Commerce Bancshares Earnings Even

Commerce Bancshares quarterly earnings remained unchanged from the same period a year ago. Net income was up slightly from a year ago.
Earnings were 58 cents per share for the three months ended Dec. 31, same as the fourth quarter of 2007.
Net income for the fourth quarter of 2008 amounted to $43.8 million compared to $43.7 million in the fourth quarter of last year.
For the year ended Dec. 31, 2008, earnings per share totaled $2.48 compared to $2.69 in 2007, a decrease of 7.8 percent, for the Kansas City, Mo., based holding company. Net income amounted to $188.7 million in 2008 compared with $206.7 million in 2007.
For the year, the return on average assets was 1.15 percent, and the return on average equity was 11.83 percent. At year end, the Tier I leverage ratio was 9.06 percent compared to 8.76 percent a year earlier.
The objective for Commerce in 2008 was to navigate through the deteriorating economy and severe dislocations in the financial markets while continuing a long-term plan to build the franchise, said David W. Kemper, chairman and CEO.
“In the face of these challenges, we strengthened our balance sheet while maintaining strong capital and excellent liquidity,” Kemper said. “This quarter we were pleased to report 14 percent growth in net interest income over the same quarter last year, driven by lower funding costs coupled with growth in earning assets. Also, while the effects of this difficult economy constrained growth in non-interest income, the company still generated over $85 million of fee income representing 35 percent of total revenue. Non-interest expense also remained controlled.”
During the quarter Commerce increased its allowance for loan losses by $16.6 million to $172.6 million.
“This allowance represents 237 percent of total non-accrual loans and 1.53 percent of outstanding loans,” Kemper said. “Non-performing assets, consisting of non-accrual loans and foreclosed property, grew this quarter from $46.2 million to $79.1 million. The increase in non-performing assets this quarter was mainly the result of placing one large residential construction loan relationship within our geographical footprint on non-accrual status. We expect continuing weak economic conditions and deteriorating credit in 2009.”
Total assets at Dec. 31 were $17.5 billion, total loans were $11.6 billion, and total deposits were $12.9 billion. During the fourth quarter the company sold $369 million par value of auction rate securities in exchange for government guaranteed student loans and recorded a pre-tax gain of $7.9 million.



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