<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, 1998
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) (IRS 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.
Yes X No
As of August 4, 1998, the registrant had outstanding 57,843,281 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, 1998 and December
31, 1997 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, including Quantitative and
Qualitative Disclosures about Market Risk
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 15, 1998. 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>
Fred L. Brown.......................................... 30,118,473 121,368
David W. Kemper........................................ 30,127,992 111,849
Benjamin F. Rassieur, III.............................. 30,129,196 110,645
Andrew C. Taylor....................................... 30,119,537 120,304
Robert H. West......................................... 30,128,200 111,641
</TABLE>
ITEM 5. OTHER INFORMATION
Pursuant to the By-Laws of the Corporation, in order for a stockholder to
bring business before the Annual Meeting, timely notice in the form required
by the By-Laws must be made. The stockholder must be a stockholder of record
on the date the notice is given and on the record date for determination of
stockholders entitled to vote at the Annual Meeting. To be timely, a
stockholder's notice must be delivered or mailed to the Secretary at 1000
Walnut, PO Box 13686, 18th Floor, Kansas City, Missouri 64199-3686 not less
than sixty days nor more than ninety days prior to the date of the Annual
Meeting. The date of the next Annual Meeting is April 21, 1999. To be in
proper written form the notice to the Secretary must set forth as to each
matter the stockholder proposes to bring before the Annual Meeting (i) a brief
description of the business and the reasons for conducting such business at
the Annual Meeting, (ii) the name and record address of such stockholder,
(iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by such stockholder,
(iv) a description of all arrangements or understandings between such
stockholder and any other person or persons (including their name) in
connection with the proposal of such business by such stockholder and any
material interest of such stockholder in such business, and (v) a
representation that such stockholder intends to appear in person or by proxy
at the Annual Meeting to bring such business before the meeting.
2
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(10) Material Contracts:
(a) Commerce Bancshares, Inc. Executive Incentive Compensation Plan
Amendment and Restatement of July 31, 1998
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
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.
By /s/ J. Daniel Stinnett
__________________
J. Daniel Stinnett
Vice President & Secretary
Date: August 10, 1998
By /s/ Jeffery D. Aberdeen
____________________
Jeffery D. Aberdeen
Controller
(Chief Accounting Officer)
Date: August 10, 1998
3
<PAGE>
SCHEDULE 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 December 31
1998 1997
----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Loans, net of unearned income........................ $ 6,608,331 $ 6,224,381
Allowance for loan losses............................ (112,990) (105,918)
----------- -----------
NET LOANS........................................ 6,495,341 6,118,463
----------- -----------
Investment securities:
Available for sale................................. 2,560,484 2,614,040
Trading account.................................... 20,232 6,477
Other non-marketable............................... 28,419 44,414
----------- -----------
TOTAL INVESTMENT SECURITIES...................... 2,609,135 2,664,931
----------- -----------
Federal funds sold and securities purchased under
agreements to resell................................ 100,035 132,980
Cash and due from banks.............................. 676,878 978,239
Land, buildings and equipment, net................... 216,643 214,209
Goodwill and core deposit premium, net............... 80,786 85,377
Customers' acceptance liability...................... 599 900
Other assets......................................... 156,797 111,842
----------- -----------
TOTAL ASSETS..................................... $10,336,214 $10,306,941
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand........................ $ 1,906,248 $ 2,124,828
Savings and interest bearing demand................ 4,333,145 4,209,141
Time open and C.D.'s of less than $100,000......... 2,190,439 2,150,719
Time open and C.D.'s of $100,000 and over.......... 247,774 215,890
----------- -----------
TOTAL DEPOSITS................................... 8,677,606 8,700,578
Federal funds purchased and securities sold under
agreements to repurchase............................ 513,461 512,558
Long-term debt and other borrowings.................. 3,887 7,207
Accrued interest, taxes and other liabilities........ 117,725 104,914
Acceptances outstanding.............................. 599 900
----------- -----------
TOTAL LIABILITIES................................ 9,313,278 9,326,157
----------- -----------
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 58,645,813
shares in 1998
and 58,285,813 shares in 1997..................... 293,229 291,429
Capital surplus.................................... 34,477 48,704
Retained earnings.................................. 689,080 626,387
Treasury stock of 580,463 shares in 1998
and 315,894 shares in 1997, at cost............... (27,945) (14,252)
Unearned employee benefits......................... (1,000) (601)
Unrealized securities gains, net................... 35,095 29,117
----------- -----------
TOTAL STOCKHOLDERS' EQUITY....................... 1,022,936 980,784
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY....... $10,336,214 $10,306,941
=========== ===========
</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
MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans............ $ 137,740 $ 123,329 $ 272,060 $ 240,643
Interest on investment securities..... 39,553 41,775 78,741 82,496
Interest on federal funds sold and
securities purchased under agreements
to resell ........................... 2,858 3,235 6,903 8,012
--------- --------- --------- ---------
TOTAL INTEREST INCOME............. 180,151 168,339 357,704 331,151
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing demand. 35,673 33,308 70,496 65,976
Time open and C.D.'s of less than
$100,000........................... 29,507 29,129 58,486 57,340
Time open and C.D.'s of $100,000 and
over............................... 3,356 2,722 6,462 5,354
Interest on federal funds purchased
and securities sold under agreements
to repurchase........................ 6,309 5,012 12,773 10,291
Interest on long-term debt and other
borrowings........................... 110 224 217 459
--------- --------- --------- ---------
TOTAL INTEREST EXPENSE............ 74,955 70,395 148,434 139,420
--------- --------- --------- ---------
NET INTEREST INCOME............... 105,196 97,944 209,270 191,731
Provision for loan losses............. 11,410 7,293 22,126 14,831
--------- --------- --------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES........ 93,786 90,651 187,144 176,900
--------- --------- --------- ---------
NON-INTEREST INCOME
Trust fees............................ 13,073 9,938 24,726 19,490
Deposit account charges and other
fees................................. 15,718 14,643 30,107 27,943
Credit card transaction fees.......... 8,901 6,975 15,996 13,258
Trading account profits and
commissions ......................... 1,827 1,721 4,108 3,587
Net gains on securities transactions.. 4,667 176 6,088 322
Other................................. 11,555 8,932 24,675 19,348
--------- --------- --------- ---------
TOTAL NON-INTEREST INCOME......... 55,741 42,385 105,700 83,948
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and employee benefits ....... 49,879 43,708 98,385 86,706
Net occupancy......................... 6,366 4,965 11,659 10,443
Equipment............................. 4,399 4,124 8,665 8,078
Supplies and communication............ 7,101 6,242 14,199 12,625
Data processing....................... 7,117 5,950 14,054 11,489
Marketing............................. 3,479 3,450 6,238 5,980
Goodwill and core deposit............. 2,295 2,415 4,591 4,829
Other................................. 12,698 13,039 25,964 25,857
--------- --------- --------- ---------
TOTAL NON-INTEREST EXPENSE........ 93,334 83,893 183,755 166,007
--------- --------- --------- ---------
Income before income taxes............ 56,193 49,143 109,089 94,841
Less income taxes..................... 18,699 16,810 37,112 33,109
--------- --------- --------- ---------
NET INCOME........................ $ 37,494 $ 32,333 $ 71,977 $ 61,732
========= ========= ========= =========
Net income per share--basic .......... $ .64 $ .55 $ 1.23 $ 1.05
========= ========= ========= =========
Net income per share--diluted ........ $ .63 $ .54 $ 1.21 $ 1.04
========= ========= ========= =========
Cash dividends per common share....... $ .145 $ .130 $ .290 $ .260
========= ========= ========= =========
</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 UNREALIZED
SHARES COMMON CAPITAL RETAINED TREASURY EMPLOYEE SECURITIES
ISSUED STOCK SURPLUS EARNINGS STOCK BENEFITS GAINS, NET TOTAL
---------- -------- -------- -------- -------- -------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1998. 58,285,813 $291,429 $ 48,704 $626,387 $(14,252) $ (601) $29,117 $ 980,784
Net income............. 71,977 71,977
Change in unrealized
securities gains, net. 5,839 5,839
Pooling acquisition.... 360,000 1,800 (11,346) 7,639 16,101 139 14,333
Purchase of treasury
stock................. (36,834) (36,834)
Sales under option and
benefit plans......... (2,893) 6,512 3,619
Issuance of stock under
restricted stock award
plan.................. 12 528 (540) --
Restricted stock award
amortization.......... 141 141
Cash dividends paid
($.290 per share)..... (16,923) (16,923)
---------- -------- -------- -------- -------- ------- ------- ----------
BALANCE JUNE 30, 1998... 58,645,813 $293,229 $ 34,477 $689,080 $(27,945) $(1,000) $35,095 $1,022,936
========== ======== ======== ======== ======== ======= ======= ==========
Balance January 1, 1997. 56,348,053 $281,740 $ 10,379 $621,689 $ (7,422) $ (340) $18,225 $ 924,271
Net income............. 61,732 61,732
Change in unrealized
securities gains, net. (2,222) (2,222)
Pooling acquisition.... (37,200) 17,612 42,352 22,764
Purchase of treasury
stock................. (61,176) (61,176)
Sales under option and
benefit plans......... (182) 691 509
Issuance of stock under
restricted stock award
plan.................. 18 340 (358) --
Restricted stock award
amortization.......... 83 83
Cash dividends paid
($.260 per share)..... (15,238) (15,238)
---------- -------- -------- -------- -------- ------- ------- ----------
Balance June 30, 1997... 56,348,053 $281,740 $(26,985) $685,795 $(25,215) $ (615) $16,003 $ 930,723
========== ======== ======== ======== ======== ======= ======= ==========
</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
--------------------
1998 1997
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income.............................................. $ 71,977 $ 61,732
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses............................. 22,126 14,831
Provision for depreciation and amortization........... 16,171 14,931
Accretion of investment security discounts............ (2,340) (2,801)
Amortization of investment security premiums.......... 4,235 4,893
Net gains on sales of investment securities (A)....... (6,088) (322)
Net increase in trading account securities............ (11,682) (1,629)
(Increase) decrease in interest receivable............ (2,006) 905
Decrease in interest payable.......................... (1,956) (1,817)
Other changes, net.................................... (22,481) (39,335)
--------- ---------
Net cash provided by operating activities........... 67,956 51,388
--------- ---------
INVESTING ACTIVITIES:
Net cash received in acquisition........................ 4,044 7,103
Proceeds from sales of investment securities (A)........ 186,309 196,839
Proceeds from maturities of investment securities (A)... 535,052 432,138
Purchases of investment securities (A).................. (602,339) (562,363)
Net decrease in federal funds sold and securities
purchased
under agreements to resell............................. 41,170 304,755
Net increase in loans................................... (340,125) (244,948)
Purchases of premises and equipment..................... (12,515) (15,947)
Sales of premises and equipment......................... 1,697 4,904
--------- ---------
Net cash provided (used) by investing activities.... (186,707) 122,481
--------- ---------
FINANCING ACTIVITIES:
Net increase (decrease) in non-interest bearing demand,
savings,
and interest bearing demand deposits................... (140,572) 27,767
Net increase (decrease) in time open and C.D.'s......... 13,506 (10,138)
Net decrease in federal funds purchased and securities
sold
under agreements to repurchase ........................ (913) (91,294)
Repayment of long-term debt............................. (3,326) (3,844)
Purchases of treasury stock............................. (35,977) (61,171)
Exercise of stock options by employees.................. 1,595 412
Cash dividends paid on common stock..................... (16,923) (15,238)
--------- ---------
Net cash used by financing activities............... (182,610) (153,506)
--------- ---------
Increase (decrease) in cash and cash equivalents.... (301,361) 20,363
Cash and cash equivalents at beginning of year.......... 978,239 833,260
--------- ---------
Cash and cash equivalents at June 30................ $ 676,878 $ 853,623
========= =========
</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 $34,842,000
in 1998 and $35,525,000 in 1997. Interest paid on deposits and borrowings for
the six month period was $150,304,000 in 1998 and $141,130,000 in 1997.
See accompanying notes to financial statements.
7
<PAGE>
SCHEDULE 5
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(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 1997 data to conform to current year
presentation. Results of operation for the six month period ended June 30,
1998 are not necessarily indicative of results to be attained for any other
period.
The significant accounting policies followed in the preparation of the
quarterly financial statements are the same as those disclosed in the 1997
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.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED JUNE MONTHS ENDED JUNE
30 30
----------------- -----------------
1998 1997 1998 1997
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance, beginning of period......... $108,569 $ 99,906 $105,918 $ 98,223
-------- -------- -------- --------
Additions:
Provision for loan losses.......... 11,410 7,293 22,126 14,831
Allowance for loan losses of
acquired banks.................... -- 3,321 964 3,321
-------- -------- -------- --------
Total additions.................. 11,410 10,614 23,090 18,152
-------- -------- -------- --------
Deductions:
Loan losses........................ 9,965 8,962 20,956 16,930
Less recoveries on loans........... 2,976 2,172 4,938 4,285
-------- -------- -------- --------
Net loan losses.................. 6,989 6,790 16,018 12,645
-------- -------- -------- --------
Balance, June 30..................... $112,990 $103,730 $112,990 $103,730
======== ======== ======== ========
</TABLE>
At June 30, 1998, non-performing assets were $44,073,000, which was .67% of
total loans and .43% of total assets. This balance consisted of $18,275,000 in
loans not accruing interest, $23,784,000 in loans past due 90 days and still
accruing interest, and $2,014,000 in foreclosed real estate.
8
<PAGE>
3. INVESTMENT SECURITIES
Investment securities, at fair value, consist of the following at June 30,
1998 and December 31, 1997.
<TABLE>
<CAPTION>
JUNE 30 December
1998 31 1997
---------- ----------
(IN THOUSANDS)
<S> <C> <C>
Available for sale:
U.S. government and federal agency obligations.... $1,410,272 $1,461,593
State and municipal obligations................... 105,690 94,115
CMO's and asset-backed securities................. 881,338 837,056
Other debt securities............................. 118,285 173,972
Equity securities................................. 44,899 47,304
Trading account securities.......................... 20,232 6,477
Other non-marketable securities..................... 28,419 44,414
---------- ----------
Total investment securities..................... $2,609,135 $2,664,931
========== ==========
</TABLE>
4. COMMON STOCK
The shares used in the calculation of basic and diluted income per share are
shown below.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30 JUNE 30
------------- -------------
1998 1997 1998 1997
------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Weighted average common shares outstanding... 58,449 58,628 58,290 58,588
Stock options................................ 1,060 637 1,052 665
------ ------ ------ ------
59,509 59,265 59,342 59,253
====== ====== ====== ======
</TABLE>
On February 6, 1998, the Board of Directors declared a three for two stock
split, effected in the form of a stock dividend, on the Company's $5 par
common stock. Accordingly, the number of shares issued was increased from
39,097,209 to 58,645,813. All share and per share data in this report have
been restated to reflect the stock split.
5. ACQUISITION ACTIVITY
On March 1, 1998, the Company completed its acquisition of City National
Bank of Pittsburg, Kansas, with assets of $120 million. The transaction was
recorded as a pooling of interests. The acquisition did not have a material
impact on the financial statements of the Company. Financial statements for
prior periods have not been restated because such restated amounts do not
differ materially from the Company's historical financial statements.
The Company has signed definitive agreements to acquire the Kansas banks of
Columbus State Bank, Fidelity State Bank in Garden City, and Heritage Bank of
Olathe. These banks have combined assets of approximately $310 million and
eleven locations. The mergers are expected to close before year-end 1998,
subject to regulatory and shareholder approval. They are not expected to have
a material impact on the Company's financial statements.
6. COMPREHENSIVE INCOME
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", in the
first quarter of 1998. SFAS No. 130 requires the reporting of comprehensive
income and its components. Comprehensive income is defined as the change in
equity from transactions and other events and circumstances from non-owner
sources,
9
<PAGE>
and excludes investments by and distributions to owners. Comprehensive income
includes net income and other items of comprehensive income meeting the above
criteria. The Company's only component of other comprehensive income is the
unrealized holding gains and losses on available for sale securities.
<TABLE>
<CAPTION>
FOR THE SIX
FOR THE THREE MONTHS MONTHS ENDED
ENDED JUNE 30 JUNE 30
---------------------- ---------------
1998 1997 1998 1997
---------- ---------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income....................... $ 37,494 $ 32,333 $71,977 $61,732
Change in unrealized gains
(losses), net................... (8,901) 15,004 5,978 (2,222)
---------- ---------- ------- -------
Comprehensive income............. $ 28,593 $ 47,337 $77,955 $59,510
========== ========== ======= =======
</TABLE>
10
<PAGE>
SCHEDULE 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JUNE 30, 1998
(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 1997 Annual Report on Form 10-K. Results of operations for the six
month period ended June 30, 1998 are not necessarily indicative of results to
be attained for any other period. In addition, this report contains certain
forward-looking statements which are subject to risks and uncertainties,
including changes in economic conditions in the Company's market area, changes
in policies by regulatory agencies, fluctuations in interest rates, demand for
loans in the Company's market area and technology changes. These factors could
cause actual results to differ materially from those reflected in such
forward-looking statements.
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
-------------- --------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net income--basic......................... $ .64 $ .55 $ 1.23 $ 1.05
Net income--diluted....................... .63 .54 1.21 1.04
Cash dividends............................ .145 .130 .290 .260
Book value................................ 17.62 15.96
Market price.............................. 48.81 28.73
SELECTED RATIOS
(Based on average balance sheets)
Loans to deposits......................... 75.30% 69.79% 74.71% 69.27%
Non-interest bearing deposits to total de-
posits................................... 21.87 20.77 21.86 20.44
Equity to loans........................... 15.76 16.19 15.79 16.50
Equity to deposits........................ 11.86 11.30 11.80 11.43
Equity to total assets.................... 9.97 9.66 9.91 9.72
Return on total assets.................... 1.46 1.36 1.42 1.32
Return on realized stockholders' equity... 15.18 14.14 14.86 13.66
Return on total stockholders' equity...... 14.63 14.11 14.32 13.53
(Based on end-of-period data)
Efficiency ratio.......................... 58.26 58.14 58.00 58.53
Tier I capital ratio...................... 12.28 12.81
Total capital ratio....................... 13.38 13.93
Leverage ratio............................ 8.94 8.84
</TABLE>
SUMMARY
Consolidated net income for the second quarter of 1998 was $37.5 million; a
$5.2 million or 16.0% increase over the second quarter of 1997. Diluted
earnings per share increased 16.7% to $.63 for the second quarter of 1998
compared to $.54 for the second quarter of 1997. The second quarter of 1998
was the Company's ninth consecutive quarter of double-digit growth in earnings
per share. Return on average assets for the quarter was 1.46% compared to
1.36% last year. Return on average realized stockholders' equity for the
second quarter was 15.18% compared to 14.14% last year. The Company's
efficiency ratio was 58.26% for the second quarter of 1998.
Consolidated net income for the first six months of 1998 was $72.0 million,
a 16.6% increase over the first six months of 1997. Diluted earnings per share
was $1.21 compared to $1.04 last year. Compared to last year, net interest
income increased 9.1%, non-interest income increased 25.9%, and non-interest
expense increased 10.7%. Year to date average loans have grown by 15.1%. A
productive sales force has contributed measurably to revenue growth and has
been rewarded with higher incentive compensation.
11
<PAGE>
A three for two stock split in the form of a 50% stock dividend was
distributed on March 30, 1998. All share and per share data in this report has
been restated to reflect the stock split.
The Company completed its acquisition of City National Bank of Pittsburg,
Kansas on March 1, 1998. The bank has four locations and approximately $120
million in assets. The acquisition was accounted for as a pooling of
interests, and stock valued at $34.3 million was exchanged in the transaction.
The acquisition did not have a material impact on the financial statements of
the Company.
The Company has signed definitive agreements to acquire three Kansas banks:
Columbus State Bank, Fidelity State Bank in Garden City, and Heritage Bank of
Olathe. These banks have combined assets of approximately $310 million and
eleven locations. Subject to regulatory and stockholder approvals, the
transactions are expected to close before year-end. They are not expected to
have a material impact on the financial statements of the Company.
NET INTEREST INCOME
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, 1998 VS. 1997 JUNE 30, 1998 VS. 1997
------------------------- -------------------------
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.................. $17,038 $(2,595) $14,443 $33,823 $(2,341) $31,482
Investment securities:
U.S. government and
federal agency
securities.......... (3,307) (236) (3,543) (7,173) (38) (7,211)
State and municipal
obligations......... (3) (50) (53) (107) 29 (78)
Other securities..... 1,428 (77) 1,351 3,407 73 3,480
Federal funds sold and
securities purchased
under agreements to
resell................ (347) (30) (377) (1,270) 161 (1,109)
------- ------- ------- ------- ------- -------
Total interest
income............ 14,809 (2,988) 11,821 28,680 (2,116) 26,564
------- ------- ------- ------- ------- -------
INTEREST EXPENSE:
Deposits:
Savings.............. 95 (30) 65 221 (13) 208
Interest bearing
demand.............. 2,055 245 2,300 5,371 (1,059) 4,312
Time open & C.D.'s of
less than $100,000.. 335 43 378 991 155 1,146
Time open & C.D.'s of
$100,000 and over... 545 89 634 937 171 1,108
Federal funds purchased
and securities sold
under agreements to
repurchase............ 1,276 21 1,297 2,024 458 2,482
Long-term debt and
other borrowings...... (119) 2 (117) (241) 6 (235)
------- ------- ------- ------- ------- -------
Total interest
expense........... 4,187 370 4,557 9,303 (282) 9,021
------- ------- ------- ------- ------- -------
NET INTEREST INCOME,
FULLY TAXABLE EQUIVALENT
BASIS................... $10,622 $(3,358) $ 7,264 $19,377 $(1,834) $17,543
======= ======= ======= ======= ======= =======
</TABLE>
12
<PAGE>
Net interest income for the second quarter of 1998 was $105.2 million, a
7.4% increase over the second quarter of 1997, and for the first six months
was $209.3 million, a 9.1% increase over last year. For the quarter, the net
interest rate margin was 4.58% compared with 4.62% last year, while the six
month margin was 4.62% in 1998 and 4.57% in 1997.
Total interest income increased $11.8 million, or 7.0%, over the second
quarter of 1997, mainly due to an increase of $850.0 million in average loan
balances. Partially offsetting this increase was a decline of 25 basis points
in average rates earned on loans and a decrease of $121.3 million in average
balances of investment securities. The average tax equivalent yield on
interest earning assets was 7.81% for the second quarter of 1998 compared to
7.90% last year.
Compared to the first six months of 1997, total interest income increased
$26.6 million, or 8.0%. Average loan balances increased $842.1 million, which
contributed income of $33.8 million. This increase was partially offset by the
effect of decreases in average loan rates and average balances of investment
securities and short-term federal funds sold and resell agreements.
Total interest expense (net of capitalized interest) increased $4.6 million,
or 6.5%, compared to the second quarter of 1997 due mainly to growth in the
Company's Premium Money Market deposit accounts and higher average borrowings
of federal funds purchased and repurchase agreements. The average cost of
funds was 4.13% for the second quarter of 1998 and 4.12% for the second
quarter of 1997.
Total interest expense increased $9.0 million, or 6.5%, in the first six
months of 1998 compared to 1997. Higher average balances in the Premium Money
Market deposit accounts were partially offset by lower rates paid on interest
checking deposits. Higher average borrowings of federal funds purchased and
repurchase agreements also contributed to the increase in expense. Average
core deposits (deposits excluding short-term certificates of deposit over
$100,000) for the first six months of 1998 increased 6.9% compared to the same
period last year. Core deposits supported 92% of average earning assets in
1998.
Summaries of average assets and liabilities and the corresponding average
rates earned/paid appear on pages 18 and 19.
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
1998 1997
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Non-accrual loans.................................... $18,275 $23,382
Past due 90 days and still accruing interest......... 23,784 24,383
------- -------
Total impaired loans............................. 42,059 47,765
Foreclosed real estate............................... 2,014 994
------- -------
Total non-performing assets...................... $44,073 $48,759
======= =======
Non-performing assets to total loans................. .67% .78%
Non-performing assets to total assets................ .43% .47%
</TABLE>
The level of non-performing assets decreased $4.7 million, or 9.6%, from
year end 1997 totals. Most of the decrease occurred in the non-accrual loan
category. Non-accrual loans at June 30, 1998 consisted mainly of construction
and land development loans ($7.9 million), business loans ($5.2 million) and
business real estate loans ($3.5 million). Loans which were 90 or more days
past due and still accruing interest included credit card loans of $7.4
million and business loans of $8.6 million.
13
<PAGE>
A subsidiary bank issues Visa and MasterCard credit cards, and credit card
loans outstanding were $509.4 million at June 30, 1998. 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 $15.5 million, or 3.0% of credit
card loans at June 30, 1998. The annualized charge-off ratio for credit card
loans was 3.89% for the first six months of 1998 compared to 3.82% for the
first six months of 1997. 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
<TABLE>
<CAPTION>
SIX MONTHS ENDED
THREE MONTHS ENDED JUNE 30
----------------------------------------- ---------------------
Mar. 31, 1998 JUNE 30, 1998 June 30, 1997 1998 1997
------------- ------------- ------------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Provision for loan loss-
es..................... $10,716 $11,410 $7,293 $22,126 $14,831
Net charge-offs......... 9,029 6,989 6,790 16,018 12,645
Net annualized charge-
offs as a percentage of
average loans.......... .58% .43% .48% .50% .46%
</TABLE>
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. The allowance for loan losses
as a percentage of loans outstanding was 1.71% at June 30, 1998, compared to
1.70% at year-end 1997 and 1.79% at June 30, 1997. The allowance at June 30,
1998 was 256% 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.
NON-INTEREST INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
30 SIX MONTHS ENDED JUNE 30
-------------------------- ---------------------------
1998 1997 % Change 1998 1997 % Change
------- ------- -------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Trust fees.............. $13,073 $ 9,938 31.5% $ 24,726 $19,490 26.9%
Deposit account charges
and other fees......... 15,718 14,643 7.3 30,107 27,943 7.7
Credit card transaction
fees................... 8,901 6,975 27.6 15,996 13,258 20.7
Trading account profits
and commissions........ 1,827 1,721 6.2 4,108 3,587 14.5
Net gains on securities
transactions........... 4,667 176 N/M 6,088 322 N/M
Other................... 11,555 8,932 29.4 24,675 19,348 27.5
------- ------- -------- -------
TOTAL NON-INTEREST
INCOME............. $55,741 $42,385 31.5 $105,700 $83,948 25.9
======= ======= ======== =======
As a % of operating
income (net interest
income plus non-
interest income)....... 34.6% 30.2% 33.6% 30.5%
======= ======= ======== =======
</TABLE>
Non-interest income rose 25.9% over the first six months of last year and
31.5% over the second quarter of last year. Trust fees increased $5.2 million
over the six months of 1997 and $3.1 million over the second quarter of 1997,
mainly due to account growth and increases in the value of assets managed.
Increases in credit card
14
<PAGE>
transaction fees were due to growth in merchant income and sales volumes.
Sales of equity securities by the Parent and a venture capital subsidiary
resulted in a substantial increase in securities gains over the prior periods.
Other income increased $5.3 million over the first six months of 1997 and
increased $2.6 million over the second quarter of 1997 due to increases in
gains on loan sales and various types of fee income growth, including non-
customer ATM fees, cash management income and brokerage related commissions
and fees.
NON-INTEREST EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE
30 SIX MONTHS ENDED JUNE 30
------------------------ --------------------------
1998 1997 % Change 1998 1997 % Change
------- ------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee
benefits.................. $49,879 $43,708 14.1% $ 98,385 $ 86,706 13.5%
Net occupancy.............. 6,366 4,965 28.2 11,659 10,443 11.6
Equipment.................. 4,399 4,124 6.7 8,665 8,078 7.3
Supplies and communication. 7,101 6,242 13.8 14,199 12,625 12.5
Data processing............ 7,117 5,950 19.6 14,054 11,489 22.3
Marketing.................. 3,479 3,450 .8 6,238 5,980 4.3
Goodwill and core deposit.. 2,295 2,415 (5.0) 4,591 4,829 (4.9)
Other...................... 12,698 13,039 (2.6) 25,964 25,857 .4
------- ------- -------- --------
TOTAL NON-INTEREST
EXPENSE............... $93,334 $83,893 11.3 $183,755 $166,007 10.7
======= ======= ======== ========
Full-time equivalent
employees................. 5,169 4,957 4.3 5,153 4,906 5.0
======= ======= ======== ========
</TABLE>
Non-interest expense rose $17.7 million, or 10.7%, compared to the first six
months of 1997 and increased $9.4 million, or 11.3%, compared to the second
quarter of 1997. Salaries and employee benefits increased $11.7 million over
the first six months of 1997 and increased $6.2 million over the second
quarter of 1997. Incentive compensation on new business, additional employees
and merit increases contributed to the salary increases. Net occupancy expense
increased $1.2 million over the first six months of 1998 and increased $1.4
million over the second quarter of 1997, partially due to an accrual for
departmental moving and expansion costs. Data processing expense increased
$2.6 million and $1.2 million over the 1997 year and quarter to date periods,
partly because of higher charges by information service providers. The
efficiency ratio was 58.26% in the second quarter of 1998 compared to 58.14%
in the second quarter of 1997 and 57.74% in the first quarter of 1998.
A comprehensive plan to attain Year 2000 compliance has been developed and
the process of analysis, testing, verification and implementation is underway
for all major financial, operational and information systems. The Company
expects to substantially complete programming changes and testing of internal
mission critical systems by December 31, 1998 with implementation anticipated
to occur by March 31, 1999. The associated costs, which are expensed as
incurred, have not been material to date and are not expected to have a
material impact on the Company's earnings in the future. These costs do not
include computer equipment and software that is scheduled to be replaced in
the normal course of business. Additionally, the Company continues to
communicate with significant customers and vendors to determine their Year
2000 plans and target dates. The Company will monitor the progress of mission
critical internal and external systems and services testing and implementation
procedures and will implement contingency plans in the event that such
procedures fail to achieve their objectives. There can be no assurance that
any contingency plans will fully mitigate the effects of any such failure.
The Company's estimate of Year 2000 project costs and the dates set forth
above by which the Company expects to substantially complete mission critical
system programming and testing and implementation are based on management's
best current estimates, which were derived utilizing numerous assumptions
about future events. There can be no guarantee that these estimates will be
achieved, and actual results could differ materially from those anticipated.
15
<PAGE>
INCOME TAXES
The Company's income tax expense was $37.1 million for the first six months
of 1998 and $33.1 for the same period in 1997, resulting in effective tax
rates of 34.0% and 34.9%, respectively. The 1998 second quarter effective tax
rate was 33.3% compared to 34.2% for the second quarter of 1997. The lower
1998 second quarter rate was partially due to the contribution of an
appreciated equity security.
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 $117.9 million at
June 30, 1998 compared to $92.4 million at December 31, 1997. Included in the
fair values were unrealized net gains of $25.7 million at June 30, 1998 and
$20.7 million at December 31, 1997. The Parent's liabilities totaled $89.6
million at June 30, 1998, compared to $10.6 million at December 31, 1997.
Liabilities at June 30, 1998 included $72.6 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 1998. 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 $2.52 billion
at June 30, 1998 and $2.66 billion at December 31, 1997. The available for
sale bank portfolio included an unrealized net gain in fair value of $26.2
million at June 30, 1998 compared to an unrealized net gain of $20.0 million
at December 31, 1997. U.S. government and federal agency securities comprised
58% and CMO's and asset-backed securities comprised 36% of the banking
subsidiaries' available for sale portfolio at June 30, 1998. The estimated
average maturity of the available for sale investment portfolio is 2.6 years
at June 30, 1998 and December 31, 1997.
In February 1998, the Board of Directors announced the approval of
additional purchases of the Company's common stock, bringing the total
purchase authorization to 3,000,000 shares. At June 30, 1998, the Company had
acquired 531,240 shares under this authorization.
The Company had an equity to asset ratio of 9.91% based on 1998 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, 1998 December 31, 1997
------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Risk-Adjusted Assets...................... $7,401,864 $7,178,225
Tier I Capital............................ 909,068 868,535
Total Capital............................. 990,702 949,291
Tier I Capital Ratio...................... 12.28% 12.10%
Total Capital Ratio....................... 13.38% 13.22%
Leverage Ratio............................ 8.94% 8.81%
</TABLE>
The Company's cash and cash equivalents (defined as "Cash and due from
banks") were $676.9 million at June 30, 1998, a decrease of $301.4 million
from December 31, 1997. Contributing to the net cash outflow were a $340.1
million increase in loans, net of repayments, treasury stock purchases of
$36.0 million and a net decrease in deposits of $127.1 million. Partially
offsetting these net outflows were $119.0 million in maturities and sales of
investment securities, net of purchases, and $68.0 million generated from
operating activities. Total assets increased $29.3 million over December 31,
1997. Loans increased $384.0 million, investment securities decreased $55.8
million, and core deposits decreased $33.7 million.
16
<PAGE>
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 $2.60
billion, standby letters of credit totaled $170.0 million, and commercial
letters of credit totaled $34.2 million at June 30, 1998. 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 $356.5 million at June 30, 1998. The current credit exposure (or
replacement cost) across all off-balance-sheet derivative contracts covered by
the risk-based capital standards was $7.6 million at June 30, 1998. 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's assets and liabilities are principally financial in nature and
the resulting net interest income thereon is subject to changes in market
interest rates and the mix of various assets and liabilities. Interest rates
in the financial markets affect the Company's decisions on pricing its assets
and liabilities which impacts net interest income, a significant cash flow
source for the Company. As a result a substantial portion of the Company's
risk management activities relates to managing interest rate risk.
The Company's Asset/Liability Management Committee monitors the interest
rate sensitivity of the Company' balance sheet monthly using earnings
simulation models and interest sensitivity GAP analysis. Using these tools,
management attempts to optimize the asset/liability mix to minimize the
impacts of significant rate movements within a broad range of interest rate
scenarios.
One set of simulation models is prepared to determine the impact on net
interest income for the coming twelve months under several interest rate
scenarios. One such scenario uses rates at June 30, 1998 and forecasted
volumes for the twelve month projection. When this position is subjected to a
graduated shift in interest rates of 100 basis points rising and 100 basis
points falling, the annual impact to the Company's net interest income is as
follows:
<TABLE>
<CAPTION>
$ IN % OF NET
SCENARIO MILLIONS INT. INCOME
-------- -------- -----------
<S> <C> <C>
100 basis point rising............................... $2.9 .66%
100 basis point falling.............................. (7.4) (1.70)
</TABLE>
Currently the Company does not have significant risks related to foreign
exchange, commodities or equity risk exposures.
IMPACT OF ACCOUNTING STANDARDS
In January 1998, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 127, "Deferral of the Effective Date of Certain
Provisions of FAS Statement 125". SFAS No. 125 provided consistent standards
for distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. The adoption of Statement No. 127 did not have a
material effect on the Company's financial statements.
17
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
SIX MONTHS 1998 SIX MONTHS 1997
------------------------------- ------------------------------
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)........... $ 2,160,814 $ 84,327 7.87% $1,738,807 $ 68,488 7.94%
Construction and
development........... 237,979 9,916 8.40 211,723 9,022 8.59
Real estate--business.. 942,440 39,461 8.44 783,297 33,342 8.58
Real estate--personal.. 1,217,314 46,485 7.70 1,029,388 40,359 7.91
Personal banking....... 1,342,874 57,241 8.60 1,276,169 54,704 8.64
Credit card............ 515,377 35,188 13.77 535,319 35,221 13.27
----------- -------- ----- ---------- -------- -----
Total loans.......... 6,416,798 272,618 8.57 5,574,703 241,136 8.72
----------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,437,077 44,534 6.25 1,668,522 51,745 6.25
State & municipal
obligations (A)....... 96,256 3,824 8.01 98,956 3,902 7.95
CMO's and asset-backed
securities............ 860,762 27,153 6.36 746,287 23,444 6.34
Trading account
securities............ 9,991 246 4.97 6,916 180 5.26
Other marketable
securities (A)........ 118,564 3,546 6.03 115,947 3,481 6.05
Other non-marketable
securities............ 31,363 926 5.95 43,147 1,286 6.01
----------- -------- ----- ---------- -------- -----
Total investment
securities.......... 2,554,013 80,229 6.33 2,679,775 84,038 6.32
----------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 249,700 6,903 5.57 296,420 8,012 5.45
----------- -------- ----- ---------- -------- -----
Total interest
earning assets...... 9,220,511 359,750 7.87 8,550,898 333,186 7.86
-------- ----- -------- -----
Less allowance for loan
losses................. (107,875) (99,950)
Unrealized gain on
investment securities.. 58,648 13,426
Cash and due from banks. 630,674 600,986
Land, buildings and
equipment, net......... 216,204 212,013
Other assets............ 211,835 186,456
----------- ----------
Total assets......... $10,229,997 $9,463,829
=========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 314,378 3,757 2.41 $ 295,961 3,549 2.42
Interest bearing
demand................ 3,985,321 66,739 3.38 3,758,152 62,427 3.35
Time open & C.D.'s of
less than $100,000.... 2,174,831 58,486 5.42 2,144,880 57,340 5.39
Time open & C.D.'s of
$100,000 and over..... 237,339 6,462 5.49 204,576 5,354 5.28
----------- -------- ----- ---------- -------- -----
Total interest
bearing deposits.... 6,711,869 135,444 4.07 6,403,569 128,670 4.05
----------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 508,547 12,773 5.06 424,222 10,291 4.89
Long-term debt and
other borrowings...... 6,678 249 7.53 13,299 484 7.33
----------- -------- ----- ---------- -------- -----
Total borrowings..... 515,225 13,022 5.10 437,521 10,775 4.97
----------- -------- ----- ---------- -------- -----
Total interest
bearing liabilities. 7,227,094 148,466 4.14% 6,841,090 139,445 4.11%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,877,153 1,644,689
Other liabilities....... 112,467 58,092
Stockholders' equity.... 1,013,283 919,958
----------- ----------
Total liabilities and
equity.............. $10,229,997 $9,463,829
=========== ==========
Net interest margin
(T/E).................. $211,284 $193,741
======== ========
Net yield on interest
earning assets......... 4.62% 4.57%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
18
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
SECOND QUARTER 1998 SECOND QUARTER 1997
------------------------------- ------------------------------
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)........... $ 2,232,693 $ 43,691 7.85% $1,778,888 $ 35,649 8.04%
Construction and
development........... 241,610 5,009 8.32 231,004 4,974 8.64
Real estate--business.. 948,825 19,876 8.40 802,726 17,258 8.62
Real estate--personal.. 1,250,376 23,591 7.57 1,049,905 20,718 7.91
Personal banking....... 1,345,300 28,870 8.61 1,286,797 27,731 8.64
Credit card............ 505,593 16,978 13.47 525,039 17,242 13.17
----------- -------- ----- ---------- -------- -----
Total loans.......... 6,524,397 138,015 8.48 5,674,359 123,572 8.73
----------- -------- ----- ---------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,439,511 22,206 6.19 1,651,765 25,749 6.25
State & municipal
obligations (A)....... 100,163 1,966 7.87 100,318 2,019 8.07
CMO's and asset-backed
securities............ 867,915 13,705 6.33 776,697 12,263 6.33
Trading account
securities............ 11,325 118 6.00 7,445 112 6.03
Other marketable
securities (A)........ 123,321 1,979 6.44 115,859 1,733 6.00
Other non-marketable
securities............ 31,455 341 4.35 42,880 684 6.40
----------- -------- ----- ---------- -------- -----
Total investment
securities.......... 2,573,690 40,315 6.28 2,694,964 42,560 6.33
----------- -------- ----- ---------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................. 206,497 2,858 5.55 231,329 3,235 5.61
----------- -------- ----- ---------- -------- -----
Total interest
earning assets...... 9,304,584 181,188 7.81 8,600,652 169,367 7.90
-------- ----- -------- -----
Less allowance for loan
losses................. (109,973) (101,856)
Unrealized gain on
investment securities.. 60,349 3,149
Cash and due from banks. 624,396 606,699
Land, buildings and
equipment, net......... 216,839 213,801
Other assets............ 215,009 190,743
----------- ----------
Total assets......... $10,311,204 $9,513,188
=========== ==========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 321,854 1,922 2.40 $ 306,157 1,857 2.43
Interest bearing
demand................ 4,014,399 33,751 3.37 3,768,355 31,451 3.35
Time open & C.D.'s of
less than $100,000.... 2,188,059 29,507 5.41 2,163,150 29,129 5.40
Time open & C.D.'s of
$100,000 and over..... 245,489 3,356 5.48 204,539 2,722 5.34
----------- -------- ----- ---------- -------- -----
Total interest
bearing deposits.... 6,769,801 68,536 4.06 6,442,201 65,159 4.06
----------- -------- ----- ---------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 502,729 6,309 5.03 400,799 5,012 5.02
Long-term debt and
other borrowings...... 6,273 117 7.53 12,797 234 7.33
----------- -------- ----- ---------- -------- -----
Total borrowings..... 509,002 6,426 5.06 413,596 5,246 5.09
----------- -------- ----- ---------- -------- -----
Total interest
bearing liabilities. 7,278,803 74,962 4.13% 6,855,797 70,405 4.12%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,894,598 1,688,916
Other liabilities....... 109,834 49,556
Stockholders' equity.... 1,027,969 918,919
----------- ----------
Total liabilities and
equity.............. $10,311,204 $9,513,188
=========== ==========
Net interest margin
(T/E).................. $106,226 $ 98,962
======== ========
Net yield on interest
earning assets......... 4.58% 4.62%
===== =====
</TABLE>
- --------
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
19
<PAGE>
INDEX TO EXHIBITS
10(a) Commerce Bancshares, Inc. Executive Incentive Compensation Plan
Amendment and Restatement of July 31, 1998
27.1 6/30/98 Financial Data Schedule
27.2 1997 Restated Financial Data Schedules
27.3 1996 Restated Financial Data Schedules
27.4 12/31/95 Restated Financial Data Schedule
COMMERCE BANCSHARES, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
AMENDMENT AND RESTATEMENT OF JULY 31, 1998
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, establish
rules and procedures thereunder, 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.
<PAGE>
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.
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 in a written form
satisfactory to Commerce and must be
received by the Commerce Director of Human
Resources on or before the last business day
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. Such
accounts are bookkeeping accounts only and
are maintained for the sole purpose of
determining the amount payable by Commerce
to the eligible employee. No assets shall
be segregated for the benefit of an eligible
employee and the bookkeeping account shall
not represent assets set aside for the
benefit of an eligible employee. An
eligible employee may elect to transfer
amounts between accounts (a "Transfer Election")
effective as of any March 1 (the "Transfer Date").
Such Transfer Election must be received by the
Commerce Director of Human Resources by the
last business day of the year preceding the year
during which the Transfer Date is to occur. Any
transfer to or from the Commerce Stock
account shall be based upon the last sale
price of Commerce Stock as reported by the
National Association of Security Dealers National
Market System on the last
2
<PAGE>
trading day in February on which a trade of
Commerce Stock is so reported. The amount
transferred from the Commerce
Stock Account shall be based upon the number
of units credited to such account as of
February 28 preceding the March 1 as of
which the Transfer Election shall be
effective. The amount transferred from the
Treasury Bill Account or the Treasury Note
Account shall be based upon the amount
credited to such account as of the February
28, preceding the March 1 as of which the
Transfer Election shall be effective.
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
for a year 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 ("NASD NMS") on the last trading day in February
of the following year 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 as reported by the NASD NMS on the last
trading day occurring on or before the date such dividend
is paid on which a trade of Commerce Stock is so reported.
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:
(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
3
<PAGE>
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
4
<PAGE>
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 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 Common 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.
5
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Commerce Bancshares, Inc. 6/30/98 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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 676,878
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 100,035
<TRADING-ASSETS> 20,232
<INVESTMENTS-HELD-FOR-SALE> 2,560,484<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,608,331<F3>
<ALLOWANCE> 112,990
<TOTAL-ASSETS> 10,336,214
<DEPOSITS> 8,677,606
<SHORT-TERM> 513,461
<LIABILITIES-OTHER> 118,324
<LONG-TERM> 3,887
0
0
<COMMON> 293,229
<OTHER-SE> 729,707
<TOTAL-LIABILITIES-AND-EQUITY> 10,336,214
<INTEREST-LOAN> 272,060
<INTEREST-INVEST> 78,495<F4>
<INTEREST-OTHER> 6,903
<INTEREST-TOTAL> 357,704
<INTEREST-DEPOSIT> 135,444
<INTEREST-EXPENSE> 148,434
<INTEREST-INCOME-NET> 209,270
<LOAN-LOSSES> 22,126
<SECURITIES-GAINS> 6,088
<EXPENSE-OTHER> 183,755
<INCOME-PRETAX> 109,089
<INCOME-PRE-EXTRAORDINARY> 71,977
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71,977
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 1.21
<YIELD-ACTUAL> 4.62<F5>
<LOANS-NON> 18,275
<LOANS-PAST> 23,784
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 105,918
<CHARGE-OFFS> 20,956
<RECOVERIES> 4,938
<ALLOWANCE-CLOSE> 112,990
<ALLOWANCE-DOMESTIC> 112,990
<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 securities of $28,419,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $246,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
These schedules contain summary financial information extracted from
Commerce Bancshares, Inc. 1997 Forms 10-Q and 10-K and are qualified in
their entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1997
<CASH> 747,323 853,623 802,314 978,239
<INT-BEARING-DEPOSITS> 0<F1> 0<F1> 0<F1> 0<F1>
<FED-FUNDS-SOLD> 436,275 64,435 135,120 132,980
<TRADING-ASSETS> 4,957 12,142 9,241 6,477
<INVESTMENTS-HELD-FOR-SALE> 2,616,241<F2> 2,682,951<F2> 2,624,341<F2> 2,614,040<F2>
<INVESTMENTS-CARRYING> 0 0 0 0
<INVESTMENTS-MARKET> 0 0 0 0
<LOANS> 5,525,701<F3> 5,811,167<F3> 6,089,468<F3> 6,224,381<F3>
<ALLOWANCE> 99,906 103,730 105,485 105,918
<TOTAL-ASSETS> 9,648,833 9,793,986 10,014,247 10,306,941
<DEPOSITS> 8,219,661 8,358,882 8,448,049 8,700,578
<SHORT-TERM> 422,247 435,515 477,688 512,663
<LIABILITIES-OTHER> 84,289 58,565 104,633 105,814
<LONG-TERM> 13,591 10,301 10,200 7,102
0 0 0 0
0 0 0 0
<COMMON> 281,740 281,740 281,740 291,429
<OTHER-SE> 627,305 648,983 691,937 689,355
<TOTAL-LIABILITIES-AND-EQUITY> 9,648,833 9,793,986 10,014,247 10,306,941
<INTEREST-LOAN> 117,314 240,643 370,376 505,604
<INTEREST-INVEST> 40,653<F4> 82,316<F4> 123,735<F4> 163,181<F4>
<INTEREST-OTHER> 4,777 8,012 10,410 13,647
<INTEREST-TOTAL> 162,812 331,151 504,837 682,876
<INTEREST-DEPOSIT> 63,511 128,670 195,110 262,107
<INTEREST-EXPENSE> 69,025 139,420 212,048 285,102
<INTEREST-INCOME-NET> 93,787 191,731 292,789 397,774
<LOAN-LOSSES> 7,538 14,831 22,638 31,354
<SECURITIES-GAINS> 146 322 2,708 3,253
<EXPENSE-OTHER> 82,114 166,007 253,651 344,450
<INCOME-PRETAX> 45,698 94,841 147,135 202,062
<INCOME-PRE-EXTRAORDINARY> 29,399 61,732 95,954 132,702
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 29,399 61,732 95,954 132,702
<EPS-PRIMARY> .50<F6> 1.05<F6> 1.64<F6> 2.27<F6>
<EPS-DILUTED> .50<F6> 1.04<F6> 1.62<F6> 2.24<F6>
<YIELD-ACTUAL> 4.52<F5> 4.57<F5> 4.58<F5> 4.61<F5>
<LOANS-NON> 13,035 15,004 13,260 23,382
<LOANS-PAST> 23,467 26,743 33,261 24,383
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 98,223 98,223 98,223 98,223
<CHARGE-OFFS> 7,968 16,930 26,031 38,183
<RECOVERIES> 2,113 4,285 6,380 10,249
<ALLOWANCE-CLOSE> 99,906 103,730 105,485 105,918
<ALLOWANCE-DOMESTIC> 99,906 103,730 105,485 105,918
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0 0
<FN>
<F1>Certificates of deposit of $297,000 are included in Investments-
Held-For-Sale.
<F2>Excludes non-marketable investment securities of $41,558,000
at March 31, 1997, $41,682,000 at June 30, 1997, $41,463,000
at September 30, 1997 and $44,414,000 at December 31, 1997.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $68,000 at March 31, 1997, $180,000
at June 30, 1997, $316,000 at September 30, 1997 and
$444,000 at December 31, 1997 on trading account securities.
<F5>Yield is computed on a tax-equivalent basis.
<F6>The above financial data schedules have been restated for the effects of
(1) the adoption of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", (2) a 5% stock dividend distributed on December 12,
1997, and (3) a three for two stock split in the form of a 50% stock
dividend distributed on March 30, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
These schedules contain summary financial information extracted from
Commerce Bancshares, Inc. 1996 Forms 10-Q and 10-K and are qualified in
their entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996
<CASH> 745,877 654,830 700,632 833,260
<INT-BEARING-DEPOSITS> 0<F1> 0<F1> 0<F1> 0<F1>
<FED-FUNDS-SOLD> 515,424 378,295 343,090 368,690
<TRADING-ASSETS> 11,494 13,956 5,255 11,265
<INVESTMENTS-HELD-FOR-SALE> 2,565,309<F2> 2,652,762<F2> 2,621,282<F2> 2,670,420<F2>
<INVESTMENTS-CARRYING> 0 0 0 0
<INVESTMENTS-MARKET> 0 0 0 0
<LOANS> 5,298,064<F3> 5,269,915<F3> 5,390,915<F3> 5,472,342<F3>
<ALLOWANCE> 98,666 98,667 98,366 98,223
<TOTAL-ASSETS> 9,505,651 9,322,969 9,414,109 9,698,186
<DEPOSITS> 8,077,174 7,948,513 8,039,862 8,166,429
<SHORT-TERM> 448,806 436,997 414,855 526,807
<LIABILITIES-OTHER> 81,094 50,905 56,223 66,559
<LONG-TERM> 14,455 14,344 14,233 14,120
0 0 0 0
0 0 0 0
<COMMON> 281,740 281,740 281,740 281,740
<OTHER-SE> 602,382 590,470 607,196 642,531
<TOTAL-LIABILITIES-AND-EQUITY> 9,505,651 9,322,969 9,414,109 9,698,186
<INTEREST-LOAN> 115,516 229,426 344,500 460,970
<INTEREST-INVEST> 38,588<F4> 78,207<F4> 119,027<F4> 160,954<F4>
<INTEREST-OTHER> 7,882 13,946 19,192 25,334
<INTEREST-TOTAL> 162,074 321,780 482,927 647,603
<INTEREST-DEPOSIT> 66,556 131,047 195,331 259,504
<INTEREST-EXPENSE> 72,560 142,351 211,969 281,860
<INTEREST-INCOME-NET> 89,514 179,429 270,958 365,743
<LOAN-LOSSES> 5,553 10,981 17,063 24,522
<SECURITIES-GAINS> 1,224 1,914 2,004 3,293
<EXPENSE-OTHER> 78,608 157,573 237,650 317,954
<INCOME-PRETAX> 42,149 86,331 132,150 182,429
<INCOME-PRE-EXTRAORDINARY> 27,283 56,201 87,056 119,512
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 27,283 56,201 87,056 119,512
<EPS-PRIMARY> .45<F6> .93<F6> 1.45<F6> 2.00<F6>
<EPS-DILUTED> .44<F6> .92<F6> 1.44<F6> 1.98<F6>
<YIELD-ACTUAL> 4.33<F5> 4.35<F5> 4.37<F5> 4.40<F5>
<LOANS-NON> 16,161 17,100 11,829 13,945
<LOANS-PAST> 20,826 16,862 21,604 24,806
<LOANS-TROUBLED> 0 0 0 0
<LOANS-PROBLEM> 0 0 0 0
<ALLOWANCE-OPEN> 98,537 98,537 98,537 98,537
<CHARGE-OFFS> 7,317 14,597 22,629 31,914
<RECOVERIES> 1,893 3,746 5,395 7,078
<ALLOWANCE-CLOSE> 98,666 98,667 98,366 98,223
<ALLOWANCE-DOMESTIC> 98,666 98,667 98,366 98,223
<ALLOWANCE-FOREIGN> 0 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0 0
<FN>
<F1>Certificates of deposit of $348,000 at March 31 and June 30, 1996,
$347,000 at September 30, 1996 and $297,000 at December 31, 1996 are
included in Investments-Held-For-Sale.
<F2>Excludes non-marketable investment securities of $33,032,000 at
March 31, 1996, $32,915,000 at June 30, 1996, $39,383,000 at September
30, 1996 and $39,830,000 at December 31, 1996.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $88,000 at March 31, 1996, $201,000 at June
30, 1996, $208,000 at September 30, 1996 and $345,000 at December 31,
1996 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
<F6>The above financial data schedules have been restated for the effects of
(1) the adoption of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", (2) 5% stock dividends distributed in December
1997 and 1996, and (3) a three for two stock split in the form of a 50%
stock dividend distributed on March 30, 1998.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
Commerce Bancshares, Inc. 12/31/95 Form 10-K and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 774,852
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 523,302
<TRADING-ASSETS> 9,369
<INVESTMENTS-HELD-FOR-SALE> 2,552,264<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 5,317,813<F3>
<ALLOWANCE> 98,537
<TOTAL-ASSETS> 9,573,951
<DEPOSITS> 8,193,092
<SHORT-TERM> 362,903
<LIABILITIES-OTHER> 119,611
<LONG-TERM> 14,562
0
0
<COMMON> 281,740
<OTHER-SE> 602,043
<TOTAL-LIABILITIES-AND-EQUITY> 9,573,951
<INTEREST-LOAN> 457,760
<INTEREST-INVEST> 160,928<F4>
<INTEREST-OTHER> 12,075
<INTEREST-TOTAL> 631,003
<INTEREST-DEPOSIT> 250,380
<INTEREST-EXPENSE> 275,258
<INTEREST-INCOME-NET> 355,745
<LOAN-LOSSES> 14,629
<SECURITIES-GAINS> 897
<EXPENSE-OTHER> 305,484
<INCOME-PRETAX> 168,782
<INCOME-PRE-EXTRAORDINARY> 107,640
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 107,640
<EPS-PRIMARY> 2.60<F6>
<EPS-DILUTED> 2.59<F6>
<YIELD-ACTUAL> 4.50<F5>
<LOANS-NON> 16,234
<LOANS-PAST> 15,690
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 87,179
<CHARGE-OFFS> 23,272
<RECOVERIES> 7,069
<ALLOWANCE-CLOSE> 98,537
<ALLOWANCE-DOMESTIC> 98,537
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Certificates of deposit of $248,000 are included in Investments-Held-
For-Sale.
<F2>Excludes non-marketable investment securities of $33,120,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $240,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
<F6>The above financial data schedule has been restated for the effects of
(1) the adoption of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share", (2) 5% stock dividends distributed in December
1996 and 1997, and (3) a three for two stock split in the form of a
50% stock dividend distributed on March 30, 1998.
</FN>
</TABLE>
