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Commerce Bancshares, Inc. Announces Record Second Quarter Earnings Per Share Of $.84

Stocks in this article: CBSH

Total assets at June 30, 2012 were $20.7 billion, total loans were $9.4 billion, and total deposits were $16.8 billion.

Commerce Bancshares, Inc. is a registered bank holding company offering a full line of banking services, including investment management and securities brokerage. The Company currently operates in approximately 360 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, and private equity activities.

Summary of Non-Performing Assets and Past Due Loans

(Dollars in thousands)   3/31/2012   6/30/2012   6/30/2011
Non-Accrual Loans   $ 68,875   $ 62,177   $ 79,717
Foreclosed Real Estate   $ 18,585     $ 20,095     $ 23,551  
Total Non-Performing Assets   $ 87,460     $ 82,272     $ 103,268  
Non-Performing Assets to Loans   .95 %   .88 %   1.12 %
Non-Performing Assets to Total Assets   .43 %   .40 %   .53 %
Loans 90 Days & Over Past Due — Still Accruing   $ 16,428     $ 11,297     $ 23,598  

This financial news release, including management's discussion of second quarter results, is posted to the Company's web site at www.commercebank.com .

     

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

FINANCIAL HIGHLIGHTS

 
For the Three Months Ended For the Six Months Ended
(Unaudited)     March 31,2012   June 30, 2012   June 30,2011   June 30, 2012   June 30,2011
FINANCIAL SUMMARY (In thousands, except per share data)  
Net interest income $ 159,737   $ 165,105   $ 164,710 $ 324,842 $ 325,683
Taxable equivalent net interest income 165,666 171,186 170,779 336,852 337,258
Non-interest income 94,583 100,816 101,344 195,399 197,250
Investment securities gains, net 4,040 1,336 1,956 5,376 3,283
Provision for loan losses 8,165 5,215 12,188 13,380 27,977
Non-interest expense 150,461 150,650 153,513 301,111 307,473
Net income attributable to Commerce Bancshares, Inc. 65,799 74,263 69,034 140,062 129,487
Cash dividends 20,438 20,216 20,056 40,654 40,110
Net total loan charge-offs (recoveries) 11,165 8,214 15,188 19,379 33,977
Business 110 (3,600 ) 1,439 (3,490 ) 3,449
Real estate — construction and land 220 116 1,125 336 3,111
Real estate — business 1,495 1,839 339 3,334 1,403
Consumer credit card 6,173 5,930 8,490 12,103 17,528
Consumer 2,631 1,974 2,229 4,605 6,242
Revolving home equity 360 943 344 1,303 711
Real estate — personal 69 679 1,027 748 1,301
Overdraft 107 333 195 440 232
Per common share:
Net income — basic $ .74 $ .84 $ .76 $ 1.58 $ 1.42
Net income — diluted $ .74 $ .84 $ .75 $ 1.58 $ 1.41
Cash dividends $ .230 $ .230 $ .219 $ .460 $ .438
Diluted wtd. average shares o/s     88,556     87,672     91,274     88,114     91,226  
RATIOS
Average loans to deposits (1) 55.53 % 55.26 % 60.17 % 55.39 % 61.30 %
Return on total average assets 1.29 % 1.45 % 1.47 % 1.37 % 1.40 %
Return on total average equity 12.04 % 13.43 % 13.12 % 12.74 % 12.54 %
Non-interest income to revenue (2) 37.19 % 37.91 % 38.09 % 37.56 % 37.72 %
Efficiency ratio (3)     58.91 %   56.39 %   57.40 %   57.62 %   58.50 %
AT PERIOD END
Book value per share based on total equity $ 24.83 $ 25.51 $ 23.38
Market value per share $ 40.52 $ 37.90 $ 40.95

Allowance for loan losses as

  a percentage of loans

1.96 % 1.90 % 2.07 %
Tier I leverage ratio 9.70 % 9.75 % 10.32 %
Tangible common equity to assets ratio (4) 10.12 % 10.18 % 10.27 %
Common shares outstanding 88,583,809 87,588,533 91,182,081
Shareholders of record 4,213 4,184 4,253
Number of bank/ATM locations 360 361 364
Full-time equivalent employees     4,713     4,702     4,786  
OTHER QTD INFORMATION
High market value per share $ 41.28 $ 41.00 $ 41.81
Low market value per share     $ 37.57     $ 36.17     $ 38.14  
 
(1)   Includes loans held for sale.
(2) Revenue includes net interest income and non-interest income.
(3) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.
(4) The tangible common equity ratio is calculated as stockholders’ equity reduced by goodwill and other intangible assets (excluding mortgage servicing rights) divided by total assets reduced by goodwill and other intangible assets (excluding mortgage servicing rights).
 
       

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

 
For the Three Months Ended   For the Six Months Ended
(Unaudited)

(In thousands, except per share data)

    March 31,2012     June 30, 2012     June 30,2011     June 30, 2012     June 30,2011
Interest income $ 169,966     $ 174,624     $ 178,087 $ 344,590     $ 353,913
Interest expense 10,229       9,519       13,377       19,748       28,230  
Net interest income 159,737 165,105 164,710 324,842 325,683
Provision for loan losses 8,165       5,215       12,188       13,380       27,977  
Net interest income after provision for loan losses 151,572       159,890       152,522       311,462       297,706  
NON-INTEREST INCOME
Bank card transaction fees 34,733 38,434 41,304 73,167 78,766
Trust fees 22,814 23,833 22,544 46,647 44,116
Deposit account charges and other fees 19,336 19,975 20,789 39,311 40,089
Capital market fees 6,871 5,010 4,979 11,881 9,699
Consumer brokerage services 2,526 2,576 2,880 5,102 5,543
Loan fees and sales 1,561 1,706 2,075 3,267 3,899
Other 6,742       9,282       6,773       16,024       15,138  
Total non-interest income 94,583       100,816       101,344       195,399       197,250  
INVESTMENT SECURITIES GAINS (LOSSES), NET
Impairment (losses) reversals on debt securities 5,587 3 (2,119 ) 5,590 4,186

Noncredit-related losses (reversals) on securities  not expected to be sold

(5,907 )     (353 )     1,469       (6,260 )     (5,110 )
Net impairment losses (320 ) (350 ) (650 ) (670 ) (924 )

Realized gains on sales and fair value  adjustments

4,360       1,686       2,606       6,046       4,207  
Investment securities gains, net 4,040       1,336       1,956       5,376       3,283  
NON-INTEREST EXPENSE
Salaries and employee benefits 89,543 87,511 84,223 177,054 171,615
Net occupancy 11,260 11,105 11,213 22,365 23,250
Equipment 5,189 4,999 5,702 10,188 11,279
Supplies and communication 5,613 5,667 5,692 11,280 11,224
Data processing and software 17,469 18,282 17,531 35,751 33,998
Marketing 3,822 4,469 4,495 8,291 8,753
Deposit insurance 2,520 2,618 2,780 5,138 7,671
Indemnification obligation (1,359 )
Other 15,045       15,999       21,877       31,044       41,042  
Total non-interest expense 150,461       150,650       153,513       301,111       307,473  
Income before income taxes 99,734 111,392 102,309 211,126 190,766
Less income taxes 32,920       36,626       32,692       69,546       60,199  
Net income 66,814 74,766 69,617 141,580 130,567
Less non-controlling interest expense 1,015       503       583       1,518       1,080  

Net income attributable to Commerce   Bancshares, Inc.

$ 65,799       $ 74,263       $ 69,034       $ 140,062       $ 129,487  
Net income per common share — basic $ .74       $ .84       $ .76       $ 1.58       $ 1.42  
Net income per common share — diluted     $ .74       $ .84       $ .75       $ 1.58       $ 1.41  
 
           

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 
(Unaudited)

(In thousands)

    March 31,2012     June 30, 2012     June 30,2011
ASSETS
Loans $ 9,247,971 $ 9,376,915 $ 9,237,078
Allowance for loan losses (181,532 )     (178,533 )     (191,538 )
Net loans 9,066,439       9,198,382       9,045,540  
Loans held for sale 9,673 8,874 42,359
Investment securities:
Available for sale 9,120,399 9,206,451 7,717,634
Trading 34,178 14,313 32,074
Non-marketable 120,734       116,190       109,867  
Total investment securities 9,275,311       9,336,954       7,859,575  
Short-term federal funds sold and securities purchased under agreements to resell 40,925 7,455 10,845
Long-term securities purchased under agreements to resell 850,000 850,000 850,000
Interest earning deposits with banks 12,038 92,544 535,696
Cash and due from banks 381,462 410,666 340,594
Land, buildings and equipment — net 353,866 350,897 374,732
Goodwill 125,585 125,585 125,585
Other intangible assets — net 7,070 6,381 9,394
Other assets 404,548       355,253       376,540  
Total assets $ 20,526,917       $ 20,742,991       $ 19,570,860  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing $ 5,209,381 $ 5,637,373 $ 4,834,750
Savings, interest checking and money market 9,038,283 8,983,090 8,139,989
Time open and C.D.’s of less than $100,000 1,143,687 1,113,824 1,273,961
Time open and C.D.’s of $100,000 and over 1,380,409       1,097,346       1,407,866  
Total deposits 16,771,760 16,831,633 15,656,566
Federal funds purchased and securities sold under agreements to repurchase 1,122,988 1,305,745 1,282,470
Other borrowings 111,520 111,292 111,929
Other liabilities 321,443       260,022       388,328  
Total liabilities 18,327,711       18,508,692       17,439,293  
Stockholders’ equity:
Preferred stock
Common stock 446,387 446,387 436,481
Capital surplus 1,032,985 1,033,523 979,247
Retained earnings 620,780 674,827 645,155
Treasury stock (22,872 ) (61,388 ) (14,515 )
Accumulated other comprehensive income 118,056       136,732       83,000  
Total stockholders’ equity 2,195,336 2,230,081 2,129,368
Non-controlling interest 3,870       4,218       2,199  
Total equity 2,199,206       2,234,299       2,131,567  
Total liabilities and equity     $ 20,526,917       $ 20,742,991       $ 19,570,860  
 
   

COMMERCE BANCSHARES, INC. and SUBSIDIARIES

AVERAGE BALANCE SHEETS — AVERAGE RATES AND YIELDS

 
(Unaudited)

(Dollars in thousands)

For the Three Months Ended
March 31, 2012     June 30, 2012     June 30, 2011
Average Balance     Avg. Rates Earned/Paid Average Balance     Avg. Rates Earned/Paid Average Balance     Avg. Rates Earned/Paid
ASSETS:
Loans:
Business (A) $ 2,893,973 3.52 % $ 2,895,167 3.58 % $ 2,959,012 3.64 %
Real estate — construction and land 380,484 4.34 360,000 4.24 429,649 4.51
Real estate — business 2,184,893 4.57 2,205,561 4.71 2,100,726 4.94
Real estate — personal 1,441,520 4.58 1,475,930 4.46 1,440,747 4.87
Consumer 1,107,878 5.93 1,134,838 5.73 1,112,315 6.32
Revolving home equity 454,782 4.18 449,416 4.17 468,380 4.24
Consumer credit card 731,030 11.78 712,708 11.87 743,317 11.13
Overdrafts 7,587     5,663     6,654    
Total loans (B) 9,202,147   4.95   9,239,283   4.95   9,260,800   5.12  
Loans held for sale 12,147 3.48 9,053 3.91 52,390 2.37
Investment securities:

U.S. government and federalagency obligations

328,106 2.08 330,648 7.58 341,725 9.72
Government-sponsored enterprise obligations 283,494 2.01 265,620 2.06 234,968 2.23
State and municipal obligations (A) 1,263,303 4.17 1,322,987 4.03 1,160,164 4.75
Mortgage-backed securities 4,190,982 2.85 4,010,276 2.89 3,057,929 3.63
Asset-backed securities 2,761,896 1.16 2,900,122 1.13 2,402,577 1.31
Other marketable securities (A) 162,616   4.11   135,930   4.92   172,754   4.18  
Total available for sale securities (B) 8,990,397 2.48 8,965,583 2.67 7,370,117 3.30
Trading securities (A) 32,628 2.95 22,748 2.65 20,456 2.78
Non-marketable securities (A) 116,873   8.55   122,651   8.60   105,015   6.24  
Total investment securities 9,139,898   2.56   9,110,982   2.75   7,495,588   3.34  

Short-term federal funds sold andsecurities purchased underagreements to resell

13,695 .50 22,139 .53 16,513 .53

Long-term securities purchasedunder agreements to resell

850,000 2.02 850,000 2.17 803,846 1.58
Interest earning deposits with banks 87,919   .25   163,075   .28   179,763   .25  
Total interest earning assets 19,305,806 3.66   19,394,532 3.75   17,808,900

 

4.15  
Non-interest earning assets (B) 1,160,906   1,154,720   1,054,328  
Total assets $ 20,466,712   $ 20,549,252   $ 18,863,228  
LIABILITIES AND EQUITY:
Interest bearing deposits:
Savings $ 549,998 .15 $ 584,196 .12 $ 537,364 .14
Interest checking and money market 8,311,734 .24 8,369,306 .21 7,580,895 .33
Time open & C.D.’s of less than $100,000 1,155,882 .73 1,128,716 .71 1,324,192 .90

Time open & C.D.’s of $100,000 and over

1,444,252   .53   1,250,164   .59   1,466,214   .67  
Total interest bearing deposits 11,461,866   .32   11,332,382   .30   10,908,665   .43  
Borrowings:

Federal funds purchased andsecurities sold underagreements to repurchase

1,287,245 .07 1,109,693 .06 952,032 .29
Other borrowings 111,800   3.26   111,336   3.16   112,099   3.29  
Total borrowings 1,399,045   .33   1,221,029   .35   1,064,131   .61  
Total interest bearing liabilities 12,860,911 .32 % 12,553,411 .30 % 11,972,796 .45 %
Non-interest bearing deposits 5,132,305 5,404,687 4,570,721
Other liabilities 275,349 367,763 208,606
Equity 2,198,147   2,223,391   2,111,105  
Total liabilities and equity $ 20,466,712   $ 20,549,252   $ 18,863,228  
Net interest income (T/E) $ 165,666   $ 171,186   $ 170,779  
Net yield on interest earning assets           3.45 %           3.55 %           3.85 %
 
(A)   Stated on a tax equivalent basis using a federal income tax rate of 35%.
(B) The allowance for loan losses and unrealized gains/(losses) on available for sale securities are included in non-interest earning assets.

COMMERCE BANCSHARES, INC. Management Discussion of Second Quarter Results June 30, 2012

For the quarter ended June 30, 2012, net income attributable to Commerce Bancshares, Inc. (net income) amounted to $74.3 million, an increase of $5.2 million, or 7.6%, over the same quarter last year, and an increase of $8.5 million compared to the previous quarter. During the current quarter, the Company recorded loan recoveries totaling $3.6 million (effectively reducing the provision for loan losses) and recorded interest income of $1.3 million on two non-performing commercial loans. The Company also received interest income of $1.1 million on the early pay-off of a commercial real estate loan. The after-tax effect of these items increased net income for the quarter by approximately $3.8 million, or $.04 per share. For the current quarter, the return on average assets was 1.45%, the return on average equity was 13.4%, and the efficiency ratio was 56.4%.

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