Commerce Bancshares (CBSH) 8-K Results of Operations and Financial Condition

Exhibit 99.1

FOR IMMEDIATE RELEASE:
Wednesday, October 12, 2005

COMMERCE BANCSHARES, INC. REPORTS THIRD
QUARTER EARNINGS PER SHARE GROWTH OF 7%

     Commerce Bancshares, Inc. announced record earnings of $.94 per share for the three months ended September 30, 2005, an increase of 7% compared to $.88 per share in the third quarter 2004 and $.80 in the second quarter 2005. Net income for the third quarter 2005 amounted to $62.8 million compared to $62.5 million in the same period last year and $54.4 million in the second quarter 2005. For the third quarter, the return on average equity was 18.1% and the return on average assets was 1.78%. The efficiency ratio for the quarter totaled 57.6%.

     For the first nine months ended September 30, 2005, earnings per share totaled $2.47, an increase of 5% compared with $2.35 in 2004. Net income amounted to $167.0 million compared with $167.7 million for 2004. The return on average assets was 1.59% and the return on average equity was 16.1%.

     In announcing these results, David W. Kemper, Chairman and CEO, said, “We are pleased to report 7% growth in earnings per share and 8% growth in pre-tax income in the third quarter of 2005 compared with the same period last year. The increase in pre-tax income resulted from an improving net interest margin, continued growth in fee income and control of expenses. Non-interest income increased 10% this quarter compared with the third quarter last year due to solid growth in deposit, bankcard and trust fee income. Non-interest expenses were well managed, growing 2% compared to the same period in 2004. Net income for the third quarter of 2005 included the recognition of tax benefits of $10.3 million, compared to tax benefits of $14.0 million recognized in the third quarter of 2004.”

     Mr. Kemper continued, “Asset quality remains strong with net loan charge-offs for the first nine months of 2005 totaling .31% of average loans compared with .41% last year. However, net loan charge-offs for the third quarter were $2.7 million higher than in the same period last year mostly due to an increase in consumer loan charge-offs. Our allowance for loan losses at September 30, 2005 totaled $129.3 million, representing 1.48% of total loans and 635% of non-performing loans. During the quarter, average loans increased 6% on an annualized basis, reflecting growth in both commercial and retail loans, while we continued the planned reduction in our investment portfolio.”

     Total assets at September 30, 2005 were $13.9 billion, total loans were $8.7 billion, and total deposits were $10.4 billion. Non-performing loans amounted to $20.4 million or .23% of total loans. During the quarter the Company purchased approximately 967 thousand shares of its common stock through its treasury buyback plan.

(more)

     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 340 banking locations in Missouri, Illinois, and Kansas. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, venture capital, and real estate activities.

     Posted to the Company’s web site is management’s discussion of third quarter results. To see this information please visit our web site at www.commercebank.com.

* * * * * * * * * * * * * * *

For additional information, contact
Jeffery Aberdeen, Controller
at PO Box 419248, Kansas City, MO
or by telephone at (816) 234-2081
Web Site: http://www.commercebank.com
Email: mymoney@commercebank.com

(Amounts in thousands)	6/30/05			9/30/05			9/30/04
Non-Accrual Loans	$	16,060		$	20,365		$	25,554
Foreclosed Real Estate	$	542		$	675		$	1,540
Total Non-Performing Assets	$	16,602		$	21,040		$	27,094
Non-Performing Assets to Loans		.20	%		.24	%		.33	%
Non-Performing Assets to Total Assets		.12	%		.15	%		.19	%
Loans 90 Days & Over Past Due — Still Accruing	$	15,070		$	15,388		$	17,625

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS

	For the Three Months Ended									For the Nine Months Ended
(Unaudited)	June 30			Sept. 30			Sept. 30			Sept. 30			Sept. 30
	2005			2005			2004			2005			2004
FINANCIAL SUMMARY(In thousands, except per share data)
Net interest income	$	127,387		$	125,832		$	123,684		$	374,696		$	373,129
Taxable equivalent net interest income		128,044			126,914			124,262			376,952			374,859
Non-interest income		84,980			86,895			78,920			252,566			249,178
Provision for loan losses		5,503			8,934			6,606			16,805			23,136
Non-interest expense		123,012			122,387			120,492			369,321			360,340
Net income		54,368			62,791			62,519			167,005			167,681
Cash dividends		15,970			15,761			15,218			47,864			46,059
Net total loan charge-offs		7,035			9,056			6,367			19,893			24,994
Net business charge-offs (recov)		(48	)		133			145			(2,536	)		5,482
Net credit card charge-offs		5,430			5,879			4,613			15,906			14,482
Net personal banking charge-offs*		1,474			1,837			1,993			5,259			5,225
Net real estate charge-offs (recov)		(19	)		492			(638	)		267			(463	)
Net overdraft charge-offs		198			715			254			997			268
Per share:
Net income — basic	$	0.81		$	0.95		$	0.89		$	2.50		$	2.38
Net income — diluted	$	0.80		$	0.94		$	0.88		$	2.47		$	2.35
Cash dividends	$	0.240		$	0.240		$	0.219		$	0.720		$	0.657
Diluted wtd. average shares o/s		67,653			66,852			70,700			67,689			71,414
RATIOS
Average loans to deposits		79.35	%		82.67	%		77.83	%		80.49	%		78.60	%
Return on total average assets		1.55	%		1.78	%		1.78	%		1.59	%		1.58	%
Return on total average stockholders’ equity		15.78	%		18.12	%		17.41	%		16.09	%		15.46	%
Non-interest income to revenue**		40.02	%		40.85	%		38.95	%		40.26	%		40.04	%
Efficiency ratio***		58.27	%		57.61	%		59.22	%		59.30	%		58.79	%
AT PERIOD END
Book value per share based on total stockholders’ equity	$	20.82		$	20.85		$	21.03
Market value per share	$	50.41		$	51.48		$	45.80
Allowance for loan losses as a percentage of loans		1.52	%		1.48	%		1.63	%
Tier I leverage ratio		9.37	%		9.44	%		9.83	%
Common shares outstanding		66,104,839			65,430,307			69,401,603
Shareholders of record		4,584			4,510			4,786
Number of bank/ATM locations		337			340			329
Number of bank charters		3			3			3
Full-time equivalent employees		4,826			4,827			4,821
										Sept. 30			Sept. 30
OTHER YTD INFORMATION											2005			2004
High market value per share										$	54.72		$	47.62
Low market value per share										$	46.14		$	41.90

* Includes consumer, student and home equity loans

** Revenue includes net interest income and non-interest income

*** 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 Nine Months Ended
(In thousands, except per share data)	June 30		Sept. 30		Sept. 30			Sept. 30		Sept. 30
	2005		2005		2004			2005		2004
INTEREST INCOME
Interest and fees on loans	$	125,242	$	134,653	$	106,218		$	378,418	$	312,980
Interest on investment securities		46,394		42,722		44,945			130,862		138,885
Interest on federal funds sold and securities purchased under agreements to resell		1,164		1,195		429			2,943		954
Total interest income		172,800		178,570		151,592			512,223		452,819
INTEREST EXPENSE
Interest on deposits:
Savings, interest checking and money market		12,192		14,461		7,130			37,110		19,622
Time open and C.D.’s of less than $100,000		12,051		13,351		9,525			35,794		29,016
Time open and C.D.’s of $100,000 and over		7,973		7,409		3,883			21,734		10,719
Interest on other borrowings		13,197		17,517		7,370			42,889		20,333
Total interest expense		45,413		52,738		27,908			137,527		79,690
Net interest income		127,387		125,832		123,684			374,696		373,129
Provision for loan losses		5,503		8,934		6,606			16,805		23,136
Net interest income after provision for loan losses		121,884		116,898		117,078			357,891		349,993
NON-INTEREST INCOME
Deposit account charges and other fees		27,476		31,117		27,072			82,894		79,524
Bank card transaction fees		21,295		21,981		19,676			62,783		56,624
Trust fees		17,040		17,353		16,047			50,787		48,339
Trading account profits and commissions		2,450		2,335		2,812			7,399		9,608
Consumer brokerage services		2,338		2,440		2,487			7,603		7,426
Loan fees and sales		4,805		2,397		2,943			10,642		11,850
Net gains (losses) on securities transactions		1,372		289		(148	)		5,273		11,636
Other		8,204		8,983		8,031			25,185		24,171
Total non-interest income		84,980		86,895		78,920			252,566		249,178
NON-INTEREST EXPENSE
Salaries and employee benefits		67,585		66,682		65,549			204,447		199,261
Net occupancy		9,527		10,277		9,740			29,582		29,740
Equipment		5,701		5,838		5,634			17,230		17,170
Supplies and communication		8,257		8,458		9,153			24,928		25,439
Data processing and software		12,069		12,108		11,469			35,632		33,901
Marketing		4,687		4,486		4,552			13,035		12,680
Other		15,186		14,538		14,395			44,467		42,149
Total non-interest expense		123,012		122,387		120,492			369,321		360,340
Income before income taxes		83,852		81,406		75,506			241,136		238,831
Less income taxes		29,484		18,615		12,987			74,131		71,150
NET INCOME	$	54,368	$	62,791	$	62,519		$	167,005	$	167,681
Net income per share — basic	$	0.81	$	0.95	$	0.89		$	2.50	$	2.38
Net income per share — diluted	$	0.80	$	0.94	$	0.88		$	2.47	$	2.35
Cash dividends per common share	$	0.240	$	0.240	$	0.219		$	0.720	$	0.657

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)	June 30			Sept. 30			Sept. 30
(In thousands)	2005			2005			2004
ASSETS
Loans, net of unearned income	$	8,499,301		$	8,742,832		$	8,162,845
Allowance for loan losses		(129,428	)		(129,306	)		(133,363	)
Net loans		8,369,873			8,613,526			8,029,482
Investment securities:
Available for sale		4,358,178			4,024,992			4,775,883
Trading		12,359			6,019			29,803
Non-marketable		73,674			79,181			73,298
Total investment securities		4,444,211			4,110,192			4,878,984
Federal funds sold and securities purchased under agreements to resell		128,204			115,900			117,505
Cash and due from banks		544,922			481,176			533,856
Land, buildings and equipment — net		372,291			376,999			341,904
Goodwill		48,522			48,522			48,522
Other assets		210,170			201,762			195,905
Total assets	$	14,118,193		$	13,948,077		$	14,146,158
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand	$	1,351,186		$	1,281,470		$	1,750,318
Savings, interest checking and money market		6,547,940			6,457,502			6,110,594
Time open and C.D.’s of less than $100,000		1,744,629			1,771,156			1,654,399
Time open and C.D.’s of $100,000 and over		1,022,361			840,700			766,260
Total deposits		10,666,116			10,350,828			10,281,571
Federal funds purchased and securities sold under agreements to repurchase		1,594,735			1,768,721			1,863,059
Other borrowings		371,781			370,729			392,586
Other liabilities		109,392			93,761			149,278
Total liabilities		12,742,024			12,584,039			12,686,494
Stockholders’ equity:
Preferred stock		—			—			—
Common stock		347,049			347,049			343,183
Capital surplus		384,166			381,433			350,999
Retained earnings		775,404			822,434			828,758
Treasury stock		(155,749	)		(192,924	)		(115,190	)
Accumulated other comprehensive income		25,299			6,046			51,914
Total stockholders’ equity		1,376,169			1,364,038			1,459,664
Total liabilities and stockholders’ equity	$	14,118,193		$	13,948,077		$	14,146,158

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCES

(Unaudited)	For the Three Months Ended									For the Nine Months Ended
(Dollars in thousands)	June 30			Sept. 30			Sept. 30			Sept. 30			Sept. 30
	2005			2005			2004			2005			2004
Loans:
Business	$	2,305,000		$	2,356,938		$	2,083,407		$	2,303,147		$	2,098,079
Real estate — construction		478,675			518,638			426,562			480,207			430,594
Real estate — business		1,765,896			1,775,132			1,806,227			1,766,452			1,845,978
Real estate — personal		1,344,203			1,366,817			1,338,895			1,348,798			1,333,178
Consumer		1,225,386			1,267,466			1,210,117			1,228,911			1,182,188
Home equity		422,637			437,359			390,005			424,209			372,811
Student		374,176			321,283			289,730			368,168			320,030
Credit card		553,965			556,235			520,232			552,416			513,467
Overdrafts		11,651			14,973			10,659			14,302			12,963
Total loans		8,481,589			8,614,841			8,075,834			8,486,610			8,109,288
Investment securities (excluding unrealized gains and losses):
Available for sale		4,345,329			4,210,497			4,695,510			4,352,305			4,833,790
Trading		7,864			10,696			10,326			9,974			14,621
Non-marketable		75,968			80,613			75,123			77,825			75,810
Total investment securities		4,429,161			4,301,806			4,780,959			4,440,104			4,924,221
Federal funds sold and securities purchased under agreements to resell		145,135			126,930			101,152			119,171			90,944
Total interest earning assets		13,055,885			13,043,577			12,957,945			13,045,885			13,124,453
Total assets		14,024,246			13,986,905			13,969,121			14,026,873			14,161,479
Deposits:
Non-interest bearing deposits		633,473			602,016			1,292,276			668,827			1,267,346
Interest bearing deposits:
Savings		417,059			404,019			406,112			408,308			403,364
Interest checking		175,820			159,958			516,021			199,037			500,711
Money market		6,644,696			6,599,088			5,689,247			6,561,766			5,659,441
Time open & C.D.’s of less than $100,000		1,732,288			1,752,749			1,657,022			1,716,942			1,685,776
Time open & C.D.’s of $100,000 and over		1,085,769			902,654			814,984			988,865			800,509
Total interest bearing deposits		10,055,632			9,818,468			9,083,386			9,874,918			9,049,801
Total deposits		10,689,105			10,420,484			10,375,662			10,543,745			10,317,147
Borrowings:
Federal funds purchased and securities sold under agreements to repurchase		1,481,135			1,724,082			1,661,568			1,620,341			1,839,469
Other borrowings		380,043			370,961			392,374			379,860			428,974
Total borrowings		1,861,178			2,095,043			2,053,942			2,000,201			2,268,443
Total interest bearing liabilities		11,916,810			11,913,511			11,137,328			11,875,119			11,318,244
Total stockholders’ equity		1,381,560			1,374,711			1,428,908			1,388,105			1,448,542
Net yield on interest earning assets (tax-equivalent basis)		3.93	%		3.86	%		3.82	%		3.86	%		3.82	%

COMMERCE BANCSHARES, INC.
Management Discussion of Third Quarter Results
September 30, 2005

For the quarter ended September 30, 2005, net income amounted to $62.8 million, an increase of 15.5% over the previous quarter and slightly higher than the 3^rd quarter of the prior year. For the current quarter, the return on assets was 1.8%, the return on average equity was 18.1%, and the efficiency ratio was 57.6%. Net income for the 3^rd quarter of 2005 included the recognition of tax benefits of $10.3 million compared to tax benefits of $14.0 million recognized in the 3^rdquarter of 2004. During the current quarter, pre-tax income increased 7.8% over the same period last year and resulted from an improving net interest margin, 10.1% growth in non-interest income, and well-controlled non-interest expenses.

Balance Sheet Review
During the 3^rd quarter, average loans increased by $133.3 million, or 1.6%, compared to the previous quarter and represented annualized growth of 6.4%. Average loans also increased $539.0 million, or 6.7%, compared to the same period last year. Compared to the 2^nd quarter of this year, average business, construction and business real estate loans grew $51.9 million, $40.0 million and $9.2 million, respectively, as a result of improved economic conditions and continued customer demand. Consumer loans increased $42.1 million as a result of continued growth in marine and recreational vehicle lending. Average personal real estate loans also increased by $22.6 million during the quarter as loan originations improved. Average student loans declined $52.9 million during the quarter, mainly due to the sale of $44.8 million from the portfolio.

Available for sale investment securities, excluding fair value adjustments, decreased on average by $134.8 million, or 3.1%, this quarter compared with the previous quarter as the Company continued to modify its investment securities portfolio to address such things as concentration, duration and interest rate risk. Average available for sale investment securities also declined by $485.0 million, or 10.3%, compared to the same quarter last year. During the quarter, sales, maturities and principal pay-downs of securities totaled $709.8 million, and included the sale of the Company’s remaining inflation-indexed treasury securities which totaled $132.5 million. Purchases of securities during the quarter totaled $414.9 million, and consisted mainly of municipal securities ($170.8 million), and mortgage-backed related securities ($104.7 million).

Total average deposits decreased by $268.6 million during the 3^rd quarter when compared to the 2^nd quarter of this year. This decrease was due mainly to declines in jumbo certificates of deposit ($183.1 million), money market and interest checking accounts ($61.5 million) and demand deposits ($31.5 million). The average loans to deposits ratio for the quarter increased from the 2^nd quarter to 82.7%.

During the current quarter, average borrowings increased by $233.9 million due to increases in federal funds purchased.

Net Interest Income
Net interest income in the 3^rd quarter amounted to $125.8 million, a decrease of $1.6 million, or 1.2%, compared with the previous quarter and an increase of $2.1 million, or 1.7%, compared to the 3^rd quarter of last year. During the 3^rd quarter of 2005 the net yield on earning assets amounted to 3.86%, compared with 3.82% in the 3^rd quarter of last year and 3.93% in the previous quarter of this year.

The decline of $1.6 million in net interest income in the 3^rd quarter 2005 compared with the previous quarter was partly a result of the Company selling its inflation-indexed treasury securities in the current quarter. The Company did not record an inflation-related adjustment this quarter, while $2.9 million of inflation income was recorded in the previous quarter. Compared with the previous quarter, the effects of the reduction in inflation income and lower average balances of investment securities reduced interest income by $3.7 million and lowered the overall rates earned on investment securities by 22 basis points. Offsetting this decline was growth in loan balances and higher rates on loans, which added $9.4 million in interest income over the previous quarter. Interest expense on deposits increased by $3.0 million over the previous quarter due mainly to higher rates on money market and certificate of deposit accounts but offset by lower average balances on jumbo certificates of deposit. An increase in both rates paid and average balances of other borrowings resulted in additional interest expense of $4.3 million.

During the quarter, the overall yield on interest earning assets increased 13 basis points to 5.46%, while the overall cost of interest bearing liabilities increased 23 basis points to 1.76%.

Non-Interest Income
For the 3^rd quarter of 2005, total non-interest income amounted to $86.9 million, compared with $85.0 million in the previous quarter and $78.9 million in the same quarter last year. Excluding investment securities gains, non-interest income grew 3.6% compared with the previous quarter and 9.5% over the same period last year. Compared with the same period last year, this growth was mainly the result of higher deposit, bank card and trust fee income. Compared with the 3^rd quarter 2004, deposit account fees increased $4.0 million, or 14.9%, mainly due to growth in deposit account overdraft fees, which grew $6.3 million over the same period last year and $3.9

COMMERCE BANCSHARES, INC.
Management Discussion of Third Quarter Results
September 30, 2005

million over last quarter. This strong growth was the result of increasing transaction volumes during the year and pricing changes initiated in the 3^rd quarter. Corporate cash management fee income was down slightly from the previous quarter and continued to be affected by an increasing interest rate environment. Bank card fees for the quarter increased 11.7% over the same period last year, mainly due to higher fees earned on debit and credit card transactions, which grew by 16.1% and 13.3%, respectively. Trust fees for the quarter increased 8.1% over the same quarter last year mainly as a result of higher fees on personal trust accounts. Included in loan fees and sales this quarter were $1.1 million in gains on sales of student loans compared with such gains of $3.6 million in the previous quarter and $1.6 million in the same quarter last year.

Net securities gains amounted to $289 thousand for the 3^rd quarter of 2005, compared to $1.4 million in the 2^nd quarter of 2005 and a loss of $148 thousand in the 3^rd quarter of last year.

Non-Interest Expense
Non-interest expense for the quarter amounted to $122.4 million, an increase of $1.9 million or 1.6%, compared with amounts recorded in the 3^rd quarter of last year, and declined slightly from amounts recorded in the previous quarter.

Compared with the 3^rd quarter of last year, salaries and benefits expense increased 1.7% mainly as a result of normal merit increases, partly offset by lower retirement and medical insurance costs. Full-time equivalent employees totaled 4,827 and 4,821 at September 30, 2005 and 2004, respectively. Costs for supplies and communication declined 7.6% mainly due to lower costs for supplies, postage and telephone. Occupancy costs grew by 5.5% due to higher costs for depreciation and utilities. Data processing costs increased by 5.6% as a result of higher costs for bank card and online banking processing fees offset by lower costs for software license fees and amortization.

Income Taxes
During the 3^rd quarter, income tax expense amounted to $18.6 million, a decrease of $10.9 million from the previous quarter and $5.6 million higher than the same quarter last year. The lower income tax expense in the current quarter compared to the previous quarter was the result of the recognition of tax benefits, totaling $10.3 million, associated with certain corporate tax reorganization initiatives which were finalized this quarter. The Company will recognize an additional $3.4 million in tax benefits related to these initiatives in the 4^th quarter of this year. The effective tax rate for the Company was 22.9% for the 3^rd quarter of 2005, compared with an effective tax rate of 35.2% in the previous quarter and 17.2% in the 3^rd quarter of 2004. It is not expected that material tax benefits of this nature will continue beyond 2005.

Credit Quality
Net loan charge-offs for the 3^rd quarter of 2005 amounted to $9.1 million compared with $7.0 million in the 2^nd quarter of 2005 and $6.4 million in the 3^rd quarter of last year. The ratio of annualized net loan charge-offs to total average loans this quarter was ..42% compared with .31% in the same quarter last year and .33% in the 2^nd quarter of 2005. The increase in net charge-offs in the 3^rd quarter of 2005 compared to the previous quarter was mainly the result of higher loan charge-offs on credit card, overdraft, and personal banking loans.

For the 3^rd quarter of 2005, annualized net charge-offs on average credit card loans were 4.19% compared with 3.53% in the same quarter last year and 3.93% in the 2^nd quarter of 2005. Additionally, personal loan net charge-offs amounted to .36% of average loans compared to .42% in the same period last year. The provision for loan losses for the quarter totaled $8.9 million and increased $3.4 million over amounts recorded in the 2^nd quarter of this year, and was $2.3 million higher than amounts recorded in the 3^rd quarter of 2004. The allowance for loan losses at September 30, 2005 amounted to $129.3 million, or 1.48% of total loans, and represents 635% of total non-performing loans.

Total non-performing assets amounted to $21.0 million, an increase of $4.4 million over the previous quarter, and amounted to .24% of loans outstanding. Non-performing assets are comprised of non-accrual loans ($20.4 million) and foreclosed real estate ($675 thousand). Loans past due more than 90 days and still accruing interest totaled $15.4 million at September 30, 2005.

Other
The Company maintains a treasury stock buyback program and effective October 2004, was authorized by the Board of Directors to repurchase up to 5 million shares of its common stock. During the quarter ended September 30, 2005, the Company purchased 967 thousand shares of treasury stock at an average cost of $53.20 per share.

Forward Looking Information
This information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements.