Commerce Bancshares income outweighs loan losses

Commerce Bancshares 3Q profit climbs as increased income outweighs high loan losses

• On 1:21 pm EDT, Wednesday October 14, 2009

KANSAS CITY, Mo. (AP) -- Bank holding company Commerce Bancshares Inc. on Wednesday said its profit for the third quarter more than doubled as income rose more than the losses from unpaid loans.

The company reported net income of $51.6 million, or 66 cents per share, compared with $24.7 million, or 32 cents per share a year earlier.

Analysts surveyed by Thomson Reuters expected 51 cents per share.

Shares in Commerce Bancshares rose $2.79, or 7.5 percent, to $39.92 in afternoon trading.

Charge-offs -- loans written off as not being repaid -- rose to $30.9 million from $18.7 million in the third quarter the year before. Nearly every category saw an increase from the year before including business loans, mortgages, real estate construction and consumer credit card loans.

The more than $12 million increase in loan charge-offs was more than offset, however, by an increase in banking income.

Net interest income, the difference between how much it costs a bank to borrow money and how much it receives from lending to customers, rose nearly $12 million to $163.5 million from $151.6 million.

Non-interest income, money derived from fees and other charges, rose $6.5 million to $102.1 million from $95.6 million.

Economic conditions are still pressuring bank performance as loan balances decline because consumers and business owners continue to be hesitant to borrow, CEO David Kemper said.

Loans to businesses, consumers and for real estate all declined.

Personal real estate loan balances declined by $18.5 million and consumer loans fell $73.9 million, for example. Loan paydowns exceeded new loan originations for those products, the company said.

"These declines were reflective of continued uncertain economic conditions in the real estate markets and lower overall demand," the company said in a statement.

Commerce Bancshares operates in more than 370 locations in Missouri, Illinois, Kansas, Oklahoma and Colorado.

Buzz up!