<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 SEPTEMBER 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 OFFICES AND ZIP CODE)
(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 November 1, 1996, the registrant had outstanding 35,652,693 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 September 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
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 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10) Material Contracts:
(a) Commerce Bancshares, Inc. Incentive Stock Option Plan amended and
restated as of October 4, 1996
(b) Commerce Bancshares, Inc. 1987 Non-Qualified Stock Option Plan
amended and restated as of October 4, 1996
(c) Commerce Bancshares, Inc. 1996 Incentive Stock Option Plan
amended and restated as of October 4, 1996
(d) Commerce Bancshares, Inc. Restricted Stock Plan amended and
restated as of October 4, 1996
(e) Commerce Bancshares, Inc. Stock Purchase Plan for Non-Employee
Directors amended and restated October 4, 1996
(f) Commerce Bancshares, Inc. Executive Incentive Compensation Plan
amended and restated October 4, 1996
(g) Form of Severance Agreement between Commerce Bancshares, Inc. and
certain of its executive officers entered into as of October 4, 1996
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1996.
1
<PAGE>
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: November 8, 1996
/s/ Jeffery D. Aberdeen
By __________________________________
Jeffery D. Aberdeen
Controller
(Chief Accounting Officer)
Date: November 8, 1996
2
<PAGE>
SCHEDULE 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
COMPARISON OF KEY RATIOS
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----- -----
<S> <C> <C>
RATIOS--THREE MONTHS ENDED SEPTEMBER 30:
(Based on average balance sheets):
Loans to deposits............................................... 67.15% 69.04%
Non-interest bearing deposits to total deposits................. 19.71 19.96
Equity to loans................................................. 16.59 16.38
Equity to deposits.............................................. 11.14 11.31
Equity to total assets.......................................... 9.48 9.56
Return on total assets.......................................... 1.32 1.19
Return on realized stockholders' equity......................... 13.95 12.58
Return on total stockholders' equity............................ 13.95 12.40
RATIOS--NINE MONTHS ENDED SEPTEMBER 30:
(Based on average balance sheets):
Loans to deposits............................................... 66.85% 68.33%
Non-interest bearing deposits to total deposits................. 19.38 19.77
Equity to loans................................................. 16.75 16.31
Equity to deposits.............................................. 11.20 11.15
Equity to total assets.......................................... 9.49 9.44
Return on total assets.......................................... 1.24 1.21
Return on realized stockholders' equity......................... 13.30 12.53
Return on total stockholders' equity............................ 13.09 12.78
(Based on end-of-period data):
Tier I capital ratio............................................ 13.37 12.69
Total capital ratio............................................. 14.52 13.90
Leverage ratio.................................................. 8.69 8.50
Efficiency ratio................................................ 61.75 62.99
</TABLE>
3
<PAGE>
SCHEDULE 2
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Loans, net of unearned income......................... $5,390,915 $5,317,813
Allowance for loan losses............................. (98,366) (98,537)
---------- ----------
NET LOANS......................................... 5,292,549 5,219,276
---------- ----------
Investment securities:
Available for sale.................................. 2,621,282 2,552,264
Trading account..................................... 5,255 9,369
Other non-marketable................................ 39,383 33,120
---------- ----------
TOTAL INVESTMENT SECURITIES....................... 2,665,920 2,594,753
---------- ----------
Federal funds sold and securities purchased under
agreements to resell................................. 343,090 523,302
Cash and due from banks............................... 700,632 774,852
Land, buildings and equipment--net.................... 208,342 210,033
Goodwill and core deposit premium--net................ 90,774 101,184
Customers' acceptance liability....................... 2,332 9,435
Other assets.......................................... 110,470 141,116
---------- ----------
TOTAL ASSETS...................................... $9,414,109 $9,573,951
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand......................... $1,727,129 $1,828,950
Savings and interest bearing demand................. 3,941,168 3,891,801
Time open and C.D.'s of less than $100,000.......... 2,160,900 2,253,390
Time open and C.D.'s of $100,000 and over........... 210,665 218,951
---------- ----------
TOTAL DEPOSITS.................................... 8,039,862 8,193,092
Federal funds purchased and securities sold under
agreements to repurchase............................. 414,855 362,903
Long-term debt and other borrowings................... 14,233 14,562
Accrued interest, taxes and other liabilities......... 53,891 110,176
Acceptances outstanding............................... 2,332 9,435
---------- ----------
TOTAL LIABILITIES................................. 8,525,173 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..................................... 81,260 84,415
Retained earnings................................... 684,756 618,388
Treasury stock of 1,810,202 shares in 1996 and
861,951 shares in 1995, at cost.................... (66,026) (32,980)
Unearned employee benefits.......................... (802) (716)
Unrealized securities gain--net of tax.............. 1,921 26,849
---------- ----------
TOTAL STOCKHOLDERS' EQUITY........................ 888,936 883,783
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........ $9,414,109 $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 MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
--------------------- -------------------
1996 1995 1996 1995
---------- ---------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans.......... $ 115,074 $ 120,608 $ 344,500 $ 337,723
Interest on investment securities... 40,827 39,089 119,235 121,897
Interest on federal funds sold and
securities purchased under
agreements to resell............... 5,246 4,394 19,192 6,711
---------- ---------- --------- ---------
TOTAL INTEREST INCOME........... 161,147 164,091 482,927 466,331
---------- ---------- --------- ---------
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing
demand........................... 32,025 31,891 96,161 88,081
Time open and C.D.'s of less than
$100,000......................... 29,411 32,072 90,277 86,427
Time open and C.D.'s of $100,000
and over......................... 2,848 3,121 8,893 8,267
Interest on federal funds purchased
and securities sold under
agreements to repurchase........... 5,102 6,235 15,950 18,039
Interest on long-term debt and other
borrowings......................... 232 271 688 841
---------- ---------- --------- ---------
TOTAL INTEREST EXPENSE.......... 69,618 73,590 211,969 201,655
---------- ---------- --------- ---------
NET INTEREST INCOME............. 91,529 90,501 270,958 264,676
Provision for loan losses........... 6,082 3,927 17,063 8,690
---------- ---------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES...... 85,447 86,574 253,895 255,986
---------- ---------- --------- ---------
NON-INTEREST INCOME
Trust income........................ 9,328 8,638 27,266 24,341
Deposit account charges and other
fees............................... 14,409 11,807 40,621 33,053
Trading account profits and
commissions........................ 1,316 1,134 4,474 3,848
Net gains on securities
transactions....................... 90 243 2,004 670
Credit card transaction fees........ 6,312 5,725 18,358 15,990
Other income........................ 8,994 6,647 23,182 18,779
---------- ---------- --------- ---------
TOTAL NON-INTEREST INCOME....... 40,449 34,194 115,905 96,681
---------- ---------- --------- ---------
OTHER EXPENSE
Salaries and employee benefits...... 40,971 41,156 123,282 117,952
Net occupancy expense on bank
premises........................... 5,619 5,369 16,272 15,257
Equipment expense................... 3,648 3,579 11,086 10,286
Supplies and communication expense.. 6,274 6,304 18,607 17,614
Data processing expense............. 5,227 5,360 15,394 15,206
Federal deposit insurance expense... 1,661 (339) 2,097 7,907
Marketing expense................... 3,415 3,718 9,469 8,119
Other operating expense............. 13,262 11,858 41,443 34,858
---------- ---------- --------- ---------
TOTAL OTHER EXPENSE............. 80,077 77,005 237,650 227,199
---------- ---------- --------- ---------
Income before income taxes.......... 45,819 43,763 132,150 125,468
Less income taxes................... 14,964 16,153 45,094 46,076
---------- ---------- --------- ---------
NET INCOME...................... $ 30,855 $ 27,610 $ 87,056 $ 79,392
========== ========== ========= =========
Net income per common and common
equivalent share................... $ .85 $ .72 $ 2.38 $ 2.10
========== ========== ========= =========
Weighted average common and common
equivalent shares outstanding...... 36,313 38,276 36,641 37,765
========== ========== ========= =========
Cash dividends per common share..... $ .190 $ .171 $ .570 $ .514
========== ========== ========= =========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SCHEDULE 4
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET
NUMBER OF UNEARNED UNREALIZED
SHARES COMMON CAPITAL RETAINED TREASURY EMPLOYEE GAIN
ISSUED STOCK SURPLUS EARNINGS STOCK BENEFITS (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 $883,783
Net income............. 87,056 87,056
Year-to-date change in
fair value of
investment securities. (24,928) (24,928)
Purchase of treasury
stock................. (39,746) 24 (39,722)
Sales under option and
benefit plans......... (3,138) 6,426 3,288
Issuance of stock under
restricted stock award
plan.................. (17) 274 (257) --
Restricted stock award
amortization.......... 147 147
Cash dividends paid
($.570 per share)..... (20,688) (20,688)
---------- -------- ------- -------- -------- ----- -------- --------
BALANCE SEPTEMBER 30,
1996................... 37,565,369 $187,827 $81,260 $684,756 $(66,026) $(802) $ 1,921 $888,936
========== ======== ======= ======== ======== ===== ======== ========
Balance January 1, 1995. 33,970,106 $169,851 $54,575 $576,331 $(12,148) $(295) $(60,116) $728,198
Net income............. 79,392 79,392
Year-to-date change in
fair value of
investment securities. 72,400 72,400
Purchase of treasury
stock................. (29,081) 7 (29,074)
Sales under option and
benefit plans......... (2,156) 5,430 3,274
Purchase acquisitions.. (435) 5,315 4,880
Pooling acquisition,
net................... 2,674,299 13,371 (4,872) 32,360 7,625 38 48,522
Issuance of stock under
restricted stock award
plan.................. 4 627 (631) --
Restricted stock award
amortization.......... 101 101
Cash dividends paid
($.514 per share)..... (19,593) (19,593)
---------- -------- ------- -------- -------- ----- -------- --------
Balance September 30,
1995................... 36,644,405 $183,222 $47,116 $668,490 $(22,232) $(818) $ 12,322 $888,100
========== ======== ======= ======== ======== ===== ======== ========
</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 NINE MONTHS
ENDED SEPTEMBER 30
--------------------
1996 1995
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................... $ 87,056 $ 79,392
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses.............................. 17,063 8,690
Provision for depreciation and amortization............ 23,085 23,012
Accretion of investment security discounts............. (4,327) (4,346)
Amortization of investment security premiums........... 17,162 19,845
Net gains on sales of investment securities (A)........ (2,004) (670)
Net (increase) decrease in trading account
securities............................................ 4,791 (2,586)
Decrease in interest receivable........................ 7,431 1,214
Increase (decrease) in interest payable................ (1,874) 8,802
Other changes, net..................................... 12,452 4,592
--------- ---------
Net cash provided by operating activities............ 160,835 137,945
--------- ---------
INVESTING ACTIVITIES:
Net cash paid in acquisitions............................ -- (33,226)
Cash paid in sale of branches............................ (38,134) --
Proceeds from sales of investment securities (A)......... 546,664 585,688
Proceeds from maturities of investment securities (A).... 292,541 407,470
Purchases of investment securities (A)................... (964,682) (460,174)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell......... 180,212 (95,325)
Net increase in loans.................................... (99,820) (365,305)
Purchases of premises and equipment...................... (19,512) (17,549)
Sales of premises and equipment.......................... 6,529 6,386
--------- ---------
Net cash provided (used) by investing activities..... (96,202) 27,965
--------- ---------
FINANCING ACTIVITIES:
Net decrease in non-interest bearing demand, savings
and interest bearing demand deposits.................... (21,902) (285,801)
Net increase (decrease) in time open and C.D.'s.......... (80,182) 97,049
Net increase in federal funds purchased and securities
sold under
agreements to repurchase................................ 51,952 78,913
Repayment of long-term debt.............................. (369) (7,691)
Purchases of treasury stock.............................. (70,325) (28,923)
Exercise of stock options by employees................... 2,661 2,922
Cash dividends paid on common stock...................... (20,688) (19,593)
--------- ---------
Net cash used by financing activities................ (138,853) (163,124)
--------- ---------
Increase (decrease) in cash and cash equivalents..... (74,220) 2,786
Cash and cash equivalents at beginning of year........... 774,852 565,805
--------- ---------
Cash and cash equivalents at September 30............ $ 700,632 $ 568,591
========= =========
</TABLE>
- --------
(A) Available for sale and other non-marketable securities, excluding trading
account securities.
Cash payments of income taxes for the nine month period were $50,398,000 in
1996 and $27,295,000 in 1995. Interest paid on deposits and borrowings for the
nine month period was $213,614,000 in 1996 and $192,967,000 in 1995.
See accompanying notes to financial statements.
7
<PAGE>
SCHEDULE 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 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 NINE MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
--------------- ---------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance, beginning of period............ $98,667 $99,221 $98,537 $87,179
------- ------- ------- -------
Additions:
Provision for loan losses.............. 6,082 3,927 17,063 8,690
Allowance for loan losses of acquired
banks................................. -- -- -- 12,932
------- ------- ------- -------
Total additions...................... 6,082 3,927 17,063 21,622
------- ------- ------- -------
Deductions:
Loan losses............................ 8,032 6,653 22,629 15,826
Less recoveries on loans............... 1,649 1,800 5,395 5,320
------- ------- ------- -------
Net loan losses...................... 6,383 4,853 17,234 10,506
------- ------- ------- -------
Balance, September 30................... $98,366 $98,295 $98,366 $98,295
======= ======= ======= =======
</TABLE>
At September 30, 1996, interest income was not being recognized on an
accrual basis for loans with an outstanding balance of $11,829,000.
3. INVESTMENT SECURITIES
Investment securities, at fair value, consist of the following at September
30, 1996 and December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
<S> <C> <C>
Available for sale:
U.S. government and federal agency
obligations.................................. $1,765,849 $1,707,111
State and municipal obligations............... 113,725 128,043
CMO's and asset-backed securities............. 652,668 670,522
Other debt securities......................... 46,359 10,982
Equity securities............................. 42,681 35,606
Trading account securities..................... 5,255 9,369
Other non-marketable securities................ 39,383 33,120
---------- ----------
Total investment securities................. $2,665,920 $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
SEPTEMBER 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 nine
month period ended September 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 nine months of 1996
totaled $87.1 million; a $7.7 million or 9.7% increase over the same period in
1995. Earnings per share increased 13.3% to $2.38 in the first nine months of
1996 compared to $2.10 in the first nine months of 1995. Net interest income
increased $6.3 million and non-interest income increased $19.2 million,
partially offset by increases of $10.5 million in other expense and $8.4
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 18.3%, while other expense, excluding intangible amortization and
F.D.I.C. insurance reductions, increased only 4.6%.
Return on average assets for the first nine months of 1996 was 1.24%
compared to 1.21% in the first nine months of 1995. Return on average
stockholders' equity for the first nine months of 1996 was 13.09% compared to
12.78% for the first nine months of 1995. The Company's efficiency ratio
(other expense/net interest income plus non-interest income excluding net
gains on securities transactions) was 61.75% for the first nine months of 1996
compared to 62.99% for the first nine months of 1995.
Consolidated net income increased $3.2 million over the third quarter of
1995 mainly due to a $6.3 million increase in non-interest income partially
offset by a $3.1 million increase in other expense and a $2.2 million increase
in the provision for loan losses. Net income increased $1.9 million over the
second quarter of 1996 mainly due to increases of $1.6 million in net interest
income and $1.8 million in non-interest income, partially offset by an
increase of $1.1 million in other expense. Earnings per share was $.85 in the
third quarter of 1996, an 18.1% increase over the third quarter of 1995 and a
7.6% increase over the second quarter of 1996.
In the second quarter of 1996, ten affiliate banks in Missouri, Kansas and
Illinois were merged to form two banks. The effects of these mergers will
enable the Company to reduce overhead costs while expanding services to
customers. Additionally, customers will gain access to additional banking
facilities in portions of Missouri, Kansas and Illinois.
The Company sold an Illinois branch in March 1996 and a Missouri branch 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 $16.6 million, or 3.6%, compared to the
first nine months of 1995 mainly due to an increase of $477.5 million in
average earning asset balances, (which caused an increase of $29.0 million in
tax equivalent interest income), partly offset by a decrease of 19 basis
points in average tax equivalent rates earned. Excluding banks acquired in
1995, total interest income increased .4% in the first nine months of 1996
over the same period in 1995. The average tax equivalent yield was 7.75% for
the first nine months of 1996 and 7.94% for the first nine months of 1995.
9
<PAGE>
Loans were 63% of average earning assets and yielded an average tax
equivalent rate of 8.71% for the first nine months of 1996. Loan interest
income increased $6.8 million, or 2.0%, over the first nine months of 1995.
This increase was mainly due to an increase of $97.2 million in average credit
card loan balances, partially offset by a decline of 46 basis points in average
tax equivalent rates earned on business loans. Interest income on investment
securities decreased $2.7 million from the first nine months of 1995 mainly due
to a decrease of $84.7 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 $12.5 million over the first
nine months of 1995 mainly due to an increase of $321.1 million in average
balances invested.
The average tax equivalent yield was 7.73% in the third quarter of 1996
compared to 7.96% in the third quarter of 1995 and 7.72% in the second quarter
of 1996. Total interest income decreased $2.9 million from the third quarter of
1995 mainly due to both lower average tax equivalent yields earned and lower
average balances invested in loans. Total interest income increased $1.4
million over the second quarter of 1996 due to higher average tax equivalent
rates earned, mainly in loans, partially offset by lower average balances
invested, mainly in federal funds sold and resell agreements.
Summaries of average earning assets and liabilities and the corresponding
average rates earned/paid appear on pages 14 through 17.
INTEREST EXPENSE AND RELATED LIABILITIES
Total interest expense (net of capitalized interest) increased $10.3 million,
or 5.1%, compared to the first nine months of 1995 due mainly to higher average
interest-bearing liabilities. The average cost of funds was 4.13% for the first
nine months of 1996 and 4.19% for the first nine months of 1995. Excluding
banks acquired in 1995, total interest expense increased 1.2% in the first nine
months of 1996 compared to the first nine months of 1995.
Average core deposits (deposits excluding short-term certificates of deposit
over $100,000) for the first nine months of 1996 were $7.85 billion, an
increase of 6.8% over the same period last year. Core deposits supported 94% of
average earning assets in 1996. Interest on deposits increased $12.6 million
over the first nine 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
$13.1 million and $6.9 million, respectively, due mainly to higher average
balances. Interest expense on federal funds purchased and securities sold under
agreements to repurchase decreased $2.1 million from the first nine months of
1995 due to a decrease in average rates paid.
Total interest expense in the third quarter of 1996 was $4.0 million lower
than the third quarter of 1995, as rate decreases were partially offset by
increases in average deposits. Interest expense was $173 thousand lower than
the second quarter of 1996 due to lower average deposits and borrowings and
lower average rates paid on deposits. The average cost of funds was 4.09% for
the second and third quarters of 1996 compared to 4.34% for the third quarter
of 1995.
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 for the periods
indicated.
10
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Non-accrual loans.............................. $11,829 $16,234
Past due 90 days and still accruing interest... 24,593 15,690
------- -------
Total impaired loans........................... 36,422 31,924
Foreclosed real estate......................... 985 1,955
------- -------
Total non-performing assets.................. $37,407 $33,879
======= =======
Non-performing assets to total loans........... .69% .64%
Non-performing assets to total assets.......... .40% .35%
</TABLE>
Non-accrual loans at September 30, 1996 are comprised of both secured and
unsecured loans to businesses and individuals. Loans past due 90 days but
still accruing interest are comprised of $9.2 million in business loans, $792
thousand in construction and development loans, $1.4 million in business real
estate loans, $2.4 million in personal real estate loans, $4.8 million in
personal banking loans and $5.9 million in credit card loans. Foreclosed
properties at September 30, 1996 are mainly comprised of individual family
dwellings and are not considered a significant risk element to the balance
sheet.
The subsidiary banks issue Visa and MasterCard credit cards, and the balance
of these consumer loans was $527.6 million at September 30, 1996. During 1996
the banking industry has experienced increasing credit losses on these loans
primarily due to easing of bankruptcy laws and general economic conditions,
and net charge-offs at major banks this year have ranged from 3.5% to over 5%
of credit card loans. The Company has also experienced an increase in credit
losses on credit card loans due to these same factors, however, net charge-off
experience through the first nine months has averaged 2.78% of outstanding
credit card loans, which is significantly lower than industry averages.
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 $12.3
million, or 2.3% of credit card loans at September 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.
ALLOWANCE 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 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 Commerce Bancshares, Inc. (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 $8.4 million compared to the first
nine months of 1995, increased $2.2 million over the third quarter of 1995 and
increased $654 thousand compared to the second quarter of 1996. The allowance
for loan losses as a percentage of loans outstanding was 1.82% at September
30, 1996, compared to 1.85% at year-end 1995 and 1.80% at September 30, 1995.
Net charge-offs on loans totaled $17.2 million for the first nine months of
1996 compared to $10.5 million for the first nine months of 1995. Net charge-
offs were $6.4 million for the third quarter of 1996 compared to $4.9 million
for the third quarter of 1995 and $5.4 million for the second quarter of 1996.
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.
11
<PAGE>
NON-INTEREST INCOME
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-------------------------------------------
QUARTER QUARTER
ENDED ENDED
NINE MONTHS 9/30/96 9/30/96
ENDED 9/30/96 COMPARED TO COMPARED
COMPARED TO QUARTER QUARTER
NINE MONTHS ENDED ENDED
ENDED 9/30/95 9/30/95 6/30/96
------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Trust income...................... $ 2,925 12.0% $ 690 8.0% $ 483 5.5%
Deposit account charges and other
fees............................. 7,568 22.9 2,602 22.0 609 4.4
Trading account profits and
commissions...................... 626 16.3 182 16.0 (116) (8.1)
Net gains on securities
transactions..................... 1,334 199.1 (153) (63.0) (600) (87.0)
Credit card transaction fees...... 2,368 14.8 587 10.3 33 .5
Other income...................... 4,403 23.5 2,347 35.3 1,380 18.1
------- ------ ------
Total non-interest income......... $19,224 19.9% $6,255 18.3% $1,789 4.6%
======= ====== ======
</TABLE>
The increase in deposit account charges and other fees in the first nine
months of 1996 compared with 1995 was partially due to fee restructuring and
added cash management fees. Income on trust fees was reflective of increased
new business coupled with improvement in market value on assets upon which
some fees are based. Credit card fees are reflective of increased merchant and
cardholder sales upon which transaction fee income is based. Included in the
other income category was an increase in gains on sales of branches and fixed
assets of $2.6 million. The quarterly comparisons to the third quarter of 1995
and the second quarter of 1996 also include increases in gains on sales of
branches and fixed assets of $1.6 million and $1.7 million, respectively.
Excluding banks acquired in 1995, total non-interest income (excluding
securities gains) increased $15.4 million, or 17.0%, in the first nine months
of 1996 compared to the first nine months of 1995.
OTHER EXPENSE
Other expense increased $10.5 million in the first nine months of 1996
compared to the first nine months of 1995. Salaries and benefits increased
$5.3 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 1.9% in the first nine months of 1996 compared to the
first nine months of 1995. In addition, marketing expense increased $1.4
million, occupancy expense on bank premises increased $1.0 million, and
expense on foreclosed real estate increased $2.2 million. These effects were
partially offset by a $5.8 million decrease in F.D.I.C. insurance expense due
to a decrease in the assessment rate. In the third quarter of 1996, the
Company accrued $1.3 million for a one time charge in connection with the
recapitalization of the SAIF fund. Excluding the expenses of banks acquired in
1995, total other expense increased only $565 thousand in the first nine
months of 1996 compared to the same period in 1995.
Other expense increased $3.1 million compared to the third quarter of 1995
mainly due to increases of $1.8 million in foreclosed real estate expense and
$2.0 million in F.D.I.C. insurance expense. Compared to the second quarter of
1996, other expense increased $1.1 million partly due to increases of $1.4
million in F.D.I.C. insurance expense and $957 thousand in marketing expense.
LIQUIDITY AND CAPITAL RESOURCES
The liquid assets of the Parent consist primarily of short-term investments
and equity securities, most of which are readily marketable. The fair value of
these investments was $84.4 million at September 30, 1996 compared to $90.1
million at December 31, 1995. Included in the fair values were unrealized net
gains of $13.4 million at September 30, 1996 and $11.0 million at December 31,
1995. The Parent's liabilities totaled $63.3 million at September 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 $51.1 million
advanced mainly from subsidiary bank holding companies in order to
12
<PAGE>
combine resources for short-term investment in liquid assets. The Parent had
no short-term borrowings from affiliate banks or long-term debt during 1996.
The Parent'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 $2.87 billion at September 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 $16.9 million at September 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 September 30, 1996, the Company had acquired 1,099,063 shares
under this authorization.
The Company (on a consolidated basis) had an equity to asset ratio of 9.49%
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>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk-Adjusted Assets........................... $5,976,262 $6,045,112
Tier I Capital................................. 798,846 756,452
Total Capital.................................. 867,729 829,784
Tier I Capital Ratio........................... 13.37% 12.51%
Total Capital Ratio............................ 14.52% 13.73%
Leverage Ratio................................. 8.69% 8.27%
</TABLE>
The Company's cash and cash equivalents (defined as "Cash and due from
banks") were $700.6 million at September 30, 1996, a decrease of $74.2 million
from December 31, 1995. Contributing to the net cash outflow were a net
decrease of $102.1 million in deposits, $70.3 million in purchases of treasury
stock and $99.8 million in additional loans made, net of repayments. In
addition, purchases of investment securities were $964.7 million, partially
offset by $839.2 million in proceeds realized from sales and maturities.
Partially offsetting these net outflows were a $180.2 million net decrease in
short-term investments in federal funds sold and resell agreements and $160.8
million generated from operating activities. Total assets and core deposits
decreased slightly, $159.8 million and $150.6 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 $2.12
billion, standby letters of credit totaled $135.1 million, and commercial
letters of credit totaled $25.4 million at September 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 $132.8 million at September 30, 1996. The current credit exposure (or
replacement cost) across all off-balance-sheet derivative contracts covered by
the risk-based capital standards was $4.4 million at September 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.
13
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
NINE MONTHS 1996 NINE 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).......... $1,679,242 $ 99,356 7.90% $1,684,814 $105,286 8.36%
Construction and
development........... 168,404 11,027 8.75 127,554 9,015 9.45
Real estate--business.. 709,032 45,755 8.62 686,887 46,057 8.96
Real estate--personal.. 985,649 57,969 7.86 943,148 54,792 7.77
Personal banking....... 1,253,995 81,473 8.68 1,242,857 81,159 8.73
Credit card............ 504,691 49,968 13.23 407,452 42,495 13.94
---------- -------- ----- ---------- -------- -----
Total loans.......... 5,301,013 345,548 8.71 5,092,712 338,804 8.89
---------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,766,554 81,207 6.14 1,717,948 79,266 6.17
State & municipal
obligations (A)....... 117,649 6,929 7.87 119,846 6,897 7.69
CMO's and asset-backed
securities............ 648,127 30,462 6.28 732,843 34,256 6.25
Trading account
securities (A)........ 6,125 208 4.54 3,549 163 6.15
Other marketable
securities (A)........ 45,299 2,252 6.64 73,005 3,315 6.07
Other non-marketable
securities............ 35,721 834 3.12 24,227 570 3.15
---------- -------- ----- ---------- -------- -----
Total investment
securities.......... 2,619,475 121,892 6.22 2,671,418 124,467 6.23
---------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 472,554 19,192 5.42 151,419 6,711 5.93
---------- -------- ----- ---------- -------- -----
Total interest
earning assets...... 8,393,042 486,632 7.75 7,915,549 469,982 7.94
-------- ----- -------- -----
Less allowance for loan
losses................. (98,490) (95,202)
Unrealized gain (loss)
on investment
securities............. 22,239 (27,932)
Cash and due from banks. 632,272 595,039
Land, buildings and
equipment--net......... 208,819 204,251
Other assets............ 197,889 204,167
---------- ----------
Total assets......... $9,355,771 $8,795,872
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 302,599 5,415 2.39 $ 312,118 5,970 2.56
Interest bearing
demand................ 3,650,900 90,746 3.32 3,270,040 82,111 3.36
Time open & C.D.'s of
less than $100,000.... 2,211,055 90,277 5.45 2,188,292 86,427 5.28
Time open & C.D.'s of
$100,000 and over..... 228,950 8,893 5.19 208,684 8,267 5.30
---------- -------- ----- ---------- -------- -----
Total interest
bearing deposits.... 6,393,504 195,331 4.08 5,979,134 182,775 4.09
---------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 445,091 15,950 4.79 446,388 18,039 5.40
Long-term debt and
other borrowings...... 14,764 792 7.16 16,694 871 6.98
---------- -------- ----- ---------- -------- -----
Total borrowings..... 459,855 16,742 4.86 463,082 18,910 5.46
---------- -------- ----- ---------- -------- -----
Total interest
bearing liabilities. 6,853,359 212,073 4.13% 6,442,216 201,685 4.19%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,536,578 1,473,457
Other liabilities ...... 77,752 49,512
Stockholders' equity.... 888,082 830,687
---------- ----------
Total liabilities and
equity.............. $9,355,771 $8,795,872
========== ==========
Net interest margin
(T/E).................. $274,559 $268,297
======== ========
Net yield on interest
earning assets......... 4.37% 4.53%
===== =====
</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
NINE MONTHS ENDED SEPTEMBER 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)................ $ (286) $ (5,644) $(5,930)
Construction and development.................... 2,890 (878) 2,012
Real estate--business........................... 1,485 (1,787) (302)
Real estate--personal........................... 2,472 705 3,177
Personal banking................................ 728 (414) 314
Credit card..................................... 10,148 (2,675) 7,473
------- -------- -------
Total loans................................... 17,437 (10,693) 6,744
------- -------- -------
Investment securities:
U.S. government & federal agency................ 2,245 (304) 1,941
State & municipal obligations (A)............... (127) 159 32
CMO's and asset-backed securities............... (3,964) 170 (3,794)
Trading account securities (A).................. 119 (74) 45
Other marketable securities (A)................. (1,259) 196 (1,063)
Other non-marketable securities................. 271 (7) 264
------- -------- -------
Total investment securities................... (2,715) 140 (2,575)
------- -------- -------
Federal funds sold and securities purchased under
agreements to resell............................ 14,243 (1,762) 12,481
------- -------- -------
Total interest income......................... 28,965 (12,315) 16,650
------- -------- -------
VARIANCE IN INTEREST EXPENSE ON:
Interest bearing deposits:
Savings......................................... (182) (373) (555)
Interest bearing demand......................... 14,311 (5,676) 8,635
Time open & C.D.'s of less than $100,000........ 1,060 2,790 3,850
Time open & C.D.'s of $100,000 and over......... 805 (179) 626
------- -------- -------
Total interest bearing deposits............... 15,994 (3,438) 12,556
------- -------- -------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase................. (416) (1,673) (2,089)
Long-term debt and other borrowings............. (101) 22 (79)
------- -------- -------
Total borrowings.............................. (517) (1,651) (2,168)
------- -------- -------
Total interest expense........................ 15,477 (5,089) 10,388
------- -------- -------
Change in net interest margin (T/E).............. $13,488 $ (7,226) $ 6,262
======= ======== =======
Percentage increase in net interest margin (T/E)
over the same period of the prior year.......... 2.33%
=======
</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>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND JUNE 30, 1996
<TABLE>
<CAPTION>
THIRD QUARTER 1996 SECOND 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).......... $1,669,718 $33,130 7.89% $1,686,451 $32,884 7.84%
Construction and
development........... 164,337 3,565 8.63 169,600 3,674 8.71
Real estate--business.. 723,412 15,607 8.58 702,606 15,107 8.65
Real estate--personal.. 985,396 19,152 7.73 990,822 19,287 7.83
Personal banking....... 1,243,795 26,934 8.61 1,253,783 27,076 8.69
Credit card............ 516,869 17,026 13.10 502,800 16,234 12.99
---------- ------- ----- ---------- ------- -----
Total loans.......... 5,303,527 115,414 8.66 5,306,062 114,262 8.66
---------- ------- ----- ---------- ------- -----
Investment securities:
U.S. government &
federal agency........ 1,796,376 27,663 6.13 1,789,272 27,311 6.14
State & municipal
obligations (A)....... 114,666 2,224 7.72 117,785 2,348 8.02
CMO's and asset-backed
securities............ 663,732 10,357 6.21 632,794 9,942 6.32
Trading account
securities (A)........ 3,624 7 .77 7,861 113 5.78
Other marketable
securities (A)........ 53,414 853 6.35 45,595 734 6.47
Other non-marketable
securities............ 38,773 580 5.95 33,940 173 2.05
---------- ------- ----- ---------- ------- -----
Total investment
securities.......... 2,670,585 41,684 6.21 2,627,247 40,621 6.22
---------- ------- ----- ---------- ------- -----
Federal funds sold and
securities purchased
under
agreements to resell... 385,594 5,246 5.41 453,629 6,064 5.38
---------- ------- ----- ---------- ------- -----
Total interest
earning assets...... 8,359,706 162,344 7.73 8,386,938 160,947 7.72
------- ----- ------- -----
Less allowance for loan
losses................. (98,197) (99,054)
Unrealized gain on
investment securities.. 350 14,220
Cash and due from banks. 623,676 615,730
Land, buildings and
equipment--net......... 208,241 208,242
Other assets............ 189,337 196,892
---------- ----------
Total assets......... $9,283,113 $9,322,968
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 296,312 1,792 2.41 $ 305,729 1,789 2.35
Interest bearing
demand................ 3,650,512 30,233 3.29 3,664,421 30,036 3.30
Time open & C.D.'s of
less than $100,000.... 2,174,378 29,411 5.38 2,213,390 29,682 5.39
Time open & C.D.'s of
$100,000 and over..... 220,355 2,848 5.14 234,170 2,984 5.13
---------- ------- ----- ---------- ------- -----
Total interest
bearing deposits.... 6,341,557 64,284 4.03 6,417,710 64,491 4.04
---------- ------- ----- ---------- ------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 424,679 5,102 4.78 429,469 5,067 4.75
Long-term debt and
other borrowings...... 15,059 271 7.16 14,470 263 7.32
---------- ------- ----- ---------- ------- -----
Total borrowings..... 439,738 5,373 4.86 443,939 5,330 4.83
---------- ------- ----- ---------- ------- -----
Total interest
bearing liabilities. 6,781,295 69,657 4.09% 6,861,649 69,821 4.09%
------- ----- ------- -----
Non-interest bearing
demand deposits........ 1,556,370 1,507,302
Other liabilities....... 65,481 71,369
Stockholders' equity.... 879,967 882,648
---------- ----------
Total liabilities and
equity.............. $9,283,113 $9,322,968
========== ==========
Net interest margin
(T/E).................. $92,687 $91,126
======= =======
Net yield on interest
earning assets......... 4.41% 4.37%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
16
<PAGE>
ANALYSIS OF VARIANCE IN NET INTEREST MARGIN (T/E) DUE TO VOLUMES AND RATES
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND JUNE 30, 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> <C>
VARIANCE IN INTEREST INCOME ON:
Loans:
Business (including foreign) (A).............. $(330) $ 576 $ 246
Construction and development.................. (115) 6 (109)
Real estate--business......................... 452 48 500
Real estate--personal......................... (107) (28) (135)
Personal banking.............................. (218) 76 (142)
Credit card................................... 459 333 792
----- ------ ------
Total loans................................. 141 1,011 1,152
----- ------ ------
Investment securities:
U.S. government & federal agency.............. 110 242 352
State & municipal obligations (A)............. (63) (61) (124)
CMO's and asset-backed securities............. 491 (76) 415
Trading account securities (A)................ (62) (44) (106)
Other marketable securities (A)............... 127 (8) 119
Other non-marketable securities............... 25 382 407
----- ------ ------
Total investment securities................. 628 435 1,063
----- ------ ------
Federal funds sold and securities purchased
under agreements to resell.................... (917) 99 (818)
----- ------ ------
Total interest income....................... (148) 1,545 1,397
----- ------ ------
VARIANCE IN INTEREST EXPENSE ON:
Interest bearing deposits:
Savings....................................... (56) 59 3
Interest bearing demand....................... 651 (454) 197
Time open & C.D.'s of less than $100,000...... (486) 215 (271)
Time open & C.D.'s of $100,000 and over....... (168) 32 (136)
----- ------ ------
Total interest bearing deposits............. (59) (148) (207)
----- ------ ------
Borrowings:
Federal funds purchased and securities sold
under agreements to repurchase............... (71) 106 35
Long-term debt and other borrowings........... 11 (3) 8
----- ------ ------
Total borrowings............................ (60) 103 43
----- ------ ------
Total interest expense...................... (119) (45) (164)
----- ------ ------
Change in net interest margin (T/E)............ $ (29) $1,590 $1,561
===== ====== ======
Percentage increase in net interest margin
(T/E) over the prior quarter.................. 1.71%
======
</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.
17
<PAGE>
AMENDED AND RESTATED
COMMERCE BANCSHARES, INC.
INCENTIVE STOCK OPTION PLAN
This Incentive Stock Option Plan (hereinafter the "Plan")
originally adopted by Commerce Bancshares, Inc. (hereinafter the
"Company") on the 7th day of February, 1986 is restated with all
amendments as of October 4, 1996.
SECTION I
DEFINITIONS
As used herein, the following definitions shall apply:
1.1 "Board" shall mean the Board of Directors of the
Company.
1.2 "Carryover Amount" shall mean one-half (1/2) of the
amount by which $100,000 exceeds the fair market value
(determined as of the date the Option is granted) of shares for
which an Employee was granted Options under the Plan in any
calendar year.
1.3 "Common Stock" shall mean the Common Stock, $5 Par
Value per share of the Company.
1.4 "Committee" shall mean the committee appointed by the
Board in accordance with Section IV of the Plan.
1.5 "Employee" shall mean officers and other key employees
employed by the Company, or any subsidiary of the Company which
now exists, is hereafter organized, or is acquired by the
Company.
1.6 "Option" shall mean a stock option granted pursuant to
the Plan.
1.7 "Optionee" shall mean any employee who is granted an
option under the Plan.
1.8 "Share" shall mean the common stock of the Company as
adjusted in accordance with Section VII of the Plan.
SECTION II
ELIGIBILITY
2.1 Options may be granted only to Employees.
2.2 No director while a member of the Committee shall be
eligible to receive an Option under the Plan.
<PAGE>
SECTION III
LIMITS ON OPTIONS AND SHARES
3.1 The total number of Shares for which Options may be
granted under this Plan shall not exceed 250,000 Shares, subject
to the provisions of Section VII. Such Shares may be authorized
but unissued or may be Treasury Shares.
3.2 If an Option should expire or terminate without having
been exercised in full, the Shares allocable to the unexercised
portion of such Option shall become available for other Options
under the Plan unless the Plan shall have been terminated.
3.3 The aggregate fair market value (determined as of the
date the Option is granted) of the Shares as to which an Employee
may be granted one (1) or more Options in any calendar year shall
not exceed $100,000 plus any unused Carryover Amount. Any unused
Carryover Amount may be carried forward for three (3) successive
years, but only to the extent the same has not been used in any
earlier calendar year. Options granted to an Employee in any
year
shall be applied first to the $100,000 limitation and then to
Carryover Amounts applied in the order of the calendar years in
which they arose.
3.4 No Option shall be granted under the Plan to an
Employee
who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company.
SECTION IV
ADMINISTRATION OF PLAN AND GRANTING OF OPTIONS
4.1 The Compensation Committee of the Board, which consists
of three (3) members of the Board, shall administer the Plan.
The
Board may from time to time remove members from or add members to
the Committee. Vacancies on the Committee, howsoever caused,
shall be filled by the Board.
4.2 The Committee shall hold meetings at such times and
places as it may determine and a majority of the Committee at
which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be
the valid acts of the Committee.
4.3 Subject to the provisions of the Plan, the Committee
shall have authority:
(a) To determine the Employees to whom and the time or
times
at which Options shall be granted and the number of
Shares to be represented by each Option;
(b) To interpret the Plan;
(c) To prescribe, amend, and rescind rules and regulations
relating to the Plan;
<PAGE>
(d) To authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant
of an Option granted by the Committee; and
(e) To make all other determinations deemed necessary or
advisable for the administration of the Plan.
4.4 The decisions, determinations, and interpretations of
the Committee shall be final and binding on all Optionees and any
other holders of any Option granted under the Plan. No member of
the Committee shall be liable for any action or determination
made
in good faith with respect to the Plan or any Option granted
under
the Plan.
SECTION V
TERMS OF STOCK OPTIONS
5.1 The Option price for Shares to be issued pursuant to
any
Option granted under the Plan shall be last sale price as
reported
by the Automated Quotation System of the National Association of
Securities Dealers on the date of the grant. In the event a sale
shall not have been effected on the date of the grant, the last
sale price first reported prior to the date of grant shall be
used.
5.2 The date of grant of an Option under the Plan shall,
for
all purposes, be the date on which the Committee makes a
determination granting such Option. Notice of the determination
shall be given to each Employee to whom an Option is so granted
within a reasonable time after the date of such grant.
5.3 The Committee shall fix the term or duration of all
Options under this Plan provided that no term shall exceed five
(5) years after the date on which the Option was granted. Options
granted under the Plan shall not be transferable other than by
will or the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by the Optionee.
5.4 In the event that an Optionee should cease to be
employed by the Company for any reason other than death or
permanent disability, the Optionee shall have the right to
exercise the Option to the extent the Option was then exercisable
at any time within three (3) months after termination of
employment; provided, however, if an Optionee's employment is
terminated voluntarily by the Optionee or is terminated because
of the Optionee's dishonesty, theft, embezzlement from the
Company, willful violation of any rules of the Company pertaining
to the conduct of Employees or the commission of a willful
felonious act while an Employee, then any Option or unexercised
portion thereof granted to said Optionee shall expire upon
termination of employment.
5.5 If an Optionee shall die while an Employee and shall
not have fully exercised the Option, an Option may be exercised
to the extent that the Optionee's right to exercise such Option
had accrued at the time of his death and had not previously been
exercised, at any time within one (1) year after the Optionee's
death by the executors or administrators of the Optionee or by
any person or persons who shall have acquired the Option directly
from the Optionee by bequest or inheritance.
<PAGE>
5.6 If an Optionee shall cease to be an Employee by reason
of a permanent disability (as determined by the Optionee
officially establishing his eligibility to receive Social
Security
disability benefits), an Option may be exercised to the extent
that the Optionee's right to exercise such Option had accrued
immediately prior to said disability, and had not previously been
exercised, at any time within one (1) year from the date such
Optionee ceased being an Employee.
5.7 No Option granted under the Plan shall be exercisable
while there is outstanding any other Option granted to the
Optionee at an earlier date. For this purpose, an Option which
has not been exercised in full is outstanding until the
expiration of the period which under its initial terms could have
been exercised. The cancellation of an earlier Option will not
enable a subsequent Option to be exercised any sooner.
SECTION VI
EXERCISE OF OPTION
6.1 An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to
exercise the Option and full payment of the shares with respect
to
which the Option is exercised has been received by the Company.
Until the issuance of the stock certificates, no right to vote or
receive dividends or any other rights as a shareholder shall
exist
with respect to the Shares with respect to which the Option has
been exercised. No adjustment will be made for a dividend or
other rights for which a record date is established prior to the
date the stock certificates are issued, except as provided in
Section VII of the Plan.
SECTION VII
REORGANIZATION OF THE COMPANY
7.1 In the event of any stock dividend, stock split,
combination of shares, or other change in the capitalization of
the Company, appropriate adjustment shall be made in the number
and kind of shares as to which Options may be granted and as to
which Options or portions thereof then outstanding and
unexercised
shall be exercisable and in the Option price thereof.
7.2 Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, Options
outstanding
as of the date of such Change in Control and not then exercisable
and vested shall become fully exercisable and vested.
For purposes of the Plan, a "Change in Control" shall mean
the happening of any of the following events:
(a) any Person is or becomes the "beneficial owner" (within
the meaning of Rule 13d-3 promulgated under Section 13
of the Securities Exchange Act of 1934 (the "Exchange
Act")), directly or indirectly, of securities of the
Company (not including in the securities beneficially
owned by such Person any securities acquired directly
from the Company or its affiliates other than in
connection with the acquisition by the Company or its
affiliates of a business) representing 20%
<PAGE>
or more of either the then outstanding shares of common
stock of the Company or the combined voting power of
the
Company's then outstanding securities; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on August 2, 1996,
constitute
the Board and any new director (other than a director
whose initial assumption of office is in connection
with
an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment
or election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in
office who either were directors on August 2, 1996 or
whose appointment, election or nomination for election
was previously so approved; or
(c) there is consummated a merger or consolidation of the
Company (or any direct or indirect subsidiary of the
Company) with any other corporation, other than (i) a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior to such merger or consolidation
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity or any parent
thereof), in combination with the ownership of
any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, at least 80%
of the combined voting power of the voting securities
of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
becomes the beneficial owner, directly or indirectly,
of securities of the Company (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Company or its
subsidiaries other than in connection with the
acquisition by the Company or its subsidiaries of a
business) representing 20% or more of either the then
outstanding shares of common stock of the Company or
the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated a sale or disposition by the
Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to
an entity, at least 80% of the combined voting power of
the voting securities of which are owned by Persons in
substantially the same proportions as their ownership
of the Company immediately prior to such sale.
For purposes of the above definition of Change in Control,
"Person" shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
<PAGE>
the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
SECTION VIII
AMENDMENT AND TERMINATION OF PLAN
8.1 The Board may amend the Plan from time to time as it
deems desirable and shall make any amendments which may be
required so that Options intended to be incentive stock options
shall at all times continue to be incentive stock options for
purposes of the Internal Revenue Code of 1954, as amended.
8.2 This Plan shall terminate on February 1, 1996, provided
that the Board may in its discretion terminate this Plan at any
time prior thereto.
8.3 Any amendment to or the termination of the Plan shall
not
affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or
terminated.
8.4 This Plan is effective on February 7, 1986, and Options
hereunder may be granted at any time subject to the terms of the
Plan on and after that date. No Option may be exercised unless
this Plan is approved by a vote of the holders of a majority of
the outstanding shares at a meeting of shareholders of the
Company
held within twelve (12) months following the effective date.
8.5 This Plan shall be interpreted and construed in
accordance with the laws of the State of Missouri.
<PAGE>
COMMERCE BANCSHARES, INC.
1987 NON-QUALIFIED STOCK OPTION PLAN
AMENDED AND RESTATED AS OF OCTOBER 4, 1996
Commerce Bancshares, Inc. (the "Company"), hereby
establishes this Non-Qualified Stock Option Plan, (the "Plan"),
for key employees of the Company and its subsidiaries. The Plan
is designed to meet the criteria of performance-based
compensation under Section 162 of the Internal Revenue Code, as
amended.
1. PURPOSE. The purpose of the Plan is to aid the Company and
its subsidiaries in obtaining and retaining qualified and
competent management personnel and to encourage significant
contributions by such personnel to the success of the
Company and its subsidiaries by providing additional,
long-term incentive to those employees who contribute
conspicuously to the successful and profitable operations of
the Company and its subsidiaries. It is believed that this
purpose will be furthered through the granting to key
employees of options to purchase shares of the common stock
of the Company ("options"), as provided herein, so that such
employees ("optionees") will be encouraged and enabled to
acquire a larger personal interest in the continued success
of the Company and its subsidiaries, thereby providing
additional incentive to such employees to operate the
Company and its subsidiaries in a manner to benefit all
shareholders.
2. ADMINISTRATION.
(a) GRANTS OF OPTIONS. All grants of options shall be made
by the Compensation and Benefits Committee (the
"Committee") of the Board of Directors of the Company
(the "Board of Directors"). The Board of Directors may
from time to time remove from or add members to the
Committee. The Committee shall consist solely of two
or more directors who are both (a) "non-employee
directors" under Rule 16b-3(b)(3) promulgated under the
Securities Exchange Act of 1934, as amended, or any
successor provision thereto and (b) "outside directors"
under Section 162(m) of the Internal Revenue Code of
1986, as amended, or any successor provision thereto.
(b) GENERAL ADMINISTRATION. The Committee shall have full
power and authority to administer and interpret the
Plan, subject to the provisions of the Plan and as to
such matters as are reserved under the Plan to the
Board of Directors. Any interpretation of the Plan or
other act of the Committee in administering the Plan
shall be final and binding on all employees. The
Committee may adopt such procedures as it deems
necessary or helpful in administering the Plan. No
member of the Committee shall be liable for action or
determination made in good faith with respect to the
Plan or any option granted under the Plan.
<PAGE>
3. ELIGIBILITY. Officers and other key employees of the
Company and its subsidiaries who are making, and who are
expected to continue to make, substantial contributions to
the success of the Company and its subsidiaries shall be
eligible to receive grants of options. An option may not be
granted to a member of the Board of Directors who is not
also an employee of the Company or a subsidiary.
4. SHARES SUBJECT TO THE PLAN. Not more than 1,500,000 shares
of the common stock, $5 par value, of the Company (the
"Common Stock") shall be issuable in respect of options
granted under the Plan. Shares reserved under the Plan
shall be appropriately adjusted as provided in Section 7 in
the event of a change in the corporate structure or the
shares of Common Stock of the Company. Shares subject to
option under the Plan may be either authorized and unissued
shares or issued shares which are reacquired by the Company
and held in its treasury. Shares of common stock subject to
an option shall, upon the expiration or termination of such
option, to the extent unexercised, again be available for
grant under the Plan.
5. GRANTS TO EMPLOYEES. Options may be granted to eligible
employees with respect to such number of shares of common
stock and at such times during the term of this Plan as the
Committee shall determine; provided, however, that not more
than .5 percent of the outstanding shares of Common Stock as
of the preceding December 31 may be awarded in any one year
to any one person. The granting of options pursuant to the
Plan shall occur when the Committee by resolution, written
consent or other appropriate action determines to grant such
option to a particular employee. An optionee may be granted
additional options under the Plan without regard to whether
any option previously granted to such optionee has been
exercised in whole or in part.
6. TERMS AND CONDITIONS OF OPTIONS. Each option shall be
evidenced by a written grant (the "option grant") in a form
approved by the Committee, to be duly executed and delivered
by or on behalf of the Company to the optionee. The option
grant shall contain provisions not inconsistent with the
following:
(a) PRICE. The purchase price per share of common stock
deliverable upon the exercise of an option shall be the
last sale price as reported by the Automated Quotation
System of the National Association of Securities
Dealers on the date the option is granted. In the
event a sale shall not have been effected on the date
of the grant, the last sale price first reported prior
to the date of grant shall be the purchase price per
share.
(b) NUMBER OF SHARES. The option grant shall specify the
number of shares of common stock to which it pertains.
(c) WAITING PERIOD AND DURATION OF OPTIONS. Options shall
be exercisable at such times and under such conditions
as may be set forth in the option grant but in no event
shall any option be exercised subsequent to the tenth
annual anniversary of such date.
<PAGE>
(d) EXERCISE OF OPTIONS. To the extent that the right to
purchase shares has accrued under the option grant,
options may be exercised by written notice to the
Company. Such notice shall be in such form and
directed to such person as the Committee shall
determine. An option may be exercised without regard
to whether any option previously granted to the same
optionee has been exercised in whole or in part.
(e) PAYMENT AND DELIVERY. Shares of common stock
purchased pursuant to an option grant shall be paid for
in full at the time of exercise, either (i) in cash
(including check, bank draft or money order), (ii) by
delivering common stock of the Company (including stock
acquired in a "cashless exercise"), or (iii) a
combination of common stock and cash. The fair market
value of the common stock so delivered shall be the
last sale price as reported by the Automated Quotation
System of the National Association of Securities
Dealers on the date of exercise. No shares shall be
issued or delivered until full payment therefor has
been made.
(f) NON-TRANSFERABILITY. The Committee may make and
include in the option grant such provisions regarding
the transferability of options as it shall in its
discretion determine.
(g) PRIOR TO EXERCISE. An optionee shall have none of the
rights of a stockholder with respect to shares subject
to the option until such shares of common stock have
been purchased by the optionee.
(h) ADJUSTMENTS FOR STOCK SPLITS, ETC. The number of
shares of common stock subject to an option and the
option price shall be appropriately adjusted as
provided in Section 7 in the event of a change in the
corporation structure or shares of the Company.
(i) INVESTMENT PURPOSE. The Committee may require any
optionee to furnish to the Company at the time of any
exercise of the option a written representation (in
form satisfactory to the Committee) that he is
acquiring the shares resulting from such exercise with
the intention of holding the same for investment and
not for public distribution.
(j) CONTINUED EMPLOYMENT. Nothing contained in the Plan,
or in any option granted pursuant to the Plan, shall
confer upon any optionee any right with respect to
continuance of employment by the Company, or a
subsidiary of the Company, or interfere in any way with
the right of the Company, or a subsidiary of the
Company, to terminate the optionee's employment at any
time, with or without cause.
(k) EMPLOYMENT STATUS AT EXERCISE. Except as provided in
Section 6(1), no option may be exercised unless the
optionee is in the employ of the Company, or a
subsidiary of the Company, at the time of such
exercise. The Committee may make such provision as it
deems appropriate with respect to optionees on leave of
absence.
<PAGE>
(l) TERMINATION OF EMPLOYMENT. Each option shall be
subject to the following provisions in the case of the
termination of the optionee's employment the term of
the option:
(i) RETIREMENT. If an optionee shall cease to be
employed by the Company, or a subsidiary of
the Company, by reason of retirement pursuant
to a pension or retirement plan of the
Company, or of a subsidiary of the Company,
the optionee may within a period of not more
than thirty-six (36) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period),
exercise any and all of the optionee's
options with respect to all or any part of
the shares as to which such options remain
unexercised.
(ii) DISABILITY. If an optionee shall cease to be
employed by the Company, or a subsidiary of
the Company, by reason of permanent
disability as determined by the optionee
establishing the optionee's eligibility to
receive Social Security disability benefits,
the optionee may within a period of not more
than thirty-six (36) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period),
exercise the optionee's option with respect
to all or any part of the shares as to which
such option remains unexercised.
(iii) DEATH OF OPTIONEE. In the event of the death
of an optionee while in the employ of the
Company, or a subsidiary of the Company, or
within twelve (12) months after the date of
termination of such employment under "(i)
Retirement," or under "(ii) Disability," any
option granted to the optionee shall be
exercisable with respect to all or any part
of the shares as to which such option remains
unexercised by the optionee's legal
representative or other person or persons to
whom the optionee's rights under the option
shall pass by the optionee's will or the laws
of descent and distribution, but only before
the expiration of the option period or of the
twelve (12) month period next succeeding the
optionee's termination of employment,
whichever first occurs.
(iv) OTHER REASONS. If an optionee shall cease to
be employed by the Company, or a subsidiary
of the Company, for any reason other than
those provided above under "(i) Retirement,"
"(ii) Disability," or "(iii) Death of
Optionee," the optionee (or, in the event of
the optionee's death, such optionee's legal
representative) may within a period of not
more than three (3) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period)
exercise the optionee's option if and to the
extent it was exercisable at the date of such
cessation of employment. Notwithstanding the
foregoing, if an optionee's employment is
terminated voluntarily by the optionee or is
terminated due to the optionee's theft,
embezzlement, willful violation of any rules
of the Company pertaining to the conduct of
employees
<PAGE>
or the commission of a willful felonious act
while an employee, then any option or
unexercised portion thereof granted to the
optionee shall immediately expire upon
termination of employment.
(m) WITHHOLDING FOR TAXES. At the time of exercise of an
option granted under this Plan, the optionee shall
provide for the payment to the Company of federal,
state, local and payroll withholding taxes attributable
to such exercise. The optionee shall advise the
Company at the time of exercise of the amount of
desired withholding but such withholding may not be
less than the minimum required by law, which minimum
amount shall be withheld in the absence of other
instruction from the optionee. The optionee may direct
the Company to withhold from the exercise of the option
that number of whole shares of common stock as shall
equal in value the nearest whole share equivalent of
the indicated tax withholding requirement. Stock to be
used for withholding shall be valued at the last sale
price as reported by the Automated Quotation System of
the National Association of Securities Dealers on the
date of exercise. To the extent the withholding amount
is not satisfied in stock, the optionee shall satisfy
the remaining amount to be withheld by remitting such
amount in cash to the Company.
7.1. CHANGE IN STOCK, ADJUSTMENTS, ETC. If the shares of common
stock of the Company shall be changed into or exchanged for
a different number or kind of shares of stock or other
securities of the Company or of another corporation (whether
by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares, or
otherwise), or if the number of such shares of common stock
shall be increased through the payment of a stock dividend
or stock split, there shall be substituted for or added to
each share of common stock of the Company theretofore
reserved for the purposes of the Plan, whether or not such
shares are at the time subjects to outstanding options, the
number and kind of shares of stock or other securities into
which each outstanding share of common stock of the Company
shall be so changed or for which it shall be so exchanged,
or to which each such share shall be entitled, as the case
may be. Outstanding options shall also be considered to be
appropriately amended as to price and other terms as may be
necessary or appropriate to reflect the foregoing events.
If there shall be any other change in the number or kind of
the outstanding shares of common stock of the Company, or of
any stock or other securities into which such common stock
shall have been changed, or for which it shall have been
exchanged, then if the Board of Directors shall in its sole
discretion determine that such change equitably requires an
adjustment in the number or kind or option price of the
shares then reserved for the purposes of the Plan, or in any
option theretofore granted or which may be granted under the
Plan, such adjustment shall be made by the Board of
Directors and shall be effective and binding for all
purposes of the Plan. In making any such substitution or
adjustment, pursuant to this Section 7.1, fractional shares
shall be ignored.
7.2 Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, Options
outstanding as of the date of such Change in Control and not
then exercisable and vested shall become fully exercisable
and vested.
<PAGE>
For purposes of the Plan, a "Change in Control" shall mean
the happening of any of the following events:
(a) any Person is or becomes the "beneficial owner" (within
the meaning of Rule 13d-3 promulgated under Section 13
of the Securities Exchange Act of 1934 (the "Exchange
Act")), directly or indirectly, of securities of the
Company (not including in the securities beneficially
owned by such Person any securities acquired directly
from the Company or its affiliates other than in
connection with the acquisition by the Company or its
affiliates of a business) representing 20% or more of
either the then outstanding shares of common stock of
the Company or the combined voting power of the
Company's then outstanding securities; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on August 2, 1996,
constitute the Board and any new director (other than a
director whose initial assumption of office is in
connection with an actual or threatened election
contest, including but not limited to a consent
solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board
or nomination for election by the Company's
stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office
who either were directors on August 2, 1996 or whose
appointment, election or nomination for election was
previously so approved; or
(c) there is consummated a merger or consolidation of the
Company (or any direct or indirect subsidiary of the
Company) with any other corporation, other than (i) a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior to such merger or consolidation
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity or any parent
thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 80% of
the combined voting power of the voting securities of
the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
becomes the beneficial owner, directly or indirectly,
of securities of the Company (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Company or its
subsidiaries other than in connection with the
acquisition by the Company or its subsidiaries of a
business) representing 20% or more of either the then
outstanding shares of common stock of the Company or
the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or
there is consummated a sale or disposition by the
<PAGE>
Company of all or substantially all of the Company's
assets, other than a sale or disposition by the
Company of all or substantially all of the Company's
assets to an entity, at least 80% of the combined
voting power of the voting securities of which are
owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to
such sale.
For purposes of the above definition of Change in Control,
"Person" shall have the meaning set forth in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d)
and 14(d) thereof, except that such term shall not include
(i) the Company or any of its subsidiaries, (ii) a trustee
or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries,
(iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of stock of the Company.
8. DURATION; AMENDMENT; TERMINATION. The Plan shall be
effective if approved by the holders of a majority of the
outstanding shares of the Company present or represented and
voting thereon at the Annual Meeting of the Stockholders of
the Company scheduled for April 19, 1995, or at any
adjournment thereof and, if approved, shall continue until
December 31, 2005, unless terminated before that time by the
Board of Directors. Options shall not be awarded or
granted after the end of such period or the earlier
termination of the Plan, but options theretofore granted
shall continue after that date unless terminated in
accordance with the terms of the Plan. The Board of
Directors may at any time terminate the Plan, and may from
time to time alter or amend the Plan or any part thereof
provided that, except as permitted by Sections 6 and 7, no
amendment shall (a) increase the total number of shares of
common stock issuable upon the exercise of options granted
under the Plan, (b) reduce the minimum option price, or (c)
impair any outstanding option.
9. CONSTRUCTION. The Plan shall be interpreted and construed
in accordance with the laws of the State of Missouri.
<PAGE>
AMENDED AND RESTATED
COMMERCE BANCSHARES, INC.
1996 INCENTIVE STOCK OPTION PLAN
This 1996 INCENTIVE STOCK OPTION PLAN (hereinafter the
"Plan") originally adopted by Commerce Bancshares, Inc.
(hereinafter the "Company") on the 3rd day of February, 1995, and
designed to provide incentive stock options within the meaning of
Section 422 and meet the criteria of performance-based
compensation under Section 162 of the Internal Revenue Code, is
hereby restated with all amendments as of October 4, 1996.
SECTION I
DEFINITIONS
As used herein, the following definitions shall apply:
1.1 "Board" shall mean the Board of Directors of the
Company.
1.2 "Common Stock" shall mean the Common Stock, $5 Par
Value per share, of the Company.
1.3 "Committee" shall mean the Compensation and Benefits
Committee appointed by the Board in accordance with Section IV of
the Plan.
1.4 "Employee" shall mean officers and other key employees
employed by the Company, or any subsidiary of the Company which
now exists, is hereafter organized, or is acquired by the
Company.
1.5 "Option" shall mean an incentive stock option granted
pursuant to the Plan.
1.6 "Optionee" shall mean any employee who is granted an
option under the Plan.
1.7 "Share" shall mean the common stock of the Company as
adjusted in accordance with Section VIII of the Plan.
SECTION II
PURPOSE
2.1 The Plan is designed to encourage officers and other
key employees to acquire a proprietary interest in the Company,
thereby aligning their interests with those of the shareholders.
It is also seeks to encourage their continued employment with the
Company and to render outstanding performance during such
employment by providing additional, long-term incentive to such
employees.
<PAGE>
SECTION III
ELIGIBILITY
3.1 Options may be granted only to Employees.
3.2 No director, other than a director who is also an
Employee, shall be eligible to receive an Option under the Plan.
SECTION IV
LIMITS ON OPTIONS AND SHARES
4.1 The total number of Shares for which Options may be
granted under this Plan shall not exceed 2,000,000 Shares,
subject to the provisions of Section VIII. Such Shares may be
authorized but unissued or may be Treasury Shares.
4.2 If an Option should expire or terminate without having
been exercised in full, the Shares allocable to the unexercised
portion of such Option shall become available for other Options
under the Plan unless the Plan shall have been terminated.
4.3 No option shall be granted under the Plan to an
Employee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company.
SECTION V
ADMINISTRATION OF PLAN AND GRANTING OF OPTIONS
5.1 The Plan shall be administered by the Compensation and
Benefits Committee of the Board, which shall consist solely of
two or more directors who are both (a) "non-employee directors"
under Rule 16b-3(b)(3) promulgated under the Securities Exchange
Act of 1934, as amended, or any successor provision thereto and
(b) "outside directors" under Section 162(m) of the Internal
Revenue Code of 1986, as amended, or any successor provision
thereto. The Board may from time to time remove members from or
add members to the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board.
5.2 The Committee shall hold meetings at such times and
places as it may determine and a majority of the Committee at
which a quorum is present, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be
the valid acts of the Committee.
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5.3 Subject to the provisions of the Plan, the Committee
shall have authority:
(a) To determine the Employees to whom and the time or
times at which Options shall be granted and the number of
Shares to be represented by each Option;
(b) To interpret the Plan;
(c) To prescribe, amend, and rescind rules and
regulations relating to the Plan;
(d) To authorize any person to execute on behalf of
the Company any instrument required to effect the grant of
an Option granted by the Committee; and
(e) To make all other determinations deemed necessary
or advisable for the administration of the Plan.
5.4 The decisions, determinations, and interpretations of
the Committee shall be final and binding on all Optionees and any
other holders of any Option granted under the Plan. No member of
the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any option granted
under the Plan.
SECTION VI
TERMS OF STOCK OPTIONS
6.1 The Option price for Shares to be issued pursuant to
any Option granted under the Plan shall be the last sale price as
reported by the Automated Quotation System of the National
Association of Securities Dealers on the date of the grant. In
the event a sale shall not have been effected on the date of the
grant, the last sale price first reported prior to the date of
grant shall be used.
6.2 The date of grant of an Option under the Plan shall,
for all purposes, be the date on which the Committee makes a
determination granting such Option. Notice of the determination
shall be given to each Employee to whom an Option is so granted
within a reasonable time after the date of such grant.
6.3 The Committee shall fix the term or duration of all
Options under this Plan provided that no term shall exceed ten
(10) years after the date on which the Option was granted.
Options granted under the Plan shall not be transferable other
than by will or the laws of descent and distribution and shall be
exercisable during the Optionee's lifetime only by the Optionee.
6.4 In the event that an Optionee should cease to be
employed by the Company for any reason other than death or
permanent disability, the Optionee shall have the right to
exercise the Option to the extent the Option was then exercisable
at any time within three (3) months after the termination of
employment; provided, however, if an Optionee's employment is
terminated voluntarily by the Optionee or is terminated because
of the Optionee's dishonesty, theft,
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embezzlement from the Company, willful violation of any rules of
the Company pertaining to the conduct of Employees or the
commission of a willful felonious act while an Employee, then any
Option or unexercised portion thereof granted to said Optionee
shall expire upon termination of employment.
6.5 If an Optionee shall die while an Employee and shall
not have fully exercised the Option, an Option may be exercised
to the extent that the Optionee's right to exercise such Option
had accrued at the time of his death and had not previously been
exercised, at any time within one (1) year after the Optionee's
death by the executors or administrators of the Optionee or by
any person or persons who shall have acquired the Option directly
from the Optionee by bequest or inheritance.
6.6 If an Optionee shall cease to be an Employee by reason
of a permanent disability (as determined by the Optionee
officially establishing his eligibility to receive Social
Security disability benefits), an Option may be exercised to the
extent that the Optionee's right to exercise such Option had
accrued immediately prior to said disability, and had not
previously been exercised, at any time within one (1) year from
the date such Optionee ceased being an Employee.
6.7 The fair market value of Common Stock for which any
Option may be granted in any calendar year under the Plan shall
be in such amount as the Committee shall determine; provided,
however, that the aggregate fair market value of Common Stock for
which Options granted under the Plan (or any other incentive
stock option plan of the Company or any subsidiary) are first
exercisable in any one calendar year by an Optionee may not
exceed $100,000 (determined as of the date of grant).
SECTION VII
EXERCISE OF OPTION
7.1 An Option shall be deemed to be exercised when written
notice of such exercise has been received by the Company in
accordance with the terms of the Option by the person entitled to
exercise the Option, and full payment for the Shares with respect
to which the Option is exercised has been received by the
Company. Payment may be made (i) in cash, (ii) by delivering
Common Stock of the Company already owned by the Optionee, or
(iii) a combination of cash and Common Stock. Until the issuance
of the stock certificates, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to
the Shares as to which the Option has been exercised. No
adjustment will be made for a dividend or other rights for which
a record date is established prior to the date the stock
certificates are issued, except as provided in Section VIII of
the Plan.
SECTION VIII
REORGANIZATION OF THE COMPANY
8.1 If the shares of common stock of the Company shall be
changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
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corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of
shares, or otherwise), or if the number of such shares of common
stock shall be increased through the payment of a stock dividend
or stock split, there shall be substituted for or added to each
share of common stock of the Company theretofore reserved for the
purposes of the Plan, whether or not such shares are at the time
subjects to outstanding options, the number and kind of shares of
stock or other securities into which each outstanding share of
common stock of the Company shall be so changed or for which it
shall be so exchanged, or to which each such share shall be
entitled, as the case may be. Outstanding options shall also be
considered to be appropriately amended as to price and other
terms as may be necessary or appropriate to reflect the foregoing
events. If there shall be any other change in the number or kind
of the outstanding shares of common stock of the Company, or of
any stock or other securities into which such common stock shall
have been changed, or for which it shall have been exchanged,
then if the Board of Directors shall in its sole discretion
determine that such change equitably requires an adjustment in
the number or kind or option price of the shares then reserved
for the purposes of the Plan, or in any option theretofore
granted or which may be granted under the Plan, such adjustment
shall be made by the Board of Directors and shall be effective
and binding for all purposes of the Plan. In making any such
substitution or adjustment, pursuant to this Section 8.1,
fractional shares shall be ignored.
8.2 Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control, Options
outstanding as of the date of such Change in Control and not then
exercisable and vested shall become fully exercisable and vested.
For purposes of the Plan, a "Change in Control" shall mean
the happening of any of the following events:
(a) any Person is or becomes the "beneficial owner"
(within the meaning of Rule 13d-3 promulgated under Section
13 of the Securities Exchange Act of 1934 (the "Exchange
Act")), directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or
its affiliates other than in connection with the acquisition
by the Company or its affiliates of a business) representing
20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the
Company's then outstanding securities; or
(b) the following individuals cease for any reason to
constitute a majority of the number of directors then
serving: individuals who, on August 2, 1996, constitute the
Board and any new director (other than a director whose
initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to
a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were
directors on August 2, 1996 or whose appointment, election
or nomination for election was previously so approved; or
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(c) there is consummated a merger or consolidation of
the Company (or any direct or indirect subsidiary of the
Company) with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities
of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof),
in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan
of the Company, at least 80% of the combined voting power of
the voting securities of the Company or such surviving
entity or any parent thereof outstanding immediately after
such merger or consolidation, or (ii) a merger or
consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is
or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired
directly from the Company or its subsidiaries other than in
connection with the acquisition by the Company or its
subsidiaries of a business) representing 20% or more of
either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then
outstanding securities; or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there
is consummated a sale or disposition by the Company of all
or substantially all of the Company's assets, other than a
sale or disposition by the Company of all or substantially
all of the Company's assets to an entity, at least 80% of
the combined voting power of the voting securities of which
are owned by Persons in substantially the same proportions
as their ownership of the Company immediately prior to such
sale.
For purposes of the above definition of Change in Control,
"Person" shall have the meaning set forth in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) the
Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
SECTION IX
AMENDMENT AND TERMINATION OF PLAN
9.1 The Board may amend the Plan from time to time as it
deems desirable and shall make any amendments which may be
required so that Options intended to be incentive stock options
shall at all times continue to be incentive stock options for
purposes of the Internal Revenue Code.
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9.2 This Plan shall terminate on December 31, 2005,
provided that the Board may in its discretion terminate this Plan
at any time prior thereto.
9.3 Any amendment to or the termination of the Plan shall
not affect Options already granted and such Options shall remain
in full force and effect as if this Plan had not been amended or
terminated.
9.4 This Plan is effective on January 1, 1996, and Options
hereunder may be granted thereafter, subject to the terms of the
Plan, provided this Plan is approved by a vote of the holders of
a majority of the outstanding shares of the Company at a meeting
of shareholders of the Company held within twelve (12) months
following the adoption date.
9.5 This Plan shall be interpreted and construed in
accordance with the laws of the State of Missouri.
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AMENDED AND RESTATED
COMMERCE BANCSHARES, INC.
RESTRICTED STOCK PLAN
This Restricted Stock Plan originally adopted by Commerce
Bancshares, Inc. on the 4th day of October, 1991 is restated with
all amendments as of October 4, 1996.
1. DEFINITIONS.
a. "Company" shall mean Commerce Bancshares, Inc., a
Missouri corporation.
b. "Common Stock" shall mean shares of the Company's
$5 par value common stock.
c. "Subsidiary" shall mean any corporation in which the
Company owns or hereafter owns, directly or indirectly,
stock possessing not less than 50% of the total
combined voting power of all classes of stock in such
corporation.
d. "Restricted Stock Awards" or "Awards" shall mean Awards
of Common Stock granted pursuant to the Plan.
e. "Plan" means the Commerce Bancshares, Inc. Restricted
Stock Plan as described herein.
f. "Committee" means the Compensation and Benefits
Committee of the Board of Directors of the Company,
which shall consist solely of two or more directors who
are "non-employee directors" under Rule 16b-3(b)(3)
promulgated under the Securities Exchange Act of 1934,
as amended, or any successor provision thereto.
g. "Participant" means individual to whom an award is
granted.
h. "Restriction Period" means the duration of time over
which a Restricted Stock Award is to vest as determined
by the Committee.
2. PURPOSE.
The purpose of the Plan is to promote the interests of the
Company and its shareholders by providing a means through the
grant of Awards hereunder for the Company to retain and attract
personnel who contribute to the growth and development of the
Company and its Subsidiaries by providing additional incentive to
such personnel by offering a greater interest in the continued
success of the Company through increased stock ownership.
3. STOCK SUBJECT TO PLAN.
Subject to the provisions of Section 7 hereof, the total
number of shares of Common Stock subject to Restricted Stock
Awards under the Plan shall not exceed 100,000 shares. Shares
subject to Awards under the Plan may be either authorized and
unissued shares or issued shares which are reacquired by the
Company and held in its treasury. Shares which have been awarded
but which have been forfeited pursuant to Section 6(d) hereof
shall be added to the shares otherwise available for Awards under
the Plan.
<PAGE>
4. ADMINISTRATION.
The Plan shall be administered by the Committee which shall
have full authority in its sole discretion to determine the
employees of the Company and its Subsidiaries to whom Awards
shall be granted, the number of shares subject to each such
Award, the time or times at which restrictions relative to such
Awards shall otherwise lapse or expire and the time or times when
Awards may be granted. All questions of interpretation and
application of the Plan and of any Awards granted pursuant hereto
shall be determined by the Committee. No member of the Committee
shall be liable for any action, determination or interpretation
under any provision of the Plan or otherwise if done in good
faith and any decision made or action taken by the Committee
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be
within the absolute discretion of the Committee and shall be
conclusive and binding upon all persons.
5. ELIGIBILITY.
The Committee may select from among the officers, executives
and management personnel of the Company or its Subsidiaries those
individuals to whom an Award shall be granted, giving
consideration to the duties of the respective employees, their
contributions to the Company and its Subsidiaries, and such other
factors as the Committee shall deem relevant to accomplish the
purpose of this Plan. No member of the Committee and no member
of the Board of Directors of the Company, unless such director is
also an officer or employee of the Company or any Subsidiary,
shall be eligible to receive any Restricted Stock Award under
this Plan.
6. GRANT OF RESTRICTED STOCK AWARDS.
Each Restricted Stock Award shall be evidenced by one or
more stock certificates registered in the name of the Participant
and an agreement to be entered into by the Participant and the
Company, the terms and conditions of which may include but are
not limited to the following:
a. NUMBER OF SHARES: The agreement shall state the total
number of shares of Common Stock to which it pertains.
b. RESTRICTION PERIOD: The Restriction Period for any
Award granted under the Plan shall be determined by the
Committee and shall have a duration of not more than
ten years from the date the Award is granted. An Award
is considered to be vested when the restriction period
lapses. Upon vesting, the certificate representing
such Award shall be delivered to the Participant
together with stock power. Restricted Stock Awards may
have different Restriction Periods and an Award may
provide varying Restriction Periods so as to permit the
vesting of an Award in installments in the discretion
of the Committee.
c. TRANSFER RESTRICTIONS: A Participant shall be required
to deposit the certificate or certificates for all
shares of Common Stock received pursuant to an Award
together with stock powers or other instruments of
transfer appropriately endorsed in blank with the
Secretary of the Company. Such shares shall not be
sold, exchanged, assigned, transferred, discounted,
pledged or otherwise disposed of during the Restriction
Period. The shares shall be released from the
restrictions described herein, in whole or in
installments, at such date or dates as may be
determined by the Committee at the time of the Award,
and a Participant's right to have an Award released
from the transfer restrictions shall accrue only if the
Participant shall have remained in the continuous
employment of the Company since the date of the Award.
d. TERMINATION OF EMPLOYMENT: In the event that a
Participant's employment terminates by reason of death
or the disability (as determined by the Participant
establishing his eligibility to receive Social Security
disability benefits) of the Participant, the
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Restriction Period shall be deemed to lapse as of the
date of death or disability on that part of the Award
which equals the portion of the Restricted Period,
measured in full and partial months, completed before
the date of death or disability, and the shares of
Common Stock constituting such portion of the Award
shall be distributed pursuant to subsection (h) hereof
in the event of the Participant's death or to the
Participant in the event of disability. The Committee
shall in its sole discretion determine any effect of
approved leaves of absence and all other matters
relating to "continuous employment," and any such
determination shall be final and conclusive.
Employment by the Company shall be deemed to include
employment by and to continue during any period in
which a Participant is in the employment of a
Subsidiary.
e. ASSIGNABILITY: Except as provided in subsection (h) of
this Section, no benefit payable under or interest in
the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge and any such attempted
action shall be void and no such benefit or interest
shall be in any manner liable for or subject to debts,
contracts, liabilities, engagements, or torts of any
Participant or beneficiary.
f. RIGHTS AS A STOCKHOLDER: The Participant shall have
the right to receive cash dividends during the
Restriction Period, to vote Common Stock subject to an
Award and to enjoy all other stockholder rights except
that (i) the Participant shall not be entitled to
delivery of the stock certificate until the Restriction
Period shall have lapsed and (ii) the Participant may
not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of the Stock during the Restriction
Period.
g. CHANGE IN CONTROL: Notwithstanding any other provision
of the Plan to the contrary, in the event of a Change
in Control the restrictions applicable to any
Restricted Stock Award shall lapse, and such Restricted
Stock Award shall become free of all restrictions and
become fully vested and transferable.
For purposes of the Plan, a "Change in Control" shall
mean the happening of any of the following events:
(i) any Person is or becomes the "beneficial owner"
(within the meaning of Rule 13d-3 promulgated
under Section 13 of the Securities Exchange Act of
1934 (the "Exchange Act")), directly or
indirectly, of securities of the Company (not
including in the securities beneficially owned by
such Person any securities acquired directly from
the Company or its affiliates other than in
connection with the acquisition by the Company or
its affiliates of a business) representing 20% or
more of either the then outstanding shares of
common stock of the Company or the combined voting
power of the Company's then outstanding
securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors
then serving: individuals who, on August 2, 1996,
constitute the Board and any new director (other
than a director whose initial assumption of office
is in connection with an actual or threatened
election contest, including but not limited to a
consent solicitation, relating to the election of
directors of the Company) whose appointment or
election by the Board or nomination for election
by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on
August 2, 1996 or whose appointment, election or
nomination for election was previously so
approved; or
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(iii) there is consummated a merger or consolidation of
the Company (or any direct or indirect subsidiary
of the Company) with any other corporation, other
than (i) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior to such merger or
consolidation continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity or any
parent thereof), in combination with the ownership
of any trustee or other fiduciary holding
securities under an employee benefit plan of the
Company, at least 80% of the combined voting power
of the voting securities of the Company or such
surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to
implement a recapitalization of the Company (or
similar transaction) in which no Person is or
becomes the beneficial owner, directly or
indirectly, of securities of the Company (not
including in the securities beneficially owned by
such Person any securities acquired directly from
the Company or its subsidiaries other than in
connection with the acquisition by the Company or
its subsidiaries of a business) representing 20%
or more of either the then outstanding shares of
common stock of the Company or the combined voting
power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company
or there is consummated a sale or disposition by
the Company of all or substantially all of the
Company's assets, other than a sale or disposition
by the Company of all or substantially all of the
Company's assets to an entity, at least 80% of the
combined voting power of the voting securities of
which are owned by Persons in substantially the
same proportions as their ownership of the Company
immediately prior to such sale.
For purposes of the above definition of Change in
Control, "Person" shall have the meaning set forth in
Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of
its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to
an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as
their ownership of stock of the Company.
h. DESIGNATION OF BENEFICIARY: Each Participant who shall
be granted a Restricted Stock Award under the Plan may
designate a beneficiary or beneficiaries and may change
such designation from time to time by filing a written
designation of beneficiary with the Secretary of the
Company, provided that no such designation shall be
effective unless received prior to the death of such
Participant. In the absence of such designation or if
the beneficiary or beneficiaries so designated shall
not survive the Participant, the certificate or
certificates evidencing the Award shall be delivered
over to the estate of the Participant.
i. OTHER PROVISIONS: The agreements authorized under this
Plan may contain such other provisions as the Committee
shall deem advisable.
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7. CHANGES IN CAPITAL STRUCTURE.
The aggregate number of shares of Common Stock on which
Awards may be granted to persons participating under the Plan and
the number of shares thereof covered by each outstanding Award
shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a
subdivision or consolidation of shares or other capital
adjustment or the payment of a stock dividend or other increase
or decrease in such shares effected without receipt of
consideration by the Company; provided, however, that any
fractional shares resulting from such adjustment shall be
eliminated and any additional certificates evidencing shares of
Common Stock to be issued pursuant to a stock dividend or other
increase in such shares shall be delivered to and held by the
Secretary of the Company subject to the terms of the agreement
entered into by the Participant and the Company.
8. RIGHT OF COMPANY TO TERMINATE EMPLOYMENT.
Neither the establishment of the Plan nor the granting of
any Award hereunder shall confer upon the recipient thereof any
right to be continued in the employ of the Company or a
Subsidiary, and the Company and its Subsidiaries expressly
reserve the right to discharge any Participant whenever the
interest of the Company or its Subsidiaries may so require
without liability to the Company or its Subsidiaries, the Board
of Directors of the Company or its Subsidiaries, or the
Committee.
9. TAXES.
a. The person entitled to receive shares of Common Stock
pursuant to the Award will be given notice as far in advance as
practicable to permit cash payment for applicable withholding
taxes to be made to the Company. The Company may defer making
delivery of the certificate representing the shares until
indemnified to its satisfaction with respect to any such
withholding tax.
b. Notwithstanding the foregoing, when an Award shall have
vested and a Participant is required to pay to the Company an
amount required to be withheld under applicable federal, state,
local and payroll taxes, the Participant may satisfy this
obligation in whole or in part by electing (the "Election") to
have the Company withhold shares of Common Stock having a value
equal to the amount required to be withheld. The value of the
shares to be withheld shall be based on the last sale price of
the Common Stock as reported by the Automated Quotation System of
the National Association of Securities Dealers on the date that
the amount of tax to be withheld shall be determined ("Tax
Date"). Each Election must be made on or prior to the Tax Date.
The Committee may disapprove any Election or may suspend or
terminate the right to make Elections. An Election is
irrevocable.
10. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may, by resolution,
amend or revise the Plan except that, without shareholder
approval, no such amendment shall increase the maximum aggregate
number of shares which may be granted under the Plan except as
provided in Section 7 or changes the class of eligible employees,
and no such amendment may without the Participant's consent
amend, suspend or terminate rights or obligations pursuant to
outstanding Restricted Stock Awards.
11. EFFECTIVE DATE.
The Plan shall be effective as of October 4, 1991.
5
<PAGE>
COMMERCE BANCSHARES, INC.
STOCK PURCHASE PLAN FOR NON-EMPLOYEE DIRECTORS
AMENDED AND RESTATED OCTOBER 4, 1996
1. PURPOSE
The Stock Purchase Plan for Non-Employee Directors
(the "Plan") is intended to provide a means by which individuals
who serve as directors (including advisory or honorary directors)
of, but are not employees of, Commerce Bancshares, Inc. (the
"Company") or any subsidiary of the Company (the "Non-Employee
Directors") may increase their proprietary interest in the
success and progress of the Company as the owners of additional
shares of the common stock of the Company.
2. ADMINISTRATION
The Plan shall be administered by the Compensation and
Benefits Committee of the Board of Directors of the Company,
which shall consist solely of two or more directors who are
"non-employee directors" under Rule 16b-3(b)(3) promulgated under
the Securities Exchange Act of 1934, as amended, or any successor
provision thereto. The Committee shall have the authority to
adopt rules and regulations for carrying out the Plan and to
interpret, construe, and implement the provisions of the Plan.
The Committee may obtain such advice or assistance as it deems
appropriate from persons not serving on the Committee.
3. ELIGIBILITY
The only persons eligible to participate in the Plan shall
be the Non-Employee Directors of the Company or any subsidiary of
the Company. Each Non-Employee Director who shall elect to
participate in the Plan is hereinafter referred to as a
Participant.
4. STOCK
(a) The shares of stock subject to purchase under the Plan
shall be shares of the Company's $5 par value common stock,
either authorized but unissued or issued and held in treasury
(the "Common Stock").
(b) In the event of any stock dividend, stock split,
combination of shares or other change in the capitalization of
the Company, appropriate adjustment shall be made in the number
and kind of shares credited to a Participant's account as of the
effective date thereof.
5. ELECTION TO PARTICIPATE
(a) Each Non-Employee Director serving as such on the
Effective Date of the Plan shall have the right to elect to
participate in the Plan as of the Effective Date by executing and
causing to be delivered to the Secretary of the Company the
appropriate election form prior to the Effective Date. Each
individual becoming a Non-Employee Director on or after July 1,
1989, shall have the right to elect to participate in the Plan if
the appropriate election form shall be delivered to the Secretary
of the Company during the year of such individual's election as a
director of the Company or any subsidiary of the Company with
participation commencing on the date such election is received.
Any Non-Employee Director who shall not previously have elected
to participate in the Plan shall have the right at any time
<PAGE>
to elect to participate in the Plan as of the first day of
January next succeeding the date on which the appropriate
election form is delivered to the Secretary of the Company.
(b) An election to participate once made shall continue in
effect from year to year until the Participant shall either cause
written notice to be delivered to the Secretary of the Company
that his participation shall cease as of the end of the calendar
year in which such notice is delivered or until the resignation,
death or disability of the Participant.
(c) Notwithstanding the provisions of subsections (a) and
(b) of this Section 5, each individual who shall become a
Non-Employee Director of the Company on or after May 1, 1991,
shall participate in the Plan effective with the date of such
individual's election. A Non-Employee Director of the Company
shall continue to participate until the resignation,
non-reelection, death or disability of such Non-Employee Director
of the Company.
6. CONTRIBUTIONS
(a) From and after the date of participation, the
compensation which would otherwise be paid in cash to each
Participant during a calendar month as a retainer for serving as
a member of a board of directors and for meetings of the board of
directors (or any committee thereof) of which such Participant is
a member (the "fees") shall be retained by the Company (and in
the case of service as a director of a subsidiary paid to the
Company prior to the last business day of each calendar month by
such subsidiary). Concurrently, the Company shall contribute on
behalf of each Participant on the Board of Directors of the
Company, and each subsidiary shall contribute on behalf of each
Participant on its board of directors by paying to the Company,
an additional amount equal to 25% of such fees to be credited,
together with the fees, to an account in the Participant's name
on the books and records of the Company as of the last business
day of each month.
(b) Any Non-Employee Director who shall not elect to
participate in the Plan shall have all compensation earned in
connection with service as a director or for meetings of the
board of directors paid in cash.
(c) No other contributions may be made by a Participant to
the Plan.
7. PURCHASE OF COMMON STOCK
As of the last business day of each calendar month, the cash
balance of each Participant's account will be divided by the last
sale price of the Common Stock as reported by the National Market
System of NASDAQ on the last business day of such month, or if no
sale price is reported, the next preceding day for which a sale
price is reported. The Participant's account shall thereupon be
credited with the equivalent number of whole shares of Common
Stock so determined. Any portion of the fees not so invested
shall be carried forward for investment in the next month,
subject to Section 5(b) hereof.
8. DISTRIBUTIONS FROM THE PLAN
(a) As soon as practicable after the end of each calendar
year, a certificate shall be issued to each Participant for the
number of equivalent shares of Common Stock credited to the
Participant's account under the Plan during the preceding
calendar year. Any cash amounts remaining in a Participant's
<PAGE>
account as of each calendar year end will be carried forward for
investment under the terms of the Plan during the next succeeding
year, unless a Participant shall have terminated his
participation in the Plan in which case such cash balance will be
distributed to such terminated Participant.
(b) At such time as a Participant shall cease to be a
Non-Employee Director or shall elect to terminate participation
in the Plan, shares of Common Stock equivalent to the shares
credited to such Participant's account, together with any cash
credit in such account, will be distributed to such terminated
Participant as soon as practicable after such termination of
participation.
(c) In the event of the death of a Participant, the
equivalent shares, together with any cash credited to the
deceased Participant's account as of the end of the month in
which such death shall occur, shall be distributed as soon as
practicable thereafter (i) to the beneficiary designated by the
Participant, or (ii) if no such designation shall have been
made or the beneficiary not survive the Participant, to the
Participant's estate. Any designation of beneficiary (which may
be any person, trust or other entity) may be made, revoked or
amended solely by the Participant at any time, which designation
shall be effective upon receipt by the Secretary of the Company.
9. AMENDMENT OF THE PLAN
The Board of Directors of the Company may from time to time
alter, amend, suspend or discontinue the Plan except that no
alteration or amendment shall be made more than once in every
twelve-month period with respect to eligibility for participation
or varying the date on or price at which the number of equivalent
shares of Common Stock will be credited to a Participant's
account.
10. MISCELLANEOUS
(a) Nothing in this Plan shall be deemed to create any
obligation on the part of the Board of Directors of the Company
to nominate any director for re-election by the Company's
shareholders or any obligation on the part of the Company to
cause its shares of stock of a subsidiary to be voted for the
re-election of any director of a subsidiary of the Company.
(b) Until the issuance of stock certificates, no right to
vote or receive dividends or any other rights as a shareholder
shall exist with respect to the Common Stock purchased under this
Plan.
(c) Except for a qualified domestic relations order as
provided Section 414(p) of the Internal Revenue Code, none of the
benefits under the Plan are subject to the claims of creditors of
participants or their beneficiaries, nor are they subject to
attachment, garnishment or any other legal process. Neither a
Participant nor such Participant's beneficiary may assign, sell,
borrow on or otherwise encumber a beneficial interest in the Plan
nor shall any such benefits be in any manner liable for or
subject to the deeds, contracts, liabilities, engagements or
torts of any Participant or beneficiary.
(d) For purposes of this Plan, a "subsidiary" is any
organization which issues voting stock and of such issued and
outstanding stock the Company owns over 50% thereof.
11. EFFECTIVE DATE
The Plan shall become effective on July 1, 1989.
<PAGE>
COMMERCE BANCSHARES, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDMENT AND RESTATEMENT OF OCTOBER 4, 1996
1. PURPOSE
The policy of Commerce Bancshares, Inc. ("Commerce") is to
compensate its officers based on performance. The purpose of
this Executive Incentive Compensation Plan ("Plan") is to provide
incentive compensation awards to those individuals whose
management efforts reflect a desire to meet commonly agreed upon
objectives or to those who by their superior performance directly
contribute to the profitability of Commerce and to encourage the
retention of outstanding contributors.
2. ADMINISTRATION
The Plan shall be administered by the Compensation and
Benefits Committee of the Board of Directors ("Board") of
Commerce, which shall consist solely of two or more directors who
are "non-employee directors" under Rule 16b-3(b)(3) promulgated
under the Securities Exchange Act of 1934, as amended, or any
successor provision thereto. The Committee shall have authority
in its sole discretion to interpret the Plan and make all
determinations, including the determination of incentive
compensation awards eligible to be deferred under the Plan. All
determinations made by the Committee shall be final and binding.
3. ELIGIBLE PARTICIPANTS
All chief executive officers, Chairmen of the Board,
Presidents, and Vice Presidents of Commerce or any of its
affiliated banks or subsidiary companies shall be eligible to
participate in the Plan, together with such other officers of
Commerce and its affiliated banks and subsidiary companies as the
Committee shall determine. Directors who are not officers or
employees of Commerce, an affiliated bank, or a subsidiary
company, are not eligible to participate in the Plan.
4. DETERMINATION OF AWARD
The Board of Commerce shall at its sole discretion approve
the amount of the aggregate incentive compensation awards to be
granted based on the recommendations of the Committee. Incentive
compensation awards made under this Plan shall be determined with
reference to performance during the preceding year. The
incentive compensation awards to be made to the Chairman of the
Board, President and/or Chief Executive Officer of Commerce shall
be determined by the Committee and all other awards to be made
under this Plan may be determined by the Committee or, should the
Committee so direct, by a committee consisting of the Chief
Executive Officer, a Vice Chairman designated by the Chief
Executive Officer, and the chief human resources officer.
5. PAYMENT OF INCENTIVE AWARD
Incentive compensation awards are generally determined and
made on or before the date of the annual meeting of shareholders
of Commerce. The normal method of payment will be in the form of
cash and awards will be paid as soon as practicable after the
awards are determined; provided, that the recipient of an award
shall not have elected to defer receipt of the incentive
compensation award as hereinafter provided.
<PAGE>
6. DEFERRAL OPTIONS
a. An eligible employee may elect to defer all or a
portion of an incentive compensation award until the
earlier to occur of retirement, death, or termination.
A deferral must be expressed either as "all" or as a
specified dollar amount. Any incentive compensation
award above the specified amount will be paid in cash,
and if the award is less than the amount deferred, the
total award will be deferred. The granting of an
incentive compensation award is discretionary and
neither delivery of deferral election materials nor an
election to defer shall affect entitlement to such an
award. All deferral elections made under the Plan are
irrevocable.
b. In order to ensure that elections to defer incentive
compensation awards are effective under applicable tax
laws, all persons eligible to participate in this Plan
will be given the opportunity to defer payment of all
or a portion of an incentive compensation award. An
election to defer must be made prior to December 31 of
the year preceding the year for which performance is
measured to determine the granting of an incentive
compensation award.
c. An eligible employee in electing a deferred payment
shall also elect the account which Commerce shall make
available to the participating employee and to which
the relevant portion of the award deferral will be
credited. The available accounts for deferral of an
incentive compensation award shall consist of (a) the
Treasury Bill Account, (b) the Treasury Note Account,
and (c) the Commerce Stock Account. Amounts may not be
transferred between accounts.
d. The Treasury Bill Account and the Treasury Note Account
are both bookkeeping accounts. The Treasury Bill
Account will have interest credited on the deferred
amount at a rate equal to the six-month treasury bill
yield with the interest credited on the first day of
each calendar quarter. The Treasury Note Account will
have interest credited on the deferred amount at a rate
equal to the four-year treasury note rate (with the
rate adjusted at the end of each four-year period) with
interest credited on the first day of each calendar
quarter. Amounts credited to either of these accounts
will be compounded on the first day of each calendar
quarter.
The Commerce Stock Account is a bookkeeping account the
value of which will be based upon the performance of
the $5.00 par value common stock of Commerce ("Commerce
Stock"). Amounts deferred into the Commerce Stock
Account will be credited to such account with units,
each reflecting one share of Commerce Stock.
Fractional units will also be credited to such account
if applicable. The number of such credited units will
be determined by dividing the value of the incentive
compensation award which is deferred into the Commerce
Stock Account by the last sale price of the Commerce
Stock as reported by the National Association of
Securities Dealers National Market System on the last
trading day in January on which a trade of Commerce
Stock is so reported. Dividends paid on the Commerce
Stock shall be reflected in a participant's Commerce
Stock Account. The crediting of additional units in
such account shall be equal to the value of the
dividends divided by the last sale price of the
Commerce Stock on the date such dividend is paid.
e. Commerce shall provide periodically to each participant
(but not less frequently than once per calendar year) a
statement setting forth the balance to the credit of
such participant in each of the accounts.
f. Amounts deferred under the provisions of this Plan will
be disbursed to participants in accordance with the
following:
<PAGE>
(1) Deferrals held in the Treasury Bill Account
and the Treasury Note Account will be paid by
Commerce in a single distribution as soon as
reasonably practicable after retirement,
disability, death or termination of
employment, except that a participant may
elect to have distributions from such
accounts made in up to ten annual equal
installments or in such installments after
receiving a lump sum payment of a portion of
the account balances. Annual installments
will be paid in an amount, less applicable
withholding taxes, determined by multiplying
the balance in either account by a fraction,
the numerator of which is one (1) and the
denominator of which is a number equal to
remaining unpaid annual installments.
(2) If a participant dies after the commencement
of payments from such participant's Treasury
Bill Account or Treasury Note Account, the
designated beneficiary shall receive the
remaining installments over the elected
installment period.
(3) With respect to a participant's Commerce
Stock Account, upon such participant's
employment terminating for disability, death,
retirement, or termination of employment, the
whole units in the participant's Commerce
Stock Account shall be converted into shares
of Commerce Stock with each whole unit
representing one share of such stock with
cash paid in lieu of any fractional shares.
No distribution, however, shall be made from
the Commerce Stock Account until arrangements
satisfactory to Commerce shall have been made
to provide for the payment to Commerce of
federal, state, local, and payroll
withholding taxes attributable to the
Commerce Stock Account.
(4) Each participant shall have the right at any
time to designate any person or persons as
beneficiary or beneficiaries (both principal
as well as contingent) to whom payment under
this Plan shall be made in the event of death
prior to complete distribution to the
participant of the amounts due under this
Plan. Any beneficiary designation may be
changed by a participant by the filing of
such change in writing on a form prescribed
by Commerce. The filing of a new beneficiary
designation form will cancel all beneficiary
designations previously filed and will apply
to all deferrals in the account. If a
beneficiary has not been designated or if all
designated beneficiaries predecease the
participant, then any amounts payable to the
beneficiary shall be paid to the
participant's estate in one lump sum.
(5) If there is any change in the number or class
of shares of Commerce stock through the
declaration of stock dividend or other
extraordinary dividends or recapitalization
resulting in stock splits or combinations or
exchanges of such shares or in the event of
similar corporate transactions, each
participant's Commerce Stock Account shall be
equitably adjusted to reflect any such change
in the number or class of issued shares of
common stock of Commerce or to reflect such
similar corporate transaction.
(6) The Human Resources/Salary Committee of
Commerce, upon 30 days written notice, may
approve a "hardship" request for distribution
of a deferred award. Unless the participant
presents proof satisfactory to
<PAGE>
such committee of financial need, requests
for hardship distribution will be denied.
Each request will be evaluated on the basis
of uniformly applied criteria.
7. AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at its discretion and at any time
amend the Plan in whole or in part. The Committee may terminate
the Plan in its entirety at any time, and, upon such termination
or such later date or dates, each participant shall: receive, in
a single distribution, the shares and cash for the fractions
thereof of Commerce Stock reflected in the Commerce Stock
Account; and shall be paid, in a single distribution or over such
period of time as determined by the Committee, the then remaining
balance in such participant's Treasury Bill Account and Treasury
Note Account.
8. MISCELLANEOUS
a. A participant under this Plan is merely a general
unsecured creditor and nothing contained in this Plan
shall create a trust of any kind or a fiduciary
relationship between Commerce and the participant or
the participant's estate. Nothing contained herein
shall be construed as conferring upon the participant
the right to continued employment with Commerce or its
subsidiaries or to an incentive compensation award.
Except as otherwise provided by applicable law,
benefits payable under this Plan may not be assigned or
hypothecated, and no such benefits shall be subject to
legal process or attachment for the payment of any
claim of any person entitled to receive the same.
b. The amendment of the Plan to allow a Commerce Stock
deferral option shall become effective on the date the
shareholders of Commerce approve the same. Subject to
such approval, an employee having a deferred option may
elect (but prior to June 30, 1994) to transfer his
balance in the Treasury Bill Account and/or the
Treasury Note Account as of April 1, 1994 to the
Commerce Stock Account with the number of units
credited to his account determined as provided in
Section 6d hereof but based on the last sale price as
of the last day in March 1994 on which a trade of
Commerce Stock is reported. An employee who in 1993
deferred a potential incentive compensation award with
respect to performance in 1994 and elected either a
Treasury Bill Account or a Treasury Note Account may
elect prior to June 30, 1994 to defer such award for
1994 to the Common Stock Account.
<PAGE>
SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into as of the 4th day of
October, 1996 by and between Commerce Bancshares, Inc., a
Missouri corporation (the "Company") and
(the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Board of Directors of the Company has approved
the Company entering into severance agreements with certain key
executives of the Company; and
WHEREAS, the Executive is a key executive of the Company;
and
WHEREAS, the Company desires assurance that it will have the
continued dedication of the Executive and the availability of his
advice and counsel notwithstanding any possibility or occurrence
of a Change in Control of the Company:
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and other good and valuable consideration, the
receipt of which is acknowledged, the parties hereto agree as
follows:
1. Certain Definitions.
a. Base Salary. "Base Salary" means the salary of
record paid to Executive as annual salary, excluding amounts
received under incentive or other bonus plans, whether or
not deferred.
b. "Cause" means conduct of Executive which is
knowingly fraudulent, deliberately dishonest or willful
misconduct.
c. Change in Control. "Change in Control" shall mean
the happening of any of the following events:
i. any Person is or becomes the "beneficial
owner" (within the meaning of Rule 13d-3 promulgated
under Section 13 of the Securities Exchange Act of 1934
(the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates other than in connection with the
acquisition by the Company or its affiliates of a
business) representing 20% or more of either the then
outstanding shares of common stock of the Company or
the combined voting power of the Company's then
outstanding securities; or
<PAGE>
ii. the following individuals cease for any
reason to constitute a majority of the number of
directors then serving: individuals who, on the
Effective Date, as defined in Section 3 herein,
constitute the Board and any new director (other than a
director whose initial assumption of office is in
connection with an actual or threatened election
contest, including but not limited to a consent
solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board
or nomination for election by the Company's
stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office
who either were directors on the Effective Date or
whose appointment, election or nomination for election
was previously so approved; or
iii. there is consummated a merger or
consolidation of the Company (or any direct or indirect
subsidiary of the Company) with any other corporation,
other than (i) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior to such merger or
consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent
thereof), in combination with the ownership of any
trustee or other fiduciary holding securities under an
employee benefit plan of the Company, at least 80% of
the combined voting power of the voting securities of
the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or
becomes the beneficial owner, directly or indirectly,
of securities of the Company (not including in the
securities beneficially owned by such Person any
securities acquired directly from the Company or its
subsidiaries other than in connection with the
acquisition by the Company or its subsidiaries of a
business) representing twenty percent (20%) or more of
either the then outstanding shares of common stock of
the Company or the combined voting power of the
Company's then outstanding securities; or
iv. the stockholders of the Company approve a
plan of complete liquidation or dissolution of the
Company or there is consummated a sale or disposition
by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by
the Company of all or substantially all of the
Company's assets to an entity at least eighty percent
(80%) of the combined voting power of the voting
securities of which are owned by Persons in
substantially the same proportions as their ownership
of the Company immediately prior to such sale.
For purposes of the above definition of Change in
Control, "Person" shall have the meaning set forth in
Section 3(a)(9) of the Exchange Act, as
2
<PAGE>
modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii)
an underwriter temporarily holding securities pursuant
to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
d. Code. "Code" means the Internal Revenue Code of
1986, as amended.
e. Disability. "Disability" means a physical or
mental condition of Executive which totally and permanently
prevents him from engaging in any occupation or employment
for remuneration or profit except for the purpose of
rehabilitation not incompatible with a finding of total and
permanent disability. The determination as to whether
Executive is totally and permanently disabled shall be made
based solely on evidence that he is eligible for disability
payments under an employee-sponsored long-term disability
program, if any such program is in effect.
f. Effective Date of Termination. "Effective Date of
Termination" means the date on which a Qualifying
Termination occurs which triggers the payment of Severance
Benefits hereunder.
g. Good Reason. "Good Reason" means, without
Executive's express written consent, the occurrence of any
one or more of the following:
i. a determination by Executive, in his
reasonable judgment, that his duties have been
materially reduced in terms of authority and
responsibility as an employee of the Company in
comparison to Executive's duties immediately prior to
the occurrence of a Change in Control;
ii. the Company's requiring Executive to be based
at a location which is at least thirty-five (35) miles
further from Executive's primary residence at the time
such requirement is imposed than is such residence from
the Company's office at which Executive is primarily
rendering services at such time, except for required
travel on the Company's business to an extent
substantially consistent with Executive's business
obligations in effect immediately prior to the
occurrence of a Change in Control;
iii. a reduction by the Company in Executive's
Base Salary as in effect 12 months before a Change in
Control; or
iv. a material reduction in Executive's level of
participation in any of the Company's short- and/or
long-term incentive compensation plans, or
3
<PAGE>
employee benefit or retirement plans, policies,
practices, or arrangements in which Executive
participated immediately prior to the occurrence of a
Change in Control; provided, however, that reductions
in the levels of participation in any such plans shall
not be deemed to be "Good Reason" if Executive's
reduced level of participation in each such program
remains substantially consistent with the average level
of participation of other executives who have positions
commensurate with Executive's position.
h. Retirement. "Retirement" means the Executive's
"Normal Retirement Date," as such term is defined in the
Company's tax-qualified, defined benefit plan (or any
successor or substitute plan or plans of the Company put
into effect prior to a Change in Control).
i. Tax Rate. "Tax Rate" means Executive's effective
tax rate based upon the combined federal and state and local
income, earnings, Medicare and any other tax rates
applicable to Executive, net of the reduction in federal
income taxes which could be obtained by deduction of such
state and local taxes.
j. Qualifying Termination. "Qualifying Termination"
shall have the meaning ascribed to it in Section 5 herein.
2. Right to Terminate. The Company or Executive may
terminate Executive's employment at any time for any reason. The
Company is obligated to provide the benefits hereinafter
specified only if such benefits are due in accordance with the
terms hereof.
3. Term of Agreement. This Agreement shall commence on
the date hereof (the "Effective Date") and shall continue until
the date that is the third anniversary of the Effective Date;
provided, however, that the term of this Agreement shall
automatically be extended for one additional year on each
anniversary, unless at least 30 days prior to such anniversary,
the Company, with approval of the Board of Directors, or
Executive shall have given notice that this Agreement shall not
be extended; and provided that, notwithstanding the delivery of
any such notice, this Agreement shall continue in effect for a
period of thirty-six (36) months after a Change in Control of the
Company, as defined in Section 1 herein, if such Change in
Control shall have occurred during the term of this Agreement, as
it may be extended; and provided that in any event this Agreement
shall expire upon the Executive's sixty-fifth (65th) birthday.
4. Right to Severance Benefits. Executive shall be
entitled to receive from the Company Severance Benefits, as
described in Section 6 herein, upon the occurrence of a
Qualifying Termination, as defined in Section 5 herein.
Executive shall not be entitled to receive Severance
Benefits, and the Company shall have no obligation under this
Agreement, if his employment is terminated under circumstances
4
<PAGE>
that do not constitute a Qualifying Termination, including, but
not limited to, Disability, Retirement, death, termination for
Cause or termination by Executive other than for Good Reason.
5. Qualifying Termination. "Qualifying Termination" means
the occurrence of any one or more of the following events:
a. within twelve (12) months prior to a Change in
Control, an involuntary termination of Executive's
employment by the Company that is in contemplation of, and
caused by, such Change in Control, such Change in Control is
pending at the time of such termination and such Change in
Control actually occurs; provided that such termination
shall not be a Qualifying Termination if circumstances
constituting Cause exist;
b. within three (3) years following a Change in
Control, an involuntary termination of Executive's
employment by the Company for reasons other than Cause, the
failure or refusal by a successor company to assume the
Company's obligations under this Agreement, as required by
Section 14 herein, or a breach by the Company or any
successor company of any of the provisions of this
Agreement;
c. a voluntary termination of employment by Executive
for Good Reason within three (3) years following a Change in
Control; or
d. a voluntary termination of employment by Executive
for any reason within the period beginning on the first
anniversary of a Change in Control and ending thirty (30)
days after such date.
6. Description of Severance Benefits. In the event that
Executive becomes entitled to receive Severance Benefits, as
provided in Section 4 herein, the Company shall pay to Executive
and provide him with the following:
a. a payment equal to the product of: (i) the lesser
of -- (a) [_____] or (b) the quotient of the number of
months following termination until the Executive attains age
65, divided by twelve; multiplied by (ii) the sum of -- (a)
the Executive's Base Salary in effect on the date that is
12-months prior to the Change in Control and (b) Executive's
average bonus for the three completed fiscal years of the
Company preceding the fiscal year in which the Change in
Control occurs;
b. a payment equal to the greater of -- (a)
Executive's actual bonus for the fiscal year of the Company
preceding the fiscal year in which the Change in Control
occurs or (b) Executive's target bonus for the fiscal year
of the Company in which the Effective Date of Termination
occurs, calculated assuming that both the Company and
Executive achieved the performance objectives required to
earn the target bonus, and
5
<PAGE>
prorated based on the number of days elapsed in the
Company's fiscal year during which his employment
terminates;
c. for the lesser of -- (i) [____] years following
the Effective Date of Termination; or (ii) until both
Executive and his spouse (if covered by any of the following
plans) are both sixty-five (65), all insured and
self-insured medical, life insurance and disability benefit
plans in which Executive participated as of the earlier of
-- (a) immediately prior to the Effective Date of
Termination; or (b) immediately prior to any change to such
benefits that could have constituted Good Reason to
terminate, shall continue to be made available to Executive
and his dependents, at a cost to Executive and his
dependents equal to such rates paid from time to time by
active Company employees whose position is similarly
situated to the position held by Executive immediately prior
to the earliest event that could have constituted Good
Reason to terminate. In the event that Executive's
participation in any such plan is barred or the cost thereof
or benefits thereunder would be taxable, the Company, for no
additional cost to Executive, shall arrange to have issued
for the benefit of Executive and his dependents individual
policies of insurance providing benefits substantially
similar to those which Executive otherwise would have been
entitled to receive under such plans if such benefits or the
cost thereof were not taxable or, if such insurance is not
available at a reasonable cost to the Company, the Company
shall otherwise provide Executive and his dependents with
benefits that, after taxes calculated at the Tax Rate, are
equivalent to the benefits Executive otherwise would have
been entitled to receive under such plans if such benefits
or the cost thereof were not taxable;
d. the opportunity to borrow from the Company or an
affiliate thereof, for an interest rate set by Executive
(which may be zero), an amount equal to the sum of the
exercise price of Executive's outstanding stock options and
taxes resulting from such exercise and the vesting of
Executive's restricted stock, with repayment required upon
the passage of 180 consecutive days of Executive being able
to sell stock acquired by exercise of such options and being
able to sell vested, restricted stock, in both cases without
any restriction; and
e. reimbursement for the costs, if any, of all
outplacement services obtained by Executive following a
Qualifying Termination.
7. Notice of Termination. Any Qualifying Termination
shall be communicated by Notice of Termination. For purposes of
this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so
indicated.
8. Form and Timing of Severance Benefits. The Severance
Benefits described in Sections 6(a) and 6(b) herein shall be paid
in cash to Executive in a single lump sum as soon
6
<PAGE>
as practicable following the Effective Date of Termination, but
in no event beyond three (3) days from such date. The loan
option described in Section 6(d) shall be provided to Executive
within three (3) days of demand for such loan by Executive.
9. Offset of Severance Benefits. The Severance Benefits
provided Executive under this Agreement shall be reduced by any
other severance benefits or damages for termination paid or owed
to Executive by the Company. However, it is expressly agreed
that payments or benefits to Executive under any retirement,
supplemental retirement, deferred compensation, pension, stock
option, restricted stock, incentive or bonus plan or arrangement
shall not be offset against or reduce in any way any payments or
benefits to which Executive is entitled under this Agreement.
10. Tax Issues.
a. All payments to be made to Executive under this
Agreement will be subject to required withholding of
federal, state and local income and employment taxes.
b. In the event that Executive becomes entitled to
any payments under this Agreement, then if any such payments
or any other compensation, benefit or other amount from the
Company for the benefit of Executive ("Parachute Payments")
will be subject to the tax imposed by Section 4999 of the
Code (including any applicable interest and penalties, the
"Excise Tax"), no Parachute Payment shall be reduced (except
for required tax withholdings) and the Company shall pay to
Executive by the earlier of the date such Excise Tax is
withheld from payments made to Executive or the date such
Excise Tax becomes due and payable by Executive, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by Executive, after deduction of any Excise
Tax on the Parachute Payments and taxes based upon the Tax
Rate and Excise Tax upon the payment provided for by this
Section 10(b), shall be equal to the amount the Executive
would have received if no Excise Tax had been imposed. The
Company shall determine in good faith whether any of the
Parachute Payments are subject to the Excise Tax and the
amount of any Excise Tax and shall notify Executive of its
determination. The Company and Executive shall file all tax
returns and reports regarding such Parachute Payments in a
manner consistent with the Company's reasonable good faith
determination. For purposes of determining the amount of
the Gross-Up Payment, Executive shall be deemed to pay taxes
at the Tax Rate applicable at the time of the Gross-Up
Payment. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time a Parachute Payment is made, Executive
shall repay to the Company at the time that the amount of
such reduction in Excise Tax is finally determined the
portion of the Gross-Up Payment attributable to such
reduction plus interest on the amount of such repayment at
the rate provided in Section 1274(d)(1) of the Code or other
applicable provision of the Code but only to the extent that
such interest is paid to Executive. In
7
<PAGE>
the event that the Excise Tax is determined to exceed the
amount taken into account hereunder at the time a Parachute
Payment is made (including by reason of any payment the
existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an
additional gross-up payment in respect of such excess (plus
any interest or penalties payable in respect of such excess)
at the time that the amount of such excess is finally
determined. The Company shall reimburse Executive for all
reasonable fees, expenses, and costs related to determining
the reasonableness of any Company position in connection
with this paragraph, preparation of any tax return or other
filing that is affected by any matter addressed in this
paragraph and any audit, litigation or other proceeding that
is affected by any matter addressed in this paragraph.
c. Notwithstanding anything in this Agreement to the
contrary, if any portion of any payments to Executive by the
Company under this Agreement and any other present or future
plan of the Company or other present or future agreement
between Executive and the Company would not be deductible by
the Company for federal income tax purposes by reason of
application of Section 162(m) of the Code, then payment of
that portion to Executive shall be deferred until the
earliest date upon which payment thereof can be made to
Executive without being non-deductible pursuant to Section
162(m) of the Code. In the event of such deferral, the
Company shall pay interest to Executive on the deferred
amount at 120% of the applicable federal rate provided for
in Section 1274(d)(2) of the Code.
11. The Company's Payment Obligation.
a. The Company's obligation to make the payments and
the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense, or other right which the
Company may have against Executive or anyone else. All
amounts payable by the Company hereunder shall be paid
without notice or demand. Each and every payment made
hereunder by the Company shall be final, and the Company
shall not seek to recover all or any part of such payment
from Executive or from whomsoever may be entitled thereto,
for any reasons whatsoever.
b. This Agreement establishes and vests in Executive
a contractual right to the benefits to which he is entitled
hereunder. However, nothing herein contained shall require
or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise
set aside any funds or other assets, in trust or otherwise,
to provide for any payments to be made or required
hereunder.
12. No Obligation to Mitigate. Executive shall not be
required to mitigate the damages or the amount of any payment
provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided under
this Agreement
8
<PAGE>
be reduced by any compensation earned by Executive as a result of
employment by another employer after any Qualifying Termination,
or otherwise.
13. Other Rights. Except as specifically provided herein,
the provisions of this Agreement, and any payment provided
hereunder, shall not reduce any amounts otherwise payable, or in
any way diminish Executive's existing rights or rights which
would accrue solely as a result of the passage of time, under any
benefit or incentive plan, employment arrangement or other
contact, plan or arrangement of the Company. As soon as
practicable following any Qualifying Termination, Executive shall
receive cash payment(s) for: (a) Executive's earned but unpaid
salary as of the Employment Termination Date; (b) the value of
Executive's earned but unused vacation time as of the Employment
Termination Date in accordance with the current Company policy,
and (c) the value of Executive's deferred compensation account(s)
under any Company or deferred compensation plan in accordance
with Executive's then current payment election.
14. Successors; Binding Agreement.
a. This Agreement and the rights and obligations of
the parties hereto shall bind and inure to the benefit of
any successor or successors of the Company by way of
reorganization, merger, acquisition or consolidation, and
any assignee of all or substantially all of its business and
properties.
b. This Agreement shall inure to the benefit of and
be enforceable by Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive
dies while any amount is still payable to Executive
hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee or other designee
or, if there be no such designee, to Executive's estate.
15. No Assignment. No benefit hereunder shall be subject
to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any attempt to do so shall be void.
16. Survival. The respective obligations of, and benefits
afforded to, the Company and Executive as provided in Sections
10, 14, 19 and 20 of this Agreement shall survive termination of
this Agreement.
17. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction, arbitrator or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in
force and effect and shall in no way be affected, impaired or
invalidated.
9
<PAGE>
18. Consultation with Counsel. Executive acknowledges (a)
that he has been given the opportunity to consult with counsel of
his own choice concerning this Agreement, and (b) that he has
read and understands the Agreement, is fully aware of its legal
effect, and has entered into it freely based upon his own
judgment with or without the advice of such counsel.
19. Arbitration. Executive shall have the option to elect
(in lieu of litigation) to have any dispute or controversy
arising under or in connection with this Agreement settled by
arbitration, conducted by a panel of three arbitrators in a
location selected by Executive within fifty (50) miles from the
location of his job with the Company, in accordance with the
rules of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrators' award in any court
having jurisdiction.
20. Attorney's Fees. Company shall pay Executive's
attorney's fees and costs incurred in connection with any dispute
concerning this Agreement unless each and every disputed claim by
the Executive is found to be wholly frivolous in arbitration or
by a court of competent jurisdiction.
21. Amendments; Waivers. This Agreement may not be
modified, amended or terminated except by an instrument in
writing, signed by Executive and by a duly authorized
representative of the Company other than the Executive. By an
instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply
with or perform, provided, however, that such waiver shall not
operate as a waiver of, or estoppel with respect to, any other or
subsequent failure. No failure to exercise and no delay in
exercising any right, remedy or power hereunder shall operate as
a waiver thereof or as a waiver of any other right, remedy or
power, nor shall any single or partial exercise of any right,
remedy or power hereunder preclude any other or further exercise
of any other right, remedy, or other power provided herein or by
law or in equity.
22. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
23. Descriptive Headings. Descriptive headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not control or affect the meaning
or construction of any of the provisions hereof.
24. Integration. The parties understand and agree that the
preceding sections recite the sole consideration for this
Agreement; that no representation or promise has been made by
Company or Executive concerning the subject matter of this
Agreement, except as expressly set forth in this Agreement; and
that all agreements and understandings between the parties
concerning the subject matter of this Agreement are embodied and
expressed in this Agreement. This Agreement shall supersede all
prior agreements and understandings among
10
<PAGE>
the parties whether written or oral, express or implied, with
respect to the employment, termination and benefits of Employee
in the event of a Qualifying Termination, including without
limitation, any employment-related agreement or benefit plan,
except to the extent that the provisions of any such agreement or
plan have been expressly referred to in this Agreement as having
continued effect.
25. Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Missouri.
26. Notices. All notices hereunder shall be in writing,
and shall be delivered in person, by facsimile or by certified
mail-return receipt requested. Notices shall be delivered as
follows:
If to the Company:
Commerce Bancshares, Inc.
1000 Walnut
Kansas City, MO 64106
Attention: President
If to the Employee:
[NAME]
[ADDRESS]
Any party may change its address by notice giving notice to
the other party of a new address in accordance with the foregoing
provisions.
27. Employment Rights. Nothing contained in this Agreement
or any act done pursuant hereto shall be construed as giving any
person any legal or equitable right against the Company, unless
specifically provided herein, or as giving any person a right to
be retained in the employ of the Company. Executive shall remain
subject to assignment, reassignment, promotion, transfer, layoff,
reduction, suspension, and discharge to the same extent as if
this Agreement had never been executed.
28. Acknowledgment. Executive hereby acknowledges that he
shall have no rights hereunder unless and until all circumstances
constituting a Qualifying Termination shall have occurred.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first written above.
11
PAGE>
COMMERCE BANCSHARES, INC.
By:
Name:
THIS CONTRACT CONTAINS A Title:
BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE
PARTIES [EXECUTIVE]
Name
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Commerce Bancshares, Inc. 9/30/96 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 700,632
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 343,090
<TRADING-ASSETS> 5,255
<INVESTMENTS-HELD-FOR-SALE> 2,621,282<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,390,915<F3>
<ALLOWANCE> 98,366
<TOTAL-ASSETS> 9,414,109
<DEPOSITS> 8,039,862
<SHORT-TERM> 414,855
<LIABILITIES-OTHER> 56,223
<LONG-TERM> 14,233
0
0
<COMMON> 187,827
<OTHER-SE> 701,109
<TOTAL-LIABILITIES-AND-EQUITY> 9,414,109
<INTEREST-LOAN> 344,500
<INTEREST-INVEST> 119,027<F4>
<INTEREST-OTHER> 19,192
<INTEREST-TOTAL> 482,927
<INTEREST-DEPOSIT> 195,331
<INTEREST-EXPENSE> 211,969
<INTEREST-INCOME-NET> 270,958
<LOAN-LOSSES> 17,063
<SECURITIES-GAINS> 2,004
<EXPENSE-OTHER> 237,650
<INCOME-PRETAX> 132,150
<INCOME-PRE-EXTRAORDINARY> 87,056
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87,056
<EPS-PRIMARY> 2.38
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.37<F5>
<LOANS-NON> 11,829
<LOANS-PAST> 21,604
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 98,537
<CHARGE-OFFS> 22,629
<RECOVERIES> 5,395
<ALLOWANCE-CLOSE> 98,366
<ALLOWANCE-DOMESTIC> 98,366
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Certificates of deposit of $347,000 are included in Investments-
Held-For-Sale.
<F2>Excludes non-marketable investment securities of $39,383,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $208,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
</FN>
</TABLE>
