<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 March 31, 1999
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 May 3, 1999, the registrant had outstanding 60,708,830 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 March 31, 1999 and December
31, 1998 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 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31,
1999.
The exhibit set forth above was filed as part of Form 10-Q with the
Securities and Exchange Commission but is not included herein.
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: May 11, 1999
/s/ Jeffery D. Aberdeen
By __________________________________
Jeffery D. Aberdeen
Controller
(Chief Accounting Officer)
Date: May 11, 1999
2
<PAGE>
Schedule 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31 December 31
1999 1998
----------- -----------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
Loans, net of unearned income........................ $ 6,948,963 $ 7,046,852
Allowance for loan losses............................ (119,557) (117,092)
----------- -----------
Net loans........................................ 6,829,406 6,929,760
----------- -----------
Investment securities:
Available for sale................................. 2,795,379 2,988,230
Trading account.................................... 7,263 14,210
Other non-marketable............................... 29,287 29,276
----------- -----------
Total investment securities...................... 2,831,929 3,031,716
----------- -----------
Federal funds sold and securities purchased under
agreements to resell................................ 366,540 261,535
Cash and due from banks.............................. 656,844 738,672
Land, buildings and equipment, net................... 223,533 222,129
Goodwill and core deposit premium, net............... 74,876 77,009
Customers' acceptance liability...................... 976 808
Other assets......................................... 88,265 140,394
----------- -----------
Total assets..................................... $11,072,369 $11,402,023
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing demand........................ $ 1,518,144 $ 1,657,037
Savings and interest bearing demand................ 5,275,280 5,295,897
Time open and C.D.'s of less than $100,000......... 2,234,323 2,269,835
Time open and C.D.'s of $100,000 and over.......... 293,838 307,428
----------- -----------
Total deposits................................... 9,321,585 9,530,197
Federal funds purchased and securities sold under
agreements to repurchase............................ 505,877 617,830
Long-term debt and other borrowings.................. 26,802 27,130
Accrued interest, taxes and other liabilities........ 141,787 145,273
Acceptances outstanding.............................. 976 808
----------- -----------
Total liabilities................................ 9,997,027 10,321,238
----------- -----------
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 61,352,684 shares.................. 306,763 306,763
Capital surplus.................................... 103,641 106,159
Retained earnings.................................. 653,822 624,256
Treasury stock of 587,103 shares in 1999 and
193,208 shares in 1998, at cost................... (24,175) (8,561)
Unearned employee benefits......................... (1,085) (904)
Accumulated other comprehensive income............. 36,376 53,072
----------- -----------
Total stockholders' equity....................... 1,075,342 1,080,785
----------- -----------
Total liabilities and stockholders' equity....... $11,072,369 $11,402,023
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Schedule 2
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
---------------------
1999 1998
---------- ----------
(Unaudited)
(In thousands, except
per share data)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans............................... $ 137,740 $ 134,320
Interest on investment securities ....................... 40,715 39,188
Interest on federal funds sold and securities purchased
under agreements to resell.............................. 6,043 4,045
---------- ----------
Total interest income................................ 184,498 177,553
---------- ----------
INTEREST EXPENSE
Interest on deposits:
Savings and interest bearing demand.................... 33,083 34,823
Time open and C.D.'s of less than $100,000............. 28,929 28,979
Time open and C.D.'s of $100,000 and over.............. 3,782 3,106
Interest on federal funds purchased and securities sold
under agreements to repurchase.......................... 6,310 6,464
Interest on long-term debt and other borrowings.......... 228 107
---------- ----------
Total interest expense............................... 72,332 73,479
---------- ----------
Net interest income.................................. 112,166 104,074
Provision for loan losses................................ 8,550 10,716
---------- ----------
Net interest income after provision for loan losses.. 103,616 93,358
---------- ----------
NON-INTEREST INCOME
Trust fees............................................... 13,912 11,653
Deposit account charges and other fees................... 16,241 14,389
Credit card transaction fees............................. 8,900 7,095
Trading account profits and commissions.................. 2,785 2,281
Net gains on securities transactions..................... 636 1,421
Other.................................................... 14,982 13,120
---------- ----------
Total non-interest income............................ 57,456 49,959
---------- ----------
NON-INTEREST EXPENSE
Salaries and employee benefits........................... 54,025 48,506
Net occupancy............................................ 6,659 5,293
Equipment................................................ 4,875 4,266
Supplies and communication............................... 8,160 7,098
Data processing.......................................... 8,211 6,937
Marketing................................................ 3,251 2,759
Goodwill and core deposit................................ 2,133 2,296
Other.................................................... 15,387 13,266
---------- ----------
Total non-interest expense........................... 102,701 90,421
---------- ----------
Income before income taxes............................... 58,371 52,896
Less income taxes........................................ 19,686 18,413
---------- ----------
Net income........................................... $ 38,685 $ 34,483
========== ==========
Net income per share--basic.............................. $ .63 $ .57
========== ==========
Net income per share--diluted............................ $ .62 $ .56
========== ==========
Cash dividends per common share.......................... $ .150 $ .138
========== ==========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Schedule 3
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Number of Unearned Other
Shares Common Capital Retained Treasury Employee Comprehensive
Issued Stock Surplus Earnings Stock Benefits Income Total
---------- -------- -------- -------- -------- -------- ------------- ----------
(Unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 1, 1999
....................... 61,352,684 $306,763 $106,159 $624,256 $ (8,561) $ (904) $53,072 $1,080,785
Net income............. 38,685 38,685
Change in unrealized
gain (loss) on
available for sale
securities............ (16,696) (16,696)
----------
Total comprehensive
income................ 21,989
----------
Purchase of treasury
stock................. (21,185) (21,185)
Sales under option and
benefit plans......... (2,499) 5,282 2,783
Issuance of stock under
restricted stock award
plan.................. (19) 289 (270) --
Restricted stock award
amortization.......... 89 89
Cash dividends paid
($.15 per share)...... (9,119) (9,119)
---------- -------- -------- -------- -------- ------- ------- ----------
Balance March 31, 1999.. 61,352,684 $306,763 $103,641 $653,822 $(24,175) $(1,085) $36,376 $1,075,342
========== ======== ======== ======== ======== ======= ======= ==========
Balance January 1, 1998. 58,285,813 $291,429 $ 48,704 $626,387 $(14,252) $ (601) $29,117 $ 980,784
Net income............. 34,483 34,483
Change in unrealized
gain (loss) on
available for sale
securities............ 14,740 14,740
----------
Total comprehensive
income................ 49,223
----------
Pooling acquisition.... 360,000 1,800 (11,346) 7,639 16,101 139 14,333
Purchase of treasury
stock................. (11,504) (11,504)
Sales under option and
benefit plans......... (1,010) 2,190 1,180
Issuance of stock under
restricted stock award
plan.................. 11 492 (503) --
Restricted stock award
amortization.......... 60 60
Cash dividends paid
($.138 per share) .... (8,480) (8,480)
---------- -------- -------- -------- -------- ------- ------- ----------
Balance March 31, 1998.. 58,645,813 $293,229 $ 36,359 $660,029 $ (6,973) $(1,044) $43,996 $1,025,596
========== ======== ======== ======== ======== ======= ======= ==========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Schedule 4
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months
Ended March 31
----------------------
1999 1998
---------- ----------
(Unaudited)
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ............................................ $ 38,685 $ 34,483
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses ........................... 8,550 10,716
Provision for depreciation and amortization ......... 8,370 7,978
Accretion of investment security discounts .......... (824) (1,298)
Amortization of investment security premiums ........ 2,805 1,883
Net gains on sales of investment securities (A) ..... (636) (1,421)
Net (increase) decrease in trading account
securities.......................................... 4,568 (530)
Decrease in interest receivable ..................... 1,055 1,685
Increase (decrease) in interest payable ............. (1,745) 235
Other changes, net .................................. 56,867 (46,779)
---------- ----------
Net cash provided by operating activities ......... 117,695 6,952
---------- ----------
INVESTING ACTIVITIES:
Net cash received in acquisition....................... -- 4,044
Proceeds from sales of investment securities (A)....... 75,217 96,351
Proceeds from maturities of investment securities (A).. 623,095 337,145
Purchases of investment securities (A) ................ (532,982) (354,018)
Net increase in federal funds sold and securities
purchased under agreements to resell ................. (105,005) (38,491)
Net (increase) decrease in loans....................... 96,254 (151,051)
Purchases of premises and equipment.................... (7,689) (5,800)
Sales of premises and equipment........................ 768 682
---------- ----------
Net cash provided (used) by investing activities... 149,658 (111,138)
---------- ----------
FINANCING ACTIVITIES:
Net decrease in non-interest bearing demand, savings,
and interest bearing demand deposits.................. (159,510) (111,288)
Net increase (decrease) in time open and C.D.'s........ (49,142) 6,321
Net decrease in federal funds purchased and securities
sold under agreements to repurchase .................. (111,953) (9,303)
Repayment of long-term debt ........................... (272) (215)
Purchases of treasury stock ........................... (20,191) (11,419)
Exercise of stock options by employees ................ 1,006 723
Cash dividends paid on common stock ................... (9,119) (8,480)
---------- ----------
Net cash used by financing activities ............. (349,181) (133,661)
---------- ----------
Decrease in cash and cash equivalents.............. (81,828) (237,847)
Cash and cash equivalents at beginning of year......... 738,672 978,239
---------- ----------
Cash and cash equivalents at March 31 ............. $ 656,844 $ 740,392
========== ==========
</TABLE>
- --------
(A) Available for sale and other non-marketable securities, excluding trading
account securities.
Net cash payments of income taxes for the three month period were
$15,815,000 in 1999 and $12,100,000 in 1998. Interest paid on deposits and
borrowings for the three month period was $74,037,000 in 1999 and $73,200,000
in 1998.
See accompanying notes to financial statements.
6
<PAGE>
Schedule 5
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(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 1998 data to conform to current year
presentation. Results of operations for the three month period ended March 31,
1999 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 1998
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 for the three
months ended March 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
-------- --------
(In thousands)
<S> <C> <C>
Balance, January 1..................................... $117,092 $105,918
-------- --------
Additions:
Provision for loan losses............................ 8,550 10,716
Allowance for loan losses of acquired bank........... -- 964
-------- --------
Total additions.................................... 8,550 11,680
-------- --------
Deductions:
Loan losses.......................................... 9,039 10,991
Less recoveries on loans............................. 2,954 1,962
-------- --------
Net loan losses.................................... 6,085 9,029
-------- --------
Balance, March 31...................................... $119,557 $108,569
======== ========
</TABLE>
At March 31, 1999, non-performing assets were $39,238,000, which was .56% of
total loans and .35% of total assets. This balance consisted of $16,569,000 in
loans not accruing interest, $21,145,000 in loans past due 90 days and still
accruing interest, and $1,524,000 in foreclosed real estate.
3. Investment Securities
Investment securities, at fair value, consist of the following at March 31,
1999 and December 31, 1998.
<TABLE>
<CAPTION>
March 31 December 31
1999 1998
---------- -----------
(In thousands)
<S> <C> <C>
Available for sale:
U.S. government and federal agency obligations... $1,331,672 $1,448,547
State and municipal obligations.................. 95,333 101,785
CMO's and asset-backed securities................ 1,222,958 974,377
Other debt securities............................ 97,954 419,413
Equity securities................................ 47,462 44,108
Trading account securities......................... 7,263 14,210
Other non-marketable securities.................... 29,287 29,276
---------- ----------
Total investment securities.................... $2,831,929 $3,031,716
========== ==========
</TABLE>
7
<PAGE>
4. Common Stock
The shares used in the calculation of basic and diluted income per share for
the three months ended March 31, 1999 and 1998 are shown below.
<TABLE>
<CAPTION>
1999 1998
------ ------
(In
thousands)
<S> <C> <C>
Weighted average common shares outstanding.................. 61,046 61,037
Stock options............................................... 871 1,094
------ ------
61,917 62,131
====== ======
</TABLE>
5. Comprehensive Income
SAFS No. 130, "Reporting Comprehensive Income", 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, 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 Three Months
Ended March 31
----------------------
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Unrealized holding gains (losses).................. $ (26,323) $ 25,056
Less: reclassification adjustment for gains
included in net income............................ 636 1,421
---------- ---------
Net unrealized gains (losses) on securities........ (26,959) 26,635
Income tax expense (benefit)....................... (10,263) 8,895
---------- ---------
Other comprehensive income (loss).................. $ (16,696) $ 14,740
========== =========
</TABLE>
6. Segments
Management has established three operating segments within the Company. The
Consumer segment includes the retail branch network, consumer finance,
bankcard, student loans and discount brokerage services. The Commercial
segment provides corporate lending, leasing, and international services, as
well as business, government deposit and cash management services. The Money
Management segment provides traditional trust and estate tax planning
services, and advisory and discretionary investment management services.
The following table presents selected financial information by segment and
reconciliations of combined segment totals to consolidated totals. There were
no material intersegment revenues between the three segments. Financial data
for 1998 bank acquisitions which have not yet been assimilated into the
business segment and cost allocation systems are included in the Consumer
segment and are not considered material.
<TABLE>
<CAPTION>
Money Segment Other/ Consolidated
Consumer Commercial Management Totals Elimination Totals
-------- ---------- ---------- -------- ----------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March
31, 1999
Net interest income
after loan loss
expense................ $ 6,216 $ 60,163 $(4,709) $ 61,670 $ 41,946 $103,616
Cost of funds
allocation............. 50,621 (22,937) 6,152 33,836 (33,836) --
Non-interest income..... 30,805 6,932 18,453 56,190 1,266 57,456
------- -------- ------- -------- -------- --------
Total net revenue....... 87,642 44,158 19,896 151,696 9,376 161,072
Non-interest expense.... 64,568 19,356 12,728 96,652 6,049 102,701
------- -------- ------- -------- -------- --------
Income before income
taxes.................. $23,074 $ 24,802 $ 7,168 $ 55,044 $ 3,327 $ 58,371
======= ======== ======= ======== ======== ========
Three Months Ended March
31, 1998
Net interest income
after loan loss
expense................ $ 521 $ 58,226 $(4,240) $ 54,507 $ 38,851 $ 93,358
Cost of funds
allocation............. 55,902 (24,282) 5,427 37,047 (37,047) --
Non-interest income..... 26,269 6,237 15,444 47,950 2,009 49,959
------- -------- ------- -------- -------- --------
Total net revenue....... 82,692 40,181 16,631 139,504 3,813 143,317
Non-interest expense.... 54,040 18,507 11,161 83,708 6,713 90,421
------- -------- ------- -------- -------- --------
Income before income
taxes.................. $28,652 $ 21,674 $ 5,470 $ 55,796 $ (2,900) $ 52,896
======= ======== ======= ======== ======== ========
</TABLE>
The segment activity, as shown above, includes both direct and allocated
items. Amounts in the "Other/Elimination" column include activity not related
to the segments, such as that relating to administrative functions, and the
effect of certain expense allocations to the segments.
8
<PAGE>
Schedule 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
March 31, 1999
(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 1998 Annual Report on Form 10-K. Results of operations for the three
month period ended March 31, 1999 are not necessarily indicative of results to
be attained for any other period.
<TABLE>
<CAPTION>
Three Months
Ended March
31
--------------
1999 1998
------ ------
<S> <C> <C>
Per Share Data
Net income--basic............................................. $ 63 $ .57
Net income--diluted........................................... .62 .56
Cash dividends................................................ .150 .138
Book value.................................................... 17.70 16.70
Market price.................................................. 38.50 45.48
Selected Ratios
(Based on average balance sheets)
Loans to deposits............................................. 75.04% 74.10%
Non-interest bearing deposits to total deposits............... 14.87 21.84
Equity to loans............................................... 15.43 15.83
Equity to deposits............................................ 11.58 11.73
Equity to total assets........................................ 9.66 9.84
Return on total assets........................................ 1.40 1.38
Return on realized stockholders' equity....................... 15.17 14.52
Return on total stockholders' equity.......................... 14.53 14.01
(Based on end-of-period data)
Efficiency ratio.............................................. 59.51 57.74
Tier I capital ratio.......................................... 11.95 12.32
Total capital ratio........................................... 13.08 13.42
Leverage ratio................................................ 8.75 9.00
</TABLE>
Summary
Consolidated net income for the first three months of 1999 was $38.7
million; a $4.2 million or 12.2% increase over the first three months of 1998.
Diluted earnings per share increased 10.7% to $.62 compared to $.56 for the
same period in the prior year. The first quarter of 1999 was the Company's
twelfth consecutive quarter of double digit growth in earnings per share. The
return on assets for the first quarter of 1999 was 1.40% versus 1.38% last
year. The return on realized equity increased to 15.17% compared to 14.52% in
1998.
Net interest income increased $8.1 million, or 7.8%, over the first three
months of 1998, mainly due to loan growth. Non-interest income increased $7.5
million, or 15.0% over 1998, due to core fee income growth. The provision for
loan losses decreased $2.2 million. Partially offsetting was an increase in
non-interest expense of $12.3 million, or 13.6%, which included an increase of
$5.5 million in salaries and benefits.
9
<PAGE>
Net Interest Income
The following table summarizes the changes in net interest income on a fully
taxable 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
March 31, 1999 vs. 1998
--------------------------
Change due to
--------------------------
Average Average
Volume Rate Total
------- -------- -------
(In thousands)
<S> <C> <C> <C>
Interest income, fully taxable equivalent basis:
Loans.............................................. $13,658 $(10,217) $3,441
Investment securities:
U.S. government and federal agency securities.... (996) (831) (1,827)
State and municipal obligations.................. 45 (14) 31
CMO's and asset-backed securities................ 2,496 (298) 2,198
Other securities................................. 1,327 (163) 1,164
Federal funds sold and securities purchased under
agreements to resell.............................. 2,997 (999) 1,998
------- -------- -------
Total interest income.......................... 19,527 (12,522) 7,005
------- -------- -------
Interest expense:
Deposits:
Savings.......................................... 170 (361) (191)
Interest bearing demand.......................... 7,385 (8,934) (1,549)
Time open & C.D.'s of less than $100,000......... 1,176 (1,226) (50)
Time open & C.D.'s of $100,000 and over.......... 988 (312) 676
Federal funds purchased and securities sold under
agreements to repurchase.......................... 1,147 (1,301) (154)
Long-term debt and other borrowings................ 370 (274) 96
------- -------- -------
Total interest expense......................... 11,236 (12,408) (1,172)
------- -------- -------
Net interest income, fully taxable equivalent
basis............................................. $ 8,291 $ (114) $ 8,177
======= ======== =======
</TABLE>
Net interest income for the first quarter of 1999 was $112.2 million, a 7.8%
increase over the first quarter of 1998. For the quarter, the net interest
rate margin was 4.49% compared with 4.66% in the first quarter of 1998 and
4.50% in the fourth quarter of 1998.
Total interest income increased $6.9 million, or 3.9%, over the first
quarter of 1998, mainly due to an increase of $691.4 million in average loan
balances. This growth was partly reflective of the effects of bank
acquisitions in 1998, in which the Company acquired loans of approximately
$238 million, plus the effects of a strong economy in many of the Company's
markets. Also contributing to this growth was an increase of $158.4 million in
average balances invested in CMO's and asset-backed securities and $216.3
million in federal funds sold and resell agreements. These increases were
partially offset by a decrease of 65 basis points in average loan rates. The
average tax equivalent yield on interest earning assets was 7.35% in the first
quarter of 1999 compared to 7.93% in the first quarter of 1998.
Total interest expense (net of capitalized interest) decreased $1.1 million,
or 1.6%, compared to the first quarter of 1998 due mainly to lower average
rates paid on interest bearing demand deposits, partially offset by higher
average balances in these deposits. Average rates paid on all interest bearing
liabilities decreased from 4.15% in the first quarter of 1998 to 3.42% in the
first quarter of 1999.
10
<PAGE>
Summaries of average assets and liabilities and the corresponding average
rates earned/paid appear on page 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>
March 31 December 31
1999 1998
-------- -----------
(In thousands)
<S> <C> <C>
Non-accrual loans................................... $16,569 $17,831
Past due 90 days and still accruing interest........ 21,145 24,529
------- -------
Total impaired loans................................ 37,714 42,360
Foreclosed real estate.............................. 1,524 2,521
------- -------
Total non-performing assets..................... $39,238 $44,881
======= =======
Non-performing assets to total loans................ .56% .64%
Non-performing assets to total assets............... .35% .39%
</TABLE>
The level of non-performing assets decreased 12.6% from year end 1998
totals. Non-accrual loans at March 31, 1999 consisted mainly of business loans
($7.4 million), business real estate loans ($2.6 million) and construction and
land development loans ($5.6 million). Loans which were 90 or more days past
due included credit card loans of $6.7 million and business loans of $6.4
million.
A subsidiary bank issues Visa and MasterCard credit cards, and credit card
loans outstanding amounted to $492.0 million at March 31, 1999. 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 $14.8 million, or 3.0% of credit
card loans at March 31, 1999. The annualized net charge-off ratio for credit
card loans was 3.47% for the first three months of 1999 compared to 3.98% for
the first three months of 1998. 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>
Three Months Ended
-----------------------------------------
Dec. 31, 1998 Mar. 31, 1999 Mar. 31, 1998
------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
Provision for loan losses...... $6,971 $8,550 $10,716
Net charge-offs................ 7,686 6,085 9,029
Net annualized charge-offs as a
percentage of average loans... .44% .35% .58%
</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. As a result of these factors,
the provision for loan losses
11
<PAGE>
decreased $2.2 million compared to the first quarter of 1998 and increased
$1.6 million compared to the fourth quarter of 1998. The allowance for loan
losses as a percentage of loans outstanding was 1.72% at March 31, 1999,
compared to 1.66% at year-end 1998 and 1.69% at March 31, 1998. The allowance
at March 31, 1999 was 305% 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 Increase
Ended March 31 (decrease)
---------------- ---------------
1999 1998 Amount Percent
------- ------- ------ -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Trust fees............................. $13,912 $11,653 $2,259 19.4%
Deposit account charges and other fees. 16,241 14,389 1,852 12.9
Credit card transaction fees........... 8,900 7,095 1,805 25.4
Trading account profits and
commissions........................... 2,785 2,281 504 22.1
Net gains on securities transactions... 636 1,421 (785) (55.2)
Other.................................. 14,982 13,120 1,862 14.2
------- ------- ------
Total non-interest income.......... $57,456 $49,959 $7,497 15.0
======= ======= ======
As a % of operating income (net
interest income plus non-interest
income)............................... 33.9% 32.4%
======= =======
</TABLE>
Non-interest income rose 15.0% in the first quarter of 1999 compared to the
first quarter of 1998. Trust fees increased $2.3 million, mainly due to
account growth and increases in the value of assets managed. The growth in
deposit account fees was mainly due to higher return item and NSF fees
collected and growth in cash management product fees. Credit card fees rose
$1.8 million because of increased transaction volumes in both the cardholder
and merchant areas, improved product pricing, and growth in the Company's
debit card product. Other income increased $1.9 million over the first quarter
of 1998 due to increases in brokerage-related income, including fees from
mutual fund sales, and international and foreign exchange income.
Non-Interest Expense
<TABLE>
<CAPTION>
Three Months Increase
Ended March 31 (decrease)
---------------- ---------------
1999 1998 Amount Percent
-------- ------- ------ -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Salaries and employee benefits........... $ 54,025 $48,506 $5,519 11.4%
Net occupancy............................ 6,659 5,293 1,366 25.8
Equipment................................ 4,875 4,266 609 14.3
Supplies and communication............... 8,160 7,098 1,062 15.0
Data processing.......................... 8,211 6,937 1,274 18.4
Marketing................................ 3,251 2,759 492 17.8
Goodwill and core deposit................ 2,133 2,296 (163) (7.1)
Other.................................... 15,387 13,266 2,121 16.0
-------- ------- ------
Total non-interest expense........... $102,701 $90,421 12,280 13.6
======== ======= ======
</TABLE>
12
<PAGE>
Non-interest expense rose 13.6% compared to the first quarter of 1998.
Salaries and employee benefits increased $5.5 million over the first quarter
of 1998. Additional full-time equivalent employees, partly due to
acquisitions, contract programming and incentive compensation all contributed
to salary growth, while increased medical costs contributed to higher overall
benefits. Occupancy costs increased over the first quarter of 1998 due partly
to increased rent on office space, building repairs, and real estate tax
expense. Equipment costs partly reflect higher costs of branch technology
expenditures made over the last year. Data processing expense increased $1.3
million, due in part to account growth and higher charges by information
service providers. The efficiency ratio was 59.51% in the first quarter of
1999 compared to 57.74% in the first quarter of 1998 and 60.03% in the fourth
quarter of 1998.
Year 2000 Readiness Disclosure*
Introduction
As discussed in the 1998 Annual Report to Shareholders, the Company has
developed a comprehensive plan to attain Year 2000 compliance. The plan has
four general phases: (1) assessment, which includes inventorying and
evaluating business processes and elements that must be modified; (2)
renovation, which includes the modification, replacement or elimination of
non-compliant items; (3) validation, or testing; and (4) implementation, which
involves putting the renovated systems and equipment into operation. As the
last phase is completed, integrated implementation is performed to ensure that
validated items operate correctly in relation with one another.
State of Readiness
Mission critical items (defined to be those programs and processes that are
essential to activities which present significant financial risk or risk in
reputation) were identified in the assessment phase. At April 12, 1999,
approximately 93% of the mission critical items had been assessed for Year
2000 issues, renovated where necessary, tested and implemented. Of the
remaining mission critical items, 3% are still in the validation phase and 4%
are in the renovation phase. The Company is well into integrated
implementation of internal mission critical software systems and expects
independent testing to be complete ahead of year end.
The Company interfaces with many third parties, including customers, supply
vendors, service providers, and counterparties. Some of its major systems are
provided by third parties. The Company has communicated with significant third
parties to determine the extent to which the Company may be affected by those
third parties' failure to remediate their own Year 2000 issues. Assessments
have been prepared for all of the Company's largest customers and
counterparties. The Company will continue to monitor the progress of third
party testing and implementation procedures throughout 1999, but cannot at
this time determine the financial effect if significant third party
remediation efforts fail.
Costs to Address Year 2000 Issues
The total cost of the Company's Year 2000 project is currently estimated to
range between $4.5 and $5.5 million. Since inception through March 31, 1999,
the cost has totaled approximately $3.0 million. This cost does not include
computer equipment and software that is replaced within scheduled time frames
in the normal course of business. A significant portion of these costs are not
likely to be incremental costs to the Company, but rather will represent the
redeployment of existing Company resources. System renovation costs for the
Company are relatively low because a significant portion of the Company's
software is vendor-supplied.
Risks of Company's Year 2000 Issues
The Company's estimate of Year 2000 project costs and the dates set forth
above by which certain phases of the project are expected to be completed are
based on management's best current estimates. Actual results could differ from
those anticipated. The failure to correct a material Year 2000 problem could
result in an interruption in, or a failure of, certain normal business
activities or operations. Such failures could materially and adversely affect
the Company's results of operations, liquidity and financial condition. The
Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on
13
<PAGE>
the Company's results of operations, liquidity and financial condition due to
the general uncertainty inherent in the Year 2000 problem. The Company
believes that, with the completion of the Year 2000 project as scheduled, the
possibility of significant interruptions and failures of normal operations
should be reduced.
Year 2000 Contingency Plans
The Company has developed remediation contingency plans and business
resumption contingency plans. Remediation plans address actions to be taken if
the remediation of a mission critical system falls behind schedule or is
unsuccessful. At March 31, 1999, the Company had completed the remediation
plan testing for mission critical items. Most of these contingency plans
involve development of manual procedures or use of alternate systems. Business
resumption plans address Year 2000 problems that occur notwithstanding the
remediation efforts of the Company and third parties. They include issues like
liquidity needs and dependence on utility, postal and other service providers.
As part of its Year 2000 business resumption planning, the Company is
modifying its current business resumption plans to reflect Year 2000 issues.
Review and testing of business resumption plans is well underway, and
independent testing is expected to be completed by the end of the second
quarter 1999.
Readers are cautioned that forward-looking statements contained in the Year
2000 discussion above should be read in conjunction with the Company's
disclosures under the heading: "Cautionary Statement Pursuant to Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995".
*This statement is made pursuant to the Year 2000 Information and Readiness
Disclosure Act. This statement originated from the Company and concerns (1)
assessments, projections, or estimates of year 2000 processing capabilities;
(2) plans, objectives, or timetables for implementing or verifying year 2000
processing capabilities; (3) test plans, dates, or results; and/or (4) reviews
and comments concerning year 2000 processing capabilities as defined by the
Act.
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 $109.7 million at
March 31, 1999 compared to $119.0 million at December 31, 1998. Included in
the fair values were unrealized net gains of $27.2 million at March 31, 1999
and $26.6 million at December 31, 1998. The Parent's liabilities totaled $22.0
million at March 31, 1999, compared to $14.2 million at December 31, 1998.
Liabilities at March 31, 1999 included $8.0 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 1999. 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 $3.04 billion
at March 31, 1999 and $3.11 billion at December 31, 1998. The available for
sale bank portfolio included an unrealized net gain in fair value of $28.1
million at March 31, 1999 compared to an unrealized net gain of $55.2 million
at December 31, 1998. U.S. government and federal agency securities comprised
50% and CMO's and asset-backed securities comprised 46% of the banking
subsidiaries' available for sale portfolio at March 31, 1999. The estimated
average maturity of the available for sale investment portfolio was 3.1 years
at March 31, 1999 and 2.3 years at December 31, 1998.
In February 1999, 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 March 31, 1999, the Company had
acquired 344,112 shares under this authorization. The Company has routinely
used these reacquired shares to fund annual stock dividends and employee
benefit programs.
14
<PAGE>
The Company had an equity to asset ratio of 9.66% based on 1999 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>
Min. Ratios for
March 31 December 31 Well-Capitalized
1999 1998 Banks
---------- ----------- ----------------
(Dollars in thousands)
<S> <C> <C> <C>
Risk-Adjusted Assets............. $8,083,245 $8,426,289
Tier I Capital................... 965,762 952,488
Total Capital.................... 1,057,279 1,060,692
Tier I Capital Ratio............. 11.95% 11.30% 6.00%
Total Capital Ratio.............. 13.08% 12.59% 10.00%
Leverage Ratio................... 8.75% 8.80% 5.00%
</TABLE>
The Company's cash and cash equivalents (defined as "Cash and due from
banks") were $656.8 million at March 31, 1999, a decrease of $81.8 million
from December 31, 1998. Contributing to the net cash outflow were net
decreases of $159.5 million in demand deposits and $112.0 million in short-
term borrowings, and a net increase of $105.0 million in overnight
investments. These outflows were partially offset by a $165.3 million increase
in proceeds from sales and maturities of investment securities, net of
purchases, and $117.7 million generated from operating activities. Total
assets decreased 2.9% from year end 1998.
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 $2.93
billion, standby letters of credit totaled $237.7 million, and commercial
letters of credit totaled $18.1 million at March 31, 1999. 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 $220.9 million at March 31, 1999. The current credit exposure (or
replacement cost) across all off-balance-sheet derivative contracts covered by
the risk-based capital standards was $5.9 million at March 31, 1999.
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's 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 and volumes at March 31, 1999 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 points rising.............................. $ 4.8 1%
100 basis points falling............................. (3.3) (1)
</TABLE>
15
<PAGE>
Currently, the Company does not have significant risks related to foreign
exchange, commodities or equity risk exposures.
Impact of Accounting Standards
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities", will be adopted by the Company
on January 1, 2000. It establishes accounting and reporting standards for
derivative instruments and hedging activities. All derivatives must be
recognized on the balance sheet at fair value, with special accounting
requirements for designated hedging activities. Certain changes in fair value
must be adjusted through income. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of the new
Statement will have a significant effect on earnings or the financial position
of the Company.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995
This report contains "forward-looking statements" within the meaning of the
federal securities laws. Such statements are subject to certain 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
competition, that could cause actual results to differ materially from
historical earnings and those presently anticipated or projected.
16
<PAGE>
AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS
Three Months Ended March 31, 1999 and 1998
<TABLE>
<CAPTION>
First Quarter 1999 First Quarter 1998
--------------------------------- ---------------------------------
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)........... $ 2,366,020 $ 41,842 7.17% $ 2,088,136 $ 40,636 7.89%
Construction and
development........... 350,312 6,690 7.75 234,308 4,907 8.49
Real estate--business.. 1,000,229 19,623 7.96 935,984 19,585 8.49
Real estate--personal.. 1,330,328 24,256 7.39 1,183,885 22,894 7.84
Personal banking....... 1,443,552 29,262 8.22 1,340,421 28,371 8.58
Credit card............ 508,943 16,371 13.05 525,270 18,210 14.06
----------- -------- ----- ----------- -------- -----
Total loans.......... 6,999,384 138,044 8.00 6,308,004 134,603 8.65
----------- -------- ----- ----------- -------- -----
Investment securities:
U.S. government &
federal agency........ 1,370,597 20,501 6.07 1,434,616 22,328 6.31
State & municipal
obligations (A)....... 94,516 1,889 8.11 92,305 1,858 8.16
CMO's and asset-backed
securities............ 1,011,920 15,646 6.27 853,530 13,448 6.39
Trading account
securities............ 17,812 263 6.00 8,642 128 6.00
Other marketable
securities (A)........ 198,359 2,754 5.63 113,754 1,567 5.59
Other non-marketable
securities............ 32,614 427 5.31 31,270 585 7.59
----------- -------- ----- ----------- -------- -----
Total investment
securities.......... 2,725,818 41,480 6.17 2,534,117 39,914 6.39
----------- -------- ----- ----------- -------- -----
Federal funds sold and
securities purchased
under agreements to
resell................ 509,698 6,043 4.81 293,383 4,045 5.59
----------- -------- ----- ----------- -------- -----
Total interest
earning assets...... 10,234,900 185,567 7.35 9,135,504 178,562 7.93
-------- ----- -------- -----
Less allowance for loan
losses................. (117,492) (105,754)
Unrealized gain on
investment securities.. 74,289 56,928
Cash and due from banks. 578,656 637,022
Land, buildings and
equipment, net......... 222,344 215,562
Other assets............ 190,136 208,626
----------- -----------
Total assets......... $11,182,833 $10,147,888
=========== ===========
LIABILITIES AND EQUITY:
Interest bearing
deposits:
Savings................ $ 335,252 1,644 1.99 $ 306,819 1,835 2.43
Interest bearing
demand................ 5,050,704 31,439 2.52 3,955,920 32,988 3.38
Time open & C.D.'s of
less than $100,000.... 2,253,202 28,929 5.21 2,161,456 28,979 5.44
Time open & C.D.'s of
$100,000 and over..... 301,188 3,782 5.09 229,098 3,106 5.50
----------- -------- ----- ----------- -------- -----
Total interest
bearing deposits.... 7,940,346 65,794 3.36 6,653,293 66,908 4.08
----------- -------- ----- ----------- -------- -----
Borrowings:
Federal funds
purchased and
securities sold under
agreements to
repurchase............ 606,832 6,310 4.22 514,430 6,464 5.10
Long-term debt and
other borrowings...... 26,991 228 3.42 7,087 132 7.53
----------- -------- ----- ----------- -------- -----
Total borrowings..... 633,823 6,538 4.18 521,517 6,596 5.13
----------- -------- ----- ----------- -------- -----
Total interest
bearing liabilities. 8,574,169 72,332 3.42% 7,174,810 73,504 4.15%
-------- ----- -------- -----
Non-interest bearing
demand deposits........ 1,386,708 1,859,514
Other liabilities....... 141,918 115,130
Stockholders' equity.... 1,080,038 998,434
----------- -----------
Total liabilities and
equity.............. $11,182,833 $10,147,888
=========== ===========
Net interest margin
(T/E).................. $113,235 $105,058
======== ========
Net yield on interest
earning assets......... 4.49% 4.66%
======== ========
</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. 3/31/99 Form 10-Q and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 656,844
<INT-BEARING-DEPOSITS> 0<F1>
<FED-FUNDS-SOLD> 366,540
<TRADING-ASSETS> 7,263
<INVESTMENTS-HELD-FOR-SALE> 2,795,379<F2>
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 6,948,963<F3>
<ALLOWANCE> 119,557
<TOTAL-ASSETS> 11,072,369
<DEPOSITS> 9,321,585
<SHORT-TERM> 505,877
<LIABILITIES-OTHER> 142,763
<LONG-TERM> 26,802
0
0
<COMMON> 306,763
<OTHER-SE> 768,579
<TOTAL-LIABILITIES-AND-EQUITY> 11,072,369
<INTEREST-LOAN> 137,740
<INTEREST-INVEST> 40,452<F4>
<INTEREST-OTHER> 6,043
<INTEREST-TOTAL> 184,498
<INTEREST-DEPOSIT> 65,794
<INTEREST-EXPENSE> 72,332
<INTEREST-INCOME-NET> 112,166
<LOAN-LOSSES> 8,550
<SECURITIES-GAINS> 636
<EXPENSE-OTHER> 102,701
<INCOME-PRETAX> 58,371
<INCOME-PRE-EXTRAORDINARY> 38,685
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,685
<EPS-PRIMARY> .63
<EPS-DILUTED> .62
<YIELD-ACTUAL> 4.49<F5>
<LOANS-NON> 16,569
<LOANS-PAST> 21,145
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 117,092
<CHARGE-OFFS> 9,039
<RECOVERIES> 2,954
<ALLOWANCE-CLOSE> 119,557
<ALLOWANCE-DOMESTIC> 119,557
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Certificates of deposit of $100,000 are included in Investments-
Held-For-Sale.
<F2>Excludes non-marketable securities of $29,287,000.
<F3>Gross of allowance for loan losses.
<F4>Excludes interest of $263,000 on trading account securities.
<F5>Yield is computed on a tax equivalent basis.
</FN>
</TABLE>
