Commerce Bancshares (CBSH) 8-K Commerce Bancshares, Inc. Reports Fourth Quarter Earnings Per Share of $.58

Exhibit 99.1

FOR IMMEDIATE RELEASE:
Tuesday, January 20, 2009

COMMERCE BANCSHARES, INC. REPORTS FOURTH
QUARTER EARNINGS PER SHARE OF $.58

     Commerce Bancshares, Inc. announced earnings of $.58 per share for the three months ended December 31, 2008 compared to $.58 in the fourth quarter of last year. Net income for the fourth quarter of 2008 amounted to $43.8 million compared to $43.7 million in the fourth quarter of last year.

     For the year ended December 31, 2008, earnings per share totaled $2.48 compared to $2.69 in 2007, a decrease of 7.8%. Net income amounted to $188.7 million in 2008 compared with $206.7 million in 2007. For the year, the return on average assets was 1.15%, and the return on average equity was 11.83%. At year end, the Tier I leverage ratio was 9.06% compared to 8.76% a year earlier.

     In making this announcement, David W. Kemper, Chairman and CEO, said, “Our key objective last year was to navigate through the deteriorating economy and severe dislocations in the financial markets while continuing our long-term plan to build our franchise. In the face of these challenges, we strengthened our balance sheet while maintaining strong capital and excellent liquidity. This quarter we were pleased to report 14% growth in net interest income over the same quarter last year, driven by lower funding costs coupled with growth in earning assets. Also, while the effects of this difficult economy constrained growth in non-interest income, the Company still generated over $85 million of fee income representing 35% of total revenue. Non-interest expense also remained controlled.”

     Mr. Kemper continued, “During the quarter we increased our allowance for loan losses by $16.6 million to $172.6 million. This allowance now represents 237% of total non-accrual loans and 1.53% of outstanding loans. Non-performing assets, consisting of non-accrual loans and foreclosed property, grew this quarter from $46.2 million to $79.1 million. The increase in non-performing assets this quarter was mainly the result of placing one large residential construction loan relationship within our geographical footprint on non-accrual status. We expect continuing weak economic conditions and deteriorating credit in 2009.”

     Total assets at December 31, 2008 were $17.5 billion, total loans were $11.6 billion, and total deposits were $12.9 billion. During the fourth quarter the Company sold $369 million par value of auction rate securities in exchange for government guaranteed student loans and recorded a pre-tax gain of $7.9 million. Pre-tax impairment charges of $9.0 million were also taken on certain other loans held for sale. Also during the quarter, net loan charge-offs totaled $24.7 million, up from $18.7 million in the previous quarter, with 63% of these loan losses related to non-residential consumer loan products.

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 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 investment activities.

Summary of Non-Performing Assets and Past Due Loans

(Dollars in thousands)	9/30/08			12/31/08			12/31/07
Non-Accrual Loans	$	41,600		$	72,896		$	19,739
Foreclosed Real Estate	$	4,622		$	6,181		$	13,678
Total Non-Performing Assets	$	46,222		$	79,077		$	33,417
Non-Performing Assets to Loans		.42	%		.70	%		.32	%
Non-Performing Assets to Total Assets		.27	%		.45	%		.21	%
Loans 90 Days & Over Past Due – Still Accruing	$	31,878		$	39,964		$	20,886

     The 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)	2008			2008			2007			2008			2007
FINANCIAL SUMMARY(In thousands, except per share data)
Net interest income	$	151,564		$	156,289		$	137,467		$	592,739		$	538,072
Taxable equivalent net interest income		154,423			160,133			139,651			604,083			546,841
Non-interest income		95,593			85,226			98,101			375,712			371,581
Investment securities gains, net		1,149			4,814			3,270			30,294			8,234
Provision for loan losses		29,567			41,333			14,062			108,900			42,732
Non-interest expense		184,532			143,403			162,897			616,113			574,758
Net income		24,673			43,836			43,692			188,655			206,660
Cash dividends		18,018			18,052			17,104			72,055			68,915
Net total loan charge-offs		18,734			24,745			14,064			69,867			42,733
Business charge-offs		1,775			2,099			1,847			4,414			4,393
Real estate — construction and land charge-offs		1,217			4,021			537			6,215			2,012
Real estate — business charge-offs		257			978			768			2,176			1,075
Consumer credit card charge-offs		8,314			8,674			6,606			31,516			23,698
Consumer charge-offs		6,060			6,901			3,542			21,447			9,538
Home equity charge-offs		208			91			205			429			446
Real estate — personal charge-offs		182			1,358			14			1,714			139
Overdraft charge-offs		721			623			545			1,956			1,432
Per share:
Net income — basic	$	0.32		$	0.58		$	0.58		$	2.50		$	2.72
Net income — diluted	$	0.32		$	0.58		$	0.58		$	2.48		$	2.69
Cash dividends	$	0.238		$	0.238		$	0.227		$	0.952		$	0.907
Diluted wtd. average shares o/s		76,172			76,293			76,106			76,136			76,848
RATIOS
Average loans to deposits (1)		93.29	%		91.09	%		89.76	%		92.11	%		88.49	%
Return on total average assets		0.60	%		1.04	%		1.09	%		1.15	%		1.33	%
Return on total average stockholders’ equity		6.07	%		10.84	%		11.46	%		11.83	%		14.00	%
Non-interest income to revenue (2)		38.68	%		35.29	%		41.64	%		38.80	%		40.85	%
Efficiency ratio (3)		74.23	%		58.90	%		68.67	%		63.16	%		62.72	%
AT PERIOD END
Book value per share based on total stockholders’ equity	$	21.12		$	20.80		$	20.26
Market value per share	$	44.19		$	43.95		$	42.72
Allowance for loan losses as a percentage of loans		1.42	%		1.53	%		1.26	%
Tier I leverage ratio		9.11	%		9.06	%		8.76	%
Common shares outstanding		75,701,500			75,790,948			75,385,536
Shareholders of record		4,487			4,512			4,581
Number of bank/ATM locations		367			368			354
Full-time equivalent employees		5,202			5,217			5,083
				Dec. 31			Dec. 31
OTHER YTD INFORMATION					2008			2007
High market value per share				$	52.86		$	46.05
Low market value per share				$	34.76		$	39.26

(1)	Includes loans held for sale
(2)	Revenue includes net interest income and non-interest income.
(3)	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 2008.

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)	2008		2008			2007		2008			2007
INTEREST INCOME
Interest and fees on loans	$	161,816	$	157,684		$	185,844	$	654,845		$	734,986
Interest and fees on loans held for sale		3,774		3,654			4,626		14,968			21,940
Interest on investment securities		41,749		47,595			40,494		171,551			153,294
Interest on federal funds sold and securities purchased under agreements to resell		2,125		497			5,788		8,287			25,881
Interest on deposits with banks		—		198			—		198			—
Total interest income		209,464		209,628			236,752		849,849			936,101
INTEREST EXPENSE
Interest on deposits:
Savings, interest checking and money market		14,802		11,364			27,472		61,133			116,094
Time open and C.D.’s of less than $100,000		16,128		15,467			28,180		77,322			110,957
Time open and C.D.’s of $100,000 and over		11,542		12,937			18,448		55,665			73,739
Interest on other borrowings		15,428		13,571			25,185		62,990			97,239
Total interest expense		57,900		53,339			99,285		257,110			398,029
Net interest income		151,564		156,289			137,467		592,739			538,072
Provision for loan losses		29,567		41,333			14,062		108,900			42,732
Net interest income after provision for loan losses		121,997		114,956			123,405		483,839			495,340
NON-INTEREST INCOME
Deposit account charges and other fees		27,854		27,172			30,610		110,361			117,350
Bank card transaction fees		29,317		28,843			28,266		113,862			103,613
Trust fees		20,518		19,377			20,392		80,294			78,840
Trading account profits and commissions		2,604		4,317			3,172		14,268			8,647
Consumer brokerage services		3,439		3,294			3,014		13,553			12,445
Loan fees and sales		1,594		(7,297	)		1,919		(2,413	)		8,835
Other		10,267		9,520			10,728		45,787			41,851
Total non-interest income		95,593		85,226			98,101		375,712			371,581
INVESTMENT SECURITIES GAINS, NET		1,149		4,814			3,270		30,294			8,234
NON-INTEREST EXPENSE
Salaries and employee benefits		83,766		83,589			78,433		333,612			308,768
Net occupancy		11,861		11,582			11,584		46,317			45,789
Equipment		6,122		6,296			6,246		24,569			24,121
Supplies and communication		9,276		8,790			8,524		35,335			34,162
Data processing and software		14,229		14,436			13,685		56,387			50,342
Marketing		4,926		4,334			4,247		19,994			18,199
Loss on purchase of auction rate securities		32,967		—			—		33,266			—
Indemnification obligation		2,879		(3,690	)		20,951		(9,619	)		20,951
Other		18,506		18,066			19,227		76,252			72,426
Total non-interest expense		184,532		143,403			162,897		616,113			574,758
Income before income taxes		34,207		61,593			61,879		273,732			300,397
Less income taxes		9,534		17,757			18,187		85,077			93,737
NET INCOME	$	24,673	$	43,836		$	43,692	$	188,655		$	206,660
Net income per share — basic	$	0.32	$	0.58		$	0.58	$	2.50		$	2.72
Net income per share — diluted	$	0.32	$	0.58		$	0.58	$	2.48		$	2.69
Cash dividends per common share	$	0.238	$	0.238		$	0.227	$	0.952		$	0.907

4

COMMERCE BANCSHARES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited)	Sept. 30			Dec. 31			Dec. 31
(In thousands)	2008			2008			2007
ASSETS
Loans	$	10,985,789		$	11,283,246		$	10,605,368
Allowance for loan losses		(156,031	)		(172,619	)		(133,586	)
Net loans		10,829,758			11,110,627			10,471,782
Loans held for sale		392,697			361,298			235,896
Investment securities:
Available for sale		3,659,488			3,630,753			3,165,020
Trading		12,353			9,463			26,478
Non-marketable		153,423			139,900			105,517
Total investment securities		3,825,264			3,780,116			3,297,015
Federal funds sold and securities purchased under agreements to resell		457,295			169,475			655,165
Interest earning deposits with banks		—			638,158			—
Cash and due from banks		496,970			491,723			673,081
Land, buildings and equipment — net		409,676			411,168			406,249
Goodwill		125,585			125,585			124,570
Other intangible assets — net		18,299			17,191			21,413
Other assets		397,856			427,106			319,660
Total assets	$	16,953,400		$	17,532,447		$	16,204,831
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand	$	1,187,334		$	1,375,000		$	1,413,849
Savings, interest checking and money market		7,451,845			7,610,306			7,155,366
Time open and C.D.’s of less than $100,000		2,018,444			2,067,266			2,374,782
Time open and C.D.’s of $100,000 and over		1,654,464			1,842,161			1,607,555
Total deposits		12,312,087			12,894,733			12,551,552
Federal funds purchased and securities sold under agreements to repurchase		1,559,975			1,026,537			1,239,219
Other borrowings		1,250,510			1,747,781			583,639
Other liabilities		232,217			286,764			302,735
Total liabilities		15,354,789			15,955,815			14,677,145
Stockholders’ equity:
Preferred stock		—			—			—
Common stock		360,935			379,505			359,694
Capital surplus		482,441			621,458			475,220
Retained earnings		760,145			633,159			669,142
Treasury stock		(161	)		(761	)		(2,477	)
Accumulated other comprehensive income (loss)		(4,749	)		(56,729	)		26,107
Total stockholders’ equity		1,598,611			1,576,632			1,527,686
Total liabilities and stockholders’ equity	$	16,953,400		$	17,532,447		$	16,204,831

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)	2008			2008			2007			2008			2007
Loans:
Business	$	3,473,797		$	3,389,273		$	3,212,440		$	3,478,927		$	3,110,386
Real estate — construction and land		698,420			723,558			677,651			701,519			671,986
Real estate — business		2,324,683			2,285,336			2,222,816			2,281,664			2,204,041
Real estate — personal		1,508,736			1,543,282			1,541,861			1,522,172			1,521,066
Consumer		1,717,075			1,669,607			1,642,600			1,674,497			1,558,302
Student		—			54,534			—			13,708			—
Home equity		479,025			494,217			454,781			474,635			443,748
Consumer credit card		790,303			770,213			712,312			776,810			665,964
Overdrafts		12,381			10,553			17,152			11,926			13,823
Total loans		11,004,420			10,940,573			10,481,613			10,935,858			10,189,316
Loans held for sale		352,283			393,029			289,192			347,441			321,916
Investment securities (excluding unrealized gains and losses):
Available for sale		3,352,799			3,720,966			3,310,548			3,446,742			3,254,467
Trading		23,278			19,923			29,897			28,840			22,321
Non-marketable		144,476			150,290			102,951			133,996			92,251
Total investment securities		3,520,553			3,891,179			3,443,396			3,609,578			3,369,039
Federal funds sold and securities purchased under agreements to resell		419,628			369,374			537,859			425,273			527,304
Interest earning deposits with banks		—			185,665			—			46,670			—
Total interest earning assets		15,296,884			15,779,820			14,752,060			15,364,820			14,407,575
Total assets		16,387,099			16,794,456			15,894,020			16,454,333			15,480,327
Deposits:
Non-interest bearing deposits		668,191			691,058			660,310			670,118			647,888
Interest bearing deposits:
Savings		410,201			402,130			375,974			400,948			392,942
Interest checking		185,984			208,817			207,536			195,858			194,555
Money market		7,312,621			7,300,157			6,864,403			7,204,267			6,802,388
Time open & C.D.’s of less than $100,000		2,041,276			2,052,594			2,391,787			2,149,119			2,359,386
Time open & C.D.’s of $100,000 and over		1,554,804			1,787,116			1,499,654			1,629,500			1,480,856
Total interest bearing deposits		11,504,886			11,750,814			11,339,354			11,579,692			11,230,127
Total deposits		12,173,077			12,441,872			11,999,664			12,249,810			11,878,015
Borrowings:
Federal funds purchased and securities sold under agreements to repurchase		1,368,050			1,081,946			1,720,651			1,373,625			1,696,613
Other borrowings		1,103,224			1,534,214			492,214			1,092,746			292,446
Total borrowings		2,471,274			2,616,160			2,212,865			2,466,371			1,989,059
Total interest bearing liabilities		13,976,160			14,366,974			13,552,219			14,046,063			13,219,186
Total stockholders’ equity		1,616,468			1,608,995			1,512,857			1,594,941			1,476,403
Net yield on interest earning assets (tax-equivalent basis)		4.02	%		4.04	%		3.76	%		3.93	%		3.80	%

6

COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2008

For the quarter ended December 31, 2008, net income amounted to $43.8 million, an increase of $19.2 million over the previous quarter and a slight increase over the same quarter last year. For the current quarter, the return on average assets was 1.04%, the return on average equity was 10.8%, and the efficiency ratio was 58.9%. The current quarter included a pre-tax gain of $7.9 million on the sale of $369 million par value auction rate securities (ARS) for which the Company received federally guaranteed student loans in exchange. The Company also recorded an impairment charge of $9.0 million related to certain other held for sale loans. Additionally, the Company increased its allowance for loan losses by $16.6 million this quarter. The 3^rd quarter of 2008 included a pre-tax loss of $33.0 million as a result of the Company’s purchase of ARS from its customers.

Balance Sheet Review

During the 4^th quarter of 2008, average loans, excluding loans held for sale, decreased $63.8 million, or .6%, compared to the previous quarter. Also, average loans increased $459.0 million, or 4.4%, this quarter compared to the same period last year. During the quarter, the Company reclassified certain loans collateralized by land to either construction or personal real estate loans. The effect of this change was to increase average construction and personal real estate loans by $53 million and $48 million, respectively, and decrease average business, consumer and business real estate loans by $19 million, $10 million and $72 million, respectively. Exclusive of this change, most loan products experienced declines in average balances, except for business real estate and home equity loans.

As mentioned above, in December 2008 the Company acquired $368 million of federally guaranteed student loans from a student loan agency in exchange for certain ARS acquired by the Company in the previous quarter, and owed by that agency. The loans, which have an average estimated life of approximately 7 years, were recorded at fair value which resulted in a discount from the face amount of approximately 2.5%. A gain on the sale of the ARS of $7.9 million was also recognized. The Company also maintains agreements with various entities to purchase certain loans which are held for sale. Due to uncertainties surrounding some of these entities’ ability to fulfill these contracts in the future, the Company adjusted loans totaling $206.1 million to fair value and recorded impairment charges of $9.0 million in the current quarter.

Available for sale investment securities (excluding fair value adjustments) increased on average by $368.2 million to $3.7 billion this quarter compared with the previous quarter. The majority of this increase was the result of purchases of ARS near the end of the 3^rd quarter of approximately $540 million par value. As noted above, $369 million of these securities were sold in December 2008. During the current quarter, maturities and principal pay-downs of securities totaled $147.8 million, while the Company reinvested $306.2 million in mortgage-backed securities, $116.5 million in corporate securities, $60.4 million in U.S. treasury and agency securities, and $33.9 million in other asset-backed securities.

Total average deposits increased $268.8 million, or 2.2%, during the 4^th quarter of 2008 compared to the previous quarter, and increased $442.2 million, or 3.7%, compared to the 4^th quarter of 2007. Compared to the previous quarter, the increase in average deposits resulted mainly from increases in certificates of deposit ($243.6 million), and non-interest bearing demand deposits ($22.9 million). The average loans to deposits ratio in the current quarter was 91.1%, compared to 93.3% in the previous quarter.

During the current quarter, the Company’s average borrowings increased $144.9 million compared to the previous quarter. This overall increase was mainly due to increases in funding from the Federal Home Loan Bank of $150.7 million and the Federal Reserve’s Term Auction Facility (TAF) of $280.4 million, but was partly offset by lower average borrowings of federal funds purchased and repurchase agreements of $286.1 million.

Net Interest Income

Net interest income in the 4^th quarter of 2008 amounted to $156.3 million, an increase of $4.7 million, or 3.1%, compared with the previous quarter and an increase of $18.8 million, or 13.7%, compared to the 4^th quarter of last year. During the 4^th quarter of 2008, the net yield on earning assets (tax equivalent) was 4.04%, compared with 4.02% in the previous quarter and 3.76% in the same period last year.

The increase of $4.7 million in net interest income in the 4^th quarter of 2008 over the previous quarter was primarily the result of lower rates paid on deposits and other borrowings, coupled with higher average investment securities balances and higher rates earned on these securities. Interest income on loans (tax equivalent) decreased by $4.1 million this quarter, due to lower average balances of overall loans coupled with lower loan rates, which have re-priced quickly this quarter given the recent Federal Reserve actions to lower rates. Interest income on investment securities increased $6.8 million (tax equivalent) as a result of higher average balances of municipal, corporate and mortgage-backed investments coupled with higher rates earned mainly on mortgage-backed securities.

Interest expense on deposits declined $2.7 million in the 4^th quarter of 2008 compared with the previous quarter as a result of lower rates paid on all deposit products, but was partly offset by growth in average certificates of deposit balances. Interest expense on borrowings decreased $1.9 million due to significantly lower rates on the TAF debt, even though there were higher balances outstanding for Federal Home Loan Bank advances and borrowings under the TAF.

The overall tax equivalent yield on interest earning assets in the 4^th quarter decreased 14 basis points from the previous quarter to 5.38%, while the overall cost of interest bearing liabilities decreased 17 basis points to 1.48%.

Non-Interest Income

For the 4^th quarter of 2008, total non-interest income amounted to $85.2 million, a decrease of $12.9 million, or 13.1%, compared to $98.1 million in the same period last

7

COMMERCE BANCSHARES, INC.
Management Discussion of Fourth Quarter Results
December 31, 2008

year. Also, 4^th quarter non-interest income declined $10.4 million, or 10.8%, compared to $95.6 million recorded in the previous quarter. The decline in non-interest income from the 4^th quarter of 2007 resulted mainly from lower deposit and trust fee income, coupled with a $9.0 million impairment charge taken on certain held for sale loans mentioned above. Bank card fees for the quarter increased 2.0% over the 4^th quarter of last year, primarily due to growth in fees earned on corporate card transactions, which grew by 27.7%, but were negatively impacted by lower retail sales this quarter affecting both merchant and credit card fees. Trust fees for the quarter decreased 5.0% from the same period last year and reflected the impact that lower markets have had on trust assets. Deposit account fees declined 11.2% from the same period last year as a result of an 18.7% decline in overdraft fee income, which was partly offset by growth in corporate cash management fees of 12.5%. Bond trading income for the current quarter totaled $4.3 million, an increase of 36.1% over the same period last year, and brokerage fee income increased 9.3%.

Investment Securities Gains and Losses

Net securities gains amounted to $4.8 million in the 4^th quarter of 2008, compared to net gains of $1.1 million in the previous quarter and net gains of $3.3 million in the same quarter last year. Net gains in the current quarter included a $7.9 million gain on ARS sold in December, as mentioned above, partly offset by losses of $2.9 million relating to fair value adjustments on certain of the Company’s private equity investments. Minority interest amounts related to these fair value adjustments (recorded as a reduction to non-interest expense) totaled $304 thousand.

Non-Interest Expense

Non-interest expense for the current quarter amounted to $143.4 million, a decrease of $19.5 million compared with amounts recorded in the same period last year. Included in non-interest expense in the current quarter was a net reduction of $3.7 million in certain Visa, Inc. (Visa) indemnification costs, compared to indemnification costs of $21.0 million for Visa obligations in the 4^th quarter of 2007. Exclusive of these items, non-interest expense in the current quarter grew 3.6% compared to the same period last year. Compared to the 4^th quarter of last year, salaries and benefits expense increased $5.2 million, or 6.6%, resulting mainly from increased staffing, related to several growth initiatives, and higher medical costs. Full-time equivalent employees totaled 5,217 and 5,083 at December 31, 2008 and 2007, respectively.

Compared with the 4^th quarter of last year, occupancy and equipment costs were virtually unchanged, while supplies and communication expense and marketing costs increased 3.1% and 2.0% respectively. Data processing and software costs increased 5.5% when compared to the same quarter last year as a result of higher costs for new software and servicing systems, coupled with bank card processing costs which increased in relation to higher bank card revenues.

Income Taxes

The effective tax rate for the Company was 28.8% for the current quarter, compared with 27.9% in the previous quarter and 29.4% in the 4^th quarter of 2007.

Credit Quality

Net loan charge-offs for the 4^th quarter of 2008 amounted to $24.7 million, compared with $18.7 million in the prior quarter and $14.1 million in the 4^th quarter of last year. The increase in net charge-offs in the 4^th quarter of 2008 compared to the previous quarter was mainly the result of continued higher consumer and credit card loan losses, which totaled $15.6 million for the quarter, higher losses on construction loans, which increased by $2.8 million over the previous quarter, and an increase in personal real estate loan losses. Combined net loan charge-offs for business, business real estate and construction loans totaled $7.1 million for the quarter compared to $3.2 million in the same quarter last year. The ratio of annualized net loan charge-offs to total average loans was .90% in the current quarter compared to .68% in the previous quarter.

For the 4^th quarter of 2008, annualized net charge-offs on average consumer credit card loans increased to 4.48%, compared with 4.19% in the previous quarter and 3.68% in the same period last year. Consumer loan net charge-offs for the quarter amounted to 1.64% of average consumer loans, compared to 1.40% in the previous quarter and .86% in the same quarter last year. The provision for loan losses for the quarter totaled $41.3 million, and was $11.8 million higher than the previous quarter and $27.3 million higher than the 4^th quarter of 2007. Higher levels of consumer losses coupled with growth in the Company’s loan watch list were the main reasons for the higher provision levels, as the Company increased the allowance for loan losses this quarter by $16.6 million. The allowance for loan losses at December 31, 2008 amounted to $172.6 million, or 1.53% of total loans, excluding loans held for sale, and was 237% of total non-accrual loans.

Total non-performing assets amounted to $79.1 million, an increase of $32.9 million over the previous quarter, and represented .70% of loans outstanding. Non-performing assets are comprised of non-accrual loans ($72.9 million) and foreclosed real estate ($6.2 million). The increase in non-performing assets was mainly the result of placing a $19.9 million residential construction loan relationship within our market on non-accrual status. Loans past due more than 90 days and still accruing interest totaled $40.0 million at December 31, 2008.

Other

The Company’s purchases of treasury stock during the current quarter were not significant.

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