-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I86fbzZGpuxu5H4twJ5Vp0EMI3MxrbAxobyRMUemE3od1fqlOOi0rJ9oKtPlxzs/ qy3cwcwNCSmp2k0nIFOqrw== 0000022356-96-000010.txt : 19960812 0000022356-96-000010.hdr.sgml : 19960812 ACCESSION NUMBER: 0000022356-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMERCE BANCSHARES INC /MO/ CENTRAL INDEX KEY: 0000022356 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 430889454 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02989 FILM NUMBER: 96606501 BUSINESS ADDRESS: STREET 1: 1000 WALNUT 86 CITY: KANSAS CITY STATE: MO ZIP: 64106 BUSINESS PHONE: 8162342000 MAIL ADDRESS: STREET 1: P O BOX 13686 CITY: KANSAS CITY STATE: MO ZIP: 64199 10-Q 1 6/30/96 FORM 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 1996 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 43-0889454 (STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.) 1000 WALNUT, KANSAS CITY, MO 64106 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) OFFICES) (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. X Yes------- No ------- As of August 2, 1996, the registrant had outstanding 35,762,025 shares of its $5 par value common stock, registrant's only class of common stock. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART I: FINANCIAL INFORMATION In the opinion of management, the consolidated financial statements of Commerce Bancshares, Inc. and Subsidiaries as of June 30, 1996 and December 31, 1995 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: Comparison of Key Ratios and Selected Market Data Schedule 2: Consolidated Balance Sheets Schedule 3: Consolidated Statements of Income Schedule 4: Statements of Changes in Stockholders' Equity Schedule 5: Consolidated Statements of Cash Flows Schedule 6: Notes to Consolidated Financial Statements Schedule 7: Management's Discussion and Analysis of Financial Condition and Results of Operations PART II: OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES On June 7, 1996, the Company approved an Amended and Restated Shareholders Rights Agreement dealing with the Preferred Stock Purchase Rights ("Rights") which were declared as a dividend for each share of Common Stock, $5.00 par value of the Company ("Common Stock") on August 23, 1988. The material changes made to such Rights are as follows: (1) the threshold at which an acquiring person will trigger the Rights was lowered from 20% to 15%; (2) the Agreement was extended until 2006, (3) the Rights were adjusted and a dividend declared and distribution made to increase the number of rights to one Right per share of Common Stock outstanding, (4) a business combination will trigger the Rights only in the event that the acquiring person has control of the Board of Directors of the Company at the time of the transaction, and (5) in addition, at any time after the Rights are triggered, but before an acquiring person acquires beneficial ownership of more than 50%, the Board of Directors has the option to exchange the Rights for other securities of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of shareholders of Commerce Bancshares, Inc. was held on April 17, 1996. 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:
VOTES NAME OF DIRECTOR VOTES FOR ABSTAIN ---------------- ---------- ------- W. Thomas Grant II..................................... 29,283,093 136,936 James B. Hebenstreit................................... 29,299,391 120,638 James M. Kemper, Jr.................................... 29,280,589 139,440 John H. Robinson, Jr................................... 29,279,257 140,772 Dolph C. Simons, Jr.................................... 29,286,348 133,681
At the same meeting, the shareholders approved, as set forth in the proxy statement for the meeting, the adoption of an amendment to the Articles of Incorporation to increase the authorized shares of Common Stock from 60,000,000 shares with a par value of $5.00 per share to 80,000,000 shares with a par value of $5.00 per 1 share. The amendment to the Articles of Incorporation was approved with a vote of 26,730,493 shares (representing 90.8% of the shares present or represented and entitled to vote) voting in favor; 2,287,753 shares voting against; 345,783 shares abstaining; and 56,000 shares representing broker non-votes. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (3) Articles of Incorporation and By-Laws: (a) Restated Articles of Incorporation, as amended (b) Restated By-Laws (4) Instruments defining the rights of security holders, including indentures: (b) Shareholder Rights Plan contained in an Amended and Restated Rights Agreement was filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference. (c) Form of Rights Certificate and Election to Exercise was filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference. (d) Form of Certificate of Designation of Preferred Stock was filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference. (27) Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended June 30, 1996. 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. /s/ J. Daniel Stinnett By __________________________________ J. Daniel Stinnett Vice President & Secretary Date: August 9, 1996 /s/ Jeffery D. Aberdeen By __________________________________ Jeffery D. Aberdeen Controller (Chief Accounting Officer) Date: August 9, 1996 2 SCHEDULE 1 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES COMPARISON OF KEY RATIOS AND SELECTED MARKET DATA (UNAUDITED) COMPARISON OF KEY RATIOS
1996 1995 ----- ----- RATIOS--THREE MONTHS ENDED JUNE 30: (Based on average balance sheets): Loans to deposits................................................. 66.95% 69.46% Non-interest bearing deposits to total deposits................... 19.02 19.67 Equity to loans................................................... 16.63 16.07 Equity to deposits................................................ 11.14 11.16 Equity to total assets............................................ 9.47 9.43 Return on total assets............................................ 1.25 1.19 Return on realized stockholders' equity........................... 13.32 12.50 Return on total stockholders' equity.............................. 13.18 12.66 RATIOS--SIX MONTHS ENDED JUNE 30: (Based on average balance sheets): Loans to deposits................................................. 66.69% 67.95% Non-interest bearing deposits to total deposits................... 19.21 19.67 Equity to loans................................................... 16.83 16.27 Equity to deposits................................................ 11.23 11.06 Equity to total assets............................................ 9.50 9.38 Return on total assets............................................ 1.20 1.22 Return on realized stockholders' equity........................... 12.98 12.50 Return on total stockholders' equity.............................. 12.67 12.99 (Based on end-of-period data): Tier I capital ratio.............................................. 13.32 12.60 Total capital ratio............................................... 14.50 13.81 Leverage ratio.................................................... 8.52 8.55 Efficiency ratio.................................................. 62.29 63.58
SELECTED MARKET DATA* JUNE 30, 1996
COMMERCE BANK PRIMARY MARKET LOCATIONS SITES ASSETS DEPOSITS LOANS -------------- ----- ---------- ---------- ---------- (DOLLARS IN THOUSANDS) St. Louis Region........................ 72 $3,115,031 $2,716,252 $1,830,448 Kansas City Region...................... 61 2,813,071 2,147,433 1,426,324 Springfield/Joplin...................... 34 1,021,993 934,661 639,658 Peoria/Bloomington...................... 23 924,567 755,053 421,234 Wichita................................. 22 747,240 598,545 364,878 Columbia................................ 17 369,505 338,866 286,699 St. Joseph.............................. 3 313,232 274,309 188,669 Manhattan/Hays.......................... 8 259,072 221,095 106,318
- -------- *Balances have not been reduced for inter-company activity. 3 SCHEDULE 2 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
JUNE 30 DECEMBER 31 1996 1995 ----------- ----------- (UNAUDITED) (IN THOUSANDS) ASSETS Loans, net of unearned income.......................... $5,269,915 $5,317,813 Allowance for loan losses.............................. (98,667) (98,537) ---------- ---------- NET LOANS.......................................... 5,171,248 5,219,276 ---------- ---------- Investment securities: Available for sale................................... 2,652,762 2,552,264 Trading account...................................... 13,956 9,369 Other non-marketable................................. 32,915 33,120 ---------- ---------- TOTAL INVESTMENT SECURITIES........................ 2,699,633 2,594,753 ---------- ---------- Federal funds sold and securities purchased under agreements to resell.................................. 378,295 523,302 Cash and due from banks................................ 654,830 774,852 Land, buildings and equipment--net..................... 206,842 210,033 Customers' acceptance liability........................ 1,732 9,435 Other assets........................................... 210,389 242,300 ---------- ---------- TOTAL ASSETS....................................... $9,322,969 $9,573,951 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing demand.......................... $1,560,726 $1,828,950 Savings and interest bearing demand.................. 3,964,674 3,891,801 Time open and C.D.'s of less than $100,000........... 2,198,986 2,253,390 Time open and C.D.'s of $100,000 and over............ 224,127 218,951 ---------- ---------- TOTAL DEPOSITS..................................... 7,948,513 8,193,092 Federal funds purchased and securities sold under agreements to repurchase.............................. 436,992 362,903 Long-term debt and other borrowings.................... 14,349 14,562 Accrued interest, taxes and other liabilities.......... 49,173 110,176 Acceptances outstanding................................ 1,732 9,435 ---------- ---------- TOTAL LIABILITIES.................................. 8,450,759 8,690,168 ---------- ---------- Stockholders' equity: Preferred stock, $1 par value. Authorized and unissued 2,000,000 shares............ -- -- Common stock, $5 par value. Authorized 80,000,000 shares; issued 37,565,369 shares............................................. 187,827 187,827 Capital surplus...................................... 81,368 84,415 Retained earnings.................................... 660,697 618,388 Treasury stock of 1,424,063 shares in 1996 and 861,951 shares in 1995, at cost..................... (52,765) (32,980) Unearned employee benefits........................... (737) (716) Unrealized securities gain (loss)--net of tax........ (4,180) 26,849 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY......................... 872,210 883,783 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY......... $9,322,969 $9,573,951 ========== ==========
See accompanying notes to financial statements. 4 SCHEDULE 3 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE FOR THE SIX MONTHS ENDED JUNE MONTHS ENDED JUNE 30 30 ----------------- ----------------- 1996 1995 1996 1995 -------- -------- -------- -------- (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) INTEREST INCOME Interest and fees on loans................. $113,910 $117,699 $229,426 $217,115 Interest on investment securities.......... 39,732 41,611 78,408 82,808 Interest on federal funds sold and securities purchased under agreements to resell.................................... 6,064 1,334 13,946 2,317 -------- -------- -------- -------- TOTAL INTEREST INCOME.................. 159,706 160,644 321,780 302,240 -------- -------- -------- -------- INTEREST EXPENSE Interest on deposits: Savings and interest bearing demand...... 31,825 29,777 64,136 56,190 Time open and C.D.'s of less than $100,000................................ 29,682 30,168 60,866 54,355 Time open and C.D.'s of $100,000 and over.................................... 2,984 2,943 6,045 5,146 Interest on federal funds purchased and securities sold under agreements to repurchase................................ 5,067 6,530 10,848 11,804 Interest on long-term debt and other borrowings................................ 233 338 456 570 -------- -------- -------- -------- TOTAL INTEREST EXPENSE................. 69,791 69,756 142,351 128,065 -------- -------- -------- -------- NET INTEREST INCOME.................... 89,915 90,888 179,429 174,175 Provision for loan losses.................. 5,428 1,930 10,981 4,763 -------- -------- -------- -------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES........................... 84,487 88,958 168,448 169,412 -------- -------- -------- -------- NON-INTEREST INCOME Trust income............................... 8,845 7,929 17,938 15,703 Deposit account charges and other fees..... 13,800 11,120 26,212 21,246 Trading account profits and commissions.... 1,432 1,346 3,158 2,714 Net gains on securities transactions....... 690 241 1,914 427 Miscellaneous credit card income........... 6,279 5,466 12,046 10,265 Other income............................... 7,614 5,797 14,188 12,132 -------- -------- -------- -------- TOTAL NON-INTEREST INCOME.............. 38,660 31,899 75,456 62,487 -------- -------- -------- -------- OTHER EXPENSE Salaries and employee benefits............. 41,154 39,650 82,311 76,796 Net occupancy expense on bank premises..... 5,261 5,034 10,653 9,888 Equipment expense.......................... 3,885 3,457 7,438 6,707 Supplies and communication expense......... 6,279 6,005 12,333 11,310 Data processing expense.................... 5,236 4,955 10,167 9,846 Federal deposit insurance expense.......... 283 4,312 436 8,246 Marketing expense.......................... 2,458 2,408 6,054 4,401 Other operating expense.................... 14,409 12,763 28,181 23,000 -------- -------- -------- -------- TOTAL OTHER EXPENSE.................... 78,965 78,584 157,573 150,194 -------- -------- -------- -------- Income before income taxes................. 44,182 42,273 86,331 81,705 Less income taxes.......................... 15,264 15,514 30,130 29,923 -------- -------- -------- -------- NET INCOME............................. $ 28,918 $ 26,759 $ 56,201 $ 51,782 ======== ======== ======== ======== Net income per common and common equivalent share..................................... $ .79 $ .70 $ 1.53 $ 1.38 ======== ======== ======== ======== Weighted average common and common equivalent shares outstanding............. 36,586 38,426 36,807 37,506 ======== ======== ======== ======== Cash dividends per common share............ $ .190 $ .171 $ .380 $ .342 ======== ======== ======== ========
See accompanying notes to financial statements. 5 SCHEDULE 4 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NUMBER UNEARNED NET OF SHARES COMMON CAPITAL RETAINED TREASURY EMPLOYEE UNREALIZED ISSUED STOCK SURPLUS EARNINGS STOCK BENEFITS GAIN (LOSS) TOTAL ---------- -------- ------- -------- -------- -------- ----------- -------- (UNAUDITED) (DOLLARS IN THOUSANDS) BALANCE JANUARY 1, 1996. 37,565,369 $187,827 $84,415 $618,388 $(32,980) $(716) $ 26,849 $883,783 Net income............. 56,201 56,201 Year-to-date change in fair value of investment securities. (31,029) (31,029) Purchase of treasury stock................. (25,871) (25,871) Sales under option and benefit plans......... (3,038) 5,952 2,914 Issuance of stock under restricted stock award plan.................. (9) 134 (125) -- Restricted stock award amortization.......... 104 104 Cash dividends paid ($.380 per share) .... (13,892) (13,892) ---------- -------- ------- -------- -------- ----- -------- -------- BALANCE JUNE 30, 1996... 37,565,369 $187,827 $81,368 $660,697 $(52,765) $(737) $ (4,180) $872,210 ========== ======== ======= ======== ======== ===== ======== ======== Balance January 1, 1995. 33,970,106 $169,851 $54,575 $576,331 $(12,148) $(295) $(60,116) $728,198 Net income............. 51,782 51,782 Year-to-date change in fair value of investment securities. 78,705 78,705 Purchase of treasury stock................. (17,289) 7 (17,282) Sales under option and benefit plans......... (1,915) 4,378 2,463 Purchase acquisition... (435) 5,315 4,880 Pooling acquisition, net................... 2,674,299 13,371 (4,872) 32,360 7,625 38 48,522 Issuance of stock under restricted stock award plan.................. 2 604 (606) -- Restricted stock award amortization.......... 65 65 Cash dividends paid ($.342 per share)..... (13,123) (13,123) ---------- -------- ------- -------- -------- ----- -------- -------- Balance June 30, 1995... 36,644,405 $183,222 $47,355 $647,350 $(11,515) $(829) $ 18,627 $884,210 ========== ======== ======= ======== ======== ===== ======== ========
See accompanying notes to financial statements. 6 SCHEDULE 5 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30 -------------------- 1996 1995 --------- --------- (UNAUDITED) (IN THOUSANDS) OPERATING ACTIVITIES: Net income............................................... $ 56,201 $ 51,782 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses.............................. 10,981 4,763 Provision for depreciation and amortization............ 15,263 14,787 Accretion of investment security discounts............. (2,826) (2,870) Amortization of investment security premiums........... 11,400 13,152 Net gains on sales of investment securities (A)........ (1,914) (427) Net increase in trading account securities............. (8,794) (3,496) (Increase) decrease in interest receivable............. (1,739) 9,537 Increase (decrease) in interest payable................ (4,433) 2,772 Other changes, net..................................... 23,089 933 --------- --------- Net cash provided by operating activities............ 97,228 90,933 --------- --------- INVESTING ACTIVITIES: Net cash paid in acquisitions............................ -- (33,226) Cash paid in sale of branch.............................. (13,595) -- Proceeds from sales of investment securities (A)......... 352,418 443,501 Proceeds from maturities of investment securities (A).... 176,897 316,130 Purchases of investment securities (A)................... (685,165) (267,741) Net (increase) decrease in federal funds sold and securities purchased under agreements to resell......... 145,007 (126,750) Net (increase) decrease in loans......................... 34,452 (309,348) Purchases of premises and equipment...................... (9,663) (11,717) Sales of premises and equipment.......................... 3,064 3,766 --------- --------- Net cash provided by investing activities............ 3,415 14,615 --------- --------- FINANCING ACTIVITIES: Net decrease in non-interest bearing demand, savings and interest bearing demand deposits.................... (185,290) (288,256) Net increase (decrease) in time open and C.D.'s.......... (41,173) 110,150 Net increase in federal funds purchased and securities sold under agreements to repurchase................................ 74,089 110,326 Repayment of long-term debt.............................. (244) (5,572) Purchases of treasury stock.............................. (56,492) (17,117) Exercise of stock options by employees................... 2,337 2,179 Cash dividends paid on common stock...................... (13,892) (13,123) --------- --------- Net cash used by financing activities................ (220,665) (101,413) --------- --------- Increase (decrease) in cash and cash equivalents..... (120,022) 4,135 Cash and cash equivalents at beginning of year........... 774,852 565,805 --------- --------- Cash and cash equivalents at June 30................. $ 654,830 $ 569,940 ========= =========
- -------- (A) Available for sale and other non-marketable securities, excluding trading account securities. Cash payments of income taxes for the six month period were $34,344,000 in 1996 and $16,027,000 in 1995. Interest paid on deposits and borrowings for the six month period was $146,642,000 in 1996 and $125,293,000 in 1995. See accompanying notes to financial statements. 7 SCHEDULE 6 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 (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 1995 data to conform to current year presentation. The significant accounting policies followed in the preparation of the quarterly financial statements are the same as those disclosed in the 1995 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 (in thousands):
FOR THE FOR THE THREE MONTHS SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 --------------- --------------- 1996 1995 1996 1995 ------- ------- ------- ------- Balance, beginning of period.................... $98,666 $92,055 $98,537 $87,179 ------- ------- ------- ------- Additions: Provision for loan losses..................... 5,428 1,930 10,981 4,763 Allowance for loan losses of acquired banks... -- 8,195 -- 12,932 ------- ------- ------- ------- Total additions............................. 5,428 10,125 10,981 17,695 ------- ------- ------- ------- Deductions: Loan losses................................... 7,280 4,969 14,597 9,173 Less recoveries on loans...................... 1,853 2,010 3,746 3,520 ------- ------- ------- ------- Net loan losses............................. 5,427 2,959 10,851 5,653 ------- ------- ------- ------- Balance, June 30................................ $98,667 $99,221 $98,667 $99,221 ======= ======= ======= =======
At June 30, 1996, interest income was not being recognized on an accrual basis for loans with an outstanding balance of $17,100,000. 3. INVESTMENT SECURITIES Investment securities, at fair value, consist of the following at June 30, 1996 and December 31, 1995 (in thousands):
JUNE 30, DECEMBER 31, 1996 1995 ---------- ------------ Available for sale: U.S. government and federal agency obligations.............. $1,811,650 $1,707,111 State and municipal obligations.............. 118,882 128,043 CMO's and asset-backed securities............... 642,526 670,522 Other debt securities..... 36,367 10,982 Equity securities......... 43,337 35,606 Trading account securities.. 13,956 9,369 Other non-marketable securities................. 32,915 33,120 ---------- ---------- Total investment securities............. $2,699,633 $2,594,753 ========== ==========
4. INCOME PER COMMON SHARE Income per share data is based on the weighted average number of common shares and common equivalent shares outstanding during the interim periods. All per share data in this report has been restated to reflect the 5% stock dividend distributed on December 15, 1995. 8 SCHEDULE 7 COMMERCE BANCSHARES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 1996 (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 1995 Annual Report on Form 10-K. Results of operations for the six month period ended June 30, 1996 are not necessarily indicative of results to be attained for any other period. SUMMARY The Company's consolidated net income for the first six months of 1996 totaled $56.2 million; a $4.4 million or 9% increase over the same period in 1995. Earnings per share increased to $1.53 in the first six months of 1996 compared to $1.38 in the first six months of 1995. Net interest income increased $5.3 million and non-interest income increased $13.0 million, partially offset by increases of $7.4 million in other expense and $6.2 million in the provision for loan losses. When the effects of the four banks acquired in March through May of 1995 are excluded, non-interest income increased by 17%, while other expense, excluding intangible amortization and F.D.I.C. insurance reductions, increased only 5%. Return on average assets for the first six months of 1996 was 1.20% compared to 1.22% in the first six months of 1995. Return on average stockholders' equity for the first six months of 1996 was 12.67% compared to 12.99% for the first six months of 1995. This decrease was partially due to the unrealized loss in fair value of available for sale investment securities during the first six months of 1995. The Company's efficiency ratio (other expense/net interest income plus non-interest income excluding net gains on securities transactions) was 62.29% for the first six months of 1996 compared to 63.58% for the first six months of 1995. Consolidated net income increased $2.2 million over the second quarter of 1995 mainly due to a $6.8 million increase in non-interest income partially offset by a $3.5 million increase in the provision for loan losses. Net income increased $1.6 million over the first quarter of 1996 mainly due to a $1.9 million increase in non-interest income. Earnings per share was $.79 in the second quarter of 1996, a 12.9% increase over the second quarter of 1995 and a 6.8% increase over the first quarter of 1996. In the second quarter of 1996, ten affiliate banks in Missouri, Kansas and Illinois were merged to form two banks, thus better serving those customers at over 100 sites in Missouri/Kansas and over 20 sites in Illinois. The Company sold a branch in Illinois in March 1996 and a branch in Missouri in August 1996. These sales did not have a material effect on the financial statements of the Company. INTEREST INCOME AND EARNING ASSETS Total interest income increased $19.5 million, or 6.5%, compared to the first six months of 1995 mainly due to an increase of $661.1 million in average earning asset balances, (which caused an increase of $27.0 million in tax equivalent interest income). Excluding banks acquired in 1995, total interest income increased 1.2% in the first six months of 1996 over the same period in 1995. The average tax equivalent yield was 7.75% for the first six months of 1996 and 7.93% for the first six months of 1995. Loans, the highest yielding category of earning assets, were 63% of average earning assets for the first six months of 1996. Loan interest income increased $12.3 million, or 5.7%, over the first six months of 1995 due to 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.) an increase of $359.6 million in average loan balances. Most of the increase in average balances is attributable to bank acquisitions. Interest income on investment securities decreased $4.4 million from the first six months of 1995 mainly due to a decrease of $114.8 million in average balances invested in CMO's and asset-backed securities. Interest income on federal funds sold and securities purchased under agreements to resell increased $11.6 million over the first six months of 1995 mainly due to an increase of $440.9 million in average balances invested. The average tax equivalent yield was 7.72% in the second quarter of 1996 compared to 8.04% in the second quarter of 1995 and 7.79% in the first quarter of 1996. Total interest income decreased $938 thousand from the second quarter of 1995 mainly due to lower average tax equivalent yields earned on loans partially offset by an increase in average balances invested in federal funds sold and resell agreements. Total interest income decreased $2.4 million from the first quarter of 1996 due to lower average balances invested in federal funds sold and resell agreements and lower average rates earned on loans, partially offset by higher average balances invested in U.S. government and federal agency securities. Summaries of average earning assets and liabilities and the corresponding average rates earned/paid appear on pages 12 through 15. 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, 1996 DECEMBER 31, 1995 ------------- ----------------- (DOLLARS IN THOUSANDS) Non-accrual loans........................ $17,100 $16,234 Past due 90 days and still accruing interest................................ 16,862 15,690 ------- ------- Total impaired loans..................... 33,962 31,924 Foreclosed real estate................... 1,603 1,955 ------- ------- Total non-performing assets.......... $35,565 $33,879 ======= ======= Non-performing assets to total loans..... .67% .64% Non-performing assets to total assets.... .38% .35%
The subsidiary banks issue Visa and MasterCard credit cards, and the balance of these consumer loans generated through credit card sales drafts and cash advances was $513.4 million at June 30, 1996. Because credit card loans traditionally have a higher than average ratio of net charge-offs to loans outstanding, management requires that a specific allowance for losses on credit card loans be maintained, which was $11.0 million, or 2.2% of credit card loans at June 30, 1996. 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 FOR LOAN LOSSES 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 all potential 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 as 10 related to 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 the Parent, reviews and examinations by bank regulatory authorities, and other factors that management believes deserve current recognition. As a result of these factors, the provision for loan losses increased $6.2 million compared to the first six months of 1995, increased $3.5 million over the second quarter of 1995 and decreased $125 thousand compared to the first quarter of 1996. The allowance for loan losses as a percentage of loans outstanding was 1.87% at June 30, 1996, compared to 1.85% at year-end 1995 and 1.83% at June 30, 1995. 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. Net charge-offs on loans totaled $10.9 million for the first six months of 1996 compared to $5.7 million for the first six months of 1995. Net charge-offs were $5.4 million for the second quarter of 1996 compared to $3.0 million for the second quarter of 1995 and $5.4 million for the first quarter of 1996. INTEREST EXPENSE AND RELATED LIABILITIES Total interest expense (net of capitalized interest) increased $14.3 million, or 11.2%, compared to the first six months of 1995 due mainly to higher average interest-bearing liabilities. The average cost of funds was 4.16% for the first six months of 1996 and 4.10% for the first six months of 1995. Excluding banks acquired in 1995, total interest expense increased 4.3% in the first six months of 1996 compared to the first six months of 1995. Average core deposits (deposits excluding short-term certificates of deposit over $100,000) for the first six months of 1996 were $7.87 billion, an increase of 9.7% over the same period last year. Core deposits supported 94% of average earning assets in 1996. Interest on deposits increased $15.4 million over the first six months of 1995. Interest expense on the Company's Premium Money Market deposits and long-term C.D.'s of less than $100,000 increased $10.2 million and $7.0 million, respectively, due mainly to higher average balances. Interest expense on federal funds purchased and securities sold under agreements to repurchase decreased $956 thousand from the first six months of 1995 due to a decrease in average rates paid. Total interest expense in the second quarter of 1996 was unchanged from the second quarter of 1995, as rate decreases were offset by increases in balances, and was $2.8 million lower than the first quarter of 1996 due to lower average rates paid on deposits. The average cost of funds was 4.09% for the second quarter of 1996 compared to 4.24% for the second quarter of 1995 and 4.22% for the first quarter of 1996. NON-INTEREST INCOME Non-interest income increased $13.0 million in the first six months of 1996 compared to the first six months of 1995. Deposit account charges and other fees increased $5.0 million partially due to fee restructuring and added cash management fees. In addition, trust income increased $2.2 million, miscellaneous credit card income increased $1.8 million and gains on securities transactions increased $1.5 million. Excluding banks acquired in 1995, total non-interest income (excluding securities gains) increased $9.0 million in the first six months of 1996 compared to the first six months of 1995. Non-interest income increased $6.8 million over the second quarter of 1995 due to increases of $2.7 million in deposit account charges and other fees, $916 thousand in trust income and $862 thousand in gains on loan sales. Compared to the first quarter of 1996, non-interest income increased $1.9 million, with increases of $1.4 million in deposit account charges and other fees and $692 thousand in gains on loan sales. 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.) AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS SIX MONTHS ENDED JUNE 30, 1996 AND 1995
SIX MONTHS 1996 SIX MONTHS 1995 ------------------------------- ------------------------------- INTEREST AVG. RATES INTEREST AVG. RATES AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/ BALANCE EXPENSE PAID BALANCE EXPENSE PAID ---------- -------- ---------- ---------- -------- ---------- (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS: Loans: Business (including foreign) (A).......... $1,684,056 $ 66,226 7.91% $1,625,307 $ 67,851 8.42% Construction and development........... 170,460 7,462 8.80 127,071 6,026 9.56 Real estate--business.. 701,763 30,148 8.64 665,806 29,838 9.04 Real estate--personal.. 985,777 38,817 7.92 916,550 34,875 7.67 Personal banking....... 1,259,151 54,539 8.71 1,207,634 51,852 8.66 Credit card............ 498,535 32,942 13.29 397,803 27,460 13.92 ---------- -------- ----- ---------- -------- ----- Total loans......... 5,299,742 230,134 8.73 4,940,171 217,902 8.89 ---------- -------- ----- ---------- -------- ----- Investment securities: U.S. government & federal agency........ 1,751,479 53,544 6.15 1,761,859 53,783 6.16 State & municipal obligations (A)....... 119,157 4,705 7.94 107,391 4,071 7.64 CMO's and asset-backed securities............ 640,239 20,105 6.32 755,081 23,595 6.30 Trading account securities (A)........ 7,389 201 5.46 3,261 106 6.54 Other marketable securities (A)........ 41,197 1,399 6.83 82,007 2,508 6.17 Other non-marketable securities............ 34,178 254 1.49 23,320 298 2.58 ---------- -------- ----- ---------- -------- ----- Total investment securities......... 2,593,639 80,208 6.22 2,732,919 84,361 6.22 ---------- -------- ----- ---------- -------- ----- Federal funds sold and securities purchased under agreements to resell... 516,512 13,946 5.43 75,660 2,317 6.18 ---------- -------- ----- ---------- -------- ----- Total interest earning assets..... 8,409,893 324,288 7.75 7,748,750 304,580 7.93 -------- ----- -------- ----- Less allowance for loan losses................. (98,638) (93,529) Unrealized gain (loss) on investment securities............. 33,304 (51,000) Cash and due from banks. 636,617 572,182 Land, buildings and equipment--net......... 209,111 201,222 Other assets............ 202,212 193,907 ---------- ---------- Total assets........ $9,392,499 $8,571,532 ========== ========== LIABILITIES AND EQUITY: Interest bearing deposits: Savings................ $ 305,777 3,623 2.38 $ 306,510 3,898 2.56 Interest bearing demand................ 3,651,096 60,513 3.33 3,202,548 52,292 3.29 Time open & C.D.'s of less than $100,000.... 2,229,595 60,866 5.49 2,130,456 54,355 5.14 Time open & C.D.'s of $100,000 and over..... 233,295 6,045 5.21 200,886 5,146 5.17 ---------- -------- ----- ---------- -------- ----- Total interest bearing deposits... 6,419,763 131,047 4.11 5,840,400 115,691 3.99 ---------- -------- ----- ---------- -------- ----- Borrowings: Federal funds purchased and securities sold under agreements to repurchase............ 455,409 10,848 4.79 439,118 11,804 5.42 Long-term debt and other borrowings...... 14,615 521 7.17 16,957 575 6.84 ---------- -------- ----- ---------- -------- ----- Total borrowings.... 470,024 11,369 4.86 456,075 12,379 5.47 ---------- -------- ----- ---------- -------- ----- Total interest bearing liabilities........ 6,889,787 142,416 4.16% 6,296,475 128,070 4.10% -------- ----- -------- ----- Non-interest bearing demand deposits........ 1,526,573 1,429,960 Other liabilities....... 83,955 41,122 Stockholders' equity.... 892,184 803,975 ---------- ---------- Total liabilities and equity......... $9,392,499 $8,571,532 ========== ========== Net interest margin (T/E).................. $181,872 $176,510 ======== ======== Net yield on interest earning assets......... 4.35% 4.59% ===== =====
- -------- (A) Stated on a tax equivalent basis using a federal income tax rate of 35%. 12 ANALYSIS OF VARIANCE IN NET INTEREST MARGIN (T/E) DUE TO VOLUMES AND RATES SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1996 VS 1995 ---------------------------- INCREASE OR (DECREASE) DUE TO CHANGE IN ---------------- TOTAL AVERAGE AVERAGE INCREASE VOLUME RATE(B) (DECREASE) ------- ------- ---------- (UNAUDITED) (DOLLARS IN THOUSANDS) VARIANCE IN INTEREST INCOME ON: Loans: Business (including foreign) (A)................. $ 2,472 $(4,097) $(1,625) Construction and development..................... 2,063 (627) 1,436 Real estate--business............................ 1,616 (1,306) 310 Real estate--personal............................ 2,640 1,302 3,942 Personal banking................................. 2,218 469 2,687 Credit card...................................... 6,973 (1,491) 5,482 ------- ------- ------- Total loans.................................... 17,982 (5,750) 12,232 ------- ------- ------- Investment securities: U.S. government & federal agency................. (318) 79 (239) State & municipal obligations (A)................ 447 187 634 CMO's and asset-backed securities................ (3,598) 108 (3,490) Trading account securities (A)................... 134 (39) 95 Other marketable securities (A).................. (1,252) 143 (1,109) Other non-marketable securities.................. 139 (183) (44) ------- ------- ------- Total investment securities.................... (4,448) 295 (4,153) ------- ------- ------- Federal funds sold and securities purchased under agreements to resell............................. 13,468 (1,839) 11,629 ------- ------- ------- Total interest income.......................... 27,002 (7,294) 19,708 ------- ------- ------- VARIANCE IN INTEREST EXPENSE ON: Interest bearing deposits: Savings.......................................... (9) (266) (275) Interest bearing demand.......................... 10,498 (2,277) 8,221 Time open & C.D.'s of less than $100,000......... 2,641 3,870 6,511 Time open & C.D.'s of $100,000 and over.......... 839 60 899 ------- ------- ------- Total interest bearing deposits................ 13,969 1,387 15,356 ------- ------- ------- Borrowings: Federal funds purchased and securities sold under agreements to repurchase.................. 124 (1,080) (956) Long-term debt and other borrowings.............. (80) 26 (54) ------- ------- ------- Total borrowings............................... 44 (1,054) (1,010) ------- ------- ------- Total interest expense......................... 14,013 333 14,346 ------- ------- ------- Change in net interest margin (T/E)............... $12,989 $(7,627) $ 5,362 ======= ======= ======= Percentage increase in net interest margin (T/E) over the same period of the prior year........... 3.04% =======
- -------- (A) Stated on a tax equivalent basis. (B) 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. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.) AVERAGE BALANCE SHEETS--AVERAGE RATES AND YIELDS THREE MONTHS ENDED JUNE 30, 1996 AND MARCH 31, 1996
SECOND QUARTER 1996 FIRST QUARTER 1996 ------------------------------- ------------------------------- INTEREST AVG. RATES INTEREST AVG. RATES AVERAGE INCOME/ EARNED/ AVERAGE INCOME/ EARNED/ BALANCE EXPENSE PAID BALANCE EXPENSE PAID ---------- -------- ---------- ---------- -------- ---------- (UNAUDITED) (DOLLARS IN THOUSANDS) ASSETS: Loans: Business (including foreign) (A).......... $1,686,451 $32,884 7.84% $1,681,661 $33,342 7.97% Construction and development........... 169,600 3,674 8.71 171,320 3,788 8.89 Real estate--business.. 702,606 15,107 8.65 700,920 15,041 8.63 Real estate--personal.. 990,822 19,287 7.83 980,732 19,530 8.01 Personal banking....... 1,253,783 27,076 8.69 1,264,519 27,463 8.74 Credit card............ 502,800 16,234 12.99 494,270 16,708 13.60 ---------- ------- ----- ---------- ------- ----- Total loans......... 5,306,062 114,262 8.66 5,293,422 115,872 8.80 ---------- ------- ----- ---------- ------- ----- Investment securities: U.S. government & federal agency........ 1,789,272 27,311 6.14 1,713,686 26,233 6.16 State & municipal obligations (A)....... 117,785 2,348 8.02 120,529 2,357 7.87 CMO's and asset-backed securities............ 632,794 9,942 6.32 647,684 10,163 6.31 Trading account securities (A)........ 7,861 113 5.78 6,917 88 5.09 Other marketable securities (A)........ 45,595 734 6.47 36,799 665 7.27 Other non-marketable securities............ 33,940 173 2.05 34,416 81 .95 ---------- ------- ----- ---------- ------- ----- Total investment securities......... 2,627,247 40,621 6.22 2,560,031 39,587 6.22 ---------- ------- ----- ---------- ------- ----- Federal funds sold and securities purchased under agreements to resell................. 453,629 6,064 5.38 579,395 7,882 5.47 ---------- ------- ----- ---------- ------- ----- Total interest earning assets..... 8,386,938 160,947 7.72 8,432,848 163,341 7.79 ------- ----- ------- ----- Less allowance for loan losses................. (99,054) (98,222) Unrealized gain on investment securities.. 14,220 52,388 Cash and due from banks. 615,730 657,504 Land, buildings and equipment--net......... 208,242 209,980 Other assets............ 196,892 207,532 ---------- ---------- Total assets........ $9,322,968 $9,462,030 ========== ========== LIABILITIES AND EQUITY: Interest bearing deposits: Savings................ $ 305,729 1,789 2.35 $ 305,825 1,834 2.41 Interest bearing demand................ 3,664,421 30,036 3.30 3,637,771 30,477 3.37 Time open & C.D.'s of less than $100,000.... 2,213,390 29,682 5.39 2,245,800 31,184 5.58 Time open & C.D.'s of $100,000 and over..... 234,170 2,984 5.13 232,420 3,061 5.30 ---------- ------- ----- ---------- ------- ----- Total interest bearing deposits... 6,417,710 64,491 4.04 6,421,816 66,556 4.17 ---------- ------- ----- ---------- ------- ----- Borrowings: Federal funds purchased and securities sold under agreements to repurchase............ 429,469 5,067 4.75 481,349 5,781 4.83 Long-term debt and other borrowings...... 14,470 263 7.32 14,760 258 7.02 ---------- ------- ----- ---------- ------- ----- Total borrowings.... 443,939 5,330 4.83 496,109 6,039 4.90 ---------- ------- ----- ---------- ------- ----- Total interest bearing liabilities........ 6,861,649 69,821 4.09% 6,917,925 72,595 4.22% ------- ----- ------- ----- Non-interest bearing demand deposits........ 1,507,302 1,545,844 Other liabilities....... 71,369 96,541 Stockholders' equity.... 882,648 901,720 ---------- ---------- Total liabilities and equity......... $9,322,968 $9,462,030 ========== ========== Net interest margin (T/E).................. $91,126 $90,746 ======= ======= Net yield on interest earning assets......... 4.37% 4.33% ===== =====
- -------- (A) Stated on a tax equivalent basis using a federal income tax rate of 35%. 14 ANALYSIS OF VARIANCE IN NET INTEREST MARGIN (T/E) DUE TO VOLUMES AND RATES THREE MONTHS ENDED JUNE 30, 1996 AND MARCH 31, 1996
CURRENT QUARTER VS PRIOR QUARTER ---------------------------- INCREASE OR (DECREASE) DUE TO CHANGE IN ---------------- TOTAL AVERAGE AVERAGE INCREASE VOLUME RATE(B) (DECREASE) ------- ------- ---------- (UNAUDITED) (DOLLARS IN THOUSANDS) VARIANCE IN INTEREST INCOME ON: Loans: Business (including foreign) (A)................. $ 95 $ (553) $ (458) Construction and development..................... (38) (76) (114) Real estate--business............................ 36 30 66 Real estate--personal............................ 201 (444) (243) Personal banking................................. (233) (154) (387) Credit card...................................... 288 (762) (474) ------- ------- ------- Total loans.................................... 349 (1,959) (1,610) ------- ------- ------- Investment securities: U.S. government & federal agency................. 1,158 (80) 1,078 State & municipal obligations (A)................ (54) 45 (9) CMO's and asset-backed securities................ (234) 13 (221) Trading account securities (A)................... 12 13 25 Other marketable securities (A).................. 159 (90) 69 Other non-marketable securities.................. (1) 93 92 ------- ------- ------- Total investment securities.................... 1,040 (6) 1,034 ------- ------- ------- Federal funds sold and securities purchased under agreements to resell............................. (1,708) (110) (1,818) ------- ------- ------- Total interest income.......................... (319) (2,075) (2,394) ------- ------- ------- VARIANCE IN INTEREST EXPENSE ON: Interest bearing deposits: Savings.......................................... (1) (44) (45) Interest bearing demand.......................... 578 (1,019) (441) Time open & C.D.'s of less than $100,000......... (449) (1,053) (1,502) Time open & C.D.'s of $100,000 and over.......... 19 (96) (77) ------- ------- ------- Total interest bearing deposits................ 147 (2,212) (2,065) ------- ------- ------- Borrowings: Federal funds purchased and securities sold under agreements to repurchase.................. (637) (77) (714) Long-term debt and other borrowings.............. (5) 10 5 ------- ------- ------- Total borrowings............................... (642) (67) (709) ------- ------- ------- Total interest expense......................... (495) (2,279) (2,774) ------- ------- ------- Change in net interest margin (T/E)............... $ 176 $ 204 $ 380 ======= ======= ======= Percentage increase in net interest margin (T/E) over the prior quarter.......................................................... .42% =======
- -------- (A) Stated on a tax equivalent basis. (B) 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. 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT'D.) OTHER EXPENSE Other expense increased $7.4 million in the first six months of 1996 compared to the first six months of 1995. Salaries and benefits increased $5.5 million in this comparison partly as a result of staff at banks acquired in 1995. Excluding employees at banks acquired in 1995, full-time equivalent employees decreased slightly in the first six months of 1996 compared to the first six months of 1995. In addition, marketing expense increased $1.7 million, supplies and communication expense increased $1.0 million and amortization of goodwill and core deposit premium increased $1.0 million. These effects were partially offset by a $7.8 million decrease in F.D.I.C. insurance expense due to a decrease in the assessment rate. Excluding the expenses of banks acquired in 1995, total other expense decreased $2.1 million in the first six months of 1996 compared to the same period in 1995. Other expense increased $381 thousand compared to the second quarter of 1995. Various increases, including a $1.5 million increase in salaries and employee benefits, were largely offset by a $4.0 million reduction in F.D.I.C. insurance expense. Compared to the first quarter of 1996, other expense increased $357 thousand. A $1.1 million reduction in marketing expense partially offset increases in other categories. LIQUIDITY AND CAPITAL RESOURCES The liquid assets of the Parent company consist primarily of short-term investments and equity securities, most of which are readily marketable. The fair value of these investments was $73.5 million at June 30, 1996 compared to $90.1 million at December 31, 1995. Included in the fair values were unrealized net gains of $11.9 million at June 30, 1996 and $11.0 million at December 31, 1995. The Parent company liabilities totaled $40.9 million at June 30, 1996, compared to $44.3 million at December 31, 1995. The 1995 liabilities included a $31.0 million liability recorded at year end 1995 for a significant treasury stock purchase settling in 1996. The 1996 liabilities included $29.9 million advanced mainly from subsidiary bank holding companies in order to combine resources for short-term investment in liquid assets. The Parent company had no short-term borrowings from affiliate banks or long-term debt during 1996. The Parent company'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 securities, which consist mainly of U.S. government and federal agency securities and CMO's and asset-backed securities. These liquid assets had a fair value of $2.95 billion at June 30, 1996 and $3.03 billion at December 31, 1995. The available for sale bank portfolio included an unrealized net loss in fair value of $26.2 million at June 30, 1996 compared to an unrealized net gain of $30.1 million at December 31, 1995. In February 1996, the Board of Directors authorized the Company to purchase up to 2,000,000 shares of common stock in either the open market or privately negotiated transactions, to be used for employee benefit programs and stock dividends. At June 30, 1996, the Company had acquired 697,496 shares under this authorization. The Company (on a consolidated basis) had an equity to asset ratio of 9.50% based on 1996 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, 1996 DECEMBER 31, 1995 ------------- ----------------- (DOLLARS IN THOUSANDS) Risk-Adjusted Assets...................... $5,895,369 $6,045,112 Tier I Capital............................ 785,507 756,452 Total Capital............................. 854,911 829,784 Tier I Capital Ratio...................... 13.32% 12.51% Total Capital Ratio....................... 14.50% 13.73% Leverage Ratio............................ 8.52% 8.27%
16 The Company's cash and cash equivalents (defined as "Cash and due from banks") were $654.8 million at June 30, 1996, a decrease of $120.0 million from December 31, 1995. Contributing to the net cash outflow were a net decrease of $185.3 million in demand deposits and $56.5 million in purchases of treasury stock. In addition, purchases of investment securities were $685.2 million, partially offset by $529.3 million in proceeds realized from sales and maturities. Partially offsetting these net outflows were a $145.0 million net decrease in short-term investments in federal funds sold and resell agreements and $97.2 million generated from operating activities. Total assets and core deposits decreased slightly, $251.0 million and $247.2 million, respectively, compared to December 31, 1995 balances. 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 $2.01 billion, standby letters of credit totaled $130.1 million, and commercial letters of credit totaled $30.8 million at June 30, 1996. 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 $152.3 million at June 30, 1996. The current credit exposure (or replacement cost) across all off-balance-sheet derivative contracts covered by the risk-based capital standards was $4.8 million at June 30, 1996. 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 INDEX TO EXHIBITS 3 - Articles of Incorporation and By-Laws: (a) Restated Articles of Incorporation, as amended (b) Restated By-Laws 4 - Instruments defining the rights of security holders, including indentures: (b) Shareholder Rights Plan contained in an Amended and Restated Rights Agreement filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference (c) Form of Rights Certificate and Election to Exercise was filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference (d) Form of Certificate of Designation of Preferred Stock was filed on Form 8-A12G/A dated June 7, 1996, and the same is hereby incorporated by reference 27 - Financial Data Schedule EX-3 2 RESTATED ARTICLES OF INCORPORATION, AS AMENDED Exhibit 3(a) RESTATED ARTICLES OF INCORPORATION OF COMMERCE BANCSHARES, INC. A Missouri Corporation ARTICLE I The name of this corporation is Commerce Bancshares, Inc. ARTICLE II The address of the corporation's registered office is in care of T. Alan Peschka, 1000 Walnut Street, Kansas City, Missouri, and the name of the corporation's registered agent at such address is Commerce Bank of Kansas City, National Association. ARTICLE III The total number of shares of all classes of stock which the corporation shall have authority to issue is 14,000,000 shares, consisting of (i) 2,000,000 shares of Preferred Stock of the par value of $1 per share, and (ii) 12,000,000 shares of Common Stock of the par value of $5 per share. The voting powers, designations, preferences and relative participating, optional or other special rights, and the qualifications, limitations, or restrictions thereof, of the classes of stock of the corporation which are fixed by these Articles of Incorporation, and the authority vested in the Board of Directors to fix by resolution or resolutions providing for the issue of preferred stock the voting powers, if any, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of Preferred Stock which are not fixed by these Articles of Incorporation are as follows: (a) The Preferred Stock may be issued from time to time in one or more series of any number of shares, provided that the aggregate number of shares issued and not canceled of any and all such series shall not exceed the total number of shares of Preferred Stock hereinabove authorized. Each series of Preferred Stock shall be distinctively designated by letter or descriptive words. All series of Preferred Stock shall rank equally and be identical in all respects except as permitted by the provisions of paragraph (b) of this Article III. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purpose of voting by classes. (b) Authority is hereby vested in the Board of Directors from time to time to issue the Preferred Stock as Preferred Stock of any series and in connection with the creation of each such series to fix by resolution or resolutions providing for the issue of shares thereof the voting powers, if any, the designation, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such series to the full extent now or hereafter permitted by these Articles of Incorporation and the laws of the State of Missouri, in respect of the matters set forth in the following subparagraphs (1) to (9), inclusive: (1) the distinctive designation of such series and the number of shares which shall constitute such series, which number may be increased or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors; (2) the dividend rate of such series and any limitations, restrictions or conditions on the payment of dividends, subject to paragraph (c) of this Article III; (3) the price or prices at which, and the terms and conditions on which, the shares of such series may be redeemed by the corporation; (4) the amount or amounts payable upon the shares of such series in the event of any liquidation, dissolution or winding up of the corporation; (5) whether or not the shares of such series shall be entitled to the benefit of a sinking fund to be applied to the purchase or redemption of shares of such series and, if so entitled, the amount of such fund and the manner of its application; (6) whether or not the shares of such series shall be made convertible into, or exchangeable for, shares of any other class or classes of stock of the corporation or shares of any other series of Preferred Stock, and, if made so convertible or exchangeable, the conversion price or prices, or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange; (7) whether or not the shares of such series shall have any voting powers and, if voting powers are so granted, the extent of such voting powers; (8) whether or not the shares of such series shall be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the corporation or any subsidiary, upon the issue of any additional Preferred Stock (including additional shares of such series or of any other series), and upon the payment of dividends (in addition to those provided in paragraphs (c) and (d) of this Article III) or the making of other distributions on, and the purchase, redemption or other acquisition by the corporation or any subsidiary of, any outstanding stock of the corporation; and (9) such other preferences, rights, restrictions and qualifications as shall not be inconsistent herewith. (c) The holders of Preferred Stock of each series shall be entitled to receive, when and as declared by the Board of Directors, dividends in cash at the rate for such series fixed by the Board of Directors as provided in paragraph (b) of this Article III, and no more, payable quarterly on the first days of January, April, July and October or of such other months as may be designated by the Board of Directors (each of the quarterly periods ending on the first day of January, April, July and October in each year, or on the first days of such other months, respectively, being hereinafter called a dividend period), in each case from the date of cumulation (as defined in paragraph (h) of this Article III) of such series. Except as may otherwise be provided in the resolution or resolutions providing for the issue of any given series of Preferred Stock, dividends on Preferred Stock shall be cumulative (whether or not there shall be net profits or net assets of the corporation legally available for the payment of such dividends) so that, if at any time full cumulative dividends (as defined in paragraph (h) of this Article III) upon the Preferred Stock of all series to the end of the last completed dividend period shall not have been paid or declared and a sum sufficient for payment thereof set apart, the amount of the deficiency shall be fully paid, but without interest, or dividends in such amount shall have been declared on each such series and a sum sufficient for the payment thereof shall have been set apart for such payment, before any sum or sums shall be set aside for or applied to the purchase or redemption of Preferred Stock of any series (either pursuant to any applicable sinking fund provisions or any redemption authorized pursuant to paragraph (g) of this Article III or otherwise) or set aside for or applied to the purchase of Common Stock and before any dividend shall be paid or any other distribution made upon the Common Stock (other than a dividend payable in Common Stock); provided, however, that any moneys deposited in the sinking fund provided for any series of Preferred Stock in the resolution or resolutions providing for the issue of shares of said series, in compliance with the provisions of such sinking fund and of this paragraph (c), may thereafter be applied to the purchase or redemption of Preferred Stock in accordance with the terms of such sinking fund whether or not at the time of such application full cumulative dividends upon the outstanding Preferred Stock of all series to the end of the last completed dividend period shall have been paid or declared and set apart for payment. All dividends declared upon the Preferred Stock of the respective series outstanding shall be declared pro rata, so that the amounts of dividends declared per share on the Preferred Stock of different series shall in all cases bear to each other the same ratio that accrued dividends per share on the shares of such respective series bear to each other. (d) Before any sum or sums shall be set aside for or applied to the purchase of Common Stock and before any dividends shall be paid or any distribution ordered or made upon the Common Stock (other than a dividend payable in Common Stock), the corporation shall comply with the sinking fund provisions, if any, of any resolution or resolutions providing for the issue of any series of Preferred Stock any shares of which shall at the time be outstanding. (e) Subject to the provisions of paragraph (c) and (d) of this Article III, the holders of Common Stock shall be entitled, to the exclusion of the holders of Preferred Stock of any and all series, to receive such dividends as from time to time may be declared by the Board of Directors. (f) In the event of any liquidation, dissolution or winding up of the corporation, the holders of Preferred Stock of each series then outstanding shall be entitled to be paid out of the assets of the corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any payment shall be made to the holders of Common Stock, an amount determined as provided in paragraph (b) of this Article III for every share of their holdings of Preferred Stock of such series. If upon any liquidation, dissolution or winding up of the corporation the assets of the corporation available for distribution to its stockholders shall be insufficient to pay the holders of Preferred Stock of all series the full amounts to which they respectively shall be entitled, the holders of Preferred Stock of all series shall share ratably in any distribution of assets according to the respective amounts which would be payable in respect of the shares of Preferred Stock held by them upon such distribution if all amounts payable on or with respect to Preferred Stock of all series were paid in full. In the event of any liquidation, dissolution or winding up of the corporation, after payment shall have been made to the holders of Preferred Stock of the full amount to which they shall be entitled as aforesaid, the holders of Common Stock shall be entitled, to the exclusion of the holders of Preferred Stock of any and all series, to share, ratably according to the number of shares of Common Stock held by them, in all remaining assets of the corporation available for distribution to its stockholders. Neither the merger or consolidation of the corporation into or with another corporation nor the merger or consolidation of any other corporation into or with the corporation, nor the sale, transfer or lease of all or substantially all of the assets of the corporation, shall be deemed to be a liquidation, dissolution or winding up of the corporation. (g) Subject to any requirements which may be applicable to the redemption of any given series of Preferred Stock as provided in any resolution or resolutions providing for the issue of such series of Preferred Stock, the Preferred Stock of all series, or of any series thereof, or any part of any series thereof, at any time outstanding, may be redeemed by the corporation at its election expressed by resolution of the Board of Directors, at any time or from time to time, upon not less than 30 days' previous notice to the holders of record of Preferred Stock to be redeemed, given by mail in such manner as may be prescribed by resolution or resolutions of the Board of Directors: (1) if such redemption shall be otherwise than by the application of moneys in any sinking fund referred to in paragraph (d) of this Article III, at the redemption price, fixed as provided in paragraph (b) of this Article III, at which shares of Preferred Stock of the particular series may then be redeemed at the option of the corporation, and (2) if such redemption shall be by the application of moneys in any sinking fund referred to in paragraph (d) of this Article III, at the redemption price, fixed as provided in paragraph (b) of this Article III, at which shares of Preferred Stock of the particular series may then be redeemed for such sinking fund; provided, however, that, before any Preferred Stock of any series shall be redeemed at said redemption price thereof specified in clause (1) of this paragraph (g), all moneys at the time in the sinking fund, if any, for Preferred Stock of that series shall first be applied, as nearly as may be, to the purchase or redemption of Preferred Stock of that series as provided in the resolution or resolutions of the Board of Directors providing for such sinking fund. If less than all the outstanding shares of Preferred Stock of any series are to be redeemed, the redemption may be made either by lot or pro rata in such manner as may be prescribed by resolution of the Board of Directors. The corporation may, if it shall so elect, provide moneys for the payment of the redemption price by depositing the amount thereof for the account of the holders of Preferred Stock entitled thereto with a bank or trust company doing business in Kansas City, Missouri and having capital and surplus of at least $5,000,000. The date upon which such deposit may be made by the corporation (hereinafter called the "date of deposit") shall be prior to the date fixed as the date of redemption but not earlier than the date on which notice thereof shall be given. In any such case there shall be included in the notice of redemption a statement of the date of deposit and of the name and address of the bank or trust company with which the deposit has been or will be made. On and after the date fixed in any such notice of redemption as the date of redemption (unless default shall be made by the corporation in providing moneys for the payment of the redemption price pursuant to such notice) or, if the corporation shall have made such deposit on or before the date specified therefor in the notice, then on and after the date of deposit, all rights of the holders of the Preferred Stock to be redeemed as stockholders of the corporation, except the right to receive the redemption price as hereinafter provided, and, in the case of such deposit, any conversion rights not theretofore expired, shall cease and terminate. Such conversion rights, however, in any event shall cease and terminate upon the date fixed for redemption or upon any earlier date fixed by the Board of Directors pursuant to paragraph (b) of this Article III for termination of such conversation rights. Anything herein contained to the contrary notwithstanding, said redemption price shall include an amount equal to accrued dividends on the Preferred Stock to be redeemed to the date fixed for the redemption thereof and the corporation shall not be required to declare or pay on such Preferred Stock to be redeemed, and the holders thereof shall not be entitled to receive, any dividends in addition to those thus included in the redemption price, provided, however, that the corporation may pay in regular course any dividends thus included in the redemption price either to the holders of record on the record date fixed for the determination of stockholders entitled to receive such dividends (in which event anything to the contrary notwithstanding, the amount so deposited need not include any dividends so paid or to be paid) or as a part of the redemption price upon surrender of the certificates for the shares redeemed. At any time on or after the date fixed as aforesaid for such redemption or, if the corporation shall elect to deposit the moneys for such redemption as herein provided, then at any time on or after the date of deposit, and without awaiting the date fixed as aforesaid for such redemption, the respective holders of record of the Preferred Stock to be redeemed shall be entitled to receive the redemption price upon actual delivery to the corporation, or, in the event of such deposit, to the bank or trust company with which such deposit shall be made, of certificates for the shares to be redeemed, such certificates, if required, to be properly stamped for transfer and duly endorsed in blank or accompanied by proper instruments of assignment and transfer thereof duly executed in blank. Any funds deposited as aforesaid which shall not be required for such redemption, because of the exercise of any right of conversion or otherwise subsequent to the date of such deposit, shall be returned to the corporation forthwith. Any moneys so deposited which shall remain unclaimed by the holders of such Preferred Stock at the end of four years after the redemption date shall be paid by such bank or trust company to the corporation, after which such holders shall be deemed to be unsecured creditors of the corporation for a period of two years (after which all rights of such holders as unsecured creditors or otherwise shall cease) and any interest accrued on moneys so deposited shall belong to the corporation and shall be paid to it from time to time. Preferred stock redeemed pursuant to the provisions of this paragraph (g) shall be canceled and shall thereafter have the status of authorized and unissued shares of Preferred Stock. (h) The term "date of cumulation" as used with reference to any series of Preferred Stock shall be deemed to mean the date fixed by the Board of Directors as the date of cumulation of such series at the time of the creation thereof or, if no date shall have been so fixed, the date on which shares of such series are first issued. Whenever used with reference to any share of any series of Preferred Stock, the term "full cumulative dividends" shall be deemed to mean (whether or not in any dividend period, or any part thereof, in respect of which such term is used there shall have been net profits or net assets of the corporation legally available for the payment of such dividends) that amount which shall be equal to dividends at the full rate fixed for such series as provided in paragraph (b) of this Article III for the period of time elapsed from the date of cumulation of such series to the date as of which full cumulative dividends are to be computed (including an amount equal to the dividend at such rate for any fraction of a dividend period included in such period of time); and the term "accrued dividends" shall be deemed to mean full cumulative dividends to the date as of which accrued dividends are to be computed, less the amount of all dividends paid, or deemed paid as hereinafter in this paragraph (h) provided, upon said share. In the event of the issue of additional shares of Preferred Stock of any series after the original issue of shares of Preferred Stock of such series, all dividends paid or accrued on Preferred Stock of such series prior to the date of issue of such additional Preferred Stock shall be deemed to have been paid on the additional Preferred Stock so issued. (i) Subject to the provisions of these Articles of Incorporation and except as otherwise provided by law, the shares of stock of the corporation, regardless of class, may be issued for such consideration and for such corporation purposes as the Board of Directors may from time to time determine. (j) Except as otherwise provided by law or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of shares of Preferred Stock, as such holders, shall not have any right to vote, and are hereby specifically excluded from the right to vote, in the election of directors or for any other purpose. Except when entitled to vote as aforesaid, the holders of Preferred Stock, as such holders, shall not be entitled to notice of any meeting of stockholders. (k) Subject to the provisions of any applicable law, or of the By-Laws of the corporation as from time to time amended, with respect to the closing of the transfer books or the fixing of a record date for the determination of stockholders entitled to vote and except as otherwise provided by law, or by these Articles of Incorporation or by the resolution or resolutions providing for the issue of any series of Preferred Stock, the holders of outstanding shares of Common Stock shall exclusively possess voting power for the election of directors and for all other purposes, each holder of record of shares of Common Stock being entitled to one vote for each share of Common Stock standing in his name on the books of the corporation. (l) Anything in this Article III to the contrary notwithstanding, dividends upon shares of any class of stock of the corporation shall be payable only out of assets legally available for the payment of such dividends, and the rights of the holders of the Preferred Stock of all series and of the holders of the Common Stock in respect of dividends shall at all times be subject to the power of the Board of Directors, which is hereby expressly vested in said Board, from time to time to set aside such reserves and to make such other provisions, if any, as said Board shall deem to be necessary or advisable, respecting the amount of working capital to be maintained. ARTICLE IV No holder of stock of the corporation of any class shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of stock, or securities convertible into stock, of any class whatsoever, whether now or hereafter authorized, and all such additional shares of stock or other securities convertible into stock may be issued and disposed of by the Board of Directors to such person or persons and on such terms and for such consideration (so far as may be permitted by law) as the Board of Directors, in their absolute discretion, may deem advisable. ARTICLE V The number and class of shares to be issued before the corporation shall commence business is Fifty (50) shares of common stock with a par value of Ten Dollars ($10) per share. The consideration to be paid therefor and the capital with which the corporation shall commence business is Five Hundred Dollars ($500). The corporation will not commence business until consideration of the value of at least Five Hundred Dollars has been received for the issuance of shares. ARTICLE VI The names and places of residence of the incorporators are as follows Name Residence James M. Kemper, Jr. 6612 Wyoming Kansas City, Missouri P. V. Miller, Jr. 2001 West 61st Terr. Shawnee Mission, Kansas T. Alan Peschka 5744 Grand Kansas City, Missouri ARTICLE VII The number of directors constituting the first board of directors of the corporation was three (3) and the number constituting the board at the time of the effectiveness of this amendment is twelve (12). The number of directors to constitute subsequent boards of directors shall be fixed by, or in the manner provided in, the By-Laws of the corporation. Any changes in the number of directors shall be reported to the Secretary of State of the State of Missouri within thirty (30) calendar days of such change. Unless the By-Laws otherwise provide, the directors shall be classified with respect to the time for which they shall severally hold office by dividing them into three classes, each consisting of one-third of the whole number of the board of directors, and all directors of the corporation shall hold office until their successors are elected and qualified. At the meeting held for the election of the first board, the directors of the first class should be elected for a term of one year; the directors of the second class for a term of two years; and the directors of the third class for a term of three years; and at each annual election the successors to the class of directors whose terms shall expire that year shall be elected to hold office for the term of three years, so that the term of office of one class of directors shall expire in each year. Notwithstanding any other provisions of these Articles of Incorporation and notwithstanding the fact that some lesser percentage may be specified by law, the entire Board of Directors of the Corporation may be removed at any time but only by the affirmative vote of the holders of 80% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) at a meeting of the shareholders called for that purpose. ARTICLE VIII The duration of the corporation is perpetual. ARTICLE IX The corporation is formed for the following purposes: (a) To purchase, subscribe for or otherwise acquire and own, hold as an investment or otherwise, use, sell, assign, deal in, transfer, mortgage, pledge, exchange or otherwise dispose of, alone or in syndicates or otherwise in conjunction with others, shares of capital stock, bonds, debentures, notes, evidences of indebtedness and other securities, contracts or obligations of any corporation, association, partnership, entity, or governmental, municipal or public authority, domestic or foreign, and to pay therefor in whole or in part, in cash or by exchanging therefor shares of the capital stock, bonds, debentures, debenture stock, notes or other obligations of this corporation or any other corporation, and while the owner or holder of any such property to receive, collect and dispose of the interest, dividends and income arising from such property, and to possess and exercise in respect thereof all the rights, powers and privileges of ownership, including all voting powers of any securities so owned; (b) To purchase or otherwise acquire the whole or any part of the property, assets, business, goodwill or rights and to undertake or assume the whole or any part of the bonds, mortgages, franchises, leases, contracts, indebtedness, guaranties, liabilities and obligations of any person, firm, association, corporation or organization, and to pay for the same or any part or combination thereof in cash, shares of the capital stock, bonds, debentures, debenture stock, notes, and other obligations of this corporation or otherwise, or by undertaking and assuming the whole or any part of the liabilities or obligations of the transferor; and to hold or in any manner dispose of the whole or any part of the property and assets so acquired or purchased, and to conduct in any lawful manner the whole or any part of the business so acquired and to exercise all the powers necessary or convenient in and about the conduct, management and carrying on of such business; (c) To purchase or otherwise acquire, hold, sell, pledge, transfer or otherwise dispose of, and to reissue or cancel the shares of its own capital stock or any securities or other obligations of this corporation; (d) To promote or assist financially, by loan, subsidy, guaranty, contribution to capital or surplus, or otherwise, corporations, syndicates, partnerships, individuals or associations of all kinds, foreign or domestic, and in connection therewith to execute mortgages, deeds of trust, other forms of encumbrances, contracts and other types of written instruments; (e) To purchase or otherwise acquire and own, hold, lease, develop, sell, exchange, or otherwise use, deal in or dispose of, mortgage or otherwise encumber, real property or any interest therein, and to purchase or otherwise acquire and own, hold, build, construct, erect, manage, operate, repair, restore, and to dispose of by sale, lease, mortgage or otherwise, buildings and structures of all types; (f) To purchase or otherwise acquire and own, hold, lease, sell or otherwise use, deal in or dispose of, mortgage or otherwise encumber personal property of every kind and description or any interest therein, and to operate, manage and maintain the same; (g) To acquire, own, hold, buy sell, transfer and otherwise dispose of patents and patent rights, trademarks and trade names, copyrights, licenses, franchises, permits and other evidences of right; (h) In general to carry on any other lawful business whatsoever in connection with the foregoing or which is calculated, directly or indirectly, to promote the interest of the corporation or to enhance the value of its properties; (i) To have and to exercise all powers necessary or incident to carrying out its corporate purposes, to exercise all other powers permitted by law, and to possess and enjoy all rights and powers which now or at any time hereafter may be granted to or exercised by a corporation of this character. ARTICLE X The board of directors shall have the power to make, alter, amend or repeal the By-Laws of the corporation from time to time. ARTICLE XI The corporation reserves the right to amend, alter, change or repeal any provisions contained in these Articles of Incorporation in the manner now or hereafter prescribed by law, and all rights conferred upon shareholders herein are granted subject to this reservation: ARTICLE XII The affirmative vote of the holders of not less than 75 percent of the outstanding shares of "Voting Stock" (as hereinafter defined) of the corporation and the affirmative vote of the holders of not less than 67 percent of the outstanding shares of Voting Stock held by stockholders other than a "Related Person" (as hereinafter defined) shall be required for the approval or authorization of any "Business Combination" (as hereinafter defined) of the corporation with any Related Person; provided however, that the 75 percent and 67 percent voting requirements shall not be applicable if: (1) The "Continuing Directors" of the corporation (as hereinafter defined) by a two-thirds vote (a) have expressly approved in advance the acquisition of outstanding shares of Voting Stock of the corporation that caused the Related Person to become a Related Person, or (b) have approved the Business Combination prior to the Related Person involved in the Business Combination having become a Related Person; (2) The Business Combination is solely between the corporation and another corporation, 100 percent of the Voting Stock of which is owned directly or indirectly by the corporation; or (3) The Business Combination is a merger or consolidation and the cash or fair market value of the property, securities or other consideration to be received per share by holders of common stock of the corporation in the Business Combination is not less than the highest per share price (with appropriate adjustments for recapitalizations and for stock splits, stock dividends and like distributions), paid by the Related Person in acquiring any of its holdings of the corporation's common stock. For the purposes of this Article Twelfth: (i) The term "Business Combination" shall mean (a) any merger or consolidation of the corporation or a subsidiary with or into a Related Person, (b) any sale, lease, exchange, transfer or other disposition, including without limitation a mortgage or any other security device, of all or any "Substantial Part" (as hereinafter defined) of the assets either of the corporation (including without limitation any voting securities of a subsidiary) or of a subsidiary, to a Related Person, (c) any merger or consolidation of a Related Person with or into the corporation or a subsidiary of the corporation, (d) any sale, lease, exchange, transfer or other disposition of all or any Substantial Part of the assets of a Related Person to the corporation or a subsidiary of the corporation, (e) the issuance of any securities of the corporation or a subsidiary of the corporation to a Related Person, (f) any recapitalization that would have the effect of increasing the voting power of a Related Person, and (g) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Combination. (ii) The term "Related Person" shall mean and include any individual corporation, partnership or other person or entity which, together with its "Affiliates" and "Associates" (as defined on February 1, 1983 at Rule 12b-2 under the Securities Exchange Act of 1934), "Beneficially Owns" (as defined on February 1, 1983 at Rule 13d-3 under the Securities Exchange Act of 1934) in the aggregate 20 percent or more of the outstanding Voting Stock of the corporation, and any Affiliate or Associate of any such individual corporation, partnership or other person or entity. (iii) The term "Substantial Part" shall mean more than 30 percent of the fair market value of the total assets of the corporation in question, as of the end of its most recent fiscal year ending prior to the time the determination is being made. (iv) Without limitation, any shares of common stock of the corporation that any Related Person has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants, or options, or otherwise, shall be deemed beneficially owned by the Related Person. (v) For the purposes of subparagraph (3) of this Article XII, the term "other consideration to be received" shall include, without limitation, common stock of the corporation retained by its existing public stockholders in the event of a Business Combination in which the corporation is the surviving corporation. (vi) The term "Voting Stock" shall mean all outstanding shares of capital stock of the corporation or another corporation entitled to vote generally in the election of directors and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares. (vii) The term "Continuing Director" shall mean a Director who was a member of the Board of Directors of the corporation immediately prior to the time that the Related Person involved in a Business Combination became a Related Person. ARTICLE XIII The provisions set forth at this ARTICLE XIII and at ARTICLES VII, XI, and XII herein may not be repealed or amended in any respect, unless such action is approved by the affirmative vote of the holders of not less than 75 percent of the outstanding shares of Voting Stock (as defined in ARTICLE XII) of the corporation; provided, however, that if there is a Related Person (as defined in ARTICLE XII), such action must also be approved by the affirmative vote of the holders of not less than 67 percent of the outstanding shares of Voting Stock held by stockholders other than the Related Person. FIRST AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COMMERCE BANCSHARES, INC. A Missouri Corporation (As of April 15, 1987) __________________________________________ The first paragraph of Article III is amended to read as follows: The total number of shares of all classes of stock which the corporation shall have the authority to issue is 26,000,000 shares, consisting of (i) 2,000,000 shares of Preferred Stock of the par value of $1 per share, and (ii) 24,000,000 shares of Common Stock of the par value of $5 per share. SECOND AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COMMERCE BANCSHARES, INC. A Missouri Corporation (As of January 26, 1990) __________________________________________ The first paragraph of Article III is amended to read as follows: The total number of shares of all classes of stock which the corporation shall have the authority to issue is 42,000,000 shares, consisting of (i) 2,000,000 shares of Preferred Stock of the par value of $1 per share, and (ii) 40,000,000 shares of Common Stock of the par value of $5 per share. THIRD AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COMMERCE BANCSHARES, INC. A Missouri Corporation (As of May 12, 1993) __________________________________________ The first paragraph of Article III is amended to read as follows: The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 62,000,000 shares, consisting of (i) 2,000,000 shares of Preferred Stock of the par value of $1 per share, and (ii) 60,000,000 shares of Common Stock of the par value of $5 per share. FOURTH AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COMMERCE BANCSHARES, INC. A Missouri Corporation (As of April 17, 1996) __________________________________________ The first paragraph of Article III is amended to read as follows: The total number of shares of all classes of stock which the Corporation shall have the authority to issue is 82,000,000 shares, consisting of (i) 2,000,000 shares of Preferred Stock of the par value of $1 per share, and (ii) 80,000,000 shares of Common Stock of the par value of $5 per share. EX-3 3 RESTATED BY-LAWS Exhibit 3(b) COMMERCE BANCSHARES, INC. BY-LAWS (CURRENTLY IN EFFECT; LAST AMENDED JUNE 7, 1996) COMMERCE BANCSHARES, INC. BY-LAWS (CURRENTLY IN EFFECT; LAST AMENDED JUNE 7, 1996) ARTICLE I LOCATION OF OFFICES SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation shall be located in Kansas City, Jackson County, Missouri, or at such other place as may be designated from time to time by the Board of Directors. SECTION 2. OTHER OFFICES. The Corporation may have offices at such other place or places, either within or without the State of Missouri, as the Board of Directors may from time to time designate. ARTICLE II MEETING OF STOCKHOLDERS SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders shall be held at the principal office of the Corporation, or at such other place as shall be designated in the notice thereof, at ten o'clock a.m. on the third Wednesday in April in each year, or if that be a legal holiday, on the next succeeding day not a legal holiday, for the purpose of electing a Board of Directors and transacting such other business as may come before the meeting. SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders may be called at any time by the Chairman of the Board, or in case of the absence or disability of the Chairman of the Board, by any Vice Chairman, if one be so elected, or by the President, or at any time upon the written request of a majority of the Board of Directors. Each call for a special meeting of the stockholders shall state the time, the day, the place and the purpose of such meeting and shall be in writing, signed by the persons making the same and delivered to the Secretary. No business shall be transacted at a special meeting other than such as is included in the purposes stated in the call. SECTION 3. NOTICE OF MEETINGS. Written or printed notice of each meeting of the stockholders stating the hour and day when, and the place where such meeting is to be held shall be served as hereinafter provided on each stockholder entitled to vote thereat not less than ten (10) days or more than seventy (70) days before such meeting, except that further notice shall be given of particular matters if required by law. In the case of the annual meetings the notice shall state that the purposes thereof are the election of a Board of Directors and the transaction of such other business as may come before the meeting. In the case of a special meeting such notice shall state the purpose or purposes for which the meeting is called. Service of such notice shall be made either personally or by depositing the same in a sealed envelope addressed to the stockholder at his address as it appears upon the records of the Corporation, and deposited in a United States Post Office, with the postage thereon prepaid. If such notice is served by mailing the same, it shall be deemed to have been given at the time when the same shall be thus mailed. If any stockholder shall not have an address appearing upon the books of the Corporation, such notice may be given by mailing the same as heretofore provided, addressed to such stockholder at the General Post Office in Kansas City, Missouri. Service of such notice shall be made by the Secretary, but in case the Secretary shall refuse or neglect to serve such notice upon each stockholder as herein provided, then such service may be made by any officer or director of the Corporation. In addition, such published notice shall be given as required by law. SECTION 4. WAIVER OF NOTICE. Any stockholder may waive notice of any meeting of the stockholders, by a writing signed by him, or by his duly authorized attorney, either before or after the time of such meeting. A copy of such waiver shall be entered in the minutes, and shall be deemed to be the notice required by him or by these By-Laws. Any stockholder present in person, or represented by proxy, at any meeting of the stockholders shall be deemed to have thereby waived notice of such meeting except where such attendance is for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. SECTION 5. MEETINGS MAY BE HELD BY CONSENT. Whenever all stockholders entitled to vote consent, by a writing filed with the Secretary, any action to be taken at a meeting of stockholders may be taken without a meeting, and any action so taken shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business, including the election of directors, may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time. If any meeting of the stockholders be irregular for want of notice, or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid, and the irregularity or defect therein waived, by a writing signed by all persons having the right to vote at such meeting. Such consent or ratification and approval may be by proxy or attorney, but all such proxies and powers of attorney must be in writing and delivered to the Secretary. SECTION 6. LIST OF STOCKHOLDERS. At least ten days before each meeting of stockholders the Secretary shall cause to be prepared a complete list of the names and addresses of all stockholders entitled to vote at such meeting, arranged in alphabetical order, with the number of shares held by each, and such list shall be produced and kept at the registered Missouri office and shall be subject to inspection by any stockholder during regular business hours. Such list shall also be produced and kept open at the meeting and shall be subject to inspection by any stockholder during the meeting. The provisions of this Section shall not apply to a special meeting held by consent pursuant to Section 5 of this Article of the By-Laws. SECTION 7. QUORUM. At any meeting of the stockholders, a majority of the outstanding capital stock entitled to vote at such meeting, being represented in person or by proxy, shall constitute a quorum for all purposes, including the election of directors, except where it is otherwise provided by law. SECTION 8. ORGANIZATION. The Chairman of the Board, and in his absence, any Vice Chairman, if one be so elected, or the President, shall preside at each meeting of the stockholders and shall act as chairman thereof. The Secretary shall act as secretary of all meetings of the stockholders. SECTION 9. VOTING. At each meeting of the stockholders, each stockholder shall be entitled to vote in person, or by proxy held by some person or persons present at such meeting, and made in accordance with the provisions of the By-Laws of the Corporation, and upon all matters shall have one vote for each share of stock standing in his name on the books of the Corporation on the record date determined as provided in Section 6 of ARTICLE VII of the By-Laws. All questions, except any question the manner of deciding which is specially regulated by law, shall be determined by a majority of the outstanding shares of capital stock represented at each meeting. If voting shall be by ballot for the election of directors or other questions, the Chairman of such meeting of the stockholders may appoint not less than two (2) persons, who are not directors, to act as Inspectors of Election and to receive and canvass the votes cast at such meeting and certify the results to the Chairman. Each such Inspector, before entering upon the discharge of his duties, shall take and subscribe the following oath: "I do solemnly swear that I will execute the duties of an inspector of the election now to be held, with strict impartiality and according to the best of my ability." The Inspectors of Election shall take charge of the polls and after the balloting shall make and file a written certificate of the result of the votes cast at the meeting. SECTION 10. ADJOURNMENT. If, at any meeting of the stockholders, a quorum shall fail to attend at the time and place for which such meeting was called, or if the business of such meeting shall not be completed, the stockholders present in person or represented by proxy may, by a majority vote, adjourn the meeting from day to day, or from time to time, not exceeding ninety (90) days from such adjournment, without further notice, until a quorum shall attend or the business thereof shall be completed. Such adjournment and the reasons therefor shall be recorded in the minutes. At any such adjournment meeting, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 11. PROXIES. Every proxy must be in writing, signed by the stockholder himself or by his duly authorized attorney or by his legal representative, and must be filed with the Secretary of the Corporation at or before the roll call at the meeting at which the same is to be used, and unless so signed and filed it cannot be used at such meeting. Any proxy may be revoked at the pleasure of the person executing it, by a writing similarly signed and filed, unless such person shall have specified therein that it is irrevocable. No proxy shall be valid after the expiration of eleven (11) months from its date, unless the person executing it shall have specified therein the length of time for which such proxy is to continue in force. In the event that such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one, shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated, unless the instrument shall otherwise provide. SECTION 12. ADVANCE NOTIFICATION OF BUSINESS TO BE TRANSACTED AT ANNUAL MEETINGS. No business may be transacted at an Annual Meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the Annual Meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the Annual Meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 12 and on the record date for the determination of stockholders entitled to vote at such Annual Meeting, and (ii) who complies with the notice procedures set forth in this Section 12. In addition to any other applicable requirements, for business to be properly brought before an Annual Meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty days nor more than ninety days prior to the date of the Annual Meeting; provided, however, that in the event that less than seventy days' notice or prior public disclosure of the date of the Annual Meeting is given or made to stockholders, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the Annual Meeting (i) a brief description of the business desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, and (v) a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to bring such business before the meeting. No business shall be conducted at the Annual Meeting of stockholders, except business brought before the Annual Meeting in accordance with the procedures set forth in this Section 12; provided, however, that once business has been properly brought before the Annual Meeting in accordance with such procedures, nothing in this Section 12 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an Annual Meeting determines that business was not properly brought before the Annual Meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. SECTION 13. CONDUCT OF MEETINGS. The board of directors of the Corporation may adopt by resolution such rules or regulations for the conduct of meetings of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the board of directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the board of directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (1) the establishment of an agenda or order of business for the meeting, (2) rules and procedures for maintaining order at the meeting and the safety of those present, (3) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman shall permit, (4) restrictions on entry to the meeting after the time fixed for the commencement thereof and (5) limitations on the time allotted to questions or comments by participants. Unless, and to the extent determined by the board of directors or the chairman of the meeting, meetings of the stockholders shall not be required to be held in accordance with rules of parliamentary procedure. ARTICLE III DIRECTORS SECTION 1. NUMBER AND QUALIFICATION. The corporate powers, business and property of the Corporation shall be exercised, conducted and controlled by a board of directors consisting of twelve (12) persons, except that the board of directors may, from time to time, increase or decrease the number of persons constituting the board provided that the board shall at all times consist of at least three (3) persons. SECTION 2. ELECTION AND TERM OF OFFICE. The directors shall be classified with respect to the time for which they shall severally hold office by dividing them into three classes, each as nearly equal in number as possible. At the meeting held for the election of the first board, the directors of the first class should be elected for a term of one year; the directors of the second class for a term of two years; and the directors of the third class for a term of three years; and at each annual election the successors to the class of directors whose terms shall expire that year shall be elected to hold office for the term of three years, so that the term of office of one class of directors shall expire in each year. All directors of the Corporation whose terms shall have expired shall hold office until their successors are elected and qualified or until there is a decrease in the number of directors. Each stockholder, in person or by proxy, shall be entitled to cast one vote for each share of stock standing in his name on the books of the Corporation on the record date for each director without cumulative voting. Each director of this Corporation upon attaining the age of 70 years, shall be deemed to have submitted his resignation as a director of this Corporation to be effective on the day such director attains the age of 70 years; provided, however, that a director who is also an officer of this Corporation, or an officer of any other corporation in which this Corporation owns capital stock (subsidiary), shall resign as a director of this Corporation on the date he retires or resigns as an officer from the last of such corporations except that, for the purposes of this Section only, a director serving as Chairman of the Board of this Corporation shall not be deemed to be an officer of this Corporation; and, provided further, that without establishing any precedent and because of the unique position of James M. Kemper, Jr. as a substantial stockholder of this Corporation and having served as the Chairman thereof from inception, James M. Kemper, Jr. may continue to serve as a director of this Corporation after attaining the age of 70 and may thereafter be elected to serve as a director of this Corporation. The continuation as a director or the election or reelection of a director, by mistake or otherwise, in violation of the aforesaid policy, shall not, ipso facto, void such continuation, election or reelection, or nullify any actions so taken by such person as a director. SECTION 3. VACANCIES. In case of increase in the number of directors or vacancy occurring on the Board of Directors through death, resignation, disqualification, or disability, any such increase or vacancy may be filled by vote of a majority of the surviving or remaining directors then in office. Such director as may be elected by the Board of Directors to fill a vacancy shall hold office for the unexpired portion of the term of the director whose place shall be vacated. Directorships created as a result of an increase in number of directors shall be allocated among the classes of directors so that no one class shall have more than one director more than any other class and, to the extent possible, any newly created directorships shall be added to the class or classes the terms of office of which are to expire at the earliest date or dates following such allocation. Directors elected under this Section 3 shall hold office until their successors are elected and qualified or until there is a decrease in the number of directors. SECTION 4. ANNUAL MEETING. The annual meeting of the directors, for the purpose of electing officers and transacting such other business as may come before the meeting shall be held in conjunction with the first regular meeting of the Board of Directors next occurring after the annual meeting of stockholders shall be finally adjourned. SECTION 5. REGULAR MEETINGS OTHER THAN ANNUAL MEETINGS. Regular meetings of the directors may be held at such time and place as shall be determined from time to time by resolution of the Board of Directors. After the time and place of such regular meetings shall have been so determined, no notice of such regular meetings need be given. SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors for any purpose or purposes shall be called by the Secretary of the Corporation at the written request of the Chairman of the Board, or the Vice Chairman, if one be so elected, or the President, or at the written request of a majority of the directors. Such request shall state the purpose or purposes of the proposed meeting. SECTION 7. NOTICE OF MEETINGS. No notice shall be required to be given of any regular meeting of the Board of Directors. Notice of any change in the place of holding any regular meeting, or of any adjournment of a regular meeting to reconvene at a different place, shall be given by mail or telegraph not less than forty-eight (48) hours before such meeting to all directors who were absent at the time such action was taken. The Secretary of the Corporation shall give notice of all special meetings of the directors by delivering to each director in person not later than the day prior to the meeting, or as to any such director not so personally notified by mailing to him, a written or printed notice of such meeting, postage prepaid, or by telegraph or by messenger delivery to each such director, at his last known address, so that in the ordinary course of the method of delivery it would reach such director at least on the day prior to the meeting. The business transacted at all special meetings of directors shall be confined to the subjects stated in the notice and to matters germane thereto, unless all directors of the Corporation are present at such meeting and consent to the transaction of other business. SECTION 8. MEETINGS MAY BE HELD BY CONSENT. Whenever all persons entitled to vote at any meeting of the directors consent, either by a writing on the records of the meeting, or filed with the Secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the doings of such meeting shall be as valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent, or to the consideration of which no objection for want of notice is made at the time. If any meeting of the directors be irregular for want of notice, or of such consent, provided a quorum was present at such meeting, the proceedings of such meeting may be ratified and approved and rendered likewise valid, and the irregularity or defect therein waived, by a writing signed by all persons having the right to vote at such meeting. Whenever any notice is required to be given to any director under any provisions of the By-Laws, a waiver thereof in writing, signed by the person entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. SECTION 9. QUORUM. A majority of the Board of Directors of the Corporation, at a meeting duly assembled, shall be necessary to constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, except where otherwise provided by law or by the By-Laws of the Corporation. SECTION 10. ADJOURNMENT. If at any meeting of the Board of Directors a quorum shall fail to attend, a majority of the directors present at the time and place appointed for such meeting may adjourn the meeting from time to time to any date until the next regular meeting, without notice other than verbal announcement at the meeting and adjournments thereof, until a quorum shall attend. Likewise, any meeting of directors at which a quorum is present may also be adjourned, in like manner and on like notice, for such time or upon such call as may be determined by vote of a majority of the directors there present. At any adjournment of any such meeting, at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally called. SECTION 11. ORGANIZATION. The Chairman of the Board, and in his absence, any Vice Chairman, if one be so elected, and in the absence of both, a Chairman pro tem, chosen by the directors present shall preside at each meeting of the directors and shall act as chairman thereof. The Secretary, and in the absence of the Secretary or any Assistant Secretary, a Secretary pro tem, chosen by the directors present, shall act as secretary of all meetings of the directors. SECTION 12. RULES AND REGULATIONS. The Board of Directors shall supervise all officers and agents and see that their duties are property performed. The Board of Directors may adopt such rules and regulations for the conduct of their meetings, the guidance of the officers and the management of the affairs of the Corporation as they deem proper, not inconsistent with law or the By-Laws of the Corporation, and may, from time to time, determine the order of business at their meetings. SECTION 13. MINUTES AND STATEMENTS. The Board of Directors shall cause to be kept a complete record of their meetings and acts, and of the proceedings of the stockholders. SECTION 14. POWERS OF THE BOARD. In addition to the power and authority conferred upon them by law, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law prohibited or limited, and which are not required or directed to be exercised or done by the stockholders or by their consent and authority first specifi- cally given and evidenced in writing. SECTION 15. COMPENSATION OF DIRECTORS. The compensation to be paid the directors of this Corporation for services at all regular or special meetings of the Board of Directors shall be determined from time to time by the Board of Directors; provided, that no such compensation shall be paid to any director who shall at the time be receiving a salary from this Corporation or any of its subsidiaries as an officer thereof. SECTION 16. NOMINATION OF DIRECTORS. Nominations of persons for election to the Board of Directors may be made at any Annual Meeting of stockholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 16 and on the record date for the determination of stockholders entitled to vote at such Annual Meeting and (ii) who complies with the notice procedures set forth in this Section 16. Persons nominated by a stockholder of the Corporation shall only be eligible for election as directors of the Corporation if such persons are nominated in accordance with the following procedures. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty days nor more than ninety days prior to the date of the Annual Meeting; provided, however, that in the event that less than seventy days' notice or prior public disclosure of the date of the Annual Meeting is given or made to stockholders, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the Annual Meeting was mailed or such public disclosure of the date of the Annual Meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"); and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act. Such notice must be accompanied by a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected. No person nominated by a stockholder of the Corporation shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 16. If the Chairman of the Annual Meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. ARTICLE IV COMMITTEES SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may, by resolution passed by a majority of the total number of directors, designate an Executive Committee to consist of the Chairman of the Board, the President, and such number of other directors as they shall determine. The members of the Executive Committee shall hold their office as such until the membership is changed by the Board of Directors. In making such new appointments the Board of Directors shall designate the directors said appointees are to succeed and the time they are respectively to serve on said Committee. The Executive Committee shall have and may exercise all powers of the Board of Directors. A majority of the members of the Executive Committee shall determine its action and shall fix the time and place of its meetings unless the Board of Directors shall otherwise provide. When regular meetings have been established no notice shall be required thereof and any and all business may be transacted thereat. Notices of special meetings shall be given in the same manner as is provided for special meetings of the Board of Directors. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting. A majority of the Executive Committee shall constitute a quorum. The Executive Committee shall keep regular minutes of its proceedings and shall report the same at the next succeeding meeting of the Board of Directors. SECTION 2. OTHER COMMITTEES. The Board of Directors may from time to time, designate such other committee or committees as the Board may deem advisable, and may select or designate the manner of selecting any such committee, which committee may consist in whole or in part of officers of this Corporation, whether or not they be directors thereof. Each such committee shall have and may exercise such powers as the Board of Directors shall provide by its resolution. SECTION 3. COMPENSATION OF COMMITTEE MEMBERS. The Board of Directors shall determine the compensation to be paid to each member of any committee appointed by it for service on such committee, provided that no such compensation shall be paid to any committee member who shall at the time be receiving a salary from this Corporation or any of its subsidiaries as an officer thereof. ARTICLE V OFFICERS SECTION 1. EXECUTIVE OFFICERS. The executive officers of this Corporation shall be a Chairman of the Board, one or more Vice Chairmen, a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Secretary, a Treasurer, a Controller and an Auditor, all of whom shall be elected by the Board of Directors. The Chairman of the Board and the President shall be chosen from among the directors; any person may hold two or more offices, except the offices of Chairman of the Board and Secretary, or President and Secretary. SECTION 2. SUBORDINATE OFFICERS. The President may appoint such other assistant officers as he may deem necessary from time to time, and such individuals so appointed by the President shall serve at the pleasure of the President and shall have such authority and shall perform such duties as the President from time to time may prescribe. SECTION 3. TENURE OF OFFICE AND REMOVAL. The tenure of office of each of the executive officers of the Corporation, subject to prior removal, shall be until the first meeting of the Board after the annual meeting of stockholders following such officer's election, and until the election of his successor. Any executive officer may be removed at any time prior to the expiration of his term by affirmative vote of the majority of the directors. The Board may delegate the power of removal of subordinate officers to any officer or committee. If the office of any officer of the Corporation becomes vacant by reason of death, resignation, retirement, disqualification or removal from office or inability to act, the Board of Directors may, in every such case, choose a successor for such officer who shall hold office for such term as may be prescribed by the Board of Directors but no longer than the unexpired portion of the term of the officer or agent whose place is vacant, and until his successor shall have been duly elected and qualified. SECTION 4. COMPENSATION. The Board of Directors shall from time to time in its discretion fix or alter the compensation of any officer. SECTION 5. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the chief executive officer and shall have and may exercise all of the powers of the President, whether the President be absent or not. The Chairman of the Board shall be a member of all standing and other committees appointed by the Board of Directors unless excused by the Board of Directors therefrom. SECTION 6. VICE CHAIRMAN OF THE BOARD. Any Vice Chairman of the Board shall have and may exercise in the absence of the Chairman of the Board all of the powers granted to the Chairman of the Board. In addition, any Vice Chairman may exercise all of the rights, powers and duties granted by the By-Laws of this Corporation to an Executive Vice President and shall perform such other duties as may be specifically designated by the Board of Directors through the Chairman of the Board. SECTION 7. THE PRESIDENT. The President shall see that all orders and resolutions of the stockholders and of the Board of Directors are carried into effect, subject, however, to the right of the Board of Directors, by resolution, to delegate any specific powers (other than those which may be by statute conferred exclusively upon the President) to any other officer, director or agent of the Corporation. He shall be a member of all standing and other committees appointed by the Board of Directors unless excused by the Board of Directors therefrom. He is also authorized and empowered to execute on behalf of the Corporation and to cause the seal thereof to be affixed to any and all deeds, mortgages, deeds of trust, bills of sale, security agreements, leases or other instruments conveying, encumbering or transferring any part of or the entire interest of the Corporation in and to any of its property, real, personal or mixed; also, any and all contracts, documents, acknowledgments of satisfaction, or releases of mortgages, judgments or other form of security creating instrument, or other instruments issued by the Corporation in the transaction of its business. He is also authorized and shall have full authority in behalf of the Corporation to attend and to act and to vote at any meeting of the stockholders of any corporation in which the Corporation may hold stock, and in connection with such meeting he shall possess and exercise in behalf of the Corporation any and all rights and powers incident to the ownership of such stock, including the power to sign proxies therefor. He shall perform such other duties and exercise such other powers not in conflict with the provisions of these By-Laws as the Board of Directors may from time to time prescribe. SECTION 8. VICE PRESIDENTS. The Executive Vice Presidents shall, in the order of precedence by date of election, whether the President be absent or present, have and exercise all of the rights, powers and duties of the President, and the signature and acknowledgment of an Executive Vice President to all official acts of the Corporation shall be valid and sufficient. The Senior Vice Presidents and the Vice Presidents shall perform such duties not inconsistent with these By-Laws as may be specifically designated by the President or the Board of Directors. SECTION 9. SECRETARY. The Secretary shall attend all meetings of the stockholders of the Corporation, and of the Board of Directors and standing committees. He shall act as the clerk or secretary thereof and shall record all of the proceedings of such meetings in minute books kept for that purpose. He shall keep in safe custody the corporate seal of the Corporation and is autho- rized to affix the same to all instruments requiring the Corporation's seal. He shall have charge of the corporate records, and, except to the extent authority may be conferred upon any transfer agent or registrar duly appointed by the Board of Directors, he shall maintain the Corporation's books, registers, stock certificate and stock transfer books and stock ledgers, and such other books, records and papers as the Board of Directors may from time to time entrust to him. He shall give or cause to be given proper notice of all meetings of stockholders and directors as required by law and the By-Laws, and shall perform such other duties as may from time to time be prescribed by the Board of Directors. SECTION 10. TREASURER. The Treasurer shall have the custody of the corporate funds and securities of the Corporation and shall keep full and accurate account of the receipts and disbursements in books belonging to the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the Corporation in the manner and for the purpose ordered by the Board of Directors, and shall render to the Board of Directors, whenever they may require it, an account of all of his transactions as Treasurer and of the financial condition of the Corporation. And he shall perform such other duties as the Board of Directors may from time to time prescribe. SECTION 11. OFFICERS' BONDS. The Board of Directors may require any officer or officers to furnish the Corporation a bond in such sum and in form and with security satisfactory to the Board of Directors for the faithful performance of the duties of their offices and the restoration to the Corporation, in case of death, resignation or removal from office of such officer or officers, of all books, papers, vouchers, money and other property of whatever kind in their possession, belonging to the Corporation. ARTICLE VI AGENTS AND ATTORNEYS The Chairman of the Board and the President, or either of them, may appoint such agents, attorneys and attorneys-in-fact of the Corporation as either may deem proper, and either may, by written power of attorney, authorize such agents, attorneys, or attorneys-in-fact, to represent the Corporation and for it and in its name, place and stead, and for its use and benefit to trans- act any and all business, to the extent authorized, which said Corporation is authorized to transact or do by its Articles of Incorporation, and in its name, place and stead, and as its corporate act and deed, to sign, acknowledge and execute any and all contracts and instruments, in writing, necessary or convenient in the transaction of such business as fully to all intents and purposes as said corporation might or could do if it acted by and through its regularly elected and qualified officers. ARTICLE VII CERTIFICATES OF STOCK AND TRANSFERS SECTION 1. FORMS AND EXECUTION OF CERTIFICATES. Each stockholder of the Corporation whose stock has been paid for in full shall be entitled to have a certificate or certificates, certifying the number of shares of stock of the Corporation owned by him. The certificates of stock shall be in such form as the Board of Directors shall determine. Each certificate shall be signed by the President, or a Vice President, and the Secretary or an Assistant Secretary, have affixed to it the seal of the Corporation, which seal may be facsimile, engraved or printed, and express on its face its number, date of issuance, the number of shares for which and the person to whom it is issued. If the Corporation has a registrar, a transfer agent or a transfer clerk who actually signs such certificates, the signatures of any of the officers above mentioned may be facsimile, engraved or printed. In case any such officer who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as if such officer were an officer at the date of its issue. SECTION 2. TRANSFER OF STOCK. Shares of stock, after certificates thereof have been issued, shall be transferrable only on the stock transfer books of the Corporation which shall be in the possession of the Secretary or of a transfer agent or clerk for the Corporation. No transfer shall be valid against the Corporation until the same is so entered upon its books and the old certificate is surrendered for cancellation. SECTION 3. OLD CERTIFICATES TO BE CANCELLED. No new certificates shall be issued for previously issued certificates until the former certificate or certificates for the shares represented thereby shall have been surrendered to and cancelled by the Secretary, by writing across the face thereof the word "Cancelled," with the date of cancellation; in case any certifi- cate shall be claimed to be lost or destroyed, no new or duplicate certificate shall be issued for the shares represented thereby, and no new certificate shall be issued upon a transfer of such shares, except pursuant to a judgment of a court of competent jurisdiction, duly given and made in accordance with the laws of the State of Missouri, or upon corporate surety bond or other indemnity in form and amount satisfactory to the Corporation being furnished to the Corporation. SECTION 4. TREASURY STOCK. All issued and outstanding stock of the Corporation that may be purchased or otherwise acquired by the Corporation shall be treasury stock, and shall be subject to disposal by action of the Board of Directors. Such stock shall neither vote nor participate in dividends while held by the Corporation. SECTION 5. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat the registered holder of any share or shares of stock whose name appears on its books as the owner or holder thereof as the absolute owner of all legal and equitable interest therein for all purposes and (except as may be otherwise provided by law) shall not be bound to recognize any equitable or other claim to or interest in such shares of stock on the part of any other person, regardless of whether or not it shall have actual or implied notice of such claim or interest. SECTION 6. CLOSING OF STOCK TRANSFER BOOKS--FIXING RECORD DATE. The Board of Directors shall have power to close the stock transfer books of the Corporation for a period not exceeding seventy (70) days preceding the date of any meeting of stockhold- ers, or the date for payment of any dividend, or the date for the allotment of rights, or the date when any change, conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding seventy (70) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, and any adjourn- ment thereof, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case such stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting, and any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. If the Board of Directors shall not have closed the transfer books or set a record date for the determination of its stockholders entitled to vote as herein provided, the date on which notice of the meeting is mailed or the date such dividend is declared or other right announced, as the case may be, shall be the record date for such determination of stockholders so entitled to participate. ARTICLE VIII SEAL The Corporation shall have a corporate seal which shall have inscribed around the circumference thereof "Commerce Bancshares, Inc., Kansas City, Missouri," and elsewhere thereon shall bear the words "Corporate Seal." The corporate seal may be affixed by impression or may be facsimile, engraved or printed. ARTICLE IX MISCELLANEOUS PROVISIONS SECTION 1. FISCAL YEAR. The fiscal year of the Corporation shall begin on the first day of January in each calendar year and shall terminate on the last day of December of the same calendar year. SECTION 2. FAILURE OR REFUSAL TO GIVE NOTICE UPON REQUEST. If the Secretary, upon written request by the proper party or parties as permitted and provided in these By-Laws, shall fail or refuse to give any notice which he is required to give in accor- dance with the provisions hereof, the party or parties entitled to require that such notice be given may sign and issue a notice of the character and in the manner herein provided and setting forth in such notice the fact of such failure or refusal on the part of the Secretary to give the notice as requested; and such notice so signed and issued shall have the same force and effect as though signed and issued by the Secretary of the Corporation. SECTION 3. CHECKS, DRAFTS, ETC. All checks and drafts on the Corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, shall be signed by such officer or officers or agent or agents as shall be thereunto duly authorized from time to time by the Board of Directors; provided, that the Board of Directors may authorize the use of facsimile signatures of such officers and upon such terms and subject to such conditions as the Board of Directors may determine. SECTION 4. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Subject as hereinafter provided: (a) The Corporation, to the extent permitted by law, shall (1) Indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a director or officer of the Corporation or of another corporation included in a controlled group of corporations of which the Corporation is a common parent, or is or was serving at the request of the Corporation as a director or officer of another corporation or other enterprise not included in said group, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in or in connection with the adjudication, defense or disposition of such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation or of the other corporation he served as aforesaid, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful; (2) Indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a director or officer of the Corporation or of another corporation included in a controlled group of corporations of which the Corporation is a common parent, or is or was serving at the request of the Corporation as a director or officer of another corporation or other enterprise not included in said group, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in or in connection with the adjudication, defense or disposition of the action or suit if he acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation or of the other corporation he served as aforesaid and shall not have been adjudged in such action or suit to be liable for negligence or misconduct in the performance of his duty to the Corporation or such other corporation with respect to the matter involved unless and only to the extent that the court in which such action or suit was brought determines upon application that, despite the adjudica- tion of liability and in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnify to the extent the court shall deem proper. (b) The Corporation may purchase and maintain insurance on behalf of any person entitled to indemnification under this section against any liability asserted against him and expenses incurred by him in any such capacity, or arising out of his status as a director or officer, whether or not the Corporation would have the power to indemnify him against the liability so insured and, if the Corporation procures such insurance, (1) the insurer thereunder shall be entitled to receive from or on behalf of said person the notice and opportunity to defend hereinafter provided for the Corporation, (2) the Corporation shall be relieved from its obligation to indemnify said person under this section to the extent that indemnity is provided in such insurance, and (3) the insurer shall not under any circumstances have a right of action, by way of subrogation or otherwise, against said person, the Corporation or other corporation or other enterprise for whom said person served at the request of the Corporation; (c) For purposes of this section, the term "other enterprise" shall include employee benefit plans; the term "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and the term "serving at the request of the Corporation" shall include any service as a director or officer which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants, or beneficiaries; a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this section; and each of the terms "controlled group of corporations" and "common parent" shall have the same meaning herein as in the U.S. Internal Revenue Code; PROVIDED NEVERTHELESS THAT (i) Any person who serves as a director or officer of a corporation that at the time of such service is in a controlled group of corporations of which the Corporation is a common parent shall be deemed to serve at the request of the Corporation, but a person serving as a director or officer of a corporation that is not in such a controlled group shall not be entitled to indemnification under this section unless actually requested to serve in said capacity by the Corporation. (ii) The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful; (iii) No person shall be entitled to indemnification under this section (A) Unless he notifies the Corporation of the threatened, pending or completed action, suit, proceeding or investigation promptly on becoming aware thereof and, before incurring expense of any kind therein or in connection therewith, gives the Corporation or its insurer the opportunity to provide an independent attorney to represent him in, and to otherwise counsel him in connection with, any such action, suit, proceeding or investigation, or (B) For or with respect to any amount paid to settle a claim asserted or action, suit or proceeding brought or threatened against him unless the Corporation's board of directors (1) approved the amount of such settlement as reasonable, or (2) upon failing so to approve the same, refused to confirm its obligation to satisfy any larger amount adjudged against him on said claim, action, suit or proceeding and the additional expenses incurred in the defense thereof, or (3) could not, by reason of the action, intervention or threat of a court, government agency or instrumentality, act with complete independence and free of circumscription in relation to the subject matter, or (C) For or with respect to any claim made against him (1) for libel or slander, (2) for an accounting of profits made from the purchase or sale by him of securities of the Corporation or of another corporation in the controlled group of corporations of which the Corporation is a common parent within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any statutory law or common law, or (3) based on or attributable to personal injury or bodily injury, sickness, disease or death or damage to, destruction of, or loss of use of property; (iv) Expenses incurred by a director or officer or a former director or officer in connection with a civil or criminal action, suit, proceeding or investigation shall be paid by the Corporation in advance of the final termination of the action, suit, proceeding or investigation in the specific case upon receipt of an undertaking by or on behalf of said person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in this section; (v) The indemnification provided by this section shall be in addition to any other rights to which a director or officer or former director or officer otherwise covered by this section may be entitled by law or under any agreement or vote of shareholders or disinterested directors, both as to action in such person's official capacity and as to action in another capacity while holding such office, shall continue as to a person who has ceased to be a director or officer of the Corporation or of another corporation or other enterprise encompassed by this section and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 5. AMENDMENTS TO BY-LAWS. The Board of Directors shall have the power to make, alter, amend or repeal the By-Laws of this Corporation from time to time. SECTION 6. CONTROL SHARE ACQUISITIONS. The provisions of Section 351.407 of the Missouri Revised Statutes (the "Control Share Act") shall not apply to any control share acquisitions of shares of the Corporation within the meaning of the Control Share Act. SECTION 7. GENDER. As used herein, the masculine pronoun shall include the feminine gender. EX-27 4 FINANCIAL DATA SCHEDULE
9 This schedule contains summary financial information extracted from Commerce Bancshares, Inc. 6/30/96 Form 10-Q and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1996 JUN-30-1996 654,830 0 378,295 13,956 2,652,762 0 0 5,269,915 98,667 9,322,969 7,948,513 436,997 50,905 14,344 0 0 187,827 684,383 9,322,969 229,426 78,207 13,946 321,780 131,047 142,351 179,429 10,981 1,914 157,573 86,331 56,201 0 0 56,201 1.53 0 4.35 17,100 16,862 0 0 98,537 14,597 3,746 98,667 98,667 0 0 Certificates of deposit of $348,000 are included in Investments- Held-For-Sale. Excludes non-marketable investment securities of $32,915,000. Gross of allowance for loan losses. Excludes interest of $201,000 on trading account securities. Yield is computed on a tax equivalent basis.
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