<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
-----------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
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 August 1, 1997, the registrant had outstanding 36,925,310 shares of its
$5 par value common stock, registrant's only class of common stock.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I: FINANCIAL INFORMATION
In the opinion of management, the consolidated financial statements of
Commerce Bancshares, Inc. and Subsidiaries as of June 30, 1997 and December
31, 1996 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: Consolidated Balance Sheets
Schedule 2: Consolidated Statements of Income
Schedule 3: Statements of Changes in Stockholders' Equity
Schedule 4: Consolidated Statements of Cash Flows
Schedule 5: Notes to Consolidated Financial Statements
Schedule 6: Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II: OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of shareholders of Commerce Bancshares, Inc. was held on
April 16, 1997. Proxies for the meeting were solicited pursuant to Regulation
14 of the Securities Exchange Act of 1934, and there was no solicitation in
opposition to management's nominees as listed in the proxy statement. The five
nominees for the five directorships (constituting one-third of the Board of
Directors) being elected at this meeting received the following votes:
<TABLE>
<CAPTION>
VOTES
NAME OF DIRECTOR VOTES FOR ABSTAIN
---------------- ---------- -------
<S> <C> <C>
Giorgio Balzer......................................... 30,912,930 127,550
Jonathan M. Kemper..................................... 30,913,773 126,707
Mary Ann Krey.......................................... 30,888,055 152,425
Terry O. Meek.......................................... 30,918,139 122,341
L. W. Stolzer.......................................... 30,931,674 108,806
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Report on Form 8-K was filed on June 18, 1997 containing Commerce
Bancshares, Inc. and subsidiaries consolidated balance sheet and statements of
income as of May 31, 1997 as required by the agreement to acquire Shawnee Bank
Shares, Inc.
2
<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: August 7, 1997
/s/ Jeffery D. Aberdeen
By __________________________________
Jeffery D. Aberdeen
Controller
(Chief Accounting Officer)
Date: August 7, 1997
3
<PAGE>
SCHEDULE 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 December
1997 31 1996
----------- ----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Loans, net of unearned income...................... $5,811,167 $5,472,342
Allowance for loan losses.......................... (103,730) (98,223)
---------- ----------
NET LOANS...................................... 5,707,437 5,374,119
---------- ----------
Investment securities:
Available for sale............................... 2,682,951 2,670,420
Trading account.................................. 12,142 11,265
Other non-marketable............................. 41,682 39,830
---------- ----------
TOTAL INVESTMENT SECURITIES.................... 2,736,775 2,721,515
---------- ----------
Federal funds sold and securities purchased under
agreements to resell.............................. 64,435 368,690
Cash and due from banks............................ 853,623 833,260
Land, buildings and equipment--net................. 214,501 209,777
Goodwill and core deposit--net..................... 83,099 87,928
Customers' acceptance liability.................... 1,355 1,259
Other assets....................................... 132,761 101,638
---------- ----------
TOTAL ASSETS................................... $9,793,986 $9,698,186
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand...................... $1,890,137 $1,800,684
Savings and interest bearing demand.............. 4,074,140 4,021,376
Time open and C.D.'s of less than $100,000....... 2,190,539 2,138,206
Time open and C.D.'s of $100,000 and over........ 204,066 206,163
---------- ----------
TOTAL DEPOSITS................................. 8,358,882 8,166,429
Federal funds purchased and securities sold under
agreements to repurchase.......................... 435,513 526,807
Long-term debt and other borrowings................ 10,303 14,120
Accrued interest, taxes and other liabilities...... 57,210 65,300
Acceptances outstanding............................ 1,355 1,259
---------- ----------
TOTAL LIABILITIES.............................. 8,863,263 8,773,915
---------- ----------
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.................................. 66,928 104,292
Retained earnings................................ 685,795 621,689
Treasury stock of 544,702 shares in 1997
and 187,977 shares in 1996, at cost............. (25,215) (7,422)
Unearned employee benefits....................... (615) (340)
Unrealized securities gain--net of tax........... 16,003 18,225
---------- ----------
TOTAL STOCKHOLDERS' EQUITY..................... 930,723 924,271
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $9,793,986 $9,698,186
========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
SCHEDULE 2
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED JUNE MONTHS ENDED JUNE
30 30
----------------- -----------------
1997 1996 1997 1996
-------- -------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans................. $123,329 $113,910 $240,643 $229,426
Interest on investment securities.......... 41,775 39,732 82,496 78,408
Interest on federal funds sold and
securities purchased under agreements to
resell.................................... 3,235 6,064 8,012 13,946
-------- -------- -------- --------
TOTAL INTEREST INCOME.................. 168,339 159,706 331,151 321,780
-------- -------- -------- --------
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing demand...... 33,308 31,825 65,976 64,136
Time open and C.D.'s of less than
$100,000................................ 29,129 29,682 57,340 60,866
Time open and C.D.'s of $100,000 and
over.................................... 2,722 2,984 5,354 6,045
Interest on federal funds purchased and
securities sold under agreements to
repurchase................................ 5,012 5,067 10,291 10,848
Interest on long-term debt and other
borrowings................................ 224 233 459 456
-------- -------- -------- --------
TOTAL INTEREST EXPENSE................. 70,395 69,791 139,420 142,351
-------- -------- -------- --------
NET INTEREST INCOME.................... 97,944 89,915 191,731 179,429
Provision for loan losses.................. 7,293 5,428 14,831 10,981
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES........................... 90,651 84,487 176,900 168,448
-------- -------- -------- --------
NON-INTEREST INCOME
Trust fees................................. 9,938 8,584 19,490 17,416
Deposit account charges and other fees..... 14,643 13,800 27,943 26,212
Credit card transaction fees............... 6,975 6,279 13,258 12,046
Trading account profits and commissions.... 1,721 1,432 3,587 3,158
Net gains on securities transactions....... 176 690 322 1,914
Other...................................... 8,932 7,875 19,348 14,710
-------- -------- -------- --------
TOTAL NON-INTEREST INCOME.............. 42,385 38,660 83,948 75,456
-------- -------- -------- --------
NON-INTEREST EXPENSE
Salaries and employee benefits............. 43,708 41,154 86,706 82,311
Net occupancy.............................. 4,965 5,261 10,443 10,653
Equipment.................................. 4,124 3,885 8,078 7,438
Supplies and communication................. 6,242 6,279 12,625 12,333
Data processing............................ 5,950 5,236 11,489 10,167
Marketing.................................. 3,450 2,458 5,980 6,054
Goodwill and core deposit.................. 2,415 2,832 4,829 5,756
Other...................................... 13,039 11,860 25,857 22,861
-------- -------- -------- --------
TOTAL NON-INTEREST EXPENSE............. 83,893 78,965 166,007 157,573
-------- -------- -------- --------
Income before income taxes................. 49,143 44,182 94,841 86,331
Less income taxes.......................... 16,810 15,264 33,109 30,130
-------- -------- -------- --------
NET INCOME............................. $ 32,333 $ 28,918 $ 61,732 $ 56,201
-------- -------- -------- --------
Net income per common and common equivalent
share..................................... $ .86 $ .75 $ 1.64 $ 1.45
======== ======== ======== ========
Weighted average common and common
equivalent shares outstanding............. 37,629 38,415 37,621 38,647
======== ======== ======== ========
Cash dividends per common share............ $ .205 $ .181 $ .410 $ .362
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
SCHEDULE 3
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NUMBER OF UNEARNED NET
SHARES COMMON CAPITAL RETAINED TREASURY EMPLOYEE UNREALIZED
ISSUED STOCK SURPLUS EARNINGS STOCK BENEFITS GAIN (LOSS) TOTAL
---------- -------- -------- -------- -------- -------- ---------- --------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1997. 37,565,369 $187,827 $104,292 $621,689 $ (7,422) $(340) $18,225 $924,271
Net income............. 61,732 61,732
Year-to-date change in
fair value of
investment securities. (2,222) (2,222)
Pooling acquisition.... (37,199) 17,612 42,352 22,765
Purchase of treasury
stock................. (61,176) (61,176)
Sales under option and
benefit plans......... (183) 691 508
Issuance of stock under
restricted stock award
plan.................. 18 340 (358) --
Restricted stock award
amortization.......... 83 83
Cash dividends paid
($.410 per share)..... (15,238) (15,238)
---------- -------- -------- -------- -------- ----- ------- --------
BALANCE JUNE 30, 1997... 37,565,369 $187,827 $ 66,928 $685,795 $(25,215) $(615) $16,003 $930,723
========== ======== ======== ======== ======== ===== ======= ========
Balance January 1, 1996. 37,565,369 $187,827 $ 84,415 $618,388 $(32,980) $(716) $26,849 $883,783
Net income............. 56,201 56,201
Year-to-date change in
fair value of
investment securities. (31,029) (31,029)
Purchase of treasury
stock................. (25,871) (25,871)
Sales under option and
benefit plans......... (3,038) 5,952 2,914
Issuance of stock under
restricted stock award
plan.................. (9) 134 (125) --
Restricted stock award
amortization.......... 104 104
Cash dividends paid
($.362 per share)..... (13,892) (13,892)
---------- -------- -------- -------- -------- ----- ------- --------
Balance June 30, 1996... 37,565,369 $187,827 $ 81,368 $660,697 $(52,765) $(737) $(4,180) $872,210
========== ======== ======== ======== ======== ===== ======= ========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
SCHEDULE 4
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30
--------------------
1997 1996
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income............................................... $ 61,732 $ 56,201
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses.............................. 14,831 10,981
Provision for depreciation and amortization............ 14,931 15,263
Accretion of investment security discounts............. (2,801) (2,826)
Amortization of investment security premiums........... 4,893 11,400
Net gains on sales of investment securities (A)........ (322) (1,914)
Net increase in trading account securities............. (1,629) (8,794)
(Increase) decrease in interest receivable............. 905 (1,739)
Decrease in interest payable........................... (1,817) (4,433)
Other changes, net..................................... (39,335) 23,089
--------- ---------
Net cash provided by operating activities............ 51,388 97,228
--------- ---------
INVESTING ACTIVITIES:
Cash received in acquisition............................. 7,103 --
Cash paid in sale of branch.............................. -- (13,595)
Proceeds from sales of investment securities (A)......... 196,839 352,418
Proceeds from maturities of investment securities (A).... 432,138 176,897
Purchases of investment securities (A)................... (562,363) (685,165)
Net decrease in federal funds sold and securities
purchased under agreements to resell.................... 304,755 145,007
Net (increase) decrease in loans......................... (244,948) 34,452
Purchases of premises and equipment...................... (15,947) (9,663)
Sales of premises and equipment.......................... 4,904 3,064
--------- ---------
Net cash provided by investing activities............ 122,481 3,415
--------- ---------
FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing demand,
savings and interest bearing demand deposits............ 27,767 (185,290)
Net decrease in time open and C.D.'s..................... (10,138) (41,173)
Net increase (decrease) in federal funds purchased and
securities sold under agreements to repurchase.......... (91,294) 74,089
Repayment of long-term debt.............................. (3,844) (244)
Purchases of treasury stock.............................. (61,171) (56,492)
Exercise of stock options by employees................... 412 2,337
Cash dividends paid on common stock...................... (15,238) (13,892)
--------- ---------
Net cash used by financing activities................ (153,506) (220,665)
--------- ---------
Increase (decrease) in cash and cash equivalents..... 20,363 (120,022)
Cash and cash equivalents at beginning of year........... 833,260 774,852
--------- ---------
Cash and cash equivalents at June 30................. $ 853,623 $ 654,830
========= =========
</TABLE>
- --------
(A) Available for sale and other non-marketable securities, excluding trading
account securities.
Net cash payments of income taxes for the six month period were $35,525,000
in 1997 and $34,344,000 in 1996. Interest paid on deposits and borrowings for
the six month period was $141,130,000 in 1997 and $146,642,000 in 1996.
See accompanying notes to financial statements.
7
<PAGE>
SCHEDULE 5
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(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 1996 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 1996
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 THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30 JUNE 30
---------------- ----------------
1997 1996 1997 1996
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Balance, beginning of period........... $ 99,906 $98,666 $ 98,223 $98,537
-------- ------- -------- -------
Additions:
Provision for loan losses............ 7,293 5,428 14,831 10,981
Allowance for loan losses of acquired
banks............................... 3,321 -- 3,321 --
-------- ------- -------- -------
Total additions.................... 10,614 5,428 18,152 10,981
-------- ------- -------- -------
Deductions:
Loan losses.......................... 8,962 7,280 16,930 14,597
Less recoveries on loans............. 2,172 1,853 4,285 3,746
-------- ------- -------- -------
Net loan losses.................... 6,790 5,427 12,645 10,851
-------- ------- -------- -------
Balance, June 30....................... $103,730 $98,667 $103,730 $98,667
======== ======= ======== =======
</TABLE>
At June 30, 1997, non-performing assets were $42,706,000, which was .73% of
total loans and .44% of total assets. This balance consisted of $15,004,000 in
loans not accruing interest, $26,743,000 in loans past due 90 days and still
accruing interest, and $959,000 in foreclosed real estate.
8
<PAGE>
3. INVESTMENT SECURITIES
Investment securities, at fair value, consist of the following at June 30,
1997 and December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
JUNE 30 December 31
1997 1996
---------- -----------
<S> <C> <C>
Available for sale:
U.S. government and federal agency obligations... $1,619,987 $1,717,945
State and municipal obligations.................. 103,944 101,293
CMO's and asset-backed securities................ 823,732 703,515
Other debt securities............................ 92,385 108,442
Equity securities................................ 42,903 39,225
Trading account securities......................... 12,142 11,265
Other non-marketable securities.................... 41,682 39,830
---------- ----------
Total investment securities.................... $2,736,775 $2,721,515
========== ==========
</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 13, 1996.
5. ACQUISITION ACTIVITY
On May 1, 1997, the Company acquired Shawnee Bank Shares, Inc., a one-bank
holding company in the metropolitan Kansas City area with assets of $202
million. The acquisition was recorded as a stock transaction and accounted for
as a pooling of interests. It has not had a material impact on the financial
statements of the Company.
The Company has signed a definitive agreement to merge with CNB Bancorp,
Inc. a one-bank holding company located in Independence, KS with $93 million
in assets. The acquisition will be both a stock and cash transaction and
accounted for by the purchase accounting method. The Company expects the
transaction to be completed during the third quarter pending regulatory and
shareholder approval.
9
<PAGE>
SCHEDULE 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1997
(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 1996 Annual Report on Form 10-K. Results of operations for the six
month period ended June 30, 1997 are not necessarily indicative of results to
be attained for any other period.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------- --------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income................................... $ .86 $ .75 $ 1.64 $ 1.45
Cash dividends............................... .205 .181 .410 .362
Book value................................... 25.14 22.98
Market price................................. 45.25 32.50
SELECTED RATIOS
(Based on average balance sheets):
Loans to deposits............................ 69.79% 66.95% 69.27% 66.69%
Non-interest bearing deposits to total
deposits.................................... 20.77 19.02 20.44 19.21
Equity to loans.............................. 16.19 16.63 16.50 16.83
Equity to deposits........................... 11.30 11.14 11.43 11.23
Equity to total assets....................... 9.66 9.47 9.72 9.50
Return on total assets....................... 1.36 1.25 1.32 1.20
Return on realized stockholders' equity...... 14.14 13.32 13.66 12.98
Return on total stockholders' equity......... 14.11 13.18 13.53 12.67
(Based on end-of period data):
Efficiency ratio............................. 59.86 61.75 60.29 62.29
Tier I capital ratio......................... 12.81 13.22
Total capital ratio.......................... 13.93 14.50
Leverage ratio............................... 8.84 8.52
</TABLE>
SUMMARY
The Company's consolidated net income for the second quarter of 1997 totaled
$32.3 million, a $3.4 million or 11.8% increase over the second quarter of
1996. Earnings per share for the second quarter increased 14.7% to $.86
compared to $.75 in the second quarter of 1996. The second quarter of 1997 was
the Company's fifth consecutive quarter of double-digit growth in earnings per
share. Return on average assets for the quarter was 1.36% compared to 1.25%
last year; quarterly return on average stockholders' equity was 14.11%
compared to 13.18% last year. The Company's efficiency ratio (non-interest
expense/net interest income plus non-interest income excluding net gains on
securities transactions) was 59.86% for the second quarter of 1997.
Consolidated net income for the first six months of 1997 was $61.7 million;
a $5.5 million or 9.8% increase over the first six months of 1996. Earnings
per share increased 13.1% to $1.64 in the first six months of 1997 compared to
$1.45 in the first six months of 1996. Net interest income increased $12.3
million and non-interest income increased $8.5 million, partially offset by
increases of $8.4 million in non-interest expense and $3.9 million in the
provision for loan losses. Compared to the first six months of 1996, non-
interest income increased 11.3%, while non-interest expense grew at a moderate
rate of 5.4%.
10
<PAGE>
On May 1, 1997, the Company acquired Shawnee Bank Shares, Inc., a one-bank
holding company with locations in the Kansas City metropolitan area and assets
of approximately $202 million. The acquisition was recorded as a pooling of
interests and has not had a material impact on the financial statements of the
Company.
The Company has an agreement to acquire CNB Bancorp, Inc., a one-bank
holding company in Independence, KS with approximately $93 million in assets.
The purchase transaction will require both stock and cash, and is expected to
be completed during the third quarter of 1997.
NET INTEREST INCOME
Net interest income is the difference between interest income generated by
earning assets and the expense paid on interest bearing liabilities. The
following table summarizes the changes in net interest income on a fully tax
equivalent basis, by major category of interest earning assets and interest
bearing liabilities, identifying changes related to volumes and rates. 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.
ANALYSIS OF CHANGES IN NET INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 VS. 1996 JUNE 30, 1997 VS. 1996
----------------------- -------------------------
CHANGE DUE TO CHANGE DUE TO
---------------- ----------------
AVERAGE AVERAGE AVERAGE AVERAGE
VOLUME RATE TOTAL VOLUME RATE TOTAL
------- ------- ------ ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME, FULLY
TAXABLE EQUIVALENT BASIS:
Loans....................... $7,887 $1,423 $9,310 $12,114 $(1,112) $11,002
Investment securities:
U.S. government and
federal agency
securities............... (2,105) 543 (1,562) (2,530) 731 (1,799)
State and municipal
obligations.............. (349) 20 (329) (796) (7) (803)
Other securities.......... 3,440 390 3,830 5,908 524 6,432
Federal funds sold and
securities purchased under
agreements to resell....... (2,982) 153 (2,829) (5,916) (18) (5,934)
------ ------ ------ ------- ------- -------
Total interest income....... 5,891 2,529 8,420 8,780 118 8,898
------ ------ ------ ------- ------- -------
INTEREST EXPENSE:
Deposits:
Savings................... 3 65 68 (116) 42 (74)
Interest bearing demand... 855 560 1,415 3,618 (1,704) 1,914
Time open & C.D.'s of less
than $100,000............ (675) 122 (553) (2,084) (1,442) (3,526)
Time open & C.D.'s of
$100,000 and over........ (379) 117 (262) (695) 4 (691)
Federal funds purchased and
securities sold under
agreements to repurchase... (340) 285 (55) (756) 199 (557)
Long-term debt and other
borrowings................. (31) 2 (29) (47) 10 (37)
------ ------ ------ ------- ------- -------
Total interest expense...... (567) 1,151 584 (80) (2,891) (2,971)
------ ------ ------ ------- ------- -------
NET INTEREST INCOME, FULLY
TAXABLE EQUIVALENT BASIS... $6,458 $1,378 $7,836 $ 8,860 $ 3,009 $11,869
====== ====== ====== ======= ======= =======
</TABLE>
Net interest income for the second quarter of 1997 was $97.9 million, an
8.9% increase over the second quarter of 1996, and for the first six months
was $191.7 million, a 6.9% increase over last year. For the quarter, the net
interest rate margin was 4.62% compared with 4.37% last year, while the six
month margin was 4.57% in 1997 and 4.35% in 1996.
Total interest income increased $8.6 million over the second quarter of
1996, mainly due to an increase of $368.3 million in average loan balances.
Average rates earned on loans increased 7 basis points, offset by a
11
<PAGE>
decrease of $222.3 million in average balances invested in federal funds sold
and resell agreements. The average tax equivalent yield on interest earning
assets was 7.90% for the second quarter of 1997 compared to 7.72% last year.
Compared to the first six months of 1996, total interest income increased
$9.4 million. A $275.0 million increase in average loan balances contributed
an increase of $12.1 million. Other factors included an increase in average
investment securities, offset by a decrease in average balances invested in
federal funds sold and resell agreements.
Total interest expense (net of capitalized interest) increased $604 thousand
compared to the second quarter of 1996 due mainly to higher average rates paid
on interest bearing demand deposits, partially offset by lower balances in
certificates of deposit and borrowings. The average cost of funds was 4.12%
for the second quarter of 1997 and 4.09% for the second quarter of 1996.
Total interest expense decreased $2.9 million in the first six months of
1997 compared to 1996. This occurred due to a decline of 6 basis points in
average rates paid on deposits and smaller balances of short-term certificates
of deposit, partially offset by higher balances in the Company's premium money
market deposit accounts. Average core deposits (deposits excluding short-term
certificates of deposit over $100,000) for the first six months of 1997
increased slightly compared to the same period last year. Core deposits
supported 93% of average earning assets in 1997.
Summaries of average assets and liabilities and the corresponding average
rates earned/paid appear on pages 16 and 17.
RISK ELEMENTS OF LOAN PORTFOLIO
Non-performing assets include impaired loans (non-accrual loans and loans 90
days delinquent and still accruing interest) and foreclosed real estate. Loans
are placed on non-accrual status when management does not expect to collect
payments consistent with acceptable and agreed upon terms of repayment
(generally, loans that are 90 days past due as to principal and/or interest
payments). These loans were made primarily to borrowers in Missouri, Kansas
and Illinois. The following table presents non-performing assets.
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Non-accrual loans.......................................... $15,004 $13,945
Past due 90 days and still accruing interest............... 26,743 24,806
------- -------
Total impaired loans....................................... 41,747 38,751
Foreclosed real estate..................................... 959 1,136
------- -------
Total non-performing assets.............................. $42,706 $39,887
======= =======
Non-performing assets to total loans....................... .73% .73%
Non-performing assets to total assets...................... .44% .41%
</TABLE>
The level of non-performing assets increased 7.1% over year end 1996 totals.
Non-accrual loans at June 30, 1997 consisted mainly of business loans ($7.5
million), business real estate loans ($3.6 million) and construction and land
development loans ($2.4 million). Loans which were 90 or more days past due
included credit card loans of $7.3 million, business loans of $9.2 million and
business real estate loans of $4.1 million.
The subsidiary banks issue Visa and MasterCard credit cards, and the balance
of these consumer loans generated through credit card sales drafts and cash
advances was $531.3 million at June 30, 1997. 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 $16.5 million, or 3.1% of credit
card loans at June 30, 1997. The annualized charge-off ratio for credit card
loans was 3.82% for the
12
<PAGE>
first six months of 1997 compared to 2.53% for the first six months of 1996.
The risk presented by the above loans and foreclosed real estate is not
considered by management to be materially adverse in relation to normal credit
risks generally taken by lenders.
PROVISION/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 current 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, 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), and reviews
and examinations by bank regulatory authorities. As a result of these factors,
the provision for loan losses increased $3.9 million compared to the first six
months of 1996, increased $1.9 million compared to the second quarter of 1996
and decreased $245 thousand from the first quarter of 1997. The allowance for
loan losses as a percentage of loans outstanding was 1.79% at June 30, 1997
and year-end 1996, and 1.87% at June 30, 1996. The allowance at June 30, 1997
was 243% of non-performing assets. Management believes that the allowance for
loan losses, which is a general reserve, is adequate to cover actual and
potential losses in the loan portfolio under current conditions. Other than as
previously noted, management is not aware of any significant risks in the
current loan portfolio due to concentrations of loans within any particular
industry, nor of any separate types of loans within a particular category of
non-performing loans that are unusually significant as to possible loan losses
when compared to the entire loan portfolio. Net charge-offs on loans totaled
$12.6 million for the first six months of 1997 compared to $10.9 million for
the first six months of 1996. Net charge-offs were $6.8 million for the second
quarter of 1997 compared to $5.4 million for the second quarter of 1996 and
$5.9 million for the first quarter of 1997. Net annualized charge-offs were
.48% of average loans for the second quarter of 1997 compared to .43% for the
first quarter of 1997 and .47% for the entire year of 1996.
NON-INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED JUNE
JUNE 30 30
------------------------ ------------------------
% %
1997 1996 CHANGE 1997 1996 CHANGE
------- ------- ------ ------- ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Trust fees................... $ 9,938 $ 8,584 15.8% $19,490 $17,416 11.9%
Deposit account charges and
other fees.................. 14,643 13,800 6.1 27,943 26,212 6.6
Credit card transaction fees. 6,975 6,279 11.1 13,258 12,046 10.1
Trading account profits and
commissions................. 1,721 1,432 20.2 3,587 3,158 13.6
Net gains on securities
transactions................ 176 690 (74.5) 322 1,914 (83.2)
Other........................ 8,932 7,875 13.4 19,348 14,710 31.5
------- ------- ------- -------
TOTAL NON-INTEREST INCOME.. $42,385 $38,660 9.6 $83,948 $75,456 11.3
======= ======= ======= =======
As a % of operating income
(net interest income plus
non-interest income)........ 30.2% 30.1% 30.5% 29.6%
======= ======= ======= =======
</TABLE>
Trust fees increased $2.1 million over the first six months of 1996 and $1.4
million over the second quarter of 1996, largely due to increases in the
number of accounts and value of assets managed. Deposit account charges and
other fees increased $1.7 million for the six months and $843 thousand for the
quarter primarily because of increases in overdraft and return item fees.
Increases in both merchant income and cardholder volume contributed to the
credit card fee growth. The decreases in gains on securities transactions were
mainly due to decreases ($1.2 million compared to six months 1996 and $484
thousand compared to second quarter 1996) in gains on sales from the available
for sale portfolio of the banking subsidiaries. Other income increased $4.6
million over
13
<PAGE>
the first six months of 1996 partly due to fee income growth, including ATM
fees, check fees and brokerage related commissions and fees. In addition, gains
on sales of vacant land, banking facilities, foreclosed real estate and loans
increased.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
30 SIX MONTHS ENDED JUNE 30
------------------------ --------------------------
1997 1996 % CHANGE 1997 1996 % CHANGE
------- ------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee
benefits.................. $43,708 $41,154 6.2% $ 86,706 $ 82,311 5.3%
Net occupancy.............. 4,965 5,261 (5.6) 10,443 10,653 (2.0)
Equipment.................. 4,124 3,885 6.2 8,078 7,438 8.6
Supplies and
communications............ 6,242 6,279 (.6) 12,625 12,333 2.4
Data processing............ 5,950 5,236 13.6 11,489 10,167 13.0
Marketing.................. 3,450 2,458 40.4 5,980 6,054 (1.2)
Goodwill and core deposit.. 2,415 2,832 (14.7) 4,829 5,756 (16.1)
Other...................... 13,039 11,860 9.9 25,857 22,861 13.1
------- ------- -------- --------
TOTAL NON-INTEREST
EXPENSE................. $83,893 $78,965 6.2 $166,007 $157,573 5.4
======= ======= ======== ========
</TABLE>
Salaries expense increased $5.6 million in the first six months of 1997
compared to 1996, partly due to a $2.6 million increase in incentive
compensation. A $1.2 million decrease in employee benefit expenses partially
offset salary increases. Data processing expense increased mainly in the area
of credit card processing. Marketing expense, although increasing $992 thousand
compared to the second quarter of 1996, was slightly less than 1996 for the six
month period. Decreases in goodwill and core deposit premium amortization
occurred because the amortization method expenses a greater proportionate
amount in early periods compared to later periods. The increases in other
expense in 1997 compared to the 1996 periods included increases in professional
fees and software expense and amortization. The efficiency ratio improved to
59.86% in the second quarter of 1997 compared to 61.75% in the second quarter
of 1996 and 60.73% in the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES
The liquid assets of the Parent consist primarily of commercial paper,
overnight repurchase agreements and equity securities, most of which are
readily marketable. The fair value of these investments was $86.1 million at
June 30, 1997 compared to $108.9 million at December 31, 1996. Included in the
fair values were unrealized net gains of $18.6 million at June 30, 1997 and
$14.6 million at December 31, 1996. The Parent's liabilities totaled $24.9
million at June 30, 1997, compared to $12.6 million at December 31, 1996.
Liabilities at June 30, 1997 included $11.7 million advanced mainly from
subsidiary bank holding companies in order to combine resources for short-term
investment in liquid assets. The Parent had no short-term borrowings from
affiliate banks or long-term debt during 1997. 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
investment securities. These liquid assets had a fair value of $2.66 billion at
June 30, 1997 and $2.94 billion at December 31, 1996. The available for sale
bank portfolio included an unrealized net gain in fair value of $3.7 million at
June 30, 1997 compared to an unrealized net gain of $12.0 million at December
31, 1996. U.S. government and federal agency securities comprised 62% and CMO's
and asset-backed securities comprised 32% of the banking subsidiaries'
available for sale portfolio at June 30, 1997.
In February 1997, the Board of Directors announced a reauthorization of its
two million share repurchase program. At June 30, 1997, the Company had
acquired 1,106,430 shares under the new authorization.
14
<PAGE>
The Company had an equity to asset ratio of 9.72% based on 1997 average
balances. As shown in the following table, the Company's capital exceeded the
minimum risk-based capital and leverage requirements of the regulatory
agencies.
<TABLE>
<CAPTION>
JUNE 30,
1997 DECEMBER 31, 1996
---------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk-Adjusted Assets................... $6,509,607 $6,283,359
Tier I Capital......................... 833,984 820,609
Total Capital.......................... 906,613 892,177
Tier I Capital Ratio................... 12.81% 13.06%
Total Capital Ratio.................... 13.93% 14.20%
Leverage Ratio......................... 8.84% 8.84%
</TABLE>
The Company's cash and cash equivalents (defined as "Cash and due from
banks") were $853.6 million at June 30, 1997, an increase of $20.4 million
over December 31, 1996. Contributing to the net cash inflow were a net
decrease of $304.8 million in short-term investments in federal funds sold and
resell agreements, $66.6 million in sales and maturities of investment
securities, net of purchases, and $51.4 million generated from operating
activities. Partially offsetting these net inflows were a $244.9 million
increase in loans, net of repayments, a $91.3 million net decrease in
borrowings of federal funds purchased and repurchase agreements, and treasury
stock purchases of $61.2 million. Total assets increased $95.8 million over
December 31, 1996, partly due to the acquisition of Shawnee State Bank in May
1997. Core deposits increased $199.2 million compared to December 31, 1996.
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 $2.32
billion, standby letters of credit totaled $151.5 million, and commercial
letters of credit totaled $40.5 million at June 30, 1997. 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 $238.3 million at June 30, 1997. The current credit exposure (or
replacement cost) across all off-balance-sheet derivative contracts covered by
the risk-based capital standards was $3.0 million at June 30, 1997. 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.
IMPACT OF ACCOUNTING STANDARDS
In January 1997, the Company adopted Statement of Financial Accounting
Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", for the provisions that became effective
at that date. The adoption did not have a material effect on the Company's
financial statements. Also, in December 1996, the Financial Accounting
Standards Board issued Statement No. 127, "Deferral of the Effective Date of
Certain Provisions of FAS Statement 125", which deferred to January 1, 1998
certain provisions of Statement No. 125. The adoption of Statement No. 127 is
not expected to have a material effect on the Company's financial statements.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings Per Share", which revises the calculation and presentation
provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The
Company believes the adoption of Statement No. 128 will not have a significant
effect on its reported earnings per share.
15
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
SIX MONTHS 1997 SIX MONTHS 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 (A)........... $1,738,807 $ 68,488 7.94% $1,684,056 $ 66,226 7.91%
Construction and
development........... 211,723 9,022 8.59 170,460 7,462 8.80
Real estate--business.. 783,297 33,342 8.58 701,763 30,148 8.64
Real estate--personal.. 1,029,388 40,359 7.91 985,777 38,817 7.92
Personal banking....... 1,276,169 54,704 8.64 1,259,151 54,539 8.71
Credit card............ 535,319 35,221 13.27 498,535 32,942 13.29
---------- -------- ----- ---------- -------- -----
Total loans.......... 5,574,703 241,136 8.72 5,299,742 230,134 8.73
---------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,668,522 51,745 6.25 1,751,479 53,544 6.15
State & municipal
obligations (A)....... 98,956 3,902 7.95 119,157 4,705 7.94
CMO's and asset-backed
securities............ 746,287 23,444 6.34 640,239 20,105 6.32
Trading account
securities............ 6,916 180 5.26 7,389 201 5.46
Other marketable
securities (A)........ 115,947 3,481 6.05 41,197 1,399 6.83
Other non-marketable
securities............ 43,147 1,286 6.01 34,178 254 1.49
---------- -------- ----- ---------- -------- -----
Total investment
securities.......... 2,679,775 84,038 6.32 2,593,639 80,208 6.22
---------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 296,420 8,012 5.45 516,512 13,946 5.43
---------- -------- ----- ---------- -------- -----
Total interest
earning assets...... 8,550,898 333,186 7.86 8,409,893 324,288 7.75
-------- ----- -------- -----
Less allowance for loan
losses................. (99,950) (98,638)
Unrealized gain on
investment securities.. 13,426 33,304
Cash and due from banks. 600,986 636,617
Land, buildings and
equipment--net......... 212,013 209,111
Other assets............ 186,456 202,212
---------- ----------
Total assets......... $9,463,829 $9,392,499
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 295,961 3,549 2.42 $ 305,777 3,623 2.38
Interest bearing
demand................ 3,758,152 62,427 3.35 3,651,096 60,513 3.33
Time open & C.D.'s of
less than $100,000.... 2,144,880 57,340 5.39 2,229,595 60,866 5.49
Time open & C.D.'s of
$100,000 and over..... 204,576 5,354 5.28 233,295 6,045 5.21
---------- -------- ----- ---------- -------- -----
Total interest
bearing deposits.... 6,403,569 128,670 4.05 6,419,763 131,047 4.11
---------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 424,222 10,291 4.89 455,409 10,848 4.79
Long-term debt and
other borrowings...... 13,299 484 7.33 14,615 521 7.17
---------- -------- ----- ---------- -------- -----
Total borrowings..... 437,521 10,775 4.97 470,024 11,369 4.86
---------- -------- ----- ---------- -------- -----
Total interest
bearing liabilities. 6,841,090 139,445 4.11% 6,889,787 142,416 4.16%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,644,689 1,526,573
Other liabilities....... 58,092 83,955
Stockholders' equity.... 919,958 892,184
---------- ----------
Total liabilities and
equity.............. $9,463,829 $9,392,499
========== ==========
Net interest margin
(T/E).................. $193,741 $181,872
======== ========
Net yield on interest
earning assets......... 4.57% 4.35%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
16
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
SECOND QUARTER 1997 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 (A)........... $1,778,888 $ 35,649 8.04% $1,686,451 $ 32,884 7.84%
Construction and
development........... 231,004 4,974 8.64 169,600 3,674 8.71
Real estate--business.. 802,726 17,258 8.62 702,606 15,107 8.65
Real estate--personal.. 1,049,905 20,718 7.91 990,822 19,287 7.83
Personal banking....... 1,286,797 27,731 8.64 1,253,783 27,076 8.69
Credit card............ 525,039 17,242 13.17 502,800 16,234 12.99
---------- -------- ----- ---------- -------- -----
Total loans.......... 5,674,359 123,572 8.73 5,306,062 114,262 8.66
---------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,651,765 25,749 6.25 1,789,272 27,311 6.14
State & municipal
obligations (A)....... 100,318 2,019 8.07 117,785 2,348 8.02
CMO's and asset-backed
securities............ 776,697 12,263 6.33 632,794 9,942 6.32
Trading account
securities............ 7,445 112 6.03 7,861 113 5.78
Other marketable
securities (A)........ 115,859 1,733 6.00 45,595 734 6.47
Other non-marketable
securities............ 42,880 684 6.40 33,940 173 2.05
---------- -------- ----- ---------- -------- -----
Total investment
securities.......... 2,694,964 42,560 6.33 2,627,247 40,621 6.22
---------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 231,329 3,235 5.61 453,629 6,064 5.38
---------- -------- ----- ---------- -------- -----
Total interest
earning assets...... 8,600,652 169,367 7.90 8,386,938 160,947 7.72
-------- ----- -------- -----
Less allowance for loan
losses................. (101,856) (99,054)
Unrealized gain on
investment securities.. 3,149 14,220
Cash and due from banks. 606,699 615,730
Land, buildings and
equipment--net......... 213,801 208,242
Other assets............ 190,743 196,892
---------- ----------
Total assets......... $9,513,188 $9,322,968
========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 306,157 1,857 2.43 $ 305,729 1,789 2.35
Interest bearing
demand................ 3,768,355 31,451 3.35 3,664,421 30,036 3.30
Time open & C.D.'s of
less than $100,000.... 2,163,150 29,129 5.40 2,213,390 29,682 5.39
Time open & C.D.'s of
$100,000 and over..... 204,539 2,722 5.34 234,170 2,984 5.13
---------- -------- ----- ---------- -------- -----
Total interest
bearing deposits.... 6,442,201 65,159 4.06 6,417,710 64,491 4.04
---------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 400,799 5,012 5.02 429,469 5,067 4.75
Long-term debt and
other borrowings...... 12,797 234 7.33 14,470 263 7.32
---------- -------- ----- ---------- -------- -----
Total borrowings..... 413,596 5,246 5.09 443,939 5,330 4.83
---------- -------- ----- ---------- -------- -----
Total interest
bearing liabilities. 6,855,797 70,405 4.12% 6,861,649 69,821 4.09%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,688,916 1,507,302
Other liabilities....... 49,556 71,369
Stockholders' equity.... 918,919 882,648
---------- ----------
Total liabilities and
equity................ $9,513,188 $9,322,968
========== ==========
Net interest margin
(T/E).................. $ 98,962 $ 91,126
======== ========
Net yield on interest
earning assets......... 4.62% 4.37%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
17
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Commerce Bancshares, Inc. 6/30/97 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 853,623
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 64,435
<TRADING-ASSETS> 12,142
<INVESTMENTS-HELD-FOR-SALE> 2,682,951<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,811,167<F3>
<ALLOWANCE> 103,730
<TOTAL-ASSETS> 9,793,986
<DEPOSITS> 8,358,882
<SHORT-TERM> 435,515
<LIABILITIES-OTHER> 58,565
<LONG-TERM> 10,301
0
0
<COMMON> 187,827
<OTHER-SE> 742,896
<TOTAL-LIABILITIES-AND-EQUITY> 9,793,986
<INTEREST-LOAN> 240,643
<INTEREST-INVEST> 82,316<F4>
<INTEREST-OTHER> 8,012
<INTEREST-TOTAL> 331,151
<INTEREST-DEPOSIT> 128,670
<INTEREST-EXPENSE> 139,420
<INTEREST-INCOME-NET> 191,731
<LOAN-LOSSES> 14,831
<SECURITIES-GAINS> 322
<EXPENSE-OTHER> 166,007
<INCOME-PRETAX> 94,841
<INCOME-PRE-EXTRAORDINARY> 61,732
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,732
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.57<F5>
<LOANS-NON> 15,004
<LOANS-PAST> 26,743
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 98,223
<CHARGE-OFFS> 16,930
<RECOVERIES> 4,285
<ALLOWANCE-CLOSE> 103,730
<ALLOWANCE-DOMESTIC> 103,730
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Certificates of deposit of $297,000 are included in Investments-
Held-For-Sale.
<F2>Excludes non-marketable investment securities of $41,682,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $180,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
</FN>
</TABLE>
