COMMERCE BANCSHARES
FINACT:[89207.TX]00001.HTM PAG: 08-AUG-2000 16:34 HTE: 8-AUG-2000 18:18 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 6316 V3.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
|
OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2000
OR
| ¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
|
OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ____________ to ___________
Commission File No. 0-2989
Commerce Bancshares, Inc.
(Exact name of registrant as specified in its charter)
| Missouri
(State of Incorporation)
|
|
43-0889454
(IRS Employer Identification No.)
|
|
1000 Walnut, Kansas City, MO 64106
(Address of principal executive offices and Zip Code)
(816) 234-2000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
As of August 2, 2000, the registrant had outstanding 60,342,536 shares of its $5 par value common stock,
registrant’s only class of common stock.
FINACT:[89207.TX]00002.HTM PAG: 10-AUG-2000 15:02 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Part I: FINANCIAL INFORMATION
In the opinion of management, the consolidated financial statements of Commerce Bancshares, Inc. and Subsidiaries
as of June 30, 2000 and December 31, 1999 and the related notes include all material adjustments which were regularly recurring in nature and necessary for fair presentation of the financial condition and the results of operations for the periods shown.
The consolidated financial statements of Commerce Bancshares, Inc. and Subsidiaries and management’s
discussion and analysis of financial condition and results of operations are presented in the schedules as follows:
| Schedule 1: |
|
Consolidated Balance Sheets |
| Schedule 2: |
|
Consolidated Statements of Income |
| Schedule 3: |
|
Statements of Changes in Stockholders’ Equity |
| Schedule 4: |
|
Consolidated Statements of Cash Flows |
| Schedule 5: |
|
Notes to Consolidated Financial Statements |
| Schedule 6: |
|
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, including Quantitative and Qualitative Disclosures about Market Risk |
Part II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of shareholders of Commerce Bancshares, Inc. was held on April 19, 2000. Proxies for the
meeting were solicited pursuant to Regulation 14 of the Securities Exchange Act of 1934, and there was no solicitation in opposition to management’s nominees, as listed in the proxy statement. The five nominees for the five directorships
(constituting one-third of the Board of Directors) being elected at this meeting received the following votes:
Name of Director
|
|
Votes For
|
|
Votes
Withheld
|
| Giorgio Balzer |
|
51,280,003 |
|
364,959 |
| Jonathan M. Kemper |
|
51,212,629 |
|
432,333 |
| Mary Ann Krey |
|
51,270,316 |
|
374,646 |
| Terry O. Meek |
|
51,291,320 |
|
353,641 |
| L. W. Stolzer |
|
51,315,367 |
|
330,158 |
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
|
(27) Financial Data Schedule
|
(b) No reports on Form 8-K were filed during the quarter ended June 30, 2000.
2
FINACT:[89207.TX]00003.HTM PAG: 25-JUL-2000 14:58 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized.
|
COMMERCE
BANCSHARES
, INC
.
|
|
Vice President & Secretary
|
Date: August 10, 2000
|
(Chief Accounting Officer)
|
Date: August 10, 2000
3
FINACT:[89207.TX]00004.HTM PAG: 01-AUG-2000 06:54 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 1
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| |
|
June 30
2000
|
|
December 31
1999
|
| |
|
(Unaudited) |
| |
|
(In thousands) |
| ASSETS |
|
|
|
|
|
|
| Loans, net of unearned income |
|
$ 7,841,876 |
|
|
$ 7,576,892 |
|
| Allowance for loan losses |
|
(127,024 |
) |
|
(123,042 |
) |
| |
|
|
|
|
|
|
| Net loans
|
|
7,714,852 |
|
|
7,453,850 |
|
| |
|
|
|
|
|
|
| Investment securities: |
|
|
|
|
|
|
| Available for sale |
|
2,074,557 |
|
|
2,451,785 |
|
| Trading account |
|
6,567 |
|
|
23,639 |
|
| Other non-marketable |
|
63,989 |
|
|
32,991 |
|
| |
|
|
|
|
|
|
| Total investment
securities |
|
2,145,113 |
|
|
2,508,415 |
|
| |
|
|
|
|
|
|
| Federal funds sold and securities purchased under agreements to resell |
|
271,958 |
|
|
238,602 |
|
| Cash and due from banks |
|
641,550 |
|
|
685,157 |
|
| Land, buildings and equipment, net |
|
244,231 |
|
|
235,163 |
|
| Goodwill and core deposit premium, net |
|
64,135 |
|
|
68,209 |
|
| Other assets |
|
147,124 |
|
|
211,540 |
|
| |
|
|
|
|
|
|
| Total assets
|
|
$11,228,963 |
|
|
$11,400,936 |
|
| |
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
| Non-interest bearing demand |
|
$ 1,564,050 |
|
|
$ 1,584,333 |
|
| Savings and interest bearing demand |
|
5,103,268 |
|
|
5,154,506 |
|
| Time open and C.D.’s of less than $100,000 |
|
2,050,193 |
|
|
2,114,443 |
|
| Time open and C.D.’s of $100,000 and over |
|
339,705 |
|
|
310,841 |
|
| |
|
|
|
|
|
|
| Total deposits
|
|
9,057,216 |
|
|
9,164,123 |
|
| Federal funds purchased and securities sold under agreements to repurchase |
|
865,920 |
|
|
1,042,429 |
|
| Long-term debt and other borrowings |
|
125,164 |
|
|
25,735 |
|
| Accrued interest, taxes and other liabilities |
|
85,128 |
|
|
88,817 |
|
| |
|
|
|
|
|
|
| Total liabilities
|
|
10,133,428 |
|
|
10,321,104 |
|
| |
|
|
|
|
|
|
| Stockholders’ equity: |
|
|
|
|
|
|
| Preferred stock, $1 par value. |
|
|
|
|
|
|
| Authorized and unissued 2,000,000 shares |
|
— |
|
|
— |
|
| Common stock, $5 par value. |
|
|
|
|
|
|
| Authorized 100,000,000 shares; issued 62,428,078
shares |
|
312,140 |
|
|
312,140 |
|
| Capital surplus |
|
128,691 |
|
|
129,173 |
|
| Retained earnings |
|
710,564 |
|
|
642,746 |
|
Treasury stock of 1,492,229 shares in 2000 and 53,829 shares in 1999, at
cost |
|
(46,522 |
) |
|
(2,089 |
) |
| Other |
|
(1,279 |
) |
|
(916 |
) |
| Accumulated other comprehensive income |
|
(8,059 |
) |
|
(1,222 |
) |
| |
|
|
|
|
|
|
| Total
stockholders’ equity |
|
1,095,535 |
|
|
1,079,832 |
|
| |
|
|
|
|
|
|
| Total liabilities
and stockholders’ equity |
|
$11,228,963 |
|
|
$11,400,936 |
|
| |
|
|
|
|
|
|
See accompanying notes to financial statements.
4
FINACT:[89207.TX]00005.HTM PAG: 19-JUL-2000 10:33 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 2
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| |
|
For the Three Months
Ended June 30
|
|
For the Six Months
Ended June 30
|
| |
|
2000
|
|
1999
|
|
2000
|
|
1999
|
| |
|
(Unaudited) |
| |
|
(In thousands, except per share data) |
| INTEREST INCOME |
|
|
|
|
|
|
|
|
| Interest and fees on loans |
|
$164,655 |
|
$139,299 |
|
$321,373 |
|
$277,039 |
| Interest on investment securities |
|
34,139 |
|
41,378 |
|
71,141 |
|
82,093 |
Interest on federal funds sold and securities purchased under
agreements to resell |
|
3,678 |
|
3,478 |
|
6,788 |
|
9,521 |
| |
|
|
|
|
|
|
|
|
| Total interest
income |
|
202,472 |
|
184,155 |
|
399,302 |
|
368,653 |
| |
|
|
|
|
|
|
|
|
| INTEREST EXPENSE |
|
|
|
|
|
|
|
|
| Interest on deposits: |
|
|
|
|
|
|
|
|
| Savings and interest bearing demand |
|
37,099 |
|
32,004 |
|
72,600 |
|
65,087 |
| Time open and C.D.’s of less than $100,000 |
|
26,813 |
|
27,676 |
|
53,388 |
|
56,605 |
| Time open and C.D.’s of $100,000 and over |
|
4,606 |
|
3,671 |
|
8,468 |
|
7,453 |
Interest on federal funds purchased and securities sold under
agreements to repurchase |
|
11,663 |
|
5,520 |
|
23,358 |
|
11,830 |
| Interest on long-term debt and other borrowings |
|
1,281 |
|
214 |
|
1,285 |
|
442 |
| |
|
|
|
|
|
|
|
|
| Total interest
expense |
|
81,462 |
|
69,085 |
|
159,099 |
|
141,417 |
| |
|
|
|
|
|
|
|
|
| Net interest income
|
|
121,010 |
|
115,070 |
|
240,203 |
|
227,236 |
| Provision for loan losses |
|
10,211 |
|
8,741 |
|
18,876 |
|
17,291 |
| |
|
|
|
|
|
|
|
|
| Net interest
income after provision for loan losses |
|
110,799 |
|
106,329 |
|
221,327 |
|
209,945 |
| |
|
|
|
|
|
|
|
|
| NON-INTEREST INCOME |
|
|
|
|
|
|
|
|
| Trust fees |
|
14,353 |
|
14,212 |
|
28,587 |
|
28,124 |
| Deposit account charges and other fees |
|
17,909 |
|
17,109 |
|
34,491 |
|
33,350 |
| Credit card transaction fees |
|
12,362 |
|
11,007 |
|
23,554 |
|
19,907 |
| Trading account profits and commissions |
|
2,325 |
|
2,620 |
|
4,710 |
|
5,405 |
| Net gains on securities transactions |
|
506 |
|
357 |
|
505 |
|
993 |
| Other |
|
16,536 |
|
16,131 |
|
28,940 |
|
31,113 |
| |
|
|
|
|
|
|
|
|
| Total
non-interest income |
|
63,991 |
|
61,436 |
|
120,787 |
|
118,892 |
| |
|
|
|
|
|
|
|
|
| NON-INTEREST EXPENSE |
|
|
|
|
|
|
|
|
| Salaries and employee benefits |
|
54,963 |
|
53,369 |
|
109,826 |
|
107,394 |
| Net occupancy |
|
7,374 |
|
6,827 |
|
14,851 |
|
13,486 |
| Equipment |
|
5,298 |
|
5,780 |
|
10,437 |
|
10,655 |
| Supplies and communication |
|
8,062 |
|
8,386 |
|
16,659 |
|
16,546 |
| Data processing |
|
9,579 |
|
9,384 |
|
18,619 |
|
17,993 |
| Marketing |
|
3,319 |
|
2,915 |
|
6,469 |
|
6,166 |
| Goodwill and core deposit |
|
2,018 |
|
2,133 |
|
4,073 |
|
4,266 |
| Other |
|
14,985 |
|
15,813 |
|
29,624 |
|
30,802 |
| |
|
|
|
|
|
|
|
|
| Total
non-interest expense |
|
105,598 |
|
104,607 |
|
210,558 |
|
207,308 |
| |
|
|
|
|
|
|
|
|
| Income before income taxes |
|
69,192 |
|
63,158 |
|
131,556 |
|
121,529 |
| Less income taxes |
|
23,589 |
|
21,387 |
|
44,698 |
|
41,073 |
| |
|
|
|
|
|
|
|
|
| Net income
|
|
$ 45,603 |
|
$ 41,771 |
|
$ 86,858 |
|
$ 80,456 |
| |
|
|
|
|
|
|
|
|
| Net income per share—basic |
|
$ .75 |
|
$ .66 |
|
$ 1.41 |
|
$ 1.26 |
| |
|
|
|
|
|
|
|
|
| Net income per share—diluted |
|
$ .74 |
|
$ .65 |
|
$ 1.40 |
|
$ 1.24 |
| |
|
|
|
|
|
|
|
|
| Cash dividends per common share |
|
$ .155 |
|
$ .143 |
|
$ .310 |
|
$ .286 |
| |
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
5
FINACT:[89207.TX]00006.HTM PAG: 01-AUG-2000 04:36 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 3
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| |
|
Number
of Shares
Issued
|
|
Common
Stock
|
|
Capital
Surplus
|
|
Retained
Earnings
|
|
Treasury
Stock
|
|
Other
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
|
| |
|
(Unaudited) |
| |
|
(Dollars in thousands) |
| Balance January 1, 2000 |
|
62,428,078 |
|
$312,140 |
|
$129,173 |
|
|
$642,746 |
|
|
$ (2,089 |
) |
|
$ (916 |
) |
|
$(1,222 |
) |
|
$1,079,832 |
|
| Net income |
|
|
|
|
|
|
|
|
86,858 |
|
|
|
|
|
|
|
|
|
|
|
86,858 |
|
Change in unrealized gain (loss) on
available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,837 |
) |
|
(6,837 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,021 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchase of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
(46,578 |
) |
|
|
|
|
|
|
|
(46,578 |
) |
Issuance of stock under purchase,
option and benefit plans |
|
|
|
|
|
(452 |
) |
|
|
|
|
1,646 |
|
|
|
|
|
|
|
|
1,194 |
|
Issuance of stock under restricted
stock award plan |
|
|
|
|
|
(30 |
) |
|
|
|
|
499 |
|
|
(469 |
) |
|
|
|
|
— |
|
Restricted stock award
amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106 |
|
|
|
|
|
106 |
|
Cash dividends paid ($.31 per
share) |
|
|
|
|
|
|
|
|
(19,040 |
) |
|
|
|
|
|
|
|
|
|
|
(19,040 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance June 30, 2000 |
|
62,428,078 |
|
$312,140 |
|
$128,691 |
|
|
$710,564 |
|
|
$(46,522 |
) |
|
$(1,279 |
) |
|
$(8,059 |
) |
|
$1,095,535 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance January 1, 1999 |
|
61,352,684 |
|
$306,763 |
|
$106,159 |
|
|
$624,256 |
|
|
$ (8,561 |
) |
|
$ (904 |
) |
|
$53,072 |
|
|
$1,080,785 |
|
| Net income |
|
|
|
|
|
|
|
|
80,456 |
|
|
|
|
|
|
|
|
|
|
|
80,456 |
|
Change in unrealized gain (loss) on
available for sale securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28,817 |
) |
|
(28,817 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51,639 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchase of treasury stock |
|
|
|
|
|
|
|
|
|
|
|
(42,809 |
) |
|
|
|
|
|
|
|
(42,809 |
) |
Issuance of stock under purchase,
option and benefit plans |
|
|
|
|
|
(4,014 |
) |
|
|
|
|
7,957 |
|
|
|
|
|
|
|
|
3,943 |
|
Issuance of stock under restricted
stock award plan |
|
|
|
|
|
(19 |
) |
|
|
|
|
289 |
|
|
(270 |
) |
|
|
|
|
— |
|
Restricted stock award
amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183 |
|
|
|
|
|
183 |
|
Cash dividends paid ($.286 per
share) |
|
|
|
|
|
|
|
|
(18,165 |
) |
|
|
|
|
|
|
|
|
|
|
(18,165 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance June 30, 1999 |
|
61,352,684 |
|
$306,763 |
|
$102,126 |
|
|
$686,547 |
|
|
$(43,124 |
) |
|
$ (991 |
) |
|
$24,255 |
|
|
$1,075,576 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements.
6
FINACT:[89207.TX]00007.HTM PAG: 08-AUG-2000 16:43 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 4
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| |
|
For the Six Months
Ended June 30
|
| |
|
2000
|
|
1999
|
| |
|
(Unaudited)
(In thousands) |
| OPERATING ACTIVITIES: |
|
|
|
|
|
|
| Net income |
|
$ 86,858 |
|
|
$ 80,456 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
| Provision for loan losses |
|
18,876 |
|
|
17,291 |
|
| Provision for depreciation and amortization |
|
18,337 |
|
|
17,317 |
|
| Accretion of investment security discounts |
|
(1,173 |
) |
|
(1,591 |
) |
| Amortization of investment security premiums |
|
5,010 |
|
|
5,809 |
|
| Net gains on sales of investment securities (A) |
|
(505 |
) |
|
(993 |
) |
| Net (increase) decrease in trading account securities |
|
14,495 |
|
|
(10,035 |
) |
| (Increase) decrease in interest receivable |
|
(4,287 |
) |
|
520 |
|
| Increase (decrease) in interest payable |
|
499 |
|
|
(6,769 |
) |
| Other changes, net |
|
(22,052 |
) |
|
34,871 |
|
| |
|
|
|
|
|
|
| Net cash provided by
operating activities |
|
116,058 |
|
|
136,876 |
|
| |
|
|
|
|
|
|
| INVESTING ACTIVITIES: |
|
|
|
|
|
|
| Cash paid in sale of branch |
|
(6,353 |
) |
|
— |
|
| Proceeds from sales of investment securities (A) |
|
3,930 |
|
|
103,837 |
|
| Proceeds from maturities of investment securities (A) |
|
771,358 |
|
|
920,732 |
|
| Purchases of investment securities (A) |
|
(444,272 |
) |
|
(805,208 |
) |
Net (increase) decrease in federal funds sold and securities purchased under
agreements to resell |
|
(33,356 |
) |
|
121,410 |
|
| Net increase in loans |
|
(277,441 |
) |
|
(137,611 |
) |
| Purchases of premises and equipment |
|
(21,578 |
) |
|
(17,268 |
) |
| Sales of premises and equipment |
|
1,711 |
|
|
1,008 |
|
| |
|
|
|
|
|
|
| Net cash provided
(used) by investing activities |
|
(6,001 |
) |
|
186,900 |
|
| |
|
|
|
|
|
|
| FINANCING ACTIVITIES: |
|
|
|
|
|
|
Net increase (decrease) in non-interest bearing demand, savings, and interest bearing
demand deposits |
|
19,545 |
|
|
(168,723 |
) |
| Net decrease in time open and C.D.’s |
|
(31,715 |
) |
|
(132,759 |
) |
Net increase (decrease) in federal funds purchased and securities sold under
agreements to repurchase |
|
(176,509 |
) |
|
341 |
|
| Repayment of long-term debt |
|
(464 |
) |
|
(818 |
) |
| Additional borrowings |
|
100,000 |
|
|
— |
|
| Purchases of treasury stock |
|
(46,578 |
) |
|
(41,285 |
) |
| Issuance of stock under purchase, option and benefit plans |
|
1,097 |
|
|
1,570 |
|
| Cash dividends paid on common stock |
|
(19,040 |
) |
|
(18,165 |
) |
| |
|
|
|
|
|
|
| Net cash used by
financing activities |
|
(153,664 |
) |
|
(359,839 |
) |
| |
|
|
|
|
|
|
| Decrease in cash and
cash equivalents |
|
(43,607 |
) |
|
(36,063 |
) |
| Cash and cash equivalents at beginning of year |
|
685,157 |
|
|
738,672 |
|
| |
|
|
|
|
|
|
| Cash and cash
equivalents at June 30 |
|
$ 641,550 |
|
|
$ 702,609 |
|
| |
|
|
|
|
|
|
(A) Available for sale and other non-marketable securities, excluding trading account securities.
Net cash payments of income taxes for the six month period were $46,439,000 in 2000 and $53,413,000 in 1999.
Interest paid on deposits and borrowings for the six month period was $158,629,000 in 2000 and $148,106,000 in 1999.
See accompanying notes to financial statements.
7
FINACT:[89207.TX]00008.HTM PAG: 08-AUG-2000 16:33 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 5
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
(Unaudited)
1. Principles of Consolidation and Presentation
The accompanying consolidated financial statements include the accounts of Commerce Bancshares, Inc. and all
majority-owned subsidiaries (the Company). All significant intercompany accounts and transactions have been eliminated. Certain reclassifications were made to 1999 data to conform to current year presentation. Results of operations for the six month
period ended June 30, 2000 are not necessarily indicative of results to be attained for any other period.
The significant accounting policies followed in the preparation of the quarterly financial statements are the same
as those disclosed in the 1999 Annual Report to stockholders to which reference is made.
2. Allowance for Loan Losses
The following is a summary of the allowance for loan losses.
| |
|
For the
Three Months Ended
June 30
|
|
For the
Six Months Ended
June 30
|
| |
|
2000
|
|
1999
|
|
2000
|
|
1999
|
| |
|
(In thousands) |
| Balance, beginning of period |
|
$124,803 |
|
$119,557 |
|
$123,042 |
|
$117,092 |
| |
|
|
|
|
|
|
|
|
| Additions: |
|
|
|
|
|
|
|
|
| Provision for loan losses |
|
10,211 |
|
8,741 |
|
18,876 |
|
17,291 |
| |
|
|
|
|
|
|
|
|
| Total additions
|
|
10,211 |
|
8,741 |
|
18,876 |
|
17,291 |
| |
|
|
|
|
|
|
|
|
| Deductions: |
|
|
|
|
|
|
|
|
| Loan losses |
|
10,492 |
|
10,663 |
|
20,244 |
|
19,702 |
| Less recoveries on loans |
|
2,502 |
|
2,590 |
|
5,350 |
|
5,544 |
| |
|
|
|
|
|
|
|
|
| Net loan losses
|
|
7,990 |
|
8,073 |
|
14,894 |
|
14,158 |
| |
|
|
|
|
|
|
|
|
| Balance, June 30 |
|
$127,024 |
|
$120,225 |
|
$127,024 |
|
$120,225 |
| |
|
|
|
|
|
|
|
|
At June 30, 2000, non-performing assets were $35,021,000, which was .45% of total loans and .31% of total assets.
This balance consisted of $15,544,000 in loans not accruing interest, $18,250,000 in loans past due 90 days and still accruing interest, and $1,227,000 in foreclosed real estate.
8
FINACT:[89207.TX]00009.HTM PAG: 01-AUG-2000 04:37 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
3. Investment Securities
Investment securities, at fair value, consist of the following at June 30, 2000 and December 31, 1999.
| |
|
June 30
2000
|
|
December 31
1999
|
| |
|
(In thousands) |
| Available for sale: |
|
|
|
|
| U.S. government and federal agency obligations |
|
$ 868,850 |
|
$1,136,332 |
| State and municipal obligations |
|
72,563 |
|
80,263 |
| CMO’s and asset-backed securities |
|
1,003,998 |
|
1,106,975 |
| Other debt securities |
|
81,771 |
|
82,262 |
| Equity securities |
|
47,375 |
|
45,953 |
| Trading account securities |
|
6,567 |
|
23,639 |
| Other non-marketable securities |
|
63,989 |
|
32,991 |
| |
|
|
|
|
| Total investment
securities |
|
$2,145,113 |
|
$2,508,415 |
| |
|
|
|
|
4. Common Stock
The shares used in the calculation of basic and diluted income per share are shown below.
| |
|
For the
Three Months
Ended June 30
|
|
For the
Six Months
Ended June 30
|
| |
|
2000
|
|
1999
|
|
2000
|
|
1999
|
| |
|
(In thousands) |
| Weighted average common shares outstanding |
|
61,213 |
|
63,649 |
|
61,634 |
|
63,873 |
| Stock options |
|
663 |
|
864 |
|
620 |
|
889 |
| |
|
|
|
|
|
|
|
|
| |
|
61,876 |
|
64,513 |
|
62,254 |
|
64,762 |
| |
|
|
|
|
|
|
|
|
5. Comprehensive Income
Comprehensive income is defined as the change in equity from transactions and other events and circumstances from
non-owner sources, and excludes investments by and distributions to owners. Comprehensive income includes net income and other items of comprehensive income meeting the above criteria. The Company’s only component of other comprehensive income is the
unrealized holding gains and losses on available for sale securities.
| |
|
For the
Three Months
Ended June 30
|
|
For the
Six Months
Ended June 30
|
| |
|
2000
|
|
1999
|
|
2000
|
|
1999
|
| |
|
(In thousands) |
| Unrealized holding gains (losses) |
|
$(9,516 |
) |
|
$(28,934 |
) |
|
$(10,935 |
) |
|
$(55,257 |
) |
Less: reclassification adjustment for gains
included in net income |
|
258 |
|
|
357 |
|
|
258 |
|
|
993 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net unrealized gains (losses) on securities |
|
(9,774 |
) |
|
(29,291 |
) |
|
(11,193 |
) |
|
(56,250 |
) |
| Income tax expense (benefit) |
|
(3,828 |
) |
|
(17,170 |
) |
|
(4,356 |
) |
|
(27,433 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Other comprehensive income (loss) |
|
$(5,946 |
) |
|
$(12,121 |
) |
|
$ (6,837 |
) |
|
$(28,817 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
9
FINACT:[89207.TX]00010.HTM PAG: 08-AUG-2000 16:34 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
6. Segments
Management has established three operating segments within the Company. The Consumer segment includes the retail
branch network, consumer finance, bankcard, student loans and discount brokerage services. The Commercial segment provides corporate lending, leasing, and international services, as well as business, government deposit and cash management services. The
Money Management segment provides traditional trust and estate tax planning services, and advisory and discretionary investment management services.
The following table presents selected financial information by segment and reconciliations of combined segment
totals to consolidated totals. There were no material intersegment revenues between the three segments.
|
|
Consumer
|
|
Commercial
|
|
Money
Management
|
|
Segment
Totals
|
|
Other/
Elimination
|
|
Consolidated
Totals
|
| |
|
(In thousands) |
| Six Months Ended June 30, 2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income after loan loss expense |
|
$ 11,923 |
|
$160,823 |
|
|
$(6,986 |
) |
|
$165,760 |
|
$ 55,567 |
|
|
$221,327 |
| Cost of funds allocation |
|
115,981 |
|
(76,635 |
) |
|
10,156 |
|
|
49,502 |
|
(49,502 |
) |
|
— |
| Non-interest income |
|
66,494 |
|
14,130 |
|
|
35,967 |
|
|
116,591 |
|
4,196 |
|
|
120,787 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total net revenue |
|
194,398 |
|
98,318 |
|
|
39,137 |
|
|
331,853 |
|
10,261 |
|
|
342,114 |
| Non-interest expense |
|
125,892 |
|
42,297 |
|
|
27,585 |
|
|
195,774 |
|
14,784 |
|
|
210,558 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
$ 68,506 |
|
$ 56,021 |
|
|
$11,552 |
|
|
$136,079 |
|
$ (4,523 |
) |
|
$131,556 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Six Months Ended June 30, 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income after loan loss expense |
|
$ 12,760 |
|
$121,901 |
|
|
$(9,058 |
) |
|
$125,603 |
|
$ 84,342 |
|
|
$209,945 |
| Cost of funds allocation |
|
100,057 |
|
(46,744 |
) |
|
11,820 |
|
|
65,133 |
|
(65,133 |
) |
|
— |
| Non-interest income |
|
62,417 |
|
13,796 |
|
|
36,441 |
|
|
112,654 |
|
6,238 |
|
|
118,892 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total net revenue |
|
175,234 |
|
88,953 |
|
|
39,203 |
|
|
303,390 |
|
25,447 |
|
|
328,837 |
| Non-interest expense |
|
130,281 |
|
39,261 |
|
|
25,519 |
|
|
195,061 |
|
12,247 |
|
|
207,308 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
$ 44,953 |
|
$ 49,692 |
|
|
$13,684 |
|
|
$108,329 |
|
$ 13,200 |
|
|
$121,529 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 2000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income after loan loss expense |
|
$ 6,307 |
|
$ 82,399 |
|
|
$(3,853 |
) |
|
$ 84,853 |
|
$ 25,946 |
|
|
$110,799 |
| Cost of funds allocation |
|
59,324 |
|
(40,582 |
) |
|
5,472 |
|
|
24,214 |
|
(24,214 |
) |
|
— |
| Non-interest income. |
|
36,968 |
|
7,257 |
|
|
17,850 |
|
|
62,075 |
|
1,916 |
|
|
63,991 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total net revenue |
|
102,599 |
|
49,074 |
|
|
19,469 |
|
|
171,142 |
|
3,648 |
|
|
174,790 |
| Non-interest expense. |
|
63,561 |
|
21,373 |
|
|
13,689 |
|
|
98,623 |
|
6,975 |
|
|
105,598 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
$ 39,038 |
|
$ 27,701 |
|
|
$ 5,780 |
|
|
$ 72,519 |
|
$ (3,327 |
) |
|
$ 69,192 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended June 30, 1999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income after loan loss expense. |
|
$ 6,544 |
|
$ 61,738 |
|
|
$(4,349 |
) |
|
$ 63,933 |
|
$ 42,396 |
|
|
$106,329 |
| Cost of funds allocation |
|
49,436 |
|
(23,807 |
) |
|
5,668 |
|
|
31,297 |
|
(31,297 |
) |
|
— |
| Non-interest income |
|
31,612 |
|
6,864 |
|
|
17,988 |
|
|
56,464 |
|
4,972 |
|
|
61,436 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total net revenue |
|
87,592 |
|
44,795 |
|
|
19,307 |
|
|
151,694 |
|
16,071 |
|
|
167,765 |
| Non-interest expense |
|
65,713 |
|
19,905 |
|
|
12,791 |
|
|
98,409 |
|
6,198 |
|
|
104,607 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
|
$ 21,879 |
|
$ 24,890 |
|
|
$ 6,516 |
|
|
$ 53,285 |
|
$ 9,873 |
|
|
$ 63,158 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The segment activity, as shown above, includes both direct and allocated items. Amounts in the “
Other/Elimination” column include activity not related to the segments, such as that relating to administrative functions, and the effect of certain expense allocations to the segments.
10
FINACT:[89207.TX]00011.HTM PAG: 04-AUG-2000 14:42 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Schedule 6
COMMERCE BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
June 30, 2000
(Unaudited)
The following discussion and analysis should be read in conjunction with the consolidated financial statements and
related notes and with the statistical information and financial data appearing in this report as well as the Company’s 1999 Annual Report on Form 10-K. Results of operations for the six month period ended June 30, 2000 are not necessarily indicative
of results to be attained for any other period.
| |
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
| |
|
2000
|
|
1999
|
|
2000
|
|
1999
|
| Per Share Data |
| Net income—basic |
|
$ .75 |
|
|
$ .66 |
|
|
$ 1.41 |
|
|
$ 1.26 |
|
| Net income—diluted |
|
.74 |
|
|
.65 |
|
|
1.40 |
|
|
1.24 |
|
| Cash dividends |
|
.155 |
|
|
.143 |
|
|
.310 |
|
|
.286 |
|
| Book value |
|
|
|
|
|
|
|
17.99 |
|
|
16.98 |
|
| Market price |
|
|
|
|
|
|
|
29.75 |
|
|
38.33 |
|
| Selected Ratios |
| (Based on average balance sheets) |
| Loans to deposits |
|
86.65 |
% |
|
75.85 |
% |
|
85.60 |
% |
|
75.45 |
% |
| Non-interest bearing deposits to total deposits |
|
14.80 |
|
|
14.52 |
|
|
14.99 |
|
|
14.69 |
|
| Equity to loans |
|
13.97 |
|
|
15.32 |
|
|
14.04 |
|
|
15.37 |
|
| Equity to deposits |
|
12.10 |
|
|
11.62 |
|
|
12.02 |
|
|
11.60 |
|
| Equity to total assets |
|
9.84 |
|
|
9.78 |
|
|
9.78 |
|
|
9.72 |
|
| Return on total assets |
|
1.65 |
|
|
1.52 |
|
|
1.57 |
|
|
1.46 |
|
| Return on realized stockholders’ equity |
|
16.71 |
|
|
16.02 |
|
|
15.98 |
|
|
15.60 |
|
| Return on total stockholders’ equity |
|
16.79 |
|
|
15.53 |
|
|
16.07 |
|
|
15.03 |
|
| (Based on end-of-period data) |
| Efficiency ratio |
|
56.14 |
|
|
58.17 |
|
|
57.28 |
|
|
58.83 |
|
| Tier I capital ratio |
|
|
|
|
|
|
|
11.75 |
|
|
11.87 |
|
| Total capital ratio |
|
|
|
|
|
|
|
13.08 |
|
|
13.14 |
|
| Leverage ratio |
|
|
|
|
|
|
|
9.42 |
|
|
8.98 |
|
Summary
Consolidated net income for the second quarter of 2000 was $45.6 million; a $3.8 million, or 9.2%, increase over
the second quarter of 1999. Diluted earnings per share increased 13.8% to $.74 for the second quarter of 2000 compared to $.65 for the second quarter of 1999. The net interest margin improved to 4.77%, and non-interest expense increased by less than 1%
compared to last year. The second quarter of 2000 was the Company’s seventeenth consecutive quarter of double-digit growth in earnings per share. Return on average assets for the quarter was 1.65% compared to 1.52% for the second quarter of 1999 and
1.49% for the first quarter of 2000. Return on average realized stockholders’ equity for the second quarter was 16.71% compared to 16.02% last year. The Company’s efficiency ratio was 56.14% for the second quarter of 2000 compared to 58.17% for
the second quarter of 1999 and 58.47% for the first quarter of 2000.
Consolidated net income for the first six months of 2000 was $86.9 million, an 8.0% increase over the first six
months of 1999. Diluted earnings per share was $1.40 compared to $1.24 for the first six months of last year.
11
FINACT:[89207.TX]00012.HTM PAG: 08-AUG-2000 16:39 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Average loans grew by 10.3% over last year. Non-interest income improved in the areas of credit card and deposit account fee income. Non-interest expense increased 1.6% over
the first six months of 1999, mainly in salaries and employee benefits and bank occupancy expense.
Net Interest Income
The following table summarizes the changes in net interest income on a fully tax equivalent basis, by major
category of interest earning assets and interest bearing liabilities, identifying changes related to volumes and rates. Changes not solely due to volume or rate changes are allocated to rate. Management believes this allocation method, applied on a
consistent basis, provides meaningful comparisons between the respective periods.
Analysis of Changes in Net Interest Income
| |
|
Three Months Ended June 30
2000 vs. 1999
|
|
Six Months Ended June 30
2000 vs. 1999
|
|
|
Change due to
|
|
|
|
Change due to
|
|
|
| |
|
Average
Volume
|
|
Average
Rate
|
|
Total
|
|
Average
Volume
|
|
Average
Rate
|
|
Total
|
| |
|
(In thousands) |
| Interest income, fully taxable equivalent basis: |
|
|
|
| Loans |
|
$14,643 |
|
|
$10,706 |
|
|
$25,349 |
|
|
$27,607 |
|
|
$16,705 |
|
|
$44,312 |
|
| Investment securities: |
U.S. government and
federal agency
securities |
|
(5,221 |
) |
|
423 |
|
|
(4,798 |
) |
|
(9,257 |
) |
|
812 |
|
|
(8,445 |
) |
| State and municipal
obligations |
|
(378 |
) |
|
(5 |
) |
|
(383 |
) |
|
(737 |
) |
|
(20 |
) |
|
(757 |
) |
| CMO’s and
asset-backed securities |
|
(2,793 |
) |
|
184 |
|
|
(2,609 |
) |
|
(1,336 |
) |
|
243 |
|
|
(1,093 |
) |
| Other securities
|
|
147 |
|
|
221 |
|
|
368 |
|
|
(1,456 |
) |
|
459 |
|
|
(997 |
) |
Federal funds sold and securities purchased
under agreements to resell |
|
(695 |
) |
|
895 |
|
|
200 |
|
|
(4,224 |
) |
|
1,491 |
|
|
(2,733 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
5,703 |
|
|
12,424 |
|
|
18,127 |
|
|
10,597 |
|
|
19,690 |
|
|
30,287 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense: |
| Deposits: |
| Savings |
|
(79 |
) |
|
42 |
|
|
(37 |
) |
|
(146 |
) |
|
(151 |
) |
|
(297 |
) |
| Interest bearing deman
d |
|
(721 |
) |
|
5,853 |
|
|
5,132 |
|
|
(517 |
) |
|
8,327 |
|
|
7,810 |
|
Time open &
C.D.’s of less than
$100,000 |
|
(1,762 |
) |
|
899 |
|
|
(863 |
) |
|
(4,230 |
) |
|
1,013 |
|
|
(3,217 |
) |
Time open &
C.D.’s of $100,000 and
over |
|
374 |
|
|
561 |
|
|
935 |
|
|
396 |
|
|
619 |
|
|
1,015 |
|
Federal funds purchased and securities sold
under agreements to repurchase |
|
2,905 |
|
|
3,238 |
|
|
6,143 |
|
|
6,139 |
|
|
5,389 |
|
|
11,528 |
|
| Long-term debt and other borrowings |
|
470 |
|
|
597 |
|
|
1,067 |
|
|
471 |
|
|
575 |
|
|
1,046 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
1,187 |
|
|
11,190 |
|
|
12,377 |
|
|
2,113 |
|
|
15,772 |
|
|
17,885 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income, fully taxable
equivalent basis |
|
$ 4,516 |
|
|
$ 1,234 |
|
|
$ 5,750 |
|
|
$ 8,484 |
|
|
$ 3,918 |
|
|
$12,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income for the second quarter of 2000 was $121.0 million, a 5.2% increase over the second quarter of
1999. The net interest rate margin was 4.77% in the second quarter of 2000 compared with 4.61% in the second quarter of 1999 and 4.68% in the first quarter of 2000. Net interest income was $240.2 million in the first six months of 2000, which was a 5.7%
increase over 1999. The six month net interest rate margin was 4.72% in 2000 compared to 4.55% in 1999.
12
FINACT:[89207.TX]00013.HTM PAG: 04-AUG-2000 14:46 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Total interest income increased $18.3 million, or 9.9%, over the second quarter of 1999, mainly due to an
increase in average loan balances of $775.2 million and an increase of 53 basis points in average rates earned on loans. Partially offsetting were decreases of $351.1 million in average U.S. government and federal agency securities and $182.7 million in
CMO’s and asset-backed securities. The average tax equivalent yield on interest earning assets was 7.96% for the second quarter of 2000 compared to 7.36% last year.
Compared to the first six months of 1999, total interest income increased $30.6 million, or 8.3%. The increase
resulted mainly from growth in average loan balances of $721.9 million and an increase of 39 basis points in average loan rates earned. These increases were partially offset by decreases of $421.3 million in average investment securities and $174.0
million in short-term investments in federal funds sold and securities purchased under resell agreements.
Total interest expense (net of capitalized interest) increased $12.4 million, or 17.9%, compared to the second
quarter of 1999 due mainly to higher average rates paid on the Company’s Premium Money Market deposit accounts. Additional increases were seen in both the level of borrowings and the rates paid on federal funds purchased and securities sold under
agreements to repurchase. These increases to interest expense were partly offset by a decrease in the average balances of time open and C.D.’s of less than $100,000. The average cost of funds was 3.82% for the second quarter of 2000 and 3.26% for the
second quarter of 1999.
Total interest expense increased $17.7 million, or 12.5%, in the first six months of 2000 compared to 1999. The
increase resulted from the same trends noted in the above quarterly comparison. Average core deposits (deposits excluding short-term certificates of deposit over $100,000) for the first six months of 2000 decreased 3.3% compared to the same period last
year. Core deposits supported 87% of average earning assets in 2000 compared to 91% in 1999. An additional $100.0 million was borrowed from the Federal Home Loan Bank (FHLB) in May 2000 to support increased loan demand. Of these borrowings, $50.0 million
mature in 2001 and have an interest rate of 7.06%, and the remaining $50.0 million mature in 2002 with a 7.35% interest rate.
Summaries of average assets and liabilities and the corresponding average rates earned/paid appear on pages 19 and
20.
Risk Elements of Loan Portfolio
Non-performing assets include impaired loans (non-accrual loans and loans 90 days delinquent and still accruing
interest) and foreclosed real estate. Loans are placed on non-accrual status when management does not expect to collect payments consistent with acceptable and agreed upon terms of repayment (generally, loans that are 90 days past due as to principal
and/or interest payments). These loans were made primarily to borrowers in Missouri, Kansas and Illinois. The following table presents non-performing assets.
| |
|
June 30,
2000
|
|
December 31,
1999
|
| |
|
(In thousands) |
| Non-accrual loans |
|
$15,544 |
|
|
$12,979 |
|
| Past due 90 days and still accruing interest |
|
18,250 |
|
|
21,317 |
|
| |
|
|
|
|
|
|
| Total impaired loans
|
|
33,794 |
|
|
34,296 |
|
| Foreclosed real estate |
|
1,227 |
|
|
1,347 |
|
| |
|
|
|
|
|
|
| Total non-performing
assets |
|
$35,021 |
|
|
$35,643 |
|
| |
|
|
|
|
|
|
| Non-performing assets to total loans |
|
.45 |
% |
|
.47 |
% |
| Non-performing assets to total assets |
|
.31 |
% |
|
.31 |
% |
The level of non-performing assets decreased $622 thousand, or 1.7%, from year end 1999 totals. Loans which were
90 or more days past due and still accruing interest decreased $3.1 million, which was partially offset by an increase of $2.6 million in non-accrual loans. Non-accrual loans at June 30, 2000 consisted mainly
13
FINACT:[89207.TX]00014.HTM PAG: 03-AUG-2000 13:24 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
of business real estate loans ($6.5 million), business loans ($6.0 million), and construction and land development loans ($2.6 million). Loans which were 90 or more days
past due included credit card loans of $5.9 million, business loans of $4.2 million and personal real estate loans of $4.2 million.
A subsidiary bank issues Visa and MasterCard credit cards, and credit card loans outstanding were $495.6 million
at June 30, 2000. Because credit card loans traditionally have a higher than average ratio of net charge-offs to loans outstanding when compared to other portfolio segments, management evaluates the credit card allowance as a separate component to ensure
its adequacy. The annualized net charge-off ratio for credit card loans was 3.31% for the first six months of 2000 compared to 3.47% for the first six months of 1999. The risk presented by the above loans and foreclosed real estate is not considered by
management to be materially adverse in relation to normal credit risks generally taken by lenders.
Provision/Allowance for Loan Losses
| |
|
Three Months Ended
|
|
Six Months Ended
June 30
|
| |
|
Mar. 31, 2000
|
|
June 30, 2000
|
|
June 30, 1999
|
|
2000
|
|
1999
|
| |
|
(Dollars in thousands) |
| Provision for loan losses |
|
$8,665 |
|
|
$10,211 |
|
|
$8,741 |
|
|
$18,876 |
|
|
$17,291 |
|
| Net charge-offs |
|
6,904 |
|
|
7,990 |
|
|
8,073 |
|
|
14,894 |
|
|
14,158 |
|
Net annualized charge-offs as a percentage of
average loans |
|
.36 |
% |
|
.41 |
% |
|
.46 |
% |
|
.39 |
% |
|
.41 |
% |
Management records the provision for loan losses, on an individual bank basis, in amounts that result in an
allowance for loan losses sufficient to cover current net charge-offs and risks believed to be inherent in the loan portfolio of each bank. Management’s evaluation includes such factors as past loan loss experience, current loan portfolio mix,
evaluation of actual and potential losses in the loan portfolio, prevailing regional and national economic conditions that might have an impact on the portfolio, regular reviews and examinations of the loan portfolio conducted by internal loan reviewers
supervised by Commerce Bancshares, Inc. (the Parent), and reviews and examinations by bank regulatory authorities. The allowance for loan losses as a percentage of loans outstanding was 1.62% at June 30, 2000 and at year-end 1999, compared to 1.68% at
June 30, 1999. The allowance at June 30, 2000 was 363% of non-performing assets. Management believes that the allowance for loan losses, which is a general reserve, is adequate to cover actual and potential losses in the loan portfolio under current
conditions. Other than as previously noted, management is not aware of any significant risks in the current loan portfolio due to concentrations of loans within any particular industry, nor of any separate types of loans within a particular category of
non-performing loans that are unusually significant as to possible loan losses when compared to the entire loan portfolio.
Non-Interest Income
| |
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
| |
|
2000
|
|
1999
|
|
% Change
|
|
2000
|
|
1999
|
|
% Change
|
| |
|
(Dollars in thousands) |
| Trust fees |
|
$14,353 |
|
|
$14,212 |
|
|
1.0 |
% |
|
$ 28,587 |
|
|
$ 28,124 |
|
|
1.6 |
% |
| Deposit account charges and other fees |
|
17,909 |
|
|
17,109 |
|
|
4.7 |
|
|
34,491 |
|
|
33,350 |
|
|
3.4 |
|
| Credit card transaction fees |
|
12,362 |
|
|
11,007 |
|
|
12.3 |
|
|
23,554 |
|
|
19,907 |
|
|
18.3 |
|
| Trading account profits and commissions |
|
2,325 |
|
|
2,620 |
|
|
(11.3 |
) |
|
4,710 |
|
|
5,405 |
|
|
(12.9 |
) |
| Net gains on securities transactions |
|
506 |
|
|
357 |
|
|
41.7 |
|
|
505 |
|
|
993 |
|
|
(49.1 |
) |
| Other |
|
16,536 |
|
|
16,131 |
|
|
2.5 |
|
|
28,940 |
|
|
31,113 |
|
|
(7.0 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
non-interest income |
|
$63,991 |
|
|
$61,436 |
|
|
4.2 |
|
|
$120,787 |
|
|
$118,892 |
|
|
1.6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As a % of operating income (net interest
income plus non-interest income) |
|
34.6 |
% |
|
34.8 |
% |
|
|
|
|
33.5 |
% |
|
34.3 |
% |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
FINACT:[89207.TX]00015.HTM PAG: 07-AUG-2000 22:01 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Non-interest income increased $1.9 million over the first six months of last year. Credit card transaction fees
rose $3.6 million due to higher transaction volumes in the cardholder and merchant areas, and growth in the Company’s debit card product. Deposit account charges and other fees grew $1.1 million mainly due to higher overdraft and return item fees
collected. These increases were partially offset by a $695 thousand decrease in trading account profits and commissions because of market conditions and cash liquidity positions at correspondent banks. Gains on securities transactions declined due to
fewer sales from the banks’ investment security portfolio. Other income decreased $2.2 million compared to last year, mainly due to net unrealized investment gains recorded in 1999 by a partnership venture fund in which the Company participates. This
decrease, along with lower gains in 2000 on loan sales, were partly offset by a gain on the sale of a bank branch and higher cash management fees recorded in 2000.
Non-interest income increased $2.6 million in the second quarter of 2000 compared to the second quarter of 1999,
with similar trends noted above. Credit card transaction fees rose $1.4 million and deposit account charges and other fees grew $800 thousand. Other income increased $405 thousand due to higher gains on loan sales in the second quarter of 2000, in
conjunction with the branch gain and offsetting 1999 investment gain noted above. These increases were partly reduced by a decline in trading account profits and commissions of $295 thousand.
Non-Interest Expense
| |
|
Three Months Ended June 30
|
|
Six Months Ended June 30
|
| |
|
2000
|
|
1999
|
|
% Change
|
|
2000
|
|
1999
|
|
% Change
|
| |
|
(Dollars in thousands) |
| Salaries and employee benefits |
|
$ 54,963 |
|
$ 53,369 |
|
3.0 |
% |
|
$109,826 |
|
$107,394 |
|
2.3 |
% |
| Net occupancy |
|
7,374 |
|
6,827 |
|
8.0 |
|
|
14,851 |
|
13,486 |
|
10.1 |
|
| Equipment |
|
5,298 |
|
5,780 |
|
(8.3 |
) |
|
10,437 |
|
10,655 |
|
(2.0 |
) |
| Supplies and communication |
|
8,062 |
|
8,386 |
|
(3.9 |
) |
|
16,659 |
|
16,546 |
|
0.7 |
|
| Data processing |
|
9,579 |
|
9,384 |
|
2.1 |
|
|
18,619 |
|
17,993 |
|
3.5 |
|
| Marketing |
|
3,319 |
|
2,915 |
|
13.9 |
|
|
6,469 |
|
6,166 |
|
4.9 |
|
| Goodwill and core deposit |
|
2,018 |
|
2,133 |
|
(5.4 |
) |
|
4,073 |
|
4,266 |
|
(4.5 |
) |
| Other |
|
14,985 |
|
15,813 |
|
(5.2 |
) |
|
29,624 |
|
30,802 |
|
(3.8 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
non-interest expense |
|
$105,598 |
|
$104,607 |
|
.9 |
|
|
$210,558 |
|
$207,308 |
|
1.6 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Full-time equivalent employees |
|
5,101 |
|
5,312 |
|
(4.0 |
) |
|
5,121 |
|
5,319 |
|
(3.7 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense rose $3.3 million, or 1.6%, compared to the first six months of 1999 and increased $991
thousand, or .9%, compared to the second quarter of 1999. Salaries and employee benefits increased $2.4 million over the first six months of 1999 and increased $1.6 million over the second quarter of 1999. Higher incentive compensation payments
contributed to salary growth, which was partially offset by lower health insurance costs. Occupancy expense increased $1.4 million over the first six months of 1999 and $547 thousand over the second quarter of 1999 partly due to lower outside tenant rent
income and higher building services expense. Data processing expense increased $626 thousand and $195 thousand over the 1999 year and quarter to date periods, partly because of account growth and higher charges by information service providers. Other
expense decreased mainly due to higher processing losses recorded in 1999. The efficiency ratio was 56.14% in the second quarter of 2000 compared to 58.17% in the second quarter of 1999 and 58.47% in the first quarter of 2000.
Income Taxes
The Company’s income tax expense was $44.7 million for the first six months of 2000 and $41.1 million for the
same period in 1999, resulting in effective tax rates of 34.0% and 33.8%, respectively. The 2000 second quarter effective tax rate was 34.1% compared to 33.9% for the second quarter of 1999.
15
FINACT:[89207.TX]00016.HTM PAG: 07-AUG-2000 22:05 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Operating Segments
The Company segregates financial information for use in assessing its performance and allocating resources among
three operating segments. The results are determined based on the Company’s management accounting process, which assigns balance sheet and income statement items to each responsible segment. These segments are defined by customer base and product
type. The management process measures the performance of the operating segments based on the management structure of the Company and is not necessarily comparable with similar information for any other financial institution. Each segment is managed by
executives who, in conjunction with the Chief Executive Officer, make strategic business decisions regarding that segment. The three reportable operating segments are Consumer, Commercial, and Money Management. Methods selected to allocate cost of funds
have an impact on the profitability between segments in year 2000 compared to 1999. The interest rates applied in that allocation, which are principally driven by current market rates, improved results for funds providing activities (Consumer segment),
lowered results for funds users (Commercial segment), and lowered the net results for activities outside the three major business segments.
The Consumer segment includes the retail branch network, consumer finance, bankcard, student loans and discount
brokerage. For the six months ended June 30, 2000, pre-tax earnings amounted to $68.5 million, up $23.6 million over the previous year. Funding credits allocated to the segment increased $15.9 million, while direct net interest income and net charge-offs
were relatively flat. Non-interest income grew $4.1 million, or 6.5%, mainly as a result of higher revenue from deposit account and credit card fees. Non-interest expense for the first six months decreased $4.4 million, or 3.4%, from the same period in
the previous year due mainly to lower costs for salaries and employee benefits.
The Commercial segment provides corporate lending, leasing, international services, and corporate cash management
services. For the six months ended June 30, 2000, pre-tax earnings amounted to $56.0 million, up 12.7% over the previous year. Direct net interest income grew $39.4 million over 1999, resulting mainly from a 19.6% increase in average loans. Assigned costs
of funding increased $29.9 million as a result of higher overall interest rates during the first six months of 2000. Loan charge-offs increased $516 thousand. Non-interest income grew $334 thousand, or 2.4%, mainly due to higher cash sweep commissions,
partially offset by a decline in commercial deposit fees. Non-interest expense grew $3.0 million, or 7.7%, mainly as a result of higher processing costs, salaries expense and operating losses.
The money management segment consists of the Investment Management Group (IMG) and the Capital Markets Group
(CMG). IMG provides trust and estate planning services, and advisory and discretionary investment management services. CMG sells fixed-income securities for personal and commercial customers. For the six months ended June 30, 2000, pre-tax earnings
amounted to $11.6 million, a decrease of $2.1 million. The decline in pre-tax earnings was mainly due to an increase of $2.1 million in non-interest expense, which included higher salaries expense and data processing costs. Non-interest income decreased
slightly due to a decline in bond trading profits and commissions. These decreases to net income were partly offset by an increase in direct net interest income, net of assigned funding credits.
Liquidity and Capital Resources
The liquid assets of the Parent consist primarily of commercial paper, overnight repurchase agreements and equity
securities, most of which are readily marketable. The fair value of these investments was $118.6 million at June 30, 2000 compared to $113.3 million at December 31, 1999. Included in the fair values were unrealized net gains of $26.7 million at June 30,
2000 and $25.1 million at December 31, 1999. The Parent’s liabilities
16
FINACT:[89207.TX]00017.HTM PAG: 07-AUG-2000 22:05 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
totaled $77.7 million at June 30, 2000, compared to $14.2 million at December 31, 1999. Liabilities at June 30, 2000 included $64.6 million advanced mainly from subsidiary
bank holding companies in order to combine resources for short-term investment in liquid assets. The funds advanced from the subsidiary bank holding companies consist mainly of subsidiary bank dividends. The Parent had no short-term borrowings from
affiliate banks or long-term debt during 2000. The Parent’s commercial paper, which management believes is readily marketable, has a P1 rating from Moody’s and an A1 rating from Standard & Poor’s. The Company is also rated A by Thomson
BankWatch with a corresponding short-term rating of TBW-1. This credit availability should provide adequate funds to meet any outstanding or future commitments of the Parent.
The liquid assets held by bank subsidiaries include federal funds sold and securities purchased under agreements
to resell and available for sale investment securities. These liquid assets had a fair value of $2.22 billion at June 30, 2000 and $2.56 billion at December 31, 1999. The available for sale bank portfolio included an unrealized net loss in fair value of
$44.3 million at June 30, 2000 compared to an unrealized net loss of $29.7 million at December 31, 1999. U.S. government and federal agency securities comprised 44% and CMO’s and asset-backed securities comprised 52% of the banking subsidiaries’
available for sale portfolio at June 30, 2000. The estimated average maturity of the available for sale investment portfolio was 2.9 years at June 30, 2000 and at December 31, 1999.
In February 2000, the Board of Directors announced the approval of additional purchases of the Company’s
common stock, bringing the total purchase authorization to 3,000,000 shares. At June 30, 2000, the Company had acquired 1,191,265 shares under this authorization. The Company has routinely used these reacquired shares to fund annual stock dividends and
employee benefit programs.
The Company had an equity to asset ratio of 9.78% based on 2000 average balances. As shown in the following table,
the Company’s capital exceeded the minimum risk-based capital and leverage requirements of the regulatory agencies.
| |
|
June 30,
2000
|
|
December 31, 1999
|
|
Min. Ratios for Well-
Capitalized Banks
|
| |
|
(Dollars in thousands) |
| Risk-Adjusted Assets |
|
$8,858,403 |
|
|
$8,678,987 |
|
|
|
|
| Tier I Capital |
|
1,040,574 |
|
|
1,014,071 |
|
|
|
|
| Total Capital |
|
1,158,840 |
|
|
1,127,005 |
|
|
|
|
| Tier I Capital Ratio |
|
11.75 |
% |
|
11.68 |
% |
|
6.00 |
% |
| Total Capital Ratio |
|
13.08 |
% |
|
12.99 |
% |
|
10.00 |
% |
| Leverage Ratio |
|
9.42 |
% |
|
9.17 |
% |
|
5.00 |
% |
The Company’s cash and cash equivalents (defined as “Cash and due from banks”) were $641.6 million
at June 30, 2000, a decrease of $43.6 million from December 31, 1999. Contributing to the net cash outflow were an increase in loans of $277.4 million (net of repayments) and a net decrease in short-term borrowings (federal funds purchased and repurchase
agreements) of $176.5 million. Partially offsetting these net cash outflows were $331.0 million in maturities and sales of investment securities (net of purchases), additional FHLB borrowings of $100.0 million, and $116.1 million generated from operating
activities. Total assets decreased $172.0 million from December 31, 1999.
The Company has various commitments and contingent liabilities which are properly not reflected on the balance
sheet. Loan commitments (excluding lines of credit related to credit card loan agreements) totaled approximately $2.94 billion, standby letters of credit totaled $278.0 million, and commercial letters of credit totaled $37.2 million at June 30, 2000. The
Company has little risk exposure in off-balance-sheet derivative contracts. The notional value of these contracts (interest rate and foreign exchange rate contracts) was $124.7 million at June 30, 2000. The current credit exposure (or replacement cost)
across all off-balance-sheet derivative contracts covered by the risk-based capital standards was $2.5 million at June 30, 2000. Management does not anticipate any material losses to arise from these contingent items and believes there are no material
commitments to extend credit that represent risks of an unusual nature.
17
FINACT:[89207.TX]00018.HTM PAG: 08-AUG-2000 16:39 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
Quantitative and Qualitative Disclosures about Market Risk
The Company’s assets and liabilities are principally financial in nature and the resulting net interest
income thereon is subject to changes in market interest rates and the mix of various assets and liabilities. Interest rates in the financial markets affect the Company’s decisions on pricing its assets and liabilities which impacts net interest
income, a significant cash flow source for the Company. As a result, a substantial portion of the Company’s risk management activities relates to managing interest rate risk.
The Company’s Asset/Liability Management Committee monitors on a monthly basis the interest rate sensitivity
of the Company’s balance sheet using earnings simulation models and interest sensitivity GAP analysis. Using these tools, management attempts to optimize the asset/liability mix to minimize the impacts of significant rate movements within a broad
range of interest rate scenarios.
One set of simulation models is prepared to determine the impact on net interest income for the coming twelve
months under several interest rate scenarios. One such scenario uses rates and volumes at June 30, 2000 for the twelve month projection. When this position is subjected to a graduated shift in interest rates of 100 basis points rising and 100 basis points
falling, the annual impact to the Company’s net interest income is as follows:
|
|
$ in
millions
|
|
% of Net
Int. Income
|
| Scenario |
| 100 basis points rising |
|
$ 3.6 |
|
|
.7 |
% |
| 100 basis points falling |
|
(4.6 |
) |
|
(.9 |
) |
Currently, the Company does not have significant risks related to foreign exchange, commodities or equity risk
exposures.
Impact of Accounting Standards
Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting for Derivative Instruments and
Hedging Activities”, will be adopted by the Company on January 1, 2001. SFAS No. 138, an amendment of SFAS No. 133 which addresses various implementation issues, will also be adopted at that time. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments and hedging activities. All derivatives must be recognized on the balance sheet at fair value, with special accounting requirements for designated hedging activities. Certain changes in fair value must be adjusted
through income. Because of the Company’s minimal use of derivatives, management does not anticipate that the adoption of the new Statements will have a significant effect on earnings or the financial position of the Company.
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
This report contains “forward-looking statements” within the meaning of the federal securities laws.
Such statements are subject to certain risks and uncertainties, including changes in economic conditions in the Company’s market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company’s
market area, and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.
18
FINACT:[89207.TX]00019.HTM PAG: 01-AUG-2000 16:03 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
AVERAGE BALANCE SHEETS—AVERAGE RATES AND YIELDS
Six Months Ended June 30, 2000 and 1999
| |
|
Six Months 2000
|
|
Six Months 1999
|
| |
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Avg. Rates
Earned/
Paid
|
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Avg. Rates
Earned/
Paid
|
| |
|
(Unaudited) |
| |
|
(Dollars in thousands) |
| ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Business (A) |
|
$ 2,614,495 |
|
|
$104,213 |
|
8.02 |
% |
|
$ 2,358,751 |
|
|
$ 84,287 |
|
7.21 |
% |
| Construction and development |
|
376,585 |
|
|
15,897 |
|
8.49 |
|
|
352,348 |
|
|
13,464 |
|
7.71 |
|
| Real estate—business |
|
1,269,362 |
|
|
51,321 |
|
8.13 |
|
|
1,023,920 |
|
|
40,567 |
|
7.99 |
|
| Real estate—personal |
|
1,410,795 |
|
|
51,712 |
|
7.37 |
|
|
1,329,476 |
|
|
48,463 |
|
7.35 |
|
| Personal banking |
|
1,577,253 |
|
|
64,979 |
|
8.28 |
|
|
1,456,611 |
|
|
58,774 |
|
8.14 |
|
| Credit card |
|
495,422 |
|
|
33,829 |
|
13.73 |
|
|
500,925 |
|
|
32,084 |
|
12.92 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans |
|
7,743,912 |
|
|
321,951 |
|
8.36 |
|
|
7,022,031 |
|
|
277,639 |
|
7.97 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. government & federal agency |
|
1,021,403 |
|
|
31,303 |
|
6.16 |
|
|
1,330,118 |
|
|
39,748 |
|
6.03 |
|
| State & municipal obligations (A) |
|
75,315 |
|
|
2,967 |
|
7.92 |
|
|
93,797 |
|
|
3,724 |
|
8.01 |
|
| CMO’s and asset-backed securities |
|
1,088,659 |
|
|
33,741 |
|
6.23 |
|
|
1,131,930 |
|
|
34,834 |
|
6.21 |
|
| Trading account securities |
|
10,705 |
|
|
349 |
|
6.55 |
|
|
14,860 |
|
|
398 |
|
5.41 |
|
| Other marketable securities (A) |
|
85,878 |
|
|
2,816 |
|
6.59 |
|
|
142,990 |
|
|
4,031 |
|
5.68 |
|
| Other non-marketable securities |
|
43,350 |
|
|
1,114 |
|
5.17 |
|
|
32,921 |
|
|
847 |
|
5.19 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment securities |
|
2,325,310 |
|
|
72,290 |
|
6.25 |
|
|
2,746,616 |
|
|
83,582 |
|
6.14 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and securities purchased under
agreements to resell |
|
223,256 |
|
|
6,788 |
|
6.11 |
|
|
397,294 |
|
|
9,521 |
|
4.83 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest earning assets |
|
10,292,478 |
|
|
401,029 |
|
7.84 |
|
|
10,165,941 |
|
|
370,742 |
|
7.35 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less allowance for loan losses |
|
(124,213 |
) |
|
|
|
|
|
|
(118,309 |
) |
|
|
|
|
|
| Unrealized gain (loss) on investment securities |
|
(9,767 |
) |
|
|
|
|
|
|
63,727 |
|
|
|
|
|
|
| Cash and due from banks |
|
544,233 |
|
|
|
|
|
|
|
594,494 |
|
|
|
|
|
|
| Land, buildings and equipment, net |
|
239,668 |
|
|
|
|
|
|
|
224,008 |
|
|
|
|
|
|
| Other assets |
|
175,841 |
|
|
|
|
|
|
|
179,153 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$11,118,240 |
|
|
|
|
|
|
|
$11,109,014 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Savings |
|
$ 324,969 |
|
|
2,805 |
|
1.74 |
|
|
$ 341,006 |
|
|
3,102 |
|
1.83 |
|
| Interest bearing demand |
|
4,968,049 |
|
|
69,795 |
|
2.83 |
|
|
5,071,428 |
|
|
61,985 |
|
2.46 |
|
| Time open & C.D.’s of less than $100,000 |
|
2,081,127 |
|
|
53,388 |
|
5.16 |
|
|
2,229,891 |
|
|
56,605 |
|
5.12 |
|
| Time open & C.D.’s of $100,000 and over |
|
315,830 |
|
|
8,468 |
|
5.39 |
|
|
297,244 |
|
|
7,453 |
|
5.06 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest bearing deposits |
|
7,689,975 |
|
|
134,456 |
|
3.52 |
|
|
7,939,569 |
|
|
129,145 |
|
3.28 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Borrowings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds purchased and securities sold under
agreements to repurchase |
|
841,420 |
|
|
23,358 |
|
5.58 |
|
|
566,299 |
|
|
11,830 |
|
4.21 |
|
| Long-term debt and other borrowings (B) |
|
55,063 |
|
|
1,488 |
|
5.43 |
|
|
26,688 |
|
|
442 |
|
3.34 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total borrowings |
|
896,483 |
|
|
24,846 |
|
5.57 |
|
|
592,987 |
|
|
12,272 |
|
4.17 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest bearing liabilities |
|
8,586,458 |
|
|
159,302 |
|
3.73 |
% |
|
8,532,556 |
|
|
141,417 |
|
3.34 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing demand deposits |
|
1,356,273 |
|
|
|
|
|
|
|
1,367,431 |
|
|
|
|
|
|
| Other liabilities |
|
88,348 |
|
|
|
|
|
|
|
129,477 |
|
|
|
|
|
|
| Stockholders’ equity |
|
1,087,161 |
|
|
|
|
|
|
|
1,079,550 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and equity |
|
$11,118,240 |
|
|
|
|
|
|
|
$11,109,014 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin (T/E) |
|
|
|
|
$241,727 |
|
|
|
|
|
|
|
$229,325 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net yield on interest earning assets |
|
|
|
|
|
|
4.72 |
% |
|
|
|
|
|
|
4.55 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
(B) Interest expense capitalized on construction projects is not deducted from the interest expense shown above.
19
FINACT:[89207.TX]00020.HTM PAG: 01-AUG-2000 16:03 HTE: 00-000-0000 00:00 BLK: 00-000-0000 00:00
COMMERCE BANCSHARES FORM 10-Q R.R. Donnelley (312) 326-7777 V3.1 - 1
AVERAGE BALANCE SHEETS—AVERAGE RATES AND YIELDS
Three Months Ended June 30, 2000 and 1999
| |
|
Second Quarter 2000
|
|
Second Quarter 1999
|
| |
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Avg.Rates
Earned/
Paid
|
|
Average
Balance
|
|
Interest
Income/
Expense
|
|
Avg.Rates
Earned/
Paid
|
| |
|
(Unaudited) |
| |
|
(Dollars in thousands) |
| ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Business (A) |
|
$ 2,654,752 |
|
|
$ 54,275 |
|
8.22 |
% |
|
$ 2,351,562 |
|
|
$ 42,445 |
|
7.24 |
% |
| Construction and development |
|
385,844 |
|
|
8,322 |
|
8.67 |
|
|
354,362 |
|
|
6,774 |
|
7.67 |
|
| Real estate—business |
|
1,272,207 |
|
|
26,005 |
|
8.22 |
|
|
1,047,351 |
|
|
20,944 |
|
8.02 |
|
| Real estate—personal |
|
1,428,110 |
|
|
26,474 |
|
7.46 |
|
|
1,328,633 |
|
|
24,207 |
|
7.31 |
|
| Personal banking |
|
1,588,889 |
|
|
33,106 |
|
8.38 |
|
|
1,469,527 |
|
|
29,512 |
|
8.06 |
|
| Credit card |
|
489,877 |
|
|
16,762 |
|
13.76 |
|
|
492,995 |
|
|
15,713 |
|
12.78 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans |
|
7,819,679 |
|
|
164,944 |
|
8.48 |
|
|
7,044,430 |
|
|
139,595 |
|
7.95 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. government & federal agency |
|
938,943 |
|
|
14,449 |
|
6.19 |
|
|
1,290,084 |
|
|
19,247 |
|
5.98 |
|
| State & municipal obligations (A) |
|
73,848 |
|
|
1,452 |
|
7.91 |
|
|
93,086 |
|
|
1,835 |
|
7.91 |
|
| CMO’s and asset-backed securities |
|
1,067,967 |
|
|
16,579 |
|
6.24 |
|
|
1,250,621 |
|
|
19,188 |
|
6.15 |
|
| Trading account securities |
|
9,501 |
|
|
163 |
|
6.30 |
|
|
11,940 |
|
|
135 |
|
4.54 |
|
| Other marketable securities (A) |
|
83,045 |
|
|
1,331 |
|
6.45 |
|
|
88,229 |
|
|
1,277 |
|
5.81 |
|
| Other non-marketable securities |
|
53,021 |
|
|
706 |
|
5.36 |
|
|
33,225 |
|
|
420 |
|
5.07 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total investment securities |
|
2,226,325 |
|
|
34,680 |
|
6.27 |
|
|
2,767,185 |
|
|
42,102 |
|
6.10 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds sold and securities purchased under
agreements to resell |
|
228,834 |
|
|
3,678 |
|
6.46 |
|
|
286,125 |
|
|
3,478 |
|
4.88 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest earning assets |
|
10,274,838 |
|
|
203,302 |
|
7.96 |
|
|
10,097,740 |
|
|
185,175 |
|
7.36 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less allowance for loan losses |
|
(124,998 |
) |
|
|
|
|
|
|
(119,117 |
) |
|
|
|
|
|
| Unrealized gain (loss) on investment securities |
|
(9,517 |
) |
|
|
|
|
|
|
53,281 |
|
|
|
|
|
|
| Cash and due from banks |
|
532,833 |
|
|
|
|
|
|
|
610,158 |
|
|
|
|
|
|
| Land, buildings and equipment, net |
|
241,497 |
|
|
|
|
|
|
|
225,654 |
|
|
|
|
|
|
| Other assets |
|
180,217 |
|
|
|
|
|
|
|
168,290 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$11,094,870 |
|
|
|
|
|
|
|
$11,036,006 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest bearing deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Savings |
|
$ 327,859 |
|
|
1,421 |
|
1.74 |
|
|
$ 346,697 |
|
|
1,458 |
|
1.69 |
|
| Interest bearing demand |
|
4,971,592 |
|
|
35,678 |
|
2.89 |
|
|
5,091,924 |
|
|
30,546 |
|
2.41 |
|
| Time open & C.D.’s of less than $100,000 |
|
2,065,931 |
|
|
26,813 |
|
5.22 |
|
|
2,206,836 |
|
|
27,676 |
|
5.03 |
|
| Time open & C.D.’s of $100,000 and over |
|
323,329 |
|
|
4,606 |
|
5.73 |
|
|
293,343 |
|
|
3,671 |
|
5.02 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest bearing deposits |
|
7,688,711 |
|
|
68,518 |
|
3.58 |
|
|
7,938,800 |
|
|
63,351 |
|
3.20 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Borrowings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal funds purchased and securities sold under
agreements to repurchase |
|
803,718 |
|
|
11,663 |
|
5.84 |
|
|
526,212 |
|
|
5,520 |
|
4.21 |
|
| Long-term debt and other borrowings (B) |
|
84,597 |
|
|
1,281 |
|
6.09 |
|
|
26,388 |
|
|
214 |
|
3.25 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total borrowings |
|
888,315 |
|
|
12,944 |
|
5.86 |
|
|
552,600 |
|
|
5,734 |
|
4.16 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total interest bearing liabilities |
|
8,577,026 |
|
|
81,462 |
|
3.82 |
% |
|
8,491,400 |
|
|
69,085 |
|
3.26 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-interest bearing demand deposits |
|
1,335,479 |
|
|
|
|
|
|
|
1,348,366 |
|
|
|
|
|
|
| Other liabilities |
|
90,277 |
|
|
|
|
|
|
|
117,173 |
|
|
|
|
|
|
| Stockholders’ equity |
|
1,092,088 |
|
|
|
|
|
|
|
1,079,067 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities and equity |
|
$11,094,870 |
|
|
|
|
|
|
|
$11,036,006 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest margin (T/E) |
|
|
|
|
$121,840 |
|
|
|
|
|
|
|
$116,090 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net yield on interest earning assets |
|
|
|
|
|
|
4.77 |
% |
|
|
|
|
|
|
4.61 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) Stated on a tax equivalent basis using a federal income tax rate of 35%.
(B) Interest expense capitalized on construction projects is not deducted from the interest expense shown above.
20