Commerce Bancshares (CBSH) 8-K Commerce Bancshares, Inc. Announces First Quarter Earnings

Exhibit 99.1

FOR IMMEDIATE RELEASE:
Tuesday, April 15, 2008

COMMERCE BANCSHARES, INC. ANNOUNCES
FIRST QUARTER EARNINGS

     Commerce Bancshares, Inc. announced earnings of $.89 per share for the three months ended March 31, 2008, an increase of 27.1% compared to $.70 per share in the first quarter of 2007. Net income for the first quarter amounted to $64.2 million compared to $51.5 million in the same period last year. The return on average assets for the three months ended March 31, 2008 was 1.6%, the return on average equity was 16.5% and the efficiency ratio was 60.1%. The current quarter included a $22.2 million pre-tax cash gain on sale of VISA Inc. (VISA) stock and the reversal of certain VISA litigation charges totaling $8.8 million, on a pre-tax basis.

     In making this announcement, David W. Kemper, Chairman and CEO, said, “Despite a difficult economic environment, we were pleased to report revenue growth of 8% this quarter compared to the same period last year. These higher revenues were the result of a 7% increase in our net interest income coupled with continued solid growth in non-interest income. Average loans increased 13% this quarter over the previous quarter, on an annualized basis, as demand remained strong for business loans. Core expense growth remained well controlled this quarter.”

     Further, Mr. Kemper noted, “The Company also increased its provision for loan losses to $20.0 million this quarter compared with $14.1 million in the previous quarter and $8.2 million in the same period last year. During the quarter, the Company recorded non-cash impairment charges totaling $5.3 million on certain investment securities, foreclosed property and an office building held for sale.”

     Mr. Kemper continued, “While we increased our loan loss reserves this quarter to reflect increasing risk in the broader economy, net loan charge-offs actually declined 15% from the previous quarter, reflecting lower net losses. Net loan charge-offs for the quarter totaled .44% compared with .53% in the previous quarter and .34% in the same quarter last year. Our allowance for loan losses totaled $141.7 million, or 1.30% of outstanding loans, up from $133.6 million last quarter. Total non-performing assets increased $2.4 million from last quarter to $35.8 million as of March 31, 2008. Our allowance for loan losses represented 562% of total non-accrual loans.”

     Total assets at March 31, 2008 were $16.8 billion, total loans were $11.3 billion, and total deposits were $12.6 billion. Also during the quarter, the Company purchased 125 thousand shares of its common stock through its treasury stock buyback plan.

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     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 360 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado. The Company also has operating subsidiaries involved in mortgage banking, credit related insurance, and private equity activities.

   Summary of Non-Performing Assets and Past Due Loans

(Dollars in thousands)	12/31/07			3/31/08			3/31/07
Non-Accrual Loans	$	19,739		$	25,190		$	17,022
Foreclosed Real Estate	$	13,678		$	10,639		$	1,034
Total Non-Performing Assets	$	33,417		$	35,829		$	18,056
Non-Performing Assets to Loans		.32	%		.33	%		.18	%
Non-Performing Assets to Total Assets		.21	%		.21	%		.12	%
Loans 90 Days & Over Past Due — Still Accruing	$	20,886		$	25,759		$	19,566

     This financial news release, including management’s discussion of first 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

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COMMERCE BANCSHARES, INC. and SUBSIDIARIES
FINANCIAL HIGHLIGHTS

	For the Three Months Ended
	December 31			March 31			March 31
(Unaudited)	2007			2008			2007
Financial Summary(In thousands, except per share data)
Net interest income	$	137,467		$	140,107		$	131,479
Taxable equivalent net interest income		139,651			142,283			133,694
Non-interest income		98,101			92,160			84,284
Investment securities gains, net		3,270			23,323			3,895
Provision for loan losses		14,062			20,000			8,161
Non-interest expense		162,897			140,755			136,419
Net income		43,692			64,167			51,496
Cash dividends		17,104			17,985			17,359
Net total loan charge-offs		14,064			11,897			8,161
Business charge-offs (recoveries)		1,847			(509	)		704
Consumer credit card charge-offs		6,606			6,593			5,813
Personal banking charge-offs (1)		3,747			3,950			1,965
Real estate — construction charge-offs		537			774			99
Real estate — business charge-offs (recoveries)		768			902			(616	)
Real estate — personal charge-offs		14			101			16
Overdraft charge-offs		545			86			180
Per share:
Net income — basic	$	0.61		$	0.90		$	0.71
Net income — diluted	$	0.60		$	0.89		$	0.70
Cash dividends	$	0.238		$	0.250		$	0.238
Diluted wtd. average shares o/s		72,482			72,397			74,018
RATIOS
Average loans to deposits (2)		89.76	%		91.78	%		87.77	%
Return on total average assets		1.09	%		1.59	%		1.38	%
Return on total average stockholders’ equity		11.46	%		16.55	%		14.41	%
Non-interest income to revenue (3)		41.64	%		39.68	%		39.06	%
Efficiency ratio (4)		68.67	%		60.11	%		62.79	%
AT PERIOD END
Book value per share based on total stockholders’ equity	$	21.28		$	21.96		$	19.86
Market value per share	$	44.86		$	42.03		$	46.01
Allowance for loan losses as a percentage of loans		1.26	%		1.30	%		1.33	%
Tier I leverage ratio		8.76	%		8.88	%		8.94	%
Common shares outstanding		71,795,749			71,854,360			72,798,420
Shareholders of record		4,581			4,598			4,679
Number of bank/ATM locations		354			362			359
Full-time equivalent employees		5,083			5,128			5,030

	March 31		March 31
OTHER YTD INFORMATION	2008		2007
High market value per share	$	45.60	$	48.35
Low market value per share	$	38.00	$	44.37

(1)	Includes net charge-offs on consumer and home equity loans
(2)	Average loans include 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.

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COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

	For the Three Months Ended
(Unaudited)	December 31		March 31		March 31
(In thousands, except per share data)	2007		2008		2007
INTEREST INCOME
Interest and fees on loans	$	185,844	$	174,338	$	176,543
Interest and fees on loans held for sale		4,626		3,917		6,080
Interest on investment securities		40,494		40,897		38,419
Interest on federal funds sold and securities purchased under agreements to resell		5,788		3,401		7,225
Total interest income		236,752		222,553		228,267
INTEREST EXPENSE
Interest on deposits:
Savings, interest checking and money market		27,472		20,614		27,637
Time open and C.D.’s of less than $100,000		28,180		25,259		26,565
Time open and C.D.’s of $100,000 and over		18,448		17,300		16,913
Interest on other borrowings		25,185		19,273		25,673
Total interest expense		99,285		82,446		96,788
Net interest income		137,467		140,107		131,479
Provision for loan losses		14,062		20,000		8,161
Net interest income after provision for loan losses		123,405		120,107		123,318
NON-INTEREST INCOME
Deposit account charges and other fees		30,610		27,075		26,511
Bank card transaction fees		28,266		26,308		23,083
Trust fees		20,392		20,113		18,653
Consumer brokerage services		3,014		3,409		3,043
Trading account profits and commissions		3,172		4,164		1,861
Loan fees and sales		1,919		2,140		1,285
Other		10,728		8,951		9,848
Total non-interest income		98,101		92,160		84,284
INVESTMENT SECURITIES GAINS, NET		3,270		23,323		3,895
NON-INTEREST EXPENSE
Salaries and employee benefits		78,433		83,010		76,900
Net occupancy		11,584		12,069		11,790
Equipment		6,246		5,907		6,433
Supplies and communication		8,524		8,724		8,506
Data processing and software		13,685		13,563		11,522
Marketing		4,247		5,287		4,318
Other		40,178		12,195		16,950
Total non-interest expense		162,897		140,755		136,419
Income before income taxes		61,879		94,835		75,078
Less income taxes		18,187		30,668		23,582
NET INCOME	$	43,692	$	64,167	$	51,496
Net income per share — basic	$	0.61	$	0.90	$	0.71
Net income per share — diluted	$	0.60	$	0.89	$	0.70
Cash dividends per common share	$	0.238	$	0.250	$	0.238

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COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)	December 31			March 31			March 31
(In thousands)	2007			2008			2007
ASSETS
Loans	$	10,605,368		$	10,933,431		$	9,903,568
Allowance for loan losses		(133,586	)		(141,689	)		(131,730	)
Net loans		10,471,782			10,791,742			9,771,838
Loans held for sale		235,896			328,240			363,052
Investment securities:
Available for sale		3,165,020			3,413,816			3,243,687
Trading		26,478			16,337			11,753
Non-marketable		105,517			117,344			78,605
Total investment securities		3,297,015			3,547,497			3,334,045
Federal funds sold and securities purchased under agreements to resell		655,165			525,033			466,810
Cash and due from banks		673,081			684,798			519,138
Land, buildings and equipment — net		406,249			408,186			389,714
Goodwill		124,570			125,863			99,158
Other intangible assets — net		21,413			20,383			16,207
Other assets		319,660			336,058			234,835
Total assets	$	16,204,831		$	16,767,800		$	15,194,797
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand	$	1,413,849		$	1,442,782		$	1,354,160
Savings, interest checking and money market		7,155,366			7,288,768			6,804,397
Time open and C.D.’s of less than $100,000		2,374,782			2,249,289			2,326,353
Time open and C.D.’s of $100,000 and over		1,607,555			1,610,226			1,447,633
Total deposits		12,551,552			12,591,065			11,932,543
Federal funds purchased and securities sold under agreements to repurchase		1,239,219			1,457,236			1,633,884
Other borrowings		583,639			781,864			39,235
Other liabilities		302,735			359,514			143,120
Total liabilities		14,677,145			15,189,679			13,748,782
Stockholders’ equity:
Preferred stock		—			—			—
Common stock		359,694			359,782			352,330
Capital surplus		475,220			474,410			421,983
Retained earnings		669,142			715,511			717,759
Treasury stock		(2,477	)		(673	)		(52,134	)
Accumulated other comprehensive income		26,107			29,091			6,077
Total stockholders’ equity		1,527,686			1,578,121			1,446,015
Total liabilities and stockholders’ equity	$	16,204,831		$	16,767,800		$	15,194,797

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COMMERCE BANCSHARES, INC. and SUBSIDIARIES
AVERAGE BALANCES

	For the Three Months Ended
(Unaudited)	December 31			March 31			March 31
(Dollars in thousands)	2007			2008			2007
Loans:
Business	$	3,212,440		$	3,503,869		$	2,988,157
Real estate — construction		677,651			684,388			646,396
Real estate — business		2,222,816			2,233,985			2,147,329
Real estate — personal		1,541,861			1,526,240			1,488,908
Consumer		1,642,600			1,635,503			1,463,383
Home equity		454,781			458,794			435,291
Consumer credit card		712,312			761,197			632,945
Overdrafts		17,152			14,118			12,300
Total loans		10,481,613			10,818,094			9,814,709
Loans held for sale		289,192			312,532			350,974
Investment securities (excluding unrealized gains and losses):
Available for sale		3,310,548			3,297,046			3,329,159
Trading		29,897			50,006			18,555
Non-marketable		102,951			111,429			77,513
Total investment securities		3,443,396			3,458,481			3,425,227
Federal funds sold and securities purchased under agreements to resell		537,859			491,227			556,370
Total interest earning assets		14,752,060			15,080,334			14,147,280
Total assets		15,894,020			16,228,334			15,173,833
Deposits:
Non-interest bearing deposits		660,310			660,951			619,858
Interest bearing deposits:
Savings		375,974			381,498			397,406
Interest checking		207,536			201,793			165,285
Money market		6,864,403			6,975,961			6,716,338
Time open & C.D.’s of less than $100,000		2,391,787			2,317,963			2,308,183
Time open & C.D.’s of $100,000 and over		1,499,654			1,589,816			1,375,250
Total interest bearing deposits		11,339,354			11,467,031			10,962,462
Total deposits		11,999,664			12,127,982			11,582,320
Borrowings:
Federal funds purchased and securities sold under agreements to repurchase		1,720,651			1,628,247			1,969,041
Long-term debt and other borrowings		492,214			730,074			50,432
Total borrowings		2,212,865			2,358,321			2,019,473
Total interest bearing liabilities		13,552,219			13,825,352			12,981,935
Total stockholders’ equity		1,512,857			1,559,800			1,449,546
Net yield on interest earning assets (tax-equivalent basis)		3.76	%		3.79	%		3.83	%

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COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2008

For the quarter ended March 31, 2008, net income amounted to $64.2 million, an increase of $12.7 million over the same quarter last year and an increase of $20.5 million over the previous quarter. The return on average assets was 1.6%, the return on average equity was 16.5% and the efficiency ratio was 60.1%. The current quarter included both pre-tax cash gains of $22.2 million on sales of VISA, Inc. (VISA) stock and an $8.8 million reduction of an indemnification obligation related to VISA litigation costs. Also during the current quarter, the Company increased its provision for loan losses to $20.0 million and took non-cash impairment charges totaling $5.3 million on certain investment securities, foreclosed property and an office building held for sale.

Balance Sheet Review

During the 1^st quarter of 2008, average loans, excluding loans held for sale, increased $336.5 million, or 3.2%, compared to the previous quarter, representing annualized growth of 12.8%. Also, average loans increased $1.0 billion, or 10.2%, this quarter 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 ($291.4 million) and consumer credit card ($48.9 million) loans offset by a decline of $15.6 million in personal real estate loans. The growth in average business loans this quarter was partly due to increased seasonal lending to a number of larger grain dealers totaling $197.6 million this quarter, coupled with demand from both new and existing business loan customers. Growth in consumer credit cards resulted mainly from growth in new accounts through increased marketing efforts over the last twelve months.

Available for sale investment securities (excluding fair value adjustments) decreased on average by $13.5 million this quarter compared with the previous quarter. During the current quarter, sales, maturities and principal paydowns of securities totaled $357.5 million, while the Company reinvested $392.3 million in mortgage-backed securities and $132.6 million in other asset-backed securities.

Total average deposits increased $128.3 million during the 1^st quarter of 2008 compared to the previous quarter, and $545.7 million, or 4.7%, compared to the 1^st quarter of 2007. Compared to the previous quarter, growth in average deposits resulted from increases in money market accounts ($111.6 million) and certificates of deposit ($16.3 million). The average loans to deposits ratio in the current quarter was 91.8%, compared to 89.8% in the previous quarter.

Average borrowings increased $145.5 million in the current quarter compared to the prior quarter, mainly due to increases in funding from Federal Home Loan Bank borrowings ($178.7 million).

Net Interest Income

Net interest income in the 1^st quarter of 2008 amounted to $140.1 million, an increase of $2.6 million, or 1.9%, compared with the previous quarter and an increase of $8.6 million, or 6.6%, compared to the 1^st quarter of last year. During the 1^st quarter of 2008, the net yield on earning assets (tax equivalent) was 3.79%, compared with 3.76% in the previous quarter and 3.83% in the same period last year.

The increase of $2.6 million in net interest income in the 1^st quarter of 2008 over the previous quarter was primarily the result of lower rates paid on deposits and borrowings coupled with an increase in average loan balances, but offset by lower rates earned on the loan portfolio. Interest income on loans (tax equivalent) decreased by $12.7 million this quarter, mainly due to lower rates earned on virtually all loan products, partly offset by higher average balances mainly on business and consumer credit card loans. Interest income on investment securities remained relatively constant as a result of slightly higher rates earned mainly on mortgage backed securities, but was offset by lower overall average balances in the portfolio.

Interest expense on deposits declined $10.9 million in the 1^st quarter of 2008 compared with the previous quarter as a result of lower rates paid on nearly all deposit products, especially on premium money market accounts and certificates of deposit. Interest expense on other borrowings decreased $5.9 million due to lower rates paid on federal funds purchased and repurchase agreements, but offset by higher balances outstanding of Federal Home Loan Bank advances. Interest expense on the Company’s $500 million structured repurchase agreements declined $2.4 million this quarter compared with the previous quarter as declining rates, coupled with the instruments’ established floors, significantly lowered interest expense.

The overall tax equivalent yield on interest earning assets in the 1^st quarter declined 44 basis points from the previous quarter to 5.99%, while the overall cost of interest bearing liabilities also decreased 51 basis points to 2.40%.

Non-Interest Income

For the 1^st quarter of 2008, total non-interest income amounted to $92.2 million, an increase of 9.3% compared to $84.3 million in the same period last year, and a decrease of 6.1% compared to $98.1 million recorded in the previous quarter. The increase in non-interest income over the 1^st 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 14.0% over the 1^st quarter of last year, primarily due to higher fees earned on debit, merchant and corporate card transactions, which grew by 13.1%, 13.7% and 27.8%, respectively. Trust fees for the quarter increased 7.8% over the same period last year due to growth in both personal and corporate trust fees. Deposit account fees grew 2.1% this quarter over the same period last year as a result of growth in corporate cash management fees of 27.1%, offset by a decline of 5.4% in overdraft fee income. Brokerage fees, including equity sales commissions and annuity fees, grew 12.0% this

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COMMERCE BANCSHARES, INC.
Management Discussion of First Quarter Results
March 31, 2008

quarter over the same period last year. Bond trading income for the quarter totaled $4.2 million, an increase of $2.3 million over the same period last year due to continued higher corporate and correspondent bank sales.

Included in non-interest income as part of net gains/losses on sales of other assets was an impairment charge of $1.1 million on an office building held for sale by the Company. The ratio of non-interest income to total revenue was 39.7% in the 1^st quarter of 2008.

Investment Securities Gains and Losses

Net securities gains amounted to $23.3 million in the 1^st quarter of 2008, compared to net gains of $3.9 million in the same quarter last year and net gains of $3.3 million in the previous quarter. Included in the current quarter was a gain of $22.2 million on the sale of VISA class B shares back to VISA, net positive fair value adjustments of $3.3 million on certain private equity investments, impairment charges of $1.9 million on certain preferred equity investments and net securities losses of $286 thousand on sales of certain available for sale securities. Minority interest expense related to fair value adjustments on private equity investments totaled $490 thousand and was recorded in other non-interest expense.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $140.8 million, a decrease of $22.1 million, or 13.6%, compared with amounts recorded in the previous quarter, and was $4.3 million, or 3.2%, higher than amounts recorded in the same quarter last year. Included in non-interest expense was an $8.8 million reduction of an indemnification obligation related to certain VISA litigation charges, which was established in the 4^th quarter of 2007. The reduction represents the Company’s portion of litigation costs which have now been escrowed by VISA. The Company’s remaining obligation for other unsettled VISA litigation totaled approximately $12.1 million. Also included in non-interest expense was an impairment charge totaling $2.3 million related to foreclosed land scheduled to be sold in the 2^nd quarter of 2008.

Compared to the 1^st quarter of last year, salaries and benefits expense increased $6.1 million, or 7.9%, mainly as a result of normal merit increases, higher incentives earned this year, and the effects of bank acquisitions in 2007, which increased salaries and benefits by approximately $1.3 million, or 1.7%. Full-time equivalent employees totaled 5,128 and 5,030 at March 31, 2008 and 2007, respectively.

Compared with the 1^st quarter of last year, occupancy and supplies and communication costs increased 2.4% and 2.6%, respectively, while equipment costs declined 8.2%. Data processing costs increased 17.7% due mostly to higher bank card processing costs which increased in relation to the higher bank card revenues this quarter. Exclusive of this, core data processing increased 5.3%.

Income Taxes

The effective tax rate for the Company was 32.3% for the current quarter, compared with 29.4% in the previous quarter and 31.4% in the 1^st quarter of 2007.

Credit Quality

Net loan charge-offs for the 1^st quarter of 2008 amounted to $11.9 million, compared with $14.1 million in the prior quarter and $8.2 million in the 1^st quarter of last year. The decrease in net charge-offs in the 1^st quarter of 2008 compared to the previous quarter was mainly the result of several larger business loan recoveries received this quarter totaling $1.6 million. Consumer credit card net charge-offs remained flat with the previous quarter while personal banking loan charge-offs increased slightly. Year-to-date, the ratio of net loan charge-offs to total average loans was .44% compared to .53% in the previous quarter.

For the 1^st quarter of 2008, annualized net charge-offs on average consumer credit card loans were 3.48%, compared with 3.68% in the previous quarter and 3.72% in the same period last year. Additionally, personal banking loan net charge-offs for the quarter amounted to .76% of average personal banking loans, compared to .71% in the previous quarter and .42% in the same quarter last year. The provision for loan losses for the quarter totaled $20.0 million, and was $5.9 million higher than the previous quarter and $11.8 million higher than the 1^st quarter of 2007. This increase resulted from higher incurred losses within the loan portfolio, stemming from increasing risk in the broader economy. The allowance for loan losses at March 31, 2008 amounted to $141.7 million, or 1.30% of total loans, excluding loans held for sale.

Total non-performing assets amounted to $35.8 million, an increase of $2.4 million over the previous quarter, and represented .33% of loans outstanding. Non-performing assets are comprised of non-accrual loans ($25.2 million) and foreclosed real estate ($10.6 million). Loans past due more than 90 days and still accruing interest totaled $25.8 million at March 31, 2008.

Other

The Company maintains a treasury stock buyback program. During the current quarter, the Company purchased 125 thousand shares of treasury stock at an average cost of $40.07 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.

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