Third-quarter earnings at Commerce Bancshares Inc. in Kansas City, Mo., surprised analysts — in a good way.

The $17.7 billion-asset Commerce said Wednesday that its net income jumped 109% from a year earlier and 40% from the second quarter, to $51.6 million.

Its profit of 66 cents per share beat the average estimate of analysts by 15 cents, partly because of better-than-expected credit quality and a fatter net interest margin.

The provision for loan losses shrunk 14% from the second quarter, to $35.4 million, as nonperforming assets dipped 2%, to $129 million, or 0.72% of total assets. Net chargeoffs fell 14%, to $30.9 million.

"Loan balances continued to decline this quarter as a result of weak demand, while deposits were relatively flat," David W. Kemper, the company's chairman and chief executive officer, said in a press release.

Still, the net interest margin widened by 11 basis points from the second quarter, to 4.02%, mostly on declining rates for certificates of deposit.

The company had recorded an after-tax loss of about $21 million on the purchase of auction-rate securities in the third quarter of 2008.

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