COMMERCE BANCSHARES, INC. REPORTS THIRD QUARTER EARNINGS PER SHARE
View the Third Quarter 2008 earnings release.
Commerce Bancshares, Inc. announced earnings of $.36 per share for the three months ended September 30, 2008, a decrease of 53.2% compared to $.77 per share in the third quarter of 2007. Net income for the third quarter amounted to $26.5 million compared with $55.9 million in the same period last year. The quarter was affected by the Company’s previously announced purchase of auction rate securities from its customers, which resulted in a pre-tax non-cash expense of $33.0 million, or $.29 per share. Additionally, the Company elected to increase its allowance for loan losses by $10.8 million this quarter, raising the allowance from 1.31% to 1.42% of average outstanding loans.
For the nine months ended September 30, 2008, earnings per share totaled $2.02 compared to $2.22 for the first nine months of last year. Net income amounted to $146.6 million in 2008 compared with $163.0 million in 2007. For the first nine months of 2008, the return on average assets was 1.2%, and the return on average equity was 12.3%.
In making this announcement, David W. Kemper, Chairman and CEO, said, “Against a backdrop of significant economic challenges facing our economy and the entire banking industry, we are pleased to report continued solid revenue growth this quarter. Net interest income grew by 12% over the same quarter last year as a result of a 6% increase in earning assets and improved net interest margins. Additionally, bankcard fees grew 11% during the third quarter compared with the same period last year reflecting continued strong growth in merchant, debit and corporate card fees. During the quarter, we elected to purchase, from our customers, auction rate securities totaling $530 million. Due to the temporary illiquid nature of these securities, under fair value accounting rules, we recorded a non-cash loss of $33.0 million. Excluding this item, non-interest expense in the current quarter remained well controlled and was up only 1% compared to the prior quarter.”
Mr. Kemper continued, “The Company’s strong capital base of $1.6 billion has grown 7% over the same period last year; our liquidity levels are significant and improving. During the quarter, net loan charge-offs totaled $18.7 million, up from $14.5 million in the previous quarter, principally as a result of higher non-mortgage consumer loan losses. Non-performing assets, consisting of non-accrual loans and foreclosed property, grew this quarter from $36.7 million to $46.2 million, primarily because of the continued weak environment for residential construction. Non-performing assets represent a modest .42% of outstanding loans. Given the current economic conditions, during the quarter we elected to increase our allowance for loan losses by $10.8 million to $156 million. This allowance now represents 375% of total non-accrual loans and 1.42% of outstanding loans.”
Total assets at September 30, 2008 were $17.0 billion, total loans were $11.4 billion, and total deposits were $12.3 billion. The Company’s bank financial strength rating was recently reaffirmed by Moody’s, and this rating ranks the bank among the top five of the fifty largest banks in the country.
Late in the afternoon on October 14, 2008, Visa, Inc. issued a press release disclosing the settlement of its litigation with Discover Financial Services. The terms of the settlement and any potential impact on the Company’s third quarter earnings from indemnification charges (as disclosed in the most recent Form 10-K) is unknown at this time. It is anticipated that the details and any effect will be reflected in the Company’s Form 10-Q.
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 over 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) | 6/30/08 | 9/30/08 | 9/30/07 |
|---|---|---|---|
| Non-Accrual Loans | $29,184 | $41,600 | $25,962 |
| Foreclosed Real Estate | $7,525 | $4,622 | $15,408 |
| Total Non-Performing Assets | $36,709 | $46,222 | $41,370 |
| Non-Performing Assets to Loans | .33% | .42% | .40% |
| Non-Performing Assets to Total Assets | .22% | .27% | .26% |
| Loans 90 Days & Over Past Due – Still Accruing | $26,293 | $31,878 | $19,227 |
This financial news release, including management’s discussion of third quarter results, is posted to the Company’s web site at: www.commercebank.com
For additional information contact:
Jeffery Aberdeen, Controller
PO Box 419248, Kansas City, MO
816-234-2081
Web Site: http://www.commercebank.com
Email: mymoney@commercebank.com†
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