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Shares Of Commerce Bancshares Plunge On Earns Miss

The Associated Press

NEW YORK (AP) — Shares of Commerce Bancshares Inc. plunged Tuesday after the regional bank said its profit fell 52 percent in the first quarter.

The Kansas City, Mo.-based bank reported net income of $30.8 million, or 40 cents per share, compared with $64.2 million, or 84 cents per share, in the year-ago period. Results came in well below the average analyst estimate of 49 cents per share, according to Thomson Reuters.

The company noted that the first quarter of 2008 included a $22.2 million pretax gain from the sale of Visa Inc. stock and the reversal of certain litigation charges that added about 26 cents to earnings per share.

Its shares dropped $4.86, or 12.4 percent, to $34.39 in afternoon trading. They are down about 11 percent this year.

Net interest income, or income generated from loans and deposits, rose 7 percent to $150 million from $140.1 million, boosted by strong deposit growth. Average deposits grew 6.5 percent during the quarter, the company said.

Results were hampered as the bank was forced to set aside more money to cover potential loan losses. Commerce's provision for loan losses more than doubled over the first quarter of last year to $43.2 million. Net chargeoffs, or loans written off as unpaid, more than tripled to $34.9 million from $11.9 million, mostly due to higher losses among consumer credit, business and real estate loans.

Total non-interest income, or profit from fees and other charges, was roughly flat at $92.4 million.

Fox Pitt Kelton analyst Andrew Marquardt reiterated an "in line" rating on the shares, noting that overall results were worse than he had expected. But he was encouraged by loan and deposit growth, as well as the bank's fee income.

Shares of other regional banks also fell sharply Tuesday on investors' growing concerns about weak profit reports. The overall market has been more upbeat in recent weeks, driving higher after several big bank chief executives said business conditions are improving. But analysts warn that many obstacles remain and that credit costs will likely stay elevated for some time.

Commerce Bancshares operates 370 branches in Missouri, Illinois, Kansas, Oklahoma and Colorado.