issued.
(i) Subject to the provisions of these Articles of
Incorporation and except as otherwise provided by law, the shares
of stock of the corporation, regardless of class, may be issued
for such consideration and for such corporation purposes as the
Board of Directors may from time to time determine.
(j) Except as otherwise provided by law or by the
resolution or resolutions providing for the issue of any series
of Preferred Stock, the holders of shares of Preferred Stock, as
such holders, shall not have any right to vote, and are hereby
specifically excluded from the right to vote, in the election of
directors or for any other purpose. Except when entitled to vote
as aforesaid, the holders of Preferred Stock, as such holders,
shall not be entitled to notice of any meeting of stockholders.
(k) Subject to the provisions of any applicable law, or of
the By-Laws of the corporation as from time to time amended, with
respect to the closing of the transfer books or the fixing of a
record date for the determination of stockholders entitled to
vote and except as otherwise provided by law, or by these
Articles of Incorporation or by the resolution or resolutions
providing for the issue of any series of Preferred Stock, the
holders of outstanding shares of Common Stock shall exclusively
possess voting power for the election of directors and for all
other purposes, each holder of record of shares of Common Stock
being entitled to one vote for each share of Common Stock
standing in his name on the books of the corporation.
<PAGE>
(l) Anything in this Article III to the contrary
notwithstanding, dividends upon shares of any class of stock of
the corporation shall be payable only out of assets legally
available for the payment of such dividends, and the rights of
the holders of the Preferred Stock of all series and of the
holders of the Common Stock in respect of dividends shall at all
times be subject to the power of the Board of Directors, which is
hereby expressly vested in said Board, from time to time to set
aside such reserves and to make such other provisions, if any, as
said Board shall deem to be necessary or advisable, respecting
the amount of working capital to be maintained.
ARTICLE IV
No holder of stock of the corporation of any class shall be
entitled as a matter of right to subscribe for or purchase any
part of any new or additional issue of stock, or securities
convertible into stock, of any class whatsoever, whether now or
hereafter authorized, and all such additional shares of stock or
other securities convertible into stock may be issued and
disposed of by the Board of Directors to such person or persons
and on such terms and for such consideration (so far as may be
permitted by law) as the Board of Directors, in their absolute
discretion, may deem advisable.
ARTICLE V
The number and class of shares to be issued before the
corporation shall commence business is Fifty (50) shares of
common stock with a par value of Ten Dollars ($10) per share. The
consideration to be paid therefor and the capital with which the
corporation shall commence business is Five Hundred Dollars
($500). The corporation will not commence business until
consideration of the value of at least Five Hundred Dollars has
been received for the issuance of shares.
ARTICLE VI
The names and places of residence of the incorporators are
as follows
Name Residence
James M. Kemper, Jr. 6612 Wyoming
Kansas City, Missouri
P. V. Miller, Jr. 2001 West 61st Terr.
Shawnee Mission, Kansas
T. Alan Peschka 5744 Grand
Kansas City, Missouri
<PAGE>
ARTICLE VII
The number of directors constituting the first board of
directors of the corporation was three (3) and the number
constituting the board at the time of the effectiveness of this
amendment is twelve (12). The number of directors to constitute
subsequent boards of directors shall be fixed by, or in the
manner provided in, the By-Laws of the corporation. Any changes
in the number of directors shall be reported to the Secretary of
State of the State of Missouri within thirty (30) calendar days
of such change.
Unless the By-Laws otherwise provide, the directors shall be
classified with respect to the time for which they shall
severally hold office by dividing them into three classes, each
consisting of one-third of the whole number of the board of
directors, and all directors of the corporation shall hold office
until their successors are elected and qualified. At the meeting
held for the election of the first board, the directors of the
first class should be elected for a term of one year; the
directors of the second class for a term of two years; and the
directors of the third class for a term of three years; and at
each annual election the successors to the class of directors
whose terms shall expire that year shall be elected to hold
office for the term of three years, so that the term of office of
one class of directors shall expire in each year.
Notwithstanding any other provisions of these Articles of
Incorporation and notwithstanding the fact that some lesser
percentage may be specified by law, the entire Board of Directors
of the Corporation may be removed at any time but only by the
affirmative vote of the holders of 80% or more of the outstanding
shares of capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this
purpose as one class) at a meeting of the shareholders called for
that purpose.
ARTICLE VIII
The duration of the corporation is perpetual.
ARTICLE IX
The corporation is formed for the following purposes:
(a) To purchase, subscribe for or otherwise acquire and
own, hold as an investment or otherwise, use, sell, assign, deal
in, transfer, mortgage, pledge, exchange or otherwise dispose of,
alone or in syndicates or otherwise in conjunction with others,
shares of capital stock, bonds, debentures, notes, evidences of
indebtedness and other securities, contracts or obligations of
any corporation, association, partnership, entity, or
governmental, municipal or public authority, domestic or foreign,
and to pay therefor in whole or in part, in cash or by exchanging
therefor shares of the capital stock, bonds, debentures,
debenture stock, notes or other obligations of this corporation
or any other corporation, and while the owner or holder of any
such property to receive, collect and dispose of the interest,
dividends and income arising from such property, and
<PAGE>
to possess and exercise in respect thereof all the rights, powers
and privileges of ownership, including all voting powers of any
securities so owned;
(b) To purchase or otherwise acquire the whole or any part
of the property, assets, business, goodwill or rights and to
undertake or assume the whole or any part of the bonds,
mortgages, franchises, leases, contracts, indebtedness,
guaranties, liabilities and obligations of any person, firm,
association, corporation or organization, and to pay for the same
or any part or combination thereof in cash, shares of the capital
stock, bonds, debentures, debenture stock, notes, and other
obligations of this corporation or otherwise, or by undertaking
and assuming the whole or any part of the liabilities or
obligations of the transferor; and to hold or in any manner
dispose of the whole or any part of the property and assets so
acquired or purchased, and to conduct in any lawful manner the
whole or any part of the business so acquired and to exercise all
the powers necessary or convenient in and about the conduct,
management and carrying on of such business;
(c) To purchase or otherwise acquire, hold, sell, pledge,
transfer or otherwise dispose of, and to reissue or cancel the
shares of its own capital stock or any securities or other
obligations of this corporation;
(d) To promote or assist financially, by loan, subsidy,
guaranty, contribution to capital or surplus, or otherwise,
corporations, syndicates, partnerships, individuals or
associations of all kinds, foreign or domestic, and in connection
therewith to execute mortgages, deeds of trust, other forms of
encumbrances, contracts and other types of written instruments;
(e) To purchase or otherwise acquire and own, hold, lease,
develop, sell, exchange, or otherwise use, deal in or dispose of,
mortgage or otherwise encumber, real property or any interest
therein, and to purchase or otherwise acquire and own, hold,
build, construct, erect, manage, operate, repair, restore, and to
dispose of by sale, lease, mortgage or otherwise, buildings and
structures of all types;
(f) To purchase or otherwise acquire and own, hold, lease,
sell or otherwise use, deal in or dispose of, mortgage or
otherwise encumber personal property of every kind and
description or any interest therein, and to operate, manage and
maintain the same;
(g) To acquire, own, hold, buy sell, transfer and otherwise
dispose of patents and patent rights, trademarks and trade names,
copyrights, licenses, franchises, permits and other evidences of
right;
(h) In general to carry on any other lawful business
whatsoever in connection with the foregoing or which is
calculated, directly or indirectly, to promote the interest of
the corporation or to enhance the value of its properties;
(i) To have and to exercise all powers necessary or
incident to carrying out its corporate purposes, to exercise all
other powers permitted by law, and to possess and enjoy all
rights
<PAGE>
and powers which now or at any time hereafter may be granted to
or exercised by a corporation of this character.
ARTICLE X
The board of directors shall have the power to make, alter,
amend or repeal the By-Laws of the corporation from time to time.
ARTICLE XI
The corporation reserves the right to amend, alter, change
or repeal any provisions contained in these Articles of
Incorporation in the manner now or hereafter prescribed by law,
and all rights conferred upon shareholders herein are granted
subject to this reservation:
ARTICLE XII
The affirmative vote of the holders of not less than 75
percent of the outstanding shares of "Voting Stock" (as
hereinafter defined) of the corporation and the affirmative vote
of the holders of not less than 67 percent of the outstanding
shares of Voting Stock held by stockholders other than a "Related
Person" (as hereinafter defined) shall be required for the
approval or authorization of any "Business Combination" (as
hereinafter defined) of the corporation with any Related Person;
provided however, that the 75 percent and 67 percent voting
requirements shall not be applicable if:
(1) The "Continuing Directors" of the corporation (as
hereinafter defined) by a two-thirds vote (a) have expressly
approved in advance the acquisition of outstanding shares of
Voting Stock of the corporation that caused the Related Person to
become a Related Person, or (b) have approved the Business
Combination prior to the Related Person involved in the Business
Combination having become a Related Person;
(2) The Business Combination is solely between the
corporation and another corporation, 100 percent of the Voting
Stock of which is owned directly or indirectly by the
corporation; or
(3) The Business Combination is a merger or consolidation
and the cash or fair market value of the property, securities or
other consideration to be received per share by holders of common
stock of the corporation in the Business Combination is not less
than the highest per share price (with appropriate adjustments
for recapitalizations and for stock splits, stock dividends and
like distributions), paid by the Related Person in acquiring any
of its holdings of the corporation's common stock.
For the purposes of this Article Twelfth:
<PAGE>
(i) The term "Business Combination" shall mean (a) any
merger or consolidation of the corporation or a subsidiary
with or into a Related Person, (b) any sale, lease,
exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all
or any "Substantial Part" (as hereinafter defined) of the
assets either of the corporation (including without
limitation any voting securities of a subsidiary) or of a
subsidiary, to a Related Person, (c) any merger or
consolidation of a Related Person with or into the
corporation or a subsidiary of the corporation, (d) any
sale, lease, exchange, transfer or other disposition of all
or any Substantial Part of the assets of a Related Person to
the corporation or a subsidiary of the corporation, (e) the
issuance of any securities of the corporation or a
subsidiary of the corporation to a Related Person, (f) any
recapitalization that would have the effect of increasing
the voting power of a Related Person, and (g) any agreement,
contract or other arrangement providing for any of the
transactions described in this definition of Business
Combination.
(ii) The term "Related Person" shall mean and include
any individual corporation, partnership or other person or
entity which, together with its "Affiliates" and
"Associates" (as defined on February 1, 1983 at Rule 12b-2
under the Securities Exchange Act of 1934), "Beneficially
Owns" (as defined on February 1, 1983 at Rule 13d-3 under
the Securities Exchange Act of 1934) in the aggregate 20
percent or more of the outstanding Voting Stock of the
corporation, and any Affiliate or Associate of any such
individual corporation, partnership or other person or
entity.
(iii) The term "Substantial Part" shall mean more than
30 percent of the fair market value of the total assets of
the corporation in question, as of the end of its most
recent fiscal year ending prior to the time the
determination is being made.
(iv) Without limitation, any shares of common stock of
the corporation that any Related Person has the right to
acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants, or options, or otherwise, shall
be deemed beneficially owned by the Related Person.
(v) For the purposes of subparagraph (3) of this
Article XII, the term "other consideration to be received"
shall include, without limitation, common stock of the
corporation retained by its existing public stockholders in
the event of a Business Combination in which the corporation
is the surviving corporation.
(vi) The term "Voting Stock" shall mean all
outstanding shares of capital stock of the corporation or
another corporation entitled to vote generally in the
election of directors and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of the
votes entitled to be cast by such shares.
(vii) The term "Continuing Director" shall mean a
Director who was a member of the Board of Directors of the
corporation immediately prior to the time that the Related
Person involved in a Business Combination became a Related
Person.
<PAGE>
ARTICLE XIII
The provisions set forth at this ARTICLE XIII and at
ARTICLES VII, XI, and XII herein may not be repealed or amended
in any respect, unless such action is approved by the affirmative
vote of the holders of not less than 75 percent of the
outstanding shares of Voting Stock (as defined in ARTICLE XII) of
the corporation; provided, however, that if there is a Related
Person (as defined in ARTICLE XII), such action must also be
approved by the affirmative vote of the holders of not less than
67 percent of the outstanding shares of Voting Stock held by
stockholders other than the Related Person.
<PAGE>
FIRST AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF
COMMERCE BANCSHARES, INC.
A Missouri Corporation
(As of April 15, 1987)
__________________________________________
The first paragraph of Article III is amended to read as follows:
The total number of shares of all classes of stock
which the corporation shall have the authority to issue
is 26,000,000 shares, consisting of
(i) 2,000,000 shares of Preferred Stock of
the par value of $1 per share, and
(ii) 24,000,000 shares of Common Stock of
the par value of $5 per share.
<PAGE>
SECOND AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF
COMMERCE BANCSHARES, INC.
A Missouri Corporation
(As of January 26, 1990)
__________________________________________
The first paragraph of Article III is amended to read as follows:
The total number of shares of all classes of stock
which the corporation shall have the authority to issue
is 42,000,000 shares, consisting of
(i) 2,000,000 shares of Preferred Stock of the par
value of $1 per share, and
(ii) 40,000,000 shares of Common Stock of the par
value of $5 per share.
<PAGE>
THIRD AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF
COMMERCE BANCSHARES, INC.
A Missouri Corporation
(As of May 12, 1993)
__________________________________________
The first paragraph of Article III is amended to read as follows:
The total number of shares of all classes of stock
which the Corporation shall have the authority to issue
is 62,000,000 shares, consisting of
(i) 2,000,000 shares of Preferred Stock of
the par value of $1 per share, and
(ii) 60,000,000 shares of Common Stock of
the par value of $5 per share.
<PAGE>
FOURTH AMENDMENT TO
RESTATED ARTICLES OF INCORPORATION
OF
COMMERCE BANCSHARES, INC.
A Missouri Corporation
(As of April 17, 1996)
__________________________________________
The first paragraph of Article III is amended to read as follows:
The total number of shares of all classes of stock
which the Corporation shall have the authority to issue
is 82,000,000 shares, consisting of
(i) 2,000,000 shares of Preferred Stock of
the par value of $1 per share, and
(ii) 80,000,000 shares of Common Stock of
the par value of $5 per share.
<PAGE>
Exhibit 3(b)
COMMERCE BANCSHARES, INC.
BY-LAWS
(CURRENTLY IN EFFECT; LAST AMENDED JUNE 7, 1996)
<PAGE>
COMMERCE BANCSHARES, INC.
BY-LAWS
(CURRENTLY IN EFFECT; LAST AMENDED JUNE 7, 1996)
ARTICLE I
LOCATION OF OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the
Corporation shall be located in Kansas City, Jackson County,
Missouri, or at such other place as may be designated from time
to time by the Board of Directors.
SECTION 2. OTHER OFFICES. The Corporation may have offices at
such other place or places, either within or without the State of
Missouri, as the Board of Directors may from time to time
designate.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
stockholders shall be held at the principal office of the
Corporation, or at such other place as shall be designated in the
notice thereof, at ten o'clock a.m. on the third Wednesday in
April in each year, or if that be a legal holiday, on the next
succeeding day not a legal holiday, for the purpose of electing a
Board of Directors and transacting such other business as may
come before the meeting.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
stockholders may be called at any time by the Chairman of the
Board, or in case of the absence or disability of the Chairman of
the Board, by any Vice Chairman, if one be so elected, or by the
President, or at any time upon the written request of a majority
of the Board of Directors. Each call for a special meeting of
the stockholders shall state the time, the day, the place and the
purpose of such meeting and shall be in writing, signed by the
persons making the same and delivered to the Secretary. No
business shall be transacted at a special meeting other than such
as is included in the purposes stated in the call.
SECTION 3. NOTICE OF MEETINGS. Written or printed notice of
each meeting of the stockholders stating the hour and day when,
and the place where such meeting is to be held shall be served as
hereinafter provided on each stockholder entitled to vote thereat
not less than ten (10) days or more than seventy (70) days before
such meeting, except that further notice shall be given of
particular matters if required by law. In the case of the annual
meetings the notice shall
<PAGE>
state that the purposes thereof are the election of a Board of
Directors and the transaction of such other business as may come
before the meeting. In the case of a special meeting such notice
shall state the purpose or purposes for which the meeting is
called. Service of such notice shall be made either personally
or by depositing the same in a sealed envelope addressed to the
stockholder at his address as it appears upon the records of the
Corporation, and deposited in a United States Post Office, with
the postage thereon prepaid. If such notice is served by mailing
the same, it shall be deemed to have been given at the time when
the same shall be thus mailed. If any stockholder shall not have
an address appearing upon the books of the Corporation, such
notice may be given by mailing the same as heretofore provided,
addressed to such stockholder at the General Post Office in
Kansas City, Missouri. Service of such notice shall be made by
the Secretary, but in case the Secretary shall refuse or neglect
to serve such notice upon each stockholder as herein provided,
then such service may be made by any officer or director of the
Corporation. In addition, such published notice shall be given
as required by law.
SECTION 4. WAIVER OF NOTICE. Any stockholder may waive notice
of any meeting of the stockholders, by a writing signed by him,
or by his duly authorized attorney, either before or after the
time of such meeting. A copy of such waiver shall be entered
in the minutes, and shall be deemed to be the notice required by
him or by these By-Laws. Any stockholder present in person, or
represented by proxy, at any meeting of the stockholders shall be
deemed to have thereby waived notice of such meeting except where
such attendance is for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully
called or convened.
SECTION 5. MEETINGS MAY BE HELD BY CONSENT. Whenever all
stockholders entitled to vote consent, by a writing filed with
the Secretary, any action to be taken at a meeting of
stockholders may be taken without a meeting, and any action so
taken shall be as valid as if had at a meeting regularly called
and noticed, and at such meeting any business, including the
election of directors, may be transacted which is not excepted
from the written consent or to the consideration of which no
objection for want of notice is made at the time. If any meeting
of the stockholders be irregular for want of notice, or of such
consent, provided a quorum was present at such meeting, the
proceedings of said meeting may be ratified and approved and
rendered likewise valid, and the irregularity or defect therein
waived, by a writing signed by all persons having the right to
vote at such meeting. Such consent or ratification and approval
may be by proxy or attorney, but all such proxies and powers of
attorney must be in writing and delivered to the Secretary.
SECTION 6. LIST OF STOCKHOLDERS. At least ten days before each
meeting of stockholders the Secretary shall cause to be prepared
a complete list of the names and addresses of all stockholders
entitled to vote at such meeting, arranged in alphabetical order,
with the number of shares held by each, and such list shall
<PAGE>
be produced and kept at the registered Missouri office and shall
be subject to inspection by any stockholder during regular
business hours. Such list shall also be produced and kept open
at the meeting and shall be subject to inspection by any
stockholder during the meeting. The provisions of this Section
shall not apply to a special meeting held by consent pursuant to
Section 5 of this Article of the By-Laws.
SECTION 7. QUORUM. At any meeting of the stockholders, a
majority of the outstanding capital stock entitled to vote at
such meeting, being represented in person or by proxy, shall
constitute a quorum for all purposes, including the election of
directors, except where it is otherwise provided by law.
SECTION 8. ORGANIZATION. The Chairman of the Board, and in his
absence, any Vice Chairman, if one be so elected, or the
President, shall preside at each meeting of the stockholders and
shall act as chairman thereof. The Secretary shall act as
secretary of all meetings of the stockholders.
SECTION 9. VOTING. At each meeting of the stockholders, each
stockholder shall be entitled to vote in person, or by proxy held
by some person or persons present at such meeting, and made in
accordance with the provisions of the By-Laws of the Corporation,
and upon all matters shall have one vote for each share of stock
standing in his name on the books of the Corporation on the
record date determined as provided in Section 6 of ARTICLE VII of
the By-Laws. All questions, except any question the manner of
deciding which is specially regulated by law, shall be determined
by a majority of the outstanding shares of capital stock
represented at each meeting. If voting shall be by ballot for
the election of directors or other questions, the Chairman of
such meeting of the stockholders may appoint not less than two
(2) persons, who are not directors, to act as Inspectors of
Election and to receive and canvass the votes cast at such
meeting and certify the results to the Chairman. Each such
Inspector, before entering upon the discharge of his duties,
shall take and subscribe the following oath: "I do solemnly
swear that I will execute the duties of an inspector of the
election now to be held, with strict impartiality and according
to the best of my ability." The Inspectors of Election shall
take charge of the polls and after the balloting shall make and
file a written certificate of the result of the votes cast at the
meeting.
SECTION 10. ADJOURNMENT. If, at any meeting of the
stockholders, a quorum shall fail to attend at the time and place
for which such meeting was called, or if the business of such
meeting shall not be completed, the stockholders present in
person or represented by proxy may, by a majority vote, adjourn
the meeting from day to day, or from time to time, not exceeding
ninety (90) days from such adjournment, without further notice,
until a quorum shall attend or the business thereof shall be
completed. Such adjournment and the reasons therefor shall be
recorded in the minutes. At any such adjournment meeting, any
business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 11. PROXIES. Every proxy must be in writing, signed by
the stockholder himself or by his duly authorized attorney or by
his legal representative, and must be filed with the Secretary of
the Corporation at or before the roll call at the meeting at
which the same is to be
<PAGE>
used, and unless so signed and filed it cannot be used at such
meeting. Any proxy may be revoked at the pleasure of the person
executing it, by a writing similarly signed and filed, unless
such person shall have specified therein that it is irrevocable.
No proxy shall be valid after the expiration of eleven (11)
months from its date, unless the person executing it shall have
specified therein the length of time for which such proxy is to
continue in force. In the event that such instrument in writing
shall designate two or more persons to act as proxies, a majority
of such persons present at the meeting, or, if only one shall be
present, then that one, shall have and may exercise all of the
powers conferred by such written instrument upon all of the
persons so designated, unless the instrument shall otherwise
provide.
SECTION 12. ADVANCE NOTIFICATION OF BUSINESS TO BE TRANSACTED AT
ANNUAL MEETINGS. No business may be transacted at an Annual
Meeting of stockholders, other than business that is either (a)
specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors (or any
duly authorized committee thereof), (b) otherwise properly
brought before the Annual Meeting by or at the direction of the
Board of Directors (or any duly authorized committee thereof), or
(c) otherwise properly brought before the Annual Meeting by any
stockholder of the Corporation (i) who is a stockholder of record
on the date of the giving of the notice provided for in this
Section 12 and on the record date for the determination of
stockholders entitled to vote at such Annual Meeting, and (ii)
who complies with the notice procedures set forth in this Section
12.
In addition to any other applicable requirements, for business to
be properly brought before an Annual Meeting by a stockholder,
such stockholder must have given timely notice thereof in proper
written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than sixty days nor more than
ninety days prior to the date of the Annual Meeting; provided,
however, that in the event that less than seventy days' notice or
prior public disclosure of the date of the Annual Meeting is
given or made to stockholders, notice by the stockholder in order
to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice
of the date of the Annual Meeting was mailed or such public
disclosure of the date of the Annual Meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth as to each matter such stockholder
proposes to bring before the Annual Meeting (i) a brief
description of the business desired to be brought before the
Annual Meeting and the reasons for conducting such business at
the Annual Meeting, (ii) the name and record address of such
stockholder, (iii) the class or series and number of shares of
capital stock of the Corporation which are owned beneficially or
of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any
other person or persons (including their names) in connection
with the proposal of such business by such stockholder and any
material interest of
<PAGE>
such stockholder in such business, and (v) a representation that
such stockholder intends to appear in person or by proxy at the
Annual Meeting to bring such business before the meeting.
No business shall be conducted at the Annual Meeting of
stockholders, except business brought before the Annual Meeting
in accordance with the procedures set forth in this Section 12;
provided, however, that once business has been properly brought
before the Annual Meeting in accordance with such procedures,
nothing in this Section 12 shall be deemed to preclude discussion
by any stockholder of any such business. If the chairman of an
Annual Meeting determines that business was not properly brought
before the Annual Meeting in accordance with the foregoing
procedures, the chairman shall declare to the meeting that the
business was not properly brought before the meeting and such
business shall not be transacted.
SECTION 13. CONDUCT OF MEETINGS. The board of directors of the
Corporation may adopt by resolution such rules or regulations for
the conduct of meetings of the stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules
and regulations as adopted by the board of directors, the
chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and
to do all such acts as, in the judgment of such chairman, are
appropriate for the proper conduct of the meeting. Such rules,
regulations or procedures, whether adopted by the board of
directors or prescribed by the chairman of the meeting, may
include, without limitation, the following: (1) the
establishment of an agenda or order of business for the meeting,
(2) rules and procedures for maintaining order at the meeting and
the safety of those present, (3) limitations on attendance at or
participation in the meeting to stockholders of record of the
Corporation, their duly authorized and constituted proxies or
such other persons as the chairman shall permit, (4) restrictions
on entry to the meeting after the time fixed for the commencement
thereof and (5) limitations on the time allotted to questions or
comments by participants. Unless, and to the extent determined
by the board of directors or the chairman of the meeting,
meetings of the stockholders shall not be required to be held in
accordance with rules of parliamentary procedure.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND QUALIFICATION. The corporate powers,
business and property of the Corporation shall be exercised,
conducted and controlled by a board of directors consisting of
twelve (12) persons, except that the board of directors may, from
time to time, increase or decrease the number of persons
constituting the board provided that the board shall at all times
consist of at least three (3) persons.
SECTION 2. ELECTION AND TERM OF OFFICE. The directors shall be
classified with respect to the time for which they shall
severally hold office by dividing them into three classes, each
as nearly equal in number as possible. At the meeting held for
the election of the first board, the directors of the first class
should be elected for a term of one year; the directors of the
second
<PAGE>
class for a term of two years; and the directors of the third
class for a term of three years; and at each annual election the
successors to the class of directors whose terms shall expire
that year shall be elected to hold office for the term of three
years, so that the term of office of one class of directors shall
expire in each year. All directors of the Corporation whose
terms shall have expired shall hold office until their successors
are elected and qualified or until there is a decrease in the
number of directors. Each stockholder, in person or by proxy,
shall be entitled to cast one vote for each share of stock
standing in his name on the books of the Corporation on the
record date for each director without cumulative voting.
Each director of this Corporation upon attaining the age of 70
years, shall be deemed to have submitted his resignation as a
director of this Corporation to be effective on the day such
director attains the age of 70 years; provided, however, that a
director who is also an officer of this Corporation, or an
officer of any other corporation in which this Corporation owns
capital stock (subsidiary), shall resign as a director of this
Corporation on the date he retires or resigns as an officer from
the last of such corporations except that, for the purposes of
this Section only, a director serving as Chairman of the Board of
this Corporation shall not be deemed to be an officer of this
Corporation; and, provided further, that without establishing any
precedent and because of the unique position of James M. Kemper,
Jr. as a substantial stockholder of this Corporation and having
served as the Chairman thereof from inception, James M. Kemper,
Jr. may continue to serve as a director of this Corporation after
attaining the age of 70 and may thereafter be elected to serve as
a director of this Corporation. The continuation as a director
or the election or reelection of a director, by mistake or
otherwise, in violation of the aforesaid policy, shall not, ipso
facto, void such continuation, election or reelection, or nullify
any actions so taken by such person as a director.
SECTION 3. VACANCIES. In case of increase in the number of
directors or vacancy occurring on the Board of Directors through
death, resignation, disqualification, or disability, any such
increase or vacancy may be filled by vote of a majority of the
surviving or remaining directors then in office. Such director
as may be elected by the Board of Directors to fill a vacancy
shall hold office for the unexpired portion of the term of the
director whose place shall be vacated. Directorships created as
a result of an increase in number of directors shall be allocated
among the classes of directors so that no one class shall have
more than one director more than any other class and, to the
extent possible, any newly created directorships shall be added
to the class or classes the terms of office of which are to
expire at the earliest date or dates following such allocation.
Directors elected under this Section 3 shall hold office until
their successors are elected and qualified or until there is a
decrease in the number of directors.
SECTION 4. ANNUAL MEETING. The annual meeting of the directors,
for the purpose of electing officers and transacting such other
business as may come before the meeting shall be held in
conjunction with the first regular meeting of the Board of
Directors next occurring after the annual meeting of stockholders
shall be finally adjourned.
<PAGE>
SECTION 5. REGULAR MEETINGS OTHER THAN ANNUAL MEETINGS. Regular
meetings of the directors may be held at such time and place as
shall be determined from time to time by resolution of the Board
of Directors. After the time and place of such regular meetings
shall have been so determined, no notice of such regular meetings
need be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of
Directors for any purpose or purposes shall be called by the
Secretary of the Corporation at the written request of the
Chairman of the Board, or the Vice Chairman, if one be so
elected, or the President, or at the written request of a
majority of the directors. Such request shall state the purpose
or purposes of the proposed meeting.
SECTION 7. NOTICE OF MEETINGS. No notice shall be required to
be given of any regular meeting of the Board of Directors.
Notice of any change in the place of holding any regular meeting,
or of any adjournment of a regular meeting to reconvene at a
different place, shall be given by mail or telegraph not less
than forty-eight (48) hours before such meeting to all directors
who were absent at the time such action was taken. The Secretary
of the Corporation shall give notice of all special meetings of
the directors by delivering to each director in person not later
than the day prior to the meeting, or as to any such director not
so personally notified by mailing to him, a written or printed
notice of such meeting, postage prepaid, or by telegraph or by
messenger delivery to each such director, at his last known
address, so that in the ordinary course of the method of delivery
it would reach such director at least on the day prior to the
meeting. The business transacted at all special meetings of
directors shall be confined to the subjects stated in the notice
and to matters germane thereto, unless all directors of the
Corporation are present at such meeting and consent to the
transaction of other business.
SECTION 8. MEETINGS MAY BE HELD BY CONSENT. Whenever all
persons entitled to vote at any meeting of the directors consent,
either by a writing on the records of the meeting, or filed with
the Secretary, or by presence at such meeting and oral consent
entered on the minutes, or by taking part in the deliberations at
such meeting without objection, the doings of such meeting shall
be as valid as if had at a meeting regularly called and noticed,
and at such meeting any business may be transacted which is not
excepted from the written consent, or to the consideration of
which no objection for want of notice is made at the time. If
any meeting of the directors be irregular for want of notice, or
of such consent, provided a quorum was present at such meeting,
the proceedings of such meeting may be ratified and approved and
rendered likewise valid, and the irregularity or defect therein
waived, by a writing signed by all persons having the right to
vote at such meeting. Whenever any notice is required to be
given to any director under any provisions of the By-Laws, a
waiver thereof in writing, signed by the person entitled to said
notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
SECTION 9. QUORUM. A majority of the Board of Directors of the
Corporation, at a meeting duly assembled, shall be necessary to
constitute a quorum for the transaction of business, and the act
of a majority of the directors present at a meeting at which a
quorum is present shall
<PAGE>
be the act of the Board of Directors, except where otherwise
provided by law or by the By-Laws of the Corporation.
SECTION 10. ADJOURNMENT. If at any meeting of the Board of
Directors a quorum shall fail to attend, a majority of the
directors present at the time and place appointed for such
meeting may adjourn the meeting from time to time to any date
until the next regular meeting, without notice other than verbal
announcement at the meeting and adjournments thereof, until a
quorum shall attend. Likewise, any meeting of directors at which
a quorum is present may also be adjourned, in like manner and on
like notice, for such time or upon such call as may be determined
by vote of a majority of the directors there present. At any
adjournment of any such meeting, at which a quorum shall be
present, any business may be transacted which might have been
transacted at the meeting as originally called.
SECTION 11. ORGANIZATION. The Chairman of the Board, and in his
absence, any Vice Chairman, if one be so elected, and in the
absence of both, a Chairman pro tem, chosen by the directors
present shall preside at each meeting of the directors and shall
act as chairman thereof. The Secretary, and in the absence of
the Secretary or any Assistant Secretary, a Secretary pro tem,
chosen by the directors present, shall act as secretary of all
meetings of the directors.
SECTION 12. RULES AND REGULATIONS. The Board of Directors shall
supervise all officers and agents and see that their duties are
property performed. The Board of Directors may adopt such rules
and regulations for the conduct of their meetings, the guidance
of the officers and the management of the affairs of the
Corporation as they deem proper, not inconsistent with law or the
By-Laws of the Corporation, and may, from time to time, determine
the order of business at their meetings.
SECTION 13. MINUTES AND STATEMENTS. The Board of Directors
shall cause to be kept a complete record of their meetings and
acts, and of the proceedings of the stockholders.
SECTION 14. POWERS OF THE BOARD. In addition to the power and
authority conferred upon them by law, the Board of Directors may
exercise all such powers of the Corporation and do all such
lawful acts and things as are not by law prohibited or limited,
and which are not required or directed to be exercised or done by
the stockholders or by their consent and authority first specifi-
cally given and evidenced in writing.
SECTION 15. COMPENSATION OF DIRECTORS. The compensation to be
paid the directors of this Corporation for services at all
regular or special meetings of the Board of Directors shall be
determined from time to time by the Board of Directors; provided,
that no such compensation shall be paid to any director who shall
at the time be receiving a salary from this Corporation or any of
its subsidiaries as an officer thereof.
SECTION 16. NOMINATION OF DIRECTORS. Nominations of persons for
election to the Board of Directors may be made at any Annual
Meeting of stockholders (a) by or at the direction
<PAGE>
of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Corporation (i) who is
a stockholder of record on the date of the giving of the notice
provided for in this Section 16 and on the record date for the
determination of stockholders entitled to vote at such Annual
Meeting and (ii) who complies with the notice procedures set
forth in this Section 16. Persons nominated by a stockholder of
the Corporation shall only be eligible for election as directors
of the Corporation if such persons are nominated in accordance
with the following procedures.
In addition to any other applicable requirements, for a
nomination to be made by a stockholder, such stockholder must
have given timely notice thereof in proper written form to the
Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be
delivered to or mailed and received at the principal executive
offices of the Corporation not less than sixty days nor more than
ninety days prior to the date of the Annual Meeting; provided,
however, that in the event that less than seventy days' notice or
prior public disclosure of the date of the Annual Meeting is
given or made to stockholders, notice by the stockholder in order
to be timely must be so received not later than the close of
business on the tenth day following the day on which such notice
of the date of the Annual Meeting was mailed or such public
disclosure of the date of the Annual Meeting was made, whichever
first occurs.
To be in proper written form, a stockholder's notice to the
Secretary must set forth (a) as to each person whom the
stockholder proposes to nominate for election as a director (i)
the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital
stock of the Corporation which are owned beneficially or of
record by the person and (iv) any other information relating to
the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (the
"Exchange Act"); and (b) as to the stockholder giving the notice
(i) the name and record address of such stockholder, (ii) the
class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such
stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee
and any other person or persons (including their names) pursuant
to which the nomination(s) are to be made by such stockholder,
(iv) a representation that such stockholder intends to appear in
person or by proxy at the Annual Meeting to nominate the persons
named in its notice and (v) any other information relating to
such stockholder that would be required to be disclosed in a
proxy statement or other filings required to be made in
connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act. Such
notice must be accompanied by a written consent of each proposed
nominee to be named as a nominee and to serve as a director if
elected.
<PAGE>
No person nominated by a stockholder of the Corporation shall be
eligible for election as a director of the Corporation unless
nominated in accordance with the procedures set forth in this
Section 16. If the Chairman of the Annual Meeting determines
that a nomination was not made in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the
nomination was defective and such defective nomination shall be
disregarded.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by
resolution passed by a majority of the total number of directors,
designate an Executive Committee to consist of the Chairman of
the Board, the President, and such number of other directors as
they shall determine. The members of the Executive Committee
shall hold their office as such until the membership is changed
by the Board of Directors. In making such new appointments the
Board of Directors shall designate the directors said appointees
are to succeed and the time they are respectively to serve on
said Committee. The Executive Committee shall have and may
exercise all powers of the Board of Directors. A majority of the
members of the Executive Committee shall determine its action and
shall fix the time and place of its meetings unless the Board of
Directors shall otherwise provide. When regular meetings have
been established no notice shall be required thereof and any and
all business may be transacted thereat. Notices of special
meetings shall be given in the same manner as is provided for
special meetings of the Board of Directors. Unless otherwise
indicated in the notice thereof, any and all business may be
transacted at a special meeting. A majority of the Executive
Committee shall constitute a quorum. The Executive Committee
shall keep regular minutes of its proceedings and shall report
the same at the next succeeding meeting of the Board of
Directors.
SECTION 2. OTHER COMMITTEES. The Board of Directors may from
time to time, designate such other committee or committees as the
Board may deem advisable, and may select or designate the manner
of selecting any such committee, which committee may consist in
whole or in part of officers of this Corporation, whether or not
they be directors thereof. Each such committee shall have and
may exercise such powers as the Board of Directors shall provide
by its resolution.
SECTION 3. COMPENSATION OF COMMITTEE MEMBERS. The Board of
Directors shall determine the compensation to be paid to each
member of any committee appointed by it for service on such
committee, provided that no such compensation shall be paid to
any committee member who shall at the time be receiving a salary
from this Corporation or any of its subsidiaries as an officer
thereof.
<PAGE>
ARTICLE V
OFFICERS
SECTION 1. EXECUTIVE OFFICERS. The executive officers of this
Corporation shall be a Chairman of the Board, one or more Vice
Chairmen, a President, one or more Executive Vice Presidents, one
or more Senior Vice Presidents, one or more Vice Presidents, a
Secretary, a Treasurer, a Controller and an Auditor, all of whom
shall be elected by the Board of Directors. The Chairman of the
Board and the President shall be chosen from among the directors;
any person may hold two or more offices, except the offices of
Chairman of the Board and Secretary, or President and Secretary.
SECTION 2. SUBORDINATE OFFICERS. The President may appoint such
other assistant officers as he may deem necessary from time to
time, and such individuals so appointed by the President shall
serve at the pleasure of the President and shall have such
authority and shall perform such duties as the President from
time to time may prescribe.
SECTION 3. TENURE OF OFFICE AND REMOVAL. The tenure of office
of each of the executive officers of the Corporation, subject to
prior removal, shall be until the first meeting of the Board
after the annual meeting of stockholders following such officer's
election, and until the election of his successor. Any executive
officer may be removed at any time prior to the expiration of his
term by affirmative vote of the majority of the directors. The
Board may delegate the power of removal of subordinate officers
to any officer or committee. If the office of any officer of the
Corporation becomes vacant by reason of death, resignation,
retirement, disqualification or removal from office or inability
to act, the Board of Directors may, in every such case, choose a
successor for such officer who shall hold office for such term as
may be prescribed by the Board of Directors but no longer than
the unexpired portion of the term of the officer or agent whose
place is vacant, and until his successor shall have been duly
elected and qualified.
SECTION 4. COMPENSATION. The Board of Directors shall from time
to time in its discretion fix or alter the compensation of any
officer.
SECTION 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board
shall be the chief executive officer and shall have and may
exercise all of the powers of the President, whether the
President be absent or not. The Chairman of the Board shall be a
member of all standing and other committees appointed by the
Board of Directors unless excused by the Board of Directors
therefrom.
SECTION 6. VICE CHAIRMAN OF THE BOARD. Any Vice Chairman of
the Board shall have and may exercise in the absence of the
Chairman of the Board all of the powers granted to the Chairman
of the Board. In addition, any Vice Chairman may exercise all of
the rights, powers and duties granted by the By-Laws of this
Corporation to an Executive Vice President and shall perform such
other duties as may be specifically designated by the Board of
Directors through the Chairman of the Board.
<PAGE>
SECTION 7. THE PRESIDENT. The President shall see that all
orders and resolutions of the stockholders and of the Board of
Directors are carried into effect, subject, however, to the right
of the Board of Directors, by resolution, to delegate any
specific powers (other than those which may be by statute
conferred exclusively upon the President) to any other officer,
director or agent of the Corporation. He shall be a member of
all standing and other committees appointed by the Board of
Directors unless excused by the Board of Directors therefrom. He
is also authorized and empowered to execute on behalf of the
Corporation and to cause the seal thereof to be affixed to any
and all deeds, mortgages, deeds of trust, bills of sale, security
agreements, leases or other instruments conveying, encumbering or
transferring any part of or the entire interest of the
Corporation in and to any of its property, real, personal or
mixed; also, any and all contracts, documents, acknowledgments of
satisfaction, or releases of mortgages, judgments or other form
of security creating instrument, or other instruments issued by
the Corporation in the transaction of its business. He is also
authorized and shall have full authority in behalf of the
Corporation to attend and to act and to vote at any meeting of
the stockholders of any corporation in which the Corporation may
hold stock, and in connection with such meeting he shall possess
and exercise in behalf of the Corporation any and all rights and
powers incident to the ownership of such stock, including the
power to sign proxies therefor. He shall perform such other
duties and exercise such other powers not in conflict with the
provisions of these By-Laws as the Board of Directors may from
time to time prescribe.
SECTION 8. VICE PRESIDENTS. The Executive Vice Presidents
shall, in the order of precedence by date of election, whether
the President be absent or present, have and exercise all of the
rights, powers and duties of the President, and the signature and
acknowledgment of an Executive Vice President to all official
acts of the Corporation shall be valid and sufficient. The
Senior Vice Presidents and the Vice Presidents shall perform such
duties not inconsistent with these By-Laws as may be specifically
designated by the President or the Board of Directors.
SECTION 9. SECRETARY. The Secretary shall attend all meetings
of the stockholders of the Corporation, and of the Board of
Directors and standing committees. He shall act as the clerk or
secretary thereof and shall record all of the proceedings of such
meetings in minute books kept for that purpose. He shall keep in
safe custody the corporate seal of the Corporation and is autho-
rized to affix the same to all instruments requiring the
Corporation's seal. He shall have charge of the corporate
records, and, except to the extent authority may be conferred
upon any transfer agent or registrar duly appointed by the Board
of Directors, he shall maintain the Corporation's books,
registers, stock certificate and stock transfer books and stock
ledgers, and such other books, records and papers as the Board of
Directors may from time to time entrust to him. He shall give or
cause to be given proper notice of all meetings of stockholders
and directors as required by law and the By-Laws, and shall
perform such other duties as may from time to time be prescribed
by the Board of Directors.
SECTION 10. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities of the Corporation and shall
keep full and accurate account of the receipts and disbursements
in books belonging to the Corporation, and shall deposit all
moneys and other
<PAGE>
valuable effects in the name and to the credit of the Corporation
in such depositaries as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation in the
manner and for the purpose ordered by the Board of Directors, and
shall render to the Board of Directors, whenever they may require
it, an account of all of his transactions as Treasurer and of the
financial condition of the Corporation. And he shall perform
such other duties as the Board of Directors may from time to time
prescribe.
SECTION 11. OFFICERS' BONDS. The Board of Directors may require
any officer or officers to furnish the Corporation a bond in such
sum and in form and with security satisfactory to the Board of
Directors for the faithful performance of the duties of their
offices and the restoration to the Corporation, in case of death,
resignation or removal from office of such officer or officers,
of all books, papers, vouchers, money and other property of
whatever kind in their possession, belonging to the Corporation.
ARTICLE VI
AGENTS AND ATTORNEYS
The Chairman of the Board and the President, or either of them,
may appoint such agents, attorneys and attorneys-in-fact of the
Corporation as either may deem proper, and either may, by written
power of attorney, authorize such agents, attorneys, or
attorneys-in-fact, to represent the Corporation and for it and in
its name, place and stead, and for its use and benefit to trans-
act any and all business, to the extent authorized, which said
Corporation is authorized to transact or do by its Articles of
Incorporation, and in its name, place and stead, and as its
corporate act and deed, to sign, acknowledge and execute any and
all contracts and instruments, in writing, necessary or
convenient in the transaction of such business as fully to all
intents and purposes as said corporation might or could do if it
acted by and through its regularly elected and qualified
officers.
ARTICLE VII
CERTIFICATES OF STOCK AND TRANSFERS
SECTION 1. FORMS AND EXECUTION OF CERTIFICATES. Each
stockholder of the Corporation whose stock has been paid for in
full shall be entitled to have a certificate or certificates,
certifying the number of shares of stock of the Corporation owned
by him. The certificates of stock shall be in such form as the
Board of Directors shall determine. Each certificate shall be
signed by the President, or a Vice President, and the Secretary
or an Assistant Secretary, have affixed to it the seal of the
Corporation, which seal may be facsimile, engraved or printed,
and express on its face its number, date of issuance, the number
of shares for which and the person to whom it is issued. If the
Corporation has a registrar, a transfer agent or a transfer clerk
who actually signs such certificates, the signatures of any of
the officers above mentioned may be facsimile, engraved or
printed. In case any such officer who has signed or whose
facsimile
<PAGE>
signature has been placed upon any such certificate shall have
ceased to be such officer before such certificate is issued, such
certificate may nevertheless be issued by the Corporation with
the same effect as if such officer were an officer at the date of
its issue.
SECTION 2. TRANSFER OF STOCK. Shares of stock, after
certificates thereof have been issued, shall be transferrable
only on the stock transfer books of the Corporation which shall
be in the possession of the Secretary or of a transfer agent or
clerk for the Corporation. No transfer shall be valid against
the Corporation until the same is so entered upon its books and
the old certificate is surrendered for cancellation.
SECTION 3. OLD CERTIFICATES TO BE CANCELLED. No new
certificates shall be issued for previously issued certificates
until the former certificate or certificates for the shares
represented thereby shall have been surrendered to and cancelled
by the Secretary, by writing across the face thereof the word
"Cancelled," with the date of cancellation; in case any certifi-
cate shall be claimed to be lost or destroyed, no new or
duplicate certificate shall be issued for the shares represented
thereby, and no new certificate shall be issued upon a transfer
of such shares, except pursuant to a judgment of a court of
competent jurisdiction, duly given and made in accordance with
the laws of the State of Missouri, or upon corporate surety bond
or other indemnity in form and amount satisfactory to the
Corporation being furnished to the Corporation.
SECTION 4. TREASURY STOCK. All issued and outstanding stock of
the Corporation that may be purchased or otherwise acquired by
the Corporation shall be treasury stock, and shall be subject to
disposal by action of the Board of Directors. Such stock shall
neither vote nor participate in dividends while held by the
Corporation.
SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be
entitled to treat the registered holder of any share or shares of
stock whose name appears on its books as the owner or holder
thereof as the absolute owner of all legal and equitable interest
therein for all purposes and (except as may be otherwise provided
by law) shall not be bound to recognize any equitable or other
claim to or interest in such shares of stock on the part of any
other person, regardless of whether or not it shall have actual
or implied notice of such claim or interest.
SECTION 6. CLOSING OF STOCK TRANSFER BOOKS--FIXING RECORD DATE.
The Board of Directors shall have power to close the stock
transfer books of the Corporation for a period not exceeding
seventy (70) days preceding the date of any meeting of stockhold-
ers, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change, conversion or
exchange of capital stock shall go into effect; provided,
however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date, not
exceeding seventy (70) days preceding the date of any meeting of
stockholders, or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, as
a record date for the determination of the stockholders entitled
to notice of, and to vote at, any such meeting, and any adjourn-
ment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of
capital stock, and in such case such stockholders and only such
stockholders as shall be stockholders of record on the date so
fixed shall be entitled to notice of, and to vote at, such
meeting, and any adjournment thereof, or to receive payment of
such dividend, or to receive such allotment
<PAGE>
of rights, or to exercise such rights, as the case may be
notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid. If
the Board of Directors shall not have closed the transfer books
or set a record date for the determination of its stockholders
entitled to vote as herein provided, the date on which notice of
the meeting is mailed or the date such dividend is declared or
other right announced, as the case may be, shall be the record
date for such determination of stockholders so entitled to
participate.
ARTICLE VIII
SEAL
The Corporation shall have a corporate seal which shall have
inscribed around the circumference thereof "Commerce Bancshares,
Inc., Kansas City, Missouri," and elsewhere thereon shall bear
the words "Corporate Seal." The corporate seal may be affixed by
impression or may be facsimile, engraved or printed.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the Corporation
shall begin on the first day of January in each calendar year and
shall terminate on the last day of December of the same calendar
year.
SECTION 2. FAILURE OR REFUSAL TO GIVE NOTICE UPON REQUEST. If
the Secretary, upon written request by the proper party or
parties as permitted and provided in these By-Laws, shall fail or
refuse to give any notice which he is required to give in accor-
dance with the provisions hereof, the party or parties entitled
to require that such notice be given may sign and issue a notice
of the character and in the manner herein provided and setting
forth in such notice the fact of such failure or refusal on the
part of the Secretary to give the notice as requested; and such
notice so signed and issued shall have the same force and effect
as though signed and issued by the Secretary of the Corporation.
SECTION 3. CHECKS, DRAFTS, ETC. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and
promissory notes, and all acceptances, obligations and other
instruments for the payment of money, shall be signed by such
officer or officers or agent or agents as shall be thereunto duly
authorized from time to time by the Board of Directors; provided,
that the Board of Directors may authorize the use of facsimile
signatures of such
<PAGE>
officers and upon such terms and subject to such conditions as
the Board of Directors may determine.
SECTION 4. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Subject
as hereinafter provided:
(a) The Corporation, to the extent permitted by law, shall
(1) Indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or
was a director or officer of the Corporation or of another
corporation included in a controlled group of corporations of
which the Corporation is a common parent, or is or was serving at
the request of the Corporation as a director or officer of
another corporation or other enterprise not included in said
group, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in or in connection with the adjudication,
defense or disposition of such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Corporation or of
the other corporation he served as aforesaid, and, with respect
to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful;
(2) Indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a
director or officer of the Corporation or of another corporation
included in a controlled group of corporations of which the
Corporation is a common parent, or is or was serving at the
request of the Corporation as a director or officer of another
corporation or other enterprise not included in said group,
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by him in or in connection with the adjudication, defense or
disposition of the action or suit if he acted in good faith and
in a manner reasonably believed to be in or not opposed to the
best interests of the Corporation or of the other corporation he
served as aforesaid and shall not have been adjudged in such
action or suit to be liable for negligence or misconduct in the
performance of his duty to the Corporation or such other
corporation with respect to the matter involved unless and only
to the extent that the court in which such action or suit was
brought determines upon application that, despite the adjudica-
tion of liability and in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnify
to the extent the court shall deem proper.
<PAGE>
(b) The Corporation may purchase and maintain insurance on
behalf of any person entitled to indemnification under this
section against any liability asserted against him and expenses
incurred by him in any such capacity, or arising out of his
status as a director or officer, whether or not the Corporation
would have the power to indemnify him against the liability so
insured and, if the Corporation procures such insurance, (1) the
insurer thereunder shall be entitled to receive from or on behalf
of said person the notice and opportunity to defend hereinafter
provided for the Corporation, (2) the Corporation shall be
relieved from its obligation to indemnify said person under this
section to the extent that indemnity is provided in such
insurance, and (3) the insurer shall not under any circumstances
have a right of action, by way of subrogation or otherwise,
against said person, the Corporation or other corporation or
other enterprise for whom said person served at the request of
the Corporation;
(c) For purposes of this section, the term "other enterprise"
shall include employee benefit plans; the term "fines" shall
include any excise taxes assessed on a person with respect to an
employee benefit plan; and the term "serving at the request of
the Corporation" shall include any service as a director or
officer which imposes duties on, or involves services by, such
director or officer with respect to an employee benefit plan, its
participants, or beneficiaries; a person who acted in good faith
and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the Corporation" as referred to in this
section; and each of the terms "controlled group of corporations"
and "common parent" shall have the same meaning herein as in the
U.S. Internal Revenue Code;
PROVIDED NEVERTHELESS THAT
(i) Any person who serves as a director or officer of a
corporation that at the time of such service is in a controlled
group of corporations of which the Corporation is a common parent
shall be deemed to serve at the request of the Corporation, but a
person serving as a director or officer of a corporation that is
not in such a controlled group shall not be entitled to
indemnification under this section unless actually requested to
serve in said capacity by the Corporation.
(ii) The termination of any action, suit or proceeding by
judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful;
(iii) No person shall be entitled to indemnification under this
section
<PAGE>
(A) Unless he notifies the Corporation of the threatened,
pending or completed action, suit, proceeding or investigation
promptly on becoming aware thereof and, before incurring expense
of any kind therein or in connection therewith, gives the
Corporation or its insurer the opportunity to provide an
independent attorney to represent him in, and to otherwise
counsel him in connection with, any such action, suit, proceeding
or investigation, or
(B) For or with respect to any amount paid to settle a claim
asserted or action, suit or proceeding brought or threatened
against him unless the Corporation's board of directors (1)
approved the amount of such settlement as reasonable, or (2) upon
failing so to approve the same, refused to confirm its obligation
to satisfy any larger amount adjudged against him on said claim,
action, suit or proceeding and the additional expenses incurred
in the defense thereof, or (3) could not, by reason of the
action, intervention or threat of a court, government agency or
instrumentality, act with complete independence and free of
circumscription in relation to the subject matter, or
(C) For or with respect to any claim made against him (1) for
libel or slander, (2) for an accounting of profits made from the
purchase or sale by him of securities of the Corporation or of
another corporation in the controlled group of corporations of
which the Corporation is a common parent within the meaning of
Section 16(b) of the Securities Exchange Act of 1934 and
amendments thereto or similar provisions of any statutory law or
common law, or (3) based on or attributable to personal injury or
bodily injury, sickness, disease or death or damage to,
destruction of, or loss of use of property;
(iv) Expenses incurred by a director or officer or a former
director or officer in connection with a civil or criminal
action, suit, proceeding or investigation shall be paid by the
Corporation in advance of the final termination of the action,
suit, proceeding or investigation in the specific case upon
receipt of an undertaking by or on behalf of said person to repay
such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation as authorized in
this section;
(v) The indemnification provided by this section shall be in
addition to any other rights to which a director or officer or
former director or officer otherwise covered by this section may
be entitled by law or under any agreement or vote of shareholders
or disinterested directors, both as to action in such person's
official capacity and as to action in another capacity while
holding such office, shall continue as to a person who has ceased
to be a director or officer of the Corporation
<PAGE>
or of another corporation or other enterprise encompassed by this
section and shall inure to the benefit of the heirs, executors
and administrators of such a person.
SECTION 5. AMENDMENTS TO BY-LAWS. The Board of Directors shall
have the power to make, alter, amend or repeal the By-Laws of
this Corporation from time to time.
SECTION 6. CONTROL SHARE ACQUISITIONS. The provisions of
Section 351.407 of the Missouri Revised Statutes (the "Control
Share Act") shall not apply to any control share acquisitions of
shares of the Corporation within the meaning of the Control Share
Act.
SECTION 7. GENDER. As used herein, the masculine pronoun shall
include the feminine gender.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Commerce Bancshares, Inc. 6/30/96 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 654,830
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 378,295
<TRADING-ASSETS> 13,956
<INVESTMENTS-HELD-FOR-SALE> 2,652,762<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,269,915<F3>
<ALLOWANCE> 98,667
<TOTAL-ASSETS> 9,322,969
<DEPOSITS> 7,948,513
<SHORT-TERM> 436,997
<LIABILITIES-OTHER> 50,905
<LONG-TERM> 14,344
0
0
<COMMON> 187,827
<OTHER-SE> 684,383
<TOTAL-LIABILITIES-AND-EQUITY> 9,322,969
<INTEREST-LOAN> 229,426
<INTEREST-INVEST> 78,207<F4>
<INTEREST-OTHER> 13,946
<INTEREST-TOTAL> 321,780
<INTEREST-DEPOSIT> 131,047
<INTEREST-EXPENSE> 142,351
<INTEREST-INCOME-NET> 179,429
<LOAN-LOSSES> 10,981
<SECURITIES-GAINS> 1,914
<EXPENSE-OTHER> 157,573
<INCOME-PRETAX> 86,331
<INCOME-PRE-EXTRAORDINARY> 56,201
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,201
<EPS-PRIMARY> 1.53
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.35<F5>
<LOANS-NON> 17,100
<LOANS-PAST> 16,862
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 98,537
<CHARGE-OFFS> 14,597
<RECOVERIES> 3,746
<ALLOWANCE-CLOSE> 98,667
<ALLOWANCE-DOMESTIC> 98,667
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Certificates of deposit of $348,000 are included in Investments-
Held-For-Sale.
<F2>Excludes non-marketable investment securities of $32,915,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $201,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
</FN>
</TABLE>
