Shares of Commerce Bancshares Inc. were down sharply midday Thursday after the Kansas City, Mo., company reported earnings that fell short of analysts' estimates and warned that new rules limiting debit-card fees could take a bite out of fourth-quarter profits.

The $19.6 billion-asset company said Thursday that it earned $65.4 million in the quarter that ended Sept. 30, up 17% from the same period a year earlier but down 5.3% from this year's second quarter. Its diluted earnings per share fell three cents from the prior quarter, to 76 cents, a penny shy of consensus analysts' estimates, according to Thomson Reuters.

In a news release, Chairman and Chief Executive Officer attributed the year-over-year growth in earnings to improved asset quality, flat expenses and increases in income from bank card and trust operations. "However," he said, "loan demand remained weak, and coupled with record low interest rates, [net interest] margins were pressured."

For the quarter, Commerce said its net interest margin was 3.51%, compared to 3.75% in last year's third quarter and 3.85% in the prior quarter.

The company reported that income from bank card transactions increased 11.7% year over year and that fees from debit cards totaled $15.5 million. However, it said it estimates that revenues from debit cards will decline by $7 million as a result of new regulations for pricing debit transactions that took effect Oct. 1.

In heavy trading, Commerce's shares were down nearly 7% at midday Thursday, to $35.82.

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