Commerce Bancshares (CBSH) 8-K Commerce Bancshares, Inc. Announces Fourth Quarter and 2007 Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE:
Tuesday, January 15, 2008

COMMERCE BANCSHARES, INC. ANNOUNCES
FOURTH QUARTER AND 2007 EARNINGS

     Commerce Bancshares, Inc. announced earnings of $.60 per share for the three months ended December 31, 2007, a decrease of 21.1% compared to $.76 per share in the fourth quarter of 2006. Net income for the fourth quarter amounted to $43.7 million compared to $57.0 million in the same period last year. The current quarter included a pre-tax charge of $21.0 million related to the Company’s share of certain estimated litigation costs of VISA U.S.A., Inc. (VISA). Operating earnings per share, exclusive of this litigation charge, for the current quarter amounted to $.78, or an increase of 3% over last year. On an operating earnings basis, the return on average assets for the three months ended December 31, 2007 was 1.4%, the return on average equity was 14.9% and the efficiency ratio was 59.8%.

     For the year ended December 31, 2007, earnings per share totaled $2.82 compared to $2.94 in 2006. Net income in 2007 amounted to $206.7 million compared to $219.8 million in 2006. Exclusive of the above mentioned litigation costs, operating net income in 2007 amounted to $219.9 million, or $3.00 per share.

     In making this announcement, David W. Kemper, Chairman and CEO, said, “We are pleased to report a 3% growth in operating earnings per share and 9% growth in revenue per share this quarter compared to the same period last year. While we were required to expense our share of certain estimated VISA litigation costs this quarter, we expect significant future benefits from our proportionate ownership in that organization. Operating results this quarter were driven by a relatively stable net interest margin and continued loan growth, combined with solid increases in a number of our fee-based businesses. Bankcard and trust fees grew 11% and 10%, respectively. Exclusive of the VISA charge, non-interest expense was well controlled this quarter.”

     Mr. Kemper continued, “While we experienced higher levels of net loan charge-offs in our consumer loan portfolios this quarter, overall credit quality remained good with net loan charge-offs for the year at .42% compared with .29% last year. Our allowance for loan losses totaled $133.6 million, or 1.26% of outstanding loans. Total non-performing assets decreased $8.0 million from last quarter to $33.4 million as of December 31, 2007. Our allowance for loan losses represented 677% of total non-accrual loans.”

     Total assets at December 31, 2007 were $16.2 billion, total loans were $10.8 billion, and total deposits were $12.6 billion. Also during the quarter, the Company paid a 5% stock dividend for the 14^th consecutive year.

1

     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 over 350 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, venture capital, and real estate activities.

Summary of Non-Performing Assets and Past Due Loans

(Dollars in thousands)	9/30/07			12/31/07			12/31/06
Non-Accrual Loans	$	25,962		$	19,739		$	16,708
Foreclosed Real Estate	$	15,408		$	13,678		$	1,515
Total Non-Performing Assets	$	41,370		$	33,417		$	18,223
Non-Performing Assets to Loans		.40	%		.32	%		. 19	%
Non-Performing Assets to Total Assets		.26	%		.21	%		.12	%
Loans 90 Days & Over Past Due – Still Accruing	$	19,227		$	20,886		$	20,376

Comparison of GAAP and Non-GAAP Information

	For the Three Months Ended									For the Year Ended
	Sept. 30			Dec. 31			Dec. 31			Dec. 31			Dec. 31
(Dollars in thousands)	2007			2007			2006			2007			2006
Net income	$	55,898		$	43,692		$	57,017		$	206,660		$	219,842
Provision relating to VISA litigation, net of tax		—			13,199			—			13,199			—
Operating net income	$	55,898		$	56,891		$	57,017		$	219,859		$	219,842
GAAP basis:
Diluted earnings per share	$	.77		$	.60		$	.76		$	2.82		$	2.94
Return on average assets		1.43	%		1.09	%		1.51	%		1.33	%		1.54	%
Return on average equity		15.10	%		11.46	%		15.52	%		14.00	%		15.96	%
Efficiency ratio		59.81	%		68.67	%		59.12	%		62.72	%		60.55	%
Operating income basis (non-GAAP):
Diluted earnings per share	$	.77		$	.78		$	.76		$	3.00		$	2.94
Return on average assets		1.43	%		1.42	%		1.51	%		1.42	%		1.54	%
Return on average equity		15.10	%		14.92	%		15.52	%		14.89	%		15.96	%
Efficiency ratio		59.81	%		59.78	%		59.12	%		60.42	%		60.55	%

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.

This financial news release, including management’s discussion of fourth quarter results, is posted to the Company’s web site atwww.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

2

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS

	For the Three Months Ended									For the Year Ended
	Sept. 30			Dec. 31			Dec. 31			Dec. 31			Dec. 31
(Unaudited)	2007			2007			2006			2007			2006
FINANCIAL SUMMARY(In thousands, except per share data)
Net interest income	$	135,262		$	137,467		$	134,232		$	538,072		$	513,199
Taxable equivalent net interest income		137,357			139,651			136,605			546,841			520,323
Non-interest income		95,137			98,101			90,030			371,581			352,586
Investment securities gains, net		1,562			3,270			24			8,234			9,035
Provision for loan losses		11,455			14,062			7,970			42,732			25,649
Non-interest expense		139,093			162,897			133,610			574,758			525,425
Net income		55,898			43,692			57,017			206,660			219,842
Cash dividends		17,133			17,104			16,463			68,915			65,758
Net total loan charge-offs		11,456			14,064			8,074			42,733			26,054
Net business charge-offs (recov)		1,853			1,847			(126	)		4,393			(823	)
Net consumer credit card charge-offs		5,331			6,606			5,131			23,698			17,854
Net personal banking charge-offs (1)		2,449			3,747			2,217			9,984			6,236
Real estate — construction charge-offs		605			537			62			2,012			62
Real estate — business charge-offs (recov)		744			768			37			1,075			(36	)
Real estate — personal charge-offs		71			14			19			139			92
Net overdraft charge-offs		403			545			734			1,432			2,669
Per share:
Net income — basic	$	0.78		$	0.61		$	0.77		$	2.86		$	2.98
Net income — diluted	$	0.77		$	0.60		$	0.76		$	2.82		$	2.94
Cash dividends	$	0.238		$	0.238		$	0.222		$	0.952		$	0.889
Diluted wtd. average shares o/s		72,707			72,482			74,940			73,189			74,678
RATIOS
Average loans to deposits (2)		88.67	%		89.76	%		85.83	%		88.49	%		84.73	%
Return on total average assets		1.43	%		1.09	%		1.51	%		1.33	%		1.54	%
Return on total average stockholders’ equity		15.10	%		11.46	%		15.52	%		14.00	%		15.96	%
Non-interest income to revenue (3)		41.29	%		41.64	%		40.15	%		40.85	%		40.72	%
Efficiency ratio (4)		59.81	%		68.67	%		59.12	%		62.72	%		60.55	%
AT PERIOD END
Book value per share based on total stockholders’ equity	$	20.75		$	21.28		$	19.63
Market value per share	$	43.70		$	44.86		$	46.10
Allowance for loan losses as a percentage of loans		1.28	%		1.26	%		1.36	%
Tier I leverage ratio		8.79	%		8.76	%		9.05	%
Common shares outstanding		71,878,511			71,795,749			73,450,171
Number of bank/ATM locations		360			354			354
Full-time equivalent employees		5,077			5,083			4,932
				Dec. 31			Dec. 31
OTHER YTD INFORMATION					2007			2006
High market value per share				$	48.35		$	48.25
Low market value per share				$	41.22		$	43.43

(1)	Includes net charge-offs on consumer and home equity loans
(2)	Includes loans held for sale
(3)	Revenue includes net interest income and non-interest income.
(4)	The efficiency ratio is calculated as non-interest expense (excluding intangibles amortization) as a percent of revenue.

All share and per share amounts have been restated to reflect the 5% stock distributed December 2007.

3

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

	For the Three Months Ended						For the Year Ended
(Unaudited)	Sept. 30		Dec. 31		Dec. 31		Dec. 31		Dec. 31
(In thousands, except per share data)	2007		2007		2006		2007		2006
INTEREST INCOME
Interest and fees on loans	$	188,863	$	185,844	$	175,123	$	734,986	$	643,329
Interest and fees on loans held for sale		5,049		4,626		5,532		21,940		21,788
Interest on investment securities		38,011		40,494		40,370		153,294		151,552
Interest on federal funds sold and securities purchased under agreements to resell		6,351		5,788		7,134		25,881		15,637
Total interest income		238,274		236,752		228,159		936,101		832,306
INTEREST EXPENSE
Interest on deposits:
Savings, interest checking and money market		31,173		27,472		27,532		116,094		96,442
Time open and C.D.’s of less than $100,000		28,541		28,180		26,007		110,957		85,424
Time open and C.D.’s of $100,000 and over		18,812		18,448		15,582		73,739		58,381
Interest on other borrowings		24,486		25,185		24,806		97,239		78,860
Total interest expense		103,012		99,285		93,927		398,029		319,107
Net interest income		135,262		137,467		134,232		538,072		513,199
Provision for loan losses		11,455		14,062		7,970		42,732		25,649
Net interest income after provision for loan losses		123,807		123,405		126,262		495,340		487,550
NON-INTEREST INCOME
Deposit account charges and other fees		30,148		30,610		29,323		117,350		115,453
Bank card transaction fees		26,409		28,266		25,475		103,613		94,928
Trust fees		19,823		20,392		18,564		78,840		72,180
Trading account profits and commissions		2,174		3,172		1,918		8,647		8,132
Consumer brokerage services		3,056		3,014		2,318		12,445		9,954
Loan fees and sales		2,919		1,919		2,059		8,835		10,503
Other		10,608		10,728		10,373		41,851		41,436
Total non-interest income		95,137		98,101		90,030		371,581		352,586
INVESTMENT SECURITIES GAINS, NET		1,562		3,270		24		8,234		9,035
NON-INTEREST EXPENSE
Salaries and employee benefits		77,312		78,433		73,140		308,768		288,273
Net occupancy		11,572		11,584		11,060		45,789		43,276
Equipment		5,761		6,246		6,536		24,121		25,665
Supplies and communication		8,546		8,524		8,332		34,162		32,670
Data processing and software		12,407		13,294		13,054		49,081		50,982
Marketing		4,775		4,247		3,945		18,199		17,317
Other		18,720		40,569		17,543		94,638		67,242
Total non-interest expense		139,093		162,897		133,610		574,758		525,425
Income before income taxes		81,413		61,879		82,706		300,397		323,746
Less income taxes		25,515		18,187		25,689		93,737		103,904
NET INCOME	$	55,898	$	43,692	$	57,017	$	206,660	$	219,842
Net income per share — basic	$	0.78	$	0.61	$	0.77	$	2.86	$	2.98
Net income per share — diluted	$	0.77	$	0.60	$	0.76	$	2.82	$	2.94
Cash dividends per common share	$	0.238	$	0.238	$	0.222	$	0.952	$	0.889

4

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)	Sept. 30			Dec. 31			Dec. 31
(In thousands)	2007			2007			2006
ASSETS
Loans	$	10,451,029		$	10,605,368		$	9,681,520
Allowance for loan losses		(133,588	)		(133,586	)		(131,730	)
Net loans		10,317,441			10,471,782			9,549,790
Loans held for sale		303,658			235,896			278,598
Investment securities:
Available for sale		3,411,804			3,165,020			3,415,440
Trading		17,189			26,478			6,676
Non-marketable		93,086			105,517			74,207
Total investment securities		3,522,079			3,297,015			3,496,323
Federal funds sold and securities purchased under agreements to resell		520,484			655,165			527,816
Cash and due from banks		543,626			673,081			626,500
Land, buildings and equipment — net		403,747			406,249			386,095
Goodwill		125,088			124,570			97,643
Other intangible assets — net		22,322			21,413			19,633
Other assets		265,864			319,660			247,951
Total assets	$	16,024,309		$	16,204,831		$	15,230,349
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand	$	1,148,991		$	1,413,849		$	1,312,400
Savings, interest checking and money market		6,971,076			7,155,366			6,879,047
Time open and C.D.’s of less than $100,000		2,398,877			2,374,782			2,302,567
Time open and C.D.’s of $100,000 and over		1,432,831			1,607,555			1,250,840
Total deposits		11,951,775			12,551,552			11,744,854
Federal funds purchased and securities sold under agreements to repurchase		2,059,095			1,239,219			1,771,282
Other borrowings		345,749			583,639			53,934
Other liabilities		176,124			302,735			218,165
Total liabilities		14,532,743			14,677,145			13,788,235
Stockholders’ equity:
Preferred stock		—			—			—
Common stock		352,330			359,694			352,330
Capital surplus		421,733			475,220			427,421
Retained earnings		794,779			669,142			683,176
Treasury stock		(91,040	)		(2,477	)		(20,613	)
Accumulated other comprehensive income (loss)		13,764			26,107			(200	)
Total stockholders’ equity		1,491,566			1,527,686			1,442,114
Total liabilities and stockholders’ equity	$	16,024,309		$	16,204,831		$	15,230,349

5

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCES

	For the Three Months Ended									For the Year Ended
(Unaudited)	Sept. 30			Dec. 31			Dec. 31			Dec. 31			Dec. 31
(Dollars in thousands)	2007			2007			2006			2007			2006
Loans:
Business	$	3,103,903		$	3,212,440		$	2,805,946		$	3,110,386		$	2,688,722
Real estate — construction		705,232			677,651			627,631			671,986			540,574
Real estate — business		2,220,136			2,222,816			2,160,705			2,204,041			2,053,455
Real estate — personal		1,538,279			1,541,861			1,490,565			1,521,066			1,415,321
Consumer		1,605,879			1,642,600			1,411,988			1,558,302			1,352,047
Home equity		446,208			454,781			443,290			443,748			445,376
Consumer credit card		670,973			712,312			611,579			665,964			595,252
Overdrafts		14,468			17,152			13,329			13,823			14,685
Total loans		10,305,078			10,481,613			9,565,033			10,189,316			9,105,432
Loans held for sale		293,610			289,192			315,108			321,916			315,950
Investment securities (excluding unrealized gains and losses):
Available for sale		3,222,014			3,310,548			3,440,245			3,254,467			3,456,219
Trading		16,343			29,897			15,471			22,321			17,444
Non-marketable		98,177			102,951			83,938			92,251			85,211
Total investment securities		3,336,534			3,443,396			3,539,654			3,369,039			3,558,874
Federal funds sold and securities purchased under agreements to resell		511,834			537,859			530,275			527,304			299,554
Total interest earning assets		14,447,056			14,752,060			13,950,070			14,407,575			13,279,810
Total assets		15,529,022			15,894,020			14,999,722			15,480,327			14,238,604
Deposits:
Non-interest bearing deposits		660,681			660,310			664,017			647,888			642,545
Interest bearing deposits:
Savings		392,317			375,974			400,737			392,942			393,870
Interest checking		211,469			207,536			179,332			194,555			175,619
Money market		6,814,225			6,864,403			6,682,961			6,802,388			6,541,661
Time open & C.D.’s of less than $100,000		2,389,019			2,391,787			2,293,197			2,359,386			2,077,257
Time open & C.D.’s of $100,000 and over		1,485,637			1,499,654			1,291,430			1,480,856			1,288,845
Total interest bearing deposits		11,292,667			11,339,354			10,847,657			11,230,127			10,477,252
Total deposits		11,953,348			11,999,664			11,511,674			11,878,015			11,119,797
Borrowings:
Federal funds purchased and securities sold under agreements to repurchase		1,628,453			1,720,651			1,792,832			1,696,613			1,455,544
Other borrowings		346,076			492,214			104,488			292,446			182,940
Total borrowings		1,974,529			2,212,865			1,897,320			1,989,059			1,638,484
Total interest bearing liabilities		13,267,196			13,552,219			12,744,977			13,219,186			12,115,736
Total stockholders’ equity		1,468,600			1,512,857			1,457,813			1,476,403			1,377,655
Net yield on interest earning assets (tax-equivalent basis)		3.77	%		3.76	%		3.89	%		3.80	%		3.92	%

6

COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2007

For the quarter ended December 31, 2007, net income amounted to $43.7 million, a decrease of $13.3 million from the same quarter last year and a decrease of $12.2 million from the previous quarter. The current quarter included a pre-tax expense provision of $21.0 million related to the Company’s share of certain estimated VISA U.S.A., Inc. (VISA) litigation costs. Excluding this amount, net income amounted to $56.9 million, or an increase of $1.0 million over the previous quarter, and was virtually flat with the same period last year. Exclusive of the VISA item, for the current quarter, the return on average assets was 1.4%, the return on average equity was 14.9%, and the efficiency ratio was 59.8%.

Balance Sheet Review

During the 4^th quarter of 2007, average loans, excluding held for sale loans, increased $176.5 million, or 1.7%, compared to the previous quarter, representing annualized growth of 6.8%. Average loans increased $916.6 million, or 9.6%, during the 4^th quarter of 2007 compared to the same period last year. Overall during the quarter, the increase in average loans compared with the previous quarter consisted mainly of growth in business ($108.5 million), consumer ($36.7 million) and consumer credit card ($41.3 million) loans offset by a decline of $27.6 million in construction loans. The growth in average business loans this quarter was partly due to seasonal borrowings which increased in the previous quarter and continued into the 4^th quarter of 2007, but with significant paydowns occurring by year end. The consumer loan growth occurred in marine and RV lending products, while the growth in credit card loans included normal seasonal growth in the 4^th quarter. When compared with the same quarter last year, and excluding the effects of completed bank acquisitions in 2007, average loans grew by 7.0%.

Available for sale investment securities increased on average by $119.8 million, or 3.7%, this quarter compared with the previous quarter. During the current quarter, sales, maturities and principal paydowns of securities totaled $464.2 million, while the Company reinvested $161.1 million in federal agency, mortgage-backed and other asset-backed securities.

Total average deposits increased by $46.3 million during the 4^th quarter of 2007 compared to the previous quarter, and $488.0 million, or 4.2%, compared to the 4^th quarter of 2006. Compared to the previous quarter, growth in average deposits resulted from increases in money market accounts ($50.2 million) and certificates of deposit ($16.8 million), but was offset by declines in savings accounts. The average loans to deposits ratio in the current quarter was 89.8%, compared to 88.7% in the previous quarter.

Average borrowings increased $238.3 million in the current quarter compared to the prior quarter, mainly due to increases in funding from Federal Home Loan Bank borrowings ($147.2 million), federal funds purchased ($52.4 million) and repurchase agreements ($39.8 million). During the quarter, the Company continued to diversify its funding sources and improve liquidity, and at December 31, 2007 its exposure to overnight federal funds borrowings was reduced by over $800 million to $126.1 million.

Net Interest Income

Net interest income in the 4^th quarter of 2007 amounted to $137.5 million, an increase of $2.2 million, or 1.6%, compared with the previous quarter and an increase of $3.2 million, or 2.4%, compared to the 4^th quarter of last year. During the 4^th quarter of 2007, the net yield on earning assets (tax-equivalent) was 3.76%, compared with 3.77% in the previous quarter and 3.89% in the same period last year.

The increase of $2.2 million in net interest income in the 4^th quarter of 2007 over the previous quarter was primarily the result of lower rates paid on deposits and borrowings coupled with an increase in average loan and investment securities balances, but offset by lower rates earned on the loan portfolio. Interest income on loans decreased by $3.4 million this quarter, mainly due to lower rates earned on virtually all loan products, but offset by higher average balances on business, consumer, and consumer credit card loans. Interest on investment securities increased by $2.5 million compared to the previous quarter as a result of both higher balances and rates, occurring mainly in mortgage-backed and other asset-backed investment securities. Interest expense on deposits declined $4.4 million in the 4^th quarter of 2007 compared with the previous quarter as a result of lower rates paid on nearly all deposit products, especially on premium money market accounts. Interest expense on other borrowings increased $699 thousand due to higher average balances of Federal Home Loan Bank advances, but was partly offset by lower rates paid on overnight federal funds purchased and repurchase agreements.

During the current quarter, the overall tax equivalent yield on interest earning assets declined 17 basis points from the previous quarter to 6.43%, while the overall cost of interest bearing liabilities also decreased 17 basis points to 2.91%.

Non-Interest Income

For the 4^th quarter of 2007, total non-interest income amounted to $98.1 million, an increase of 9.0% compared to $90.0 million in the same period last year, and an increase of 3.1% compared to $95.1 million recorded in the previous quarter. The increase in non-interest income over the 4^th quarter of last year resulted mainly from double digit growth in bank card, brokerage, and bond trading income, in addition to solid growth in trust and corporate cash management fees. Bank card fees for the quarter increased 11.0% over the 4^th quarter of last year, primarily due to higher fees earned on debit and corporate card transactions, which grew by 13.7% and 36.0%, respectively. Trust fees for the quarter increased 9.8% over the same quarter last year due to growth in both personal and corporate trust fees. Deposit account fees grew 4.4% this quarter over the same period last year as a result of growth in corporate cash management fees of 15.5%, along with a 2.5% increase in overdraft fee income.

7

COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2007

Brokerage fees, including equity sales commissions and annuity fees, grew 30.0% this quarter over the same period last year. Bond trading income increased 65.4% over the same period last year due to continued higher corporate and correspondent bank sales.

During the current quarter, gains on sales of student loans totaled $794 thousand compared with $1.9 million in the previous quarter. Approximately $93.6 million of student loans were sold this quarter. The ratio of non-interest income to total revenue was 41.6% in the 4^th quarter of 2007.

Investment Securities Gains and Losses

Net securities gains amounted to $3.3 million in the 4^th quarter of 2007, compared to net gains of $24 thousand in the same quarter last year and net gains of $1.6 million in the previous quarter. Included in the current quarter were net gains of $2.2 million on sales of certain available for sale securities, coupled with a net gain of $1.1 million due to fair value adjustments on various private equity investments. Related minority interest expense totaled $181 thousand on these private equity net gains, which was recorded in other non-interest expense.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $162.9 million, an increase of $29.3 million, or 21.9%, compared with amounts recorded in the same period last year, and was $23.8 million, or 17.1%, higher than amounts recorded in the prior quarter. As mentioned earlier, current quarter non-interest expense included a non-cash expense provision of $21.0 million related to the Company’s share of certain estimated VISA litigation costs. The covered litigation is described in VISA’s Form 10-K which was filed on December 13, 2007. The Company’s expense provision related to VISA’s American Express litigation, which was recently settled by VISA, and other VISA litigation, including the Discover and interchange litigation, which has not yet been settled. The Company currently anticipates that its proportional share of the proceeds of VISA’s initial public offering, expected to occur in 2008, will provide significant future benefit to the Company.

Excluding the VISA litigation provision, non-interest expense in the current quarter grew by 6.2% over the same period last year. Compared to the 4^th quarter of last year, salaries and benefits expense increased $5.3 million, or 7.2%, mainly as a result of normal merit increases and the effects of bank acquisitions in 2007, which increased salaries and benefits by approximately $886 thousand. Full-time equivalent employees totaled 5,083 and 4,932 at December 31, 2007 and 2006, respectively.

Compared with the 4^th quarter of last year, occupancy and supplies and communication costs increased 4.7% and 2.3%, respectively, for a combined increase of $716 thousand, while professional and loan collection fees grew by $1.5 million.

Income Taxes

The effective tax rate for the Company was 30.6% for the current quarter, compared with 31.3% in the previous quarter and 31.1% in the 4^th quarter of 2006.

Credit Quality

Net loan charge-offs for the 4^th quarter of 2007 amounted to $14.1 million, compared with $11.5 million in the prior quarter and $8.1 million in the 4^th quarter of last year. The increase in net charge-offs in the 4^th quarter of 2007 compared to the previous quarter was the result of higher personal banking and consumer credit card loan charge-offs. Year-to-date, the ratio of net loan charge-offs to total average loans was .42% compared to .29% last year.

For the 4^th quarter of 2007, annualized net charge-offs on average consumer credit card loans were 3.68%, compared with 3.15% in the previous quarter and 3.33% in the same period last year. Additionally, personal banking loan net charge-offs for the quarter amounted to .71% of average personal banking loans, compared to .47% in both the previous quarter and the same quarter last year. The provision for loan losses for the quarter totaled $14.1 million, and was $2.6 million higher than the previous quarter and $6.1 million higher than the 4^th quarter of 2006. The allowance for loan losses at December 31, 2007 amounted to $133.6 million, or 1.26% of total loans, excluding held for sale loans.

Total non-performing assets amounted to $33.4 million, a decrease of $8.0 million from the previous quarter, and represented .32% of loans outstanding. This decrease was partly the result of the sale of over $4.9 million of foreclosed real estate, comprised mainly of houses and residential lots. In addition, the Company resolved a $5.5 million non-accrual agricultural business loan as a result of the liquidation of related collateral. The Company also foreclosed on a business real estate loan, transferring the balance of $3.4 million to foreclosed property. Non-performing assets are comprised of non-accrual loans ($19.7 million) and foreclosed real estate ($13.7 million). Loans past due more than 90 days and still accruing interest totaled $20.9 million at December 31, 2007.

Other

The Company maintains a treasury stock buyback program. During the current quarter, the Company purchased 166 thousand shares of treasury stock at an average cost of $44.85 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.

8