COMMERCE BANCSHARES, INC. ANNOUNCES THIRD QUARTER EARNINGS PER SHARE OF $.66

Commerce Bancshares, Inc. announced earnings of $.66 per share for the quarter ended September 30, 2009 compared to $.48 per share in the previous quarter and $.32 per share in the third quarter of 2008. Net income for the third quarter amounted to $51.6 million compared to $37.0 million in the previous quarter and $24.7 million in the same period last year. During the third quarter of 2008, the Company recorded a loss on the purchase of auction rate securities totaling approximately $21 million after tax, or $.27 per share. For the quarter, the return on average assets totaled 1.16% and the return on average equity was 11.5%.

For the nine months ended September 30, 2009, earnings per share totaled $1.54 compared to $1.90 for the first nine months of last year. Net income amounted to $119.5 million for the first nine months of 2009 compared with $144.8 million in 2008, or a decline of $25.4 million. At September 30, 2009, the ratio of tangible common equity to total assets improved to 9.6% compared to 8.7% at the same time last year.

In making this announcement, David W. Kemper, Chairman and CEO, said, "Although the economy remains challenging, this quarter we were pleased to report an increase in net income of 40%, or $14.7 million, over the previous quarter. The increase in net income over the previous quarter was mainly the result of 4% growth in total revenue and good overall expense control. Our net interest margin increased to 4.02% from 3.91% in the previous quarter. Loan balances continued to decline this quarter as a result of weak demand, while deposits were relatively flat."

Mr. Kemper continued, “During this quarter we strengthened our balance sheet, enhancing both our capital and liquidity positions while also building our loan loss reserves. Tangible common equity increased $153 million this quarter through retained earnings, securities portfolio appreciation and stock issuance. Liquidity also increased as our loan to deposit ratio declined to 77.4%. During the quarter we increased our allowance for loan losses by $4.5 million to $190.5 million, representing 1.85% of outstanding loans. Net loan charge-offs declined by $5.1 million from the prior quarter. Non-performing assets, consisting of non-accrual loans and foreclosed property, declined by $2.5 million to $129.2 million, or 1.26% of loans.”

Total assets at September 30, 2009 were $18.0 billion, total loans were $10.6 billion, and total deposits were $13.8 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 over 370 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)

6/30/09

9/30/09

9/30/08

Non-Accrual Loans

$122,648

$121,698

$41,600

Foreclosed Real Estate

$9,039

$7,535

$4,622

Total Non-Performing Assets

$131,687

$129,233

$46,222

Non-Performing Assets to Loans

1.23%

1.26%

.42%

Non-Performing Assets to Total Assets

.74%

.72%

.27%

Loans 90 Days & Over Past Due – Still Accruing

$39,968

$45,614

$31,878

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:

Email: mymoney@commercebank.com†


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