Magazine article American Banker

Stocks: Rave Fails to Shield Commerce of N.J. from Selloff

Magazine article American Banker

Stocks: Rave Fails to Shield Commerce of N.J. from Selloff

Article excerpt

Shares of Commerce Bancorp spotlighted the fickleness of the stock market on Wednesday by failing to ignite despite a glowing evaluation by a major investment firm.

The stock, after being touted by A.G. Edwards & Sons, was caught in a wave of bank stock selling as investors booked profits from the prior day's run-up. Shares dropped $1.625, to $57.6875.

With a stellar second-quarter performance, Commerce Bancorp "continues to astound even us, one of the company's most ardent supporters," said David C. Stumpf, a banking analyst at A.G. Edwards.

Year over year, revenue at the Cherry Hill, N.J., banking company jumped 25% on 21% deposit growth and a 22% increase in loans.

Mr. Stumpf credited the company's marketing culture, saying shares can sustain valuations that "have more in common with growing retailers" than more subdued banks.

Commerce Bancorp's "unique strategy and execution skill will continue to produce impressive results," Mr. Stumpf said.

The company's "historically strong growth rate could actually accelerate" because of customer dissatisfaction from mergers, including First Union's takeover of the Northeast regional CoreStates Financial Corp., Mr. Stumpf said.

Shares should hit $68 within the next 12 months, he said.

Despite the assessment, included in a report full of superlatives, Commerce shares were hammered.

Banks suffered once again as short-term investors said "it's time to lock in my profits and rotate out of the group into another," said Charles M. Vincent, a banking analyst with PNC Asset Management who has been following the stock market for three decades. …

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