Commerce Bancshares, Inc. Reports Earnings Per Share Growth of 10% for

    Business Editors

    KANSAS CITY, Mo.--(BUSINESS WIRE)--Jan. 13, 2005--Commerce Bancshares, Inc. (Nasdaq:CBSH) announced record earnings of $3.10 per share in 2004 compared to $2.81 per share in 2003, an increase of 10%. Total net income for 2004 amounted to $220.3 million compared to $206.5 million earned in 2003. For the year, the return on assets was 1.6%, the return on equity totaled 15.2% and the efficiency ratio totaled 59.2%.
    For the fourth quarter, earnings per share amounted to $.75, compared to $.74 for the same period last year, while total net income for the quarter amounted to $52.7 million compared with $53.9 million last year. The return on average assets for the fourth quarter 2004 was 1.5% and the return on equity for the quarter was 14.4%.
    In announcing these results, David W. Kemper, Chairman and CEO, said: "We are pleased to report the 20th consecutive year of record earnings. These results were achieved despite a year when both the balance sheet and net interest income did not grow, chiefly due to sluggish loan demand and constraints from a rising interest rate environment. However, our focus in payment systems fee businesses, especially bank card and deposit account services, contributed to an 8% increase in non-interest income, which now comprises 40% of total revenue. Non-interest expense grew a modest 2% compared with the previous year, while a 9% decline in loan charge-offs reduced our credit costs. As a result, net income increased 7% over 2003."
    Mr. Kemper added: "Asset quality remains strong with our allowance for loan losses totaling over $132 million and representing 1.59% of total loans. Net loan charge-offs for 2004 totaled $33.2 million, compared to $36.6 million in the previous year. Also non-performing assets, which totaled $18.8 million at December 31, 2004, declined over 40% compared with amounts recorded in the previous year."
    Total assets at December 31, 2004, were $14.3 billion, total loans were $8.3 billion, and total deposits were $10.4 billion. At December 31, 2004, the allowance for loan losses represented 751% of non-performing loans. Net loan charge-offs for the year totaled .41% of average loans outstanding, down from .46% last year, and non-performing assets were .23% of total loans.
    During the fourth quarter, the Company declared and paid its eleventh consecutive annual 5% stock dividend.

    Commerce Bancshares, Inc. is a registered bank holding company offering a full line of banking services, including investment management and securities brokerage. The Company currently operates in approximately 330 banking locations in Missouri, Illinois, and Kansas. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, venture capital, leasing and real estate activities.
    Posted to the Company's web site is management's discussion of fourth quarter results. To see this information, please visit our web site at www.commercebank.com.

(Amounts in thousands) 9/30/04 12/31/04 12/31/03 ---------------------------------------------------------------------- Non-Accrual Loans $25,554 $17,618 $32,523 ---------------------------------------------------------------------- Foreclosed Real Estate $1,540 $1,157 $1,162 ---------------------------------------------------------------------- Total Non-Performing Assets $27,094 $18,775 $33,685 ---------------------------------------------------------------------- Non-Performing Assets to Loans .33% .23% .41% ---------------------------------------------------------------------- Non-Performing Assets to Total Assets .19% .13% .24% ---------------------------------------------------------------------- Loans 90 Days & Over Past Due -- Still Accruing $17,625 $13,067 $20,901 ======================================================================

COMMERCE BANCSHARES, INC. and SUBSIDIARIES FINANCIAL HIGHLIGHTS

For the Three Months Ended For the Year Ended (Unaudited) Sept. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 2004 2004 2003 2004 2003 ---------------------------------------------------------------------- FINANCIAL SUMMARY (In thousands, except per share data) Net interest income $123,684 $124,202 $127,507 $497,331 $502,392 Taxable equivalent net interest income 124,262 124,738 128,149 499,597 505,399 Non-interest income 78,920 77,753 76,420 326,931 301,667 Provision for loan losses 6,606 7,215 11,002 30,351 40,676 Non-interest expense 120,492 122,429 116,765 482,769 472,144 Net income 62,519 52,660 53,861 220,341 206,524 Cash dividends 15,218 15,076 14,613 61,135 51,266 Net total loan charge-offs 6,367 8,184 8,482 33,178 36,573 Net business charge-offs (recov) 100 128 (1,112) 5,460 4,928 Net credit card charge-offs 4,658 4,983 5,389 19,615 19,664 Net personal banking charge- offs(a) 1,993 2,251 2,468 7,476 8,470 Net real estate charge-offs (recov) (638) 453 730 (10) 858 Net overdraft charge-offs 254 369 1,007 637 2,653 Per share: Net income - basic $0.89 $0.77 $0.75 $3.15 $2.84 Net income - diluted $0.88 $0.75 $0.74 $3.10 $2.81 Cash dividends $0.219 $0.219 $0.204 $0.876 $0.707 Diluted wtd. average shares o/s 70,700 70,029 72,855 71,066 73,617 ====================================================================== RATIOS Average loans to deposits 77.83% 79.03% 79.38% 78.71% 79.96% Return on total average assets 1.78% 1.48% 1.54% 1.56% 1.52% Return on total average stockholders' equity 17.41% 14.40% 14.77% 15.19% 14.27% Non-interest income to revenue(b) 38.95% 38.50% 37.47% 39.66% 37.52% Efficiency ratio(c) 59.22% 60.26% 56.82% 59.16% 58.83% ====================================================================== AT PERIOD END Book value per share based on total stockholders' equity $21.03 $20.90 $20.35 Market value per share $45.80 $50.20 $46.69 Allowance for loan losses as a percentage of loans 1.63% 1.59% 1.66% Tier I leverage ratio 9.77% 9.60% 9.71% Common shares outstanding 69,401,603 68,257,531 71,286,031 Shareholders of record 4,786 4,776 4,920 Number of bank/ATM locations 329 330 328 Number of bank charters 3 3 4 Full-time equivalent employees 4,821 4,821 4,967 =================================================== Dec. 31 Dec. 31 OTHER YTD INFORMATION 2004 2003 --------------------------------------------------- High market value per share $50.24 $46.99 Low market value per share $41.90 $31.93 ===================================================

(a) Includes consumer, student and home equity loans. (b) Revenue includes net interest income and non-interest income. (c) The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of net interest income and non-interest income (excluding gains/losses on securities transactions).

COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

(Unaudited) For the Three Months Ended For the Year Ended (In thousands, Sept. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 except per share 2004 2004 2003 2004 2003 data) ---------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans $106,218 $112,358 $105,737 $425,338 $433,495 Interest on investment securities 44,945 44,555 47,646 183,440 183,084 Interest on federal funds sold and securities purchased under agreements to resell 429 358 266 1,312 831 ------- ------- ------- ------- ------- Total interest income 151,592 157,271 153,649 610,090 617,410 ------- ------- ------- ------- -------

INTEREST EXPENSE Interest on deposits: Savings, interest checking and money market 7,130 8,335 6,263 27,957 28,742 Time open and C.D.'s of less than $100,000 9,525 9,908 10,525 38,924 48,440 Time open and C.D.'s of $100,000 and over 3,883 4,193 3,064 14,912 14,278 Interest on other borrowings 7,370 10,633 6,290 30,966 23,558 ------- ------- ------- ------- ------- Total interest expense 27,908 33,069 26,142 112,759 115,018 ------- ------- ------- ------- ------- Net interest income 123,684 124,202 127,507 497,331 502,392 Provision for loan losses 6,606 7,215 11,002 30,351 40,676 ------- ------- ------- ------- ------- Net interest income after provision for loan losses 117,078 116,987 116,505 466,980 461,716 ------- ------- ------- ------- -------

NON-INTEREST INCOME Trust fees 16,047 15,918 15,877 64,257 60,921 Deposit account charges and other fees 27,072 25,858 27,890 105,382 97,711 Bank card transaction fees 19,676 21,629 17,428 78,253 67,102 Trading account profits and commissions 2,812 2,680 3,127 12,288 14,740 Consumer brokerage services 2,376 2,328 2,284 9,429 9,095 Mortgage banking revenue 545 534 449 1,841 4,007 Net gains (losses) on securities transactions (148) (544) (777) 11,092 4,560 Other 10,540 9,350 10,142 44,389 43,531 ------- ------- ------- ------- ------- Total non- interest income 78,920 77,753 76,420 326,931 301,667 ------- ------- ------- ------- -------

NON-INTEREST EXPENSE Salaries and employee benefits 65,549 66,208 64,964 265,469 264,599 Net occupancy 9,740 9,818 9,508 39,558 38,736 Equipment 5,634 5,733 6,168 22,903 24,104 Supplies and communication 9,153 8,321 7,995 33,760 33,474 Data processing and software 11,469 12,099 10,499 46,000 40,567 Marketing 4,552 4,008 3,398 16,688 14,397 Other intangible assets amortization 431 399 442 1,699 1,794 Other 13,964 15,843 13,791 56,692 54,473 ------- ------- ------- ------- ------- Total non- interest expense 120,492 122,429 116,765 482,769 472,144 ------- ------- ------- ------- ------- Income before income taxes 75,506 72,311 76,160 311,142 291,239 Less income taxes 12,987 19,651 22,299 90,801 84,715 ------- ------- ------- ------- ------- NET INCOME $62,519 $52,660 $53,861 $220,341 $206,524 ======= ======= ======= ======= ======= Net income per share - basic $0.89 $0.77 $0.75 $3.15 $2.84 ======= ======= ======= ======= ======= Net income per share - diluted $0.88 $0.75 $0.74 $3.10 $2.81 ======= ======= ======= ======= ======= Cash dividends per common share $0.219 $0.219 $0.204 $0.876 $0.707 ======================================================================

COMMERCE BANCSHARES, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Unaudited) Sept. 30 Dec. 31 Dec. 31 (In thousands) 2004 2004 2003 ---------------------------------------------------------------------- ASSETS Loans, net of unearned income $8,162,845 $8,305,359 $8,142,679 Allowance for loan losses (133,363) (132,394) (135,221) ------------ ------------ ------------ Net loans 8,029,482 8,172,965 8,007,458 ------------ ------------ ------------ Investment securities: Available for sale 4,775,883 4,754,941 4,956,668 Trading 29,803 9,403 9,356 Non-marketable 73,298 73,024 73,170 ------------ ------------ ------------ Total investment securities 4,878,984 4,837,368 5,039,194 ------------ ------------ ------------ Federal funds sold and securities purchased under agreements to resell 117,505 68,905 108,120 Cash and due from banks 533,856 585,815 567,123 Land, buildings and equipment - net 341,904 336,446 336,366 Goodwill 48,522 48,522 48,522 Other intangible assets - net 889 499 2,184 Other assets 195,016 199,848 178,197 ------------ ------------ ------------ Total assets $14,146,158 $14,250,368 $14,287,164 ============ ============ ============

LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Non-interest bearing demand $1,750,318 $1,943,771 $1,716,214 Savings, interest checking and money market 6,110,594 6,072,115 6,080,543 Time open and C.D.'s of less than $100,000 1,654,399 1,656,002 1,730,237 Time open and C.D.'s of $100,000 and over 766,260 762,421 679,214 ------------ ------------ ------------ Total deposits 10,281,571 10,434,309 10,206,208 Federal funds purchased and securities sold under agreements to repurchase 1,863,059 1,913,878 2,106,044 Other borrowings 392,586 389,542 403,853 Other liabilities 149,278 85,759 120,105 ------------ ------------ ------------ Total liabilities 12,686,494 12,823,488 12,836,210 ------------ ------------ ------------ Stockholders' equity: Preferred stock --- --- --- Common stock 343,183 347,049 343,183 Capital surplus 353,705 392,156 359,300 Retained earnings 828,758 703,293 707,136 Treasury stock (115,190) (51,646) (29,573) Other (2,706) (3,542) (1,963) Accumulated other comprehensive income 51,914 39,570 72,871 ------------ ------------ ------------ Total stockholders' equity 1,459,664 1,426,880 1,450,954 ------------ ------------ ------------ Total liabilities and stockholders' equity $14,146,158 $14,250,368 $14,287,164 ======================================================================

COMMERCE BANCSHARES, INC. and SUBSIDIARIES AVERAGE BALANCES

(Unaudited) For the Three Months Ended For the Year Ended (Dollars in Sept. 30 Dec. 31 Dec. 31 Dec. 31 Dec. 31 thousands) 2004 2004 2003 2004 2003 ---------------------------------------------------------------------- Loans: Business $2,032,375 $2,129,818 $1,996,813 $2,071,128 $2,137,250 Real estate - construction 426,562 420,179 410,272 427,976 404,058 Real estate - business 1,806,227 1,755,767 1,870,190 1,823,302 1,831,575 Real estate - personal 1,338,895 1,339,865 1,335,977 1,334,859 1,304,677 Consumer 1,210,117 1,205,381 1,162,362 1,188,018 1,129,267 Home equity 390,005 405,830 343,058 381,111 324,375 Student 289,730 344,258 347,595 326,120 339,577 Credit card 571,264 576,658 538,310 564,280 527,049 Overdrafts 10,659 14,379 10,755 13,319 11,631 --------- --------- --------- --------- --------- Total loans 8,075,834 8,192,135 8,015,332 8,130,113 8,009,459 --------- --------- --------- --------- --------- Investment securities (excluding unrealized gains and losses): Available for sale 4,695,510 4,707,651 4,693,803 4,802,083 4,348,969 Trading 10,326 13,145 9,368 14,250 17,003 Non-marketable 75,123 74,744 77,549 75,542 74,501 --------- --------- --------- --------- --------- Total investment securities 4,780,959 4,795,540 4,780,720 4,891,875 4,440,473 --------- --------- --------- --------- --------- Federal funds sold and securities purchased under agreements to resell 101,152 63,769 85,505 84,113 63,232 --------- --------- --------- --------- --------- Total interest earning assets 12,957,945 13,051,444 12,881,557 13,106,101 12,513,164 ========== ========== ========== ========== ========== Total assets 13,969,121 14,112,455 13,885,498 14,149,156 13,542,758 ========== ========== ========== ========== ==========

Deposits: Non-interest bearing deposits 1,292,276 1,351,240 1,183,899 1,288,434 1,083,207 Interest bearing deposits: Savings 406,112 397,679 388,448 401,935 380,323 Interest checking 516,021 552,036 435,975 513,612 404,193 Money market 5,689,247 5,653,086 5,699,117 5,657,844 5,611,634 Time open & C.D.'s of less than $100,000 1,657,022 1,657,463 1,755,471 1,678,659 1,838,137 Time open & C.D.'s of $100,000 and over 814,984 753,928 634,196 788,800 699,241 --------- --------- --------- --------- --------- Total interest bearing deposits 9,083,386 9,014,192 8,913,207 9,040,850 8,933,528 --------- --------- --------- --------- --------- Total deposits 10,375,662 10,365,432 10,097,106 10,329,284 10,016,735 ---------- ---------- ---------- ---------- ---------- Borrowings: Federal funds purchased and securities sold under agreements to repurchase 1,661,568 1,791,567 1,812,998 1,827,428 1,550,211 Long-term debt and other borrowings 392,374 390,150 411,382 419,215 395,026 --------- --------- --------- --------- --------- Total borrowings 2,053,942 2,181,717 2,224,380 2,246,643 1,945,237 --------- --------- --------- --------- ---------

Total interest bearing liabilities 11,137,328 11,195,909 11,137,587 11,287,493 10,878,765 Total stockholders' equity 1,428,908 1,455,062 1,446,380 1,450,181 1,446,973

Net yield on interest earning assets (tax- equivalent basis) 3.82% 3.80% 3.95% 3.81% 4.04% ======================================================================

--30--AMM/dx*

CONTACT: Commerce Bancshares, Inc. Jeffery Aberdeen, 816-234-2081 mymoney@commercebank.com http://www.commercebank.com

KEYWORD: MISSOURI INDUSTRY KEYWORD: BANKING EARNINGS SOURCE: Commerce Bancshares, Inc.

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