Magazine article American Banker

Thriving Commerce Bancorp in N.J. Becoming Popular Pick

Magazine article American Banker

Thriving Commerce Bancorp in N.J. Becoming Popular Pick

Article excerpt

A tougher market may help Commerce Bancorp in New Jersey stand out from the crowd, analysts say.

Earnings at the Cherry Hill banking company can keep growing 15% a year or more, they estimate. Profit growth at similar companies could retreat as loan growth slows and fee income dwindles, they say.

"This one's a keeper," said Edward Najarian, banking analyst at Wheat First Union. "You want an institution with a strong focus and sustained earnings per share momentum."

Commerce Bancorp is showing up on the short list of more analysts, who are searching for jewels among the battered regional banks.

Industry watchers say the selloff of regional bank stocks has been excessive, but market volatility and signs of a slowing economy have made them hesitant to recommend all such stocks.

Commerce Bancorp shares, which gained 50 cents to close at $39.875 on Tuesday, could top $50 a share in the next 12 months, analysts say.

The $4.4 billion-asset company is a standout among commercial banks, said Cassandra Toroian, a banking analyst at Ryan, Beck & Co.

"An aggressive expansion strategy and a proven ability to be a true retailer" make it a master at gathering low-cost deposits that fuel earnings growth, Ms. Toroian said.

The company's recent deal to acquire Prestige Financial Corp., with $310 million of assets and eight branches in central New Jersey, is considered a example of adaptability.

Commerce had generally expanded by opening new branches.

But this year it has made two acquistion deals-the one with Prestige is the second-to expand into tough-to-crack areas, analysts said. …

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