Commerce reports 12% hike in earnings per share

Commerce Bancshares Inc. announced record earnings of 79 cents per share for the three months ended June 30, 2004, an increase of 10 percent compared to 72 cents per share in 2003.

Net income for the second quarter amounted to $53.8 million compared with $50.5 million in the same period last year. For the quarter, the return on average equity was 14.9 percent and the return on assets was 1.51 percent. The efficiency ratio for the quarter decreased to 58 percent compared to 58.8 percent in the same period last year.

For the first six months ended June 30, 2004, earnings per share totaled $1.54, an increase of 12 percent compared with $1.38 in 2003. Net income amounted to $105.2 million compared with $97.7 million for 2003, an increase of 8 percent.

"We are pleased to report double digit earnings per share growth for both the quarter and the first six months of the year. In each instance, the results were driven by sustained growth in fee income and good operating expense management. In particular, bank card and deposit fees increased in excess of 10 percent compared to the same quarter last year, while non-interest expenses increased only 2 percent," said David W. Kemper, Commerce Bancshares chairman and CEO, in a news release. "Non-interest income for the first six months totaled 41 percent of total revenue. However, net interest income for the quarter was down 2 percent compared with the same period last year and reflects continued downward pressure on the net interest margin and sluggish loan demand."

Kemper added, "Asset quality remained strong this quarter with net charge-offs totaling $6.2 million, a decrease of $6.1 million from the prior quarter and a decrease of $3.2 million from the second quarter of last year. Our allowance for loan losses at June 30, 2004 totaled $133.1 million and was 481 percent of non-performing loans.

Net charge-offs for the first six months were .46 percent of average loans and our loan loss reserve remains at 1.64 percent of total loans."

Total assets at June 30, 2004 were $14.4 billion, total loans were $8.1 billion, and total deposits were $10.4 billion. Non-performing loans totaled $27.7 million or .34 percent of total loans. During the second quarter, Moody's Investors Service upgraded the long-term deposits rating of the Company's principal banking subsidiary to Aa3 and increased its bank financial strength rating to B.

Commerce Bancshares, Inc. is a registered bank holding company that operates in approximately 330 banking locations in Missouri, Illinois, and Kansas. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, venture capital, and real estate activities. Commerce is publicly traded on NASDAQ under the symbol CBSH.