On Aug 26, 2013, we reaffirmed our Neutral recommendation on
Commerce Bancshares, Inc.
). This was based on the company's positive second-quarter 2013
results, but we remain concerned about persistently rising
On Jul 11, Commerce Bancshares reported second-quarter 2013
earnings of 72 cents per share, in line with the Zacks Consensus
Estimate. Earnings were primarily driven by top-line growth,
partially offset by higher operating expenses. Consistent growth
in loans, along with steady capital and profitability ratios
added to the company's strong financials. However, a drop in
total deposits was the downside.
The Zacks Consensus Estimate for 2013 advanced 0.7% to $2.86 per
share over the last 60 days. Further, for 2014, the Zacks
Consensus Estimate increased 0.7% to $2.93 per share over the
same time period. As a result, Commerce Bancshares currently
carries a Zacks Rank #3 (Hold).
Commerce Bancshares' sound capital base and solid liquidity help
it to effectively deploy its capital, thereby making it an
attractive pick for income-seeking investors. Moreover, recently
the company entered into an agreement to acquire Summit
Bancshares, thereby expanding its footprints to newer markets.
However, owing to the present interest rate scenario, significant
improvement in net interest income (NII) is not expected in the
near term. Further, higher expenses, exposure to real estate
loans, overall volatile market conditions and stringent
regulatory requirements are plausible concerns.
Other Stocks Worth Considering
Some better performing banks include
First Interstate Bancsystem Inc.
Mercantile Bank Corp.
). All these stocks carry a Zack's Rank #1 (Strong Buy).
COMMERCE BANCSH (CBSH): Free Stock Analysis
FIRSTBANK ALMA (FBMI): Free Stock Analysis
FIRST INTST MT (FIBK): Free Stock Analysis
MERCANTILE BANK (MBWM): Free Stock Analysis
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