On Mar 15, 2013, we reiterated our long-term recommendation on
Commerce Bancshares, Inc
) at Neutral, as we believe that the risk-reward profile for the
company is currently balanced. Our decision rests on the
augmented top line as well as sustained growth in loans and
deposits. However, we remain concerned about the company's
Commerce Bancshares' fourth-quarter 2012 earnings came in at 72
cents, in line with the Zacks Consensus Estimate. Earnings were
mainly driven by 3.6% growth in the top line in comparison with
the prior quarter.
Following its fourth-quarter results, the Zacks Consensus
Estimate for 2013 was up marginally to $2.85 per share over the
last 60 days. Yet, the Zacks Consensus Estimate for 2014 has
remained stable at $2.94 per share over the same time frame. Due
to lack of directional movement in earnings estimates, Commerce
Bancshares currently carries a Zacks Rank #3 (Hold).
Commerce Bancshares has maintained a steady dividend policy due
to its sustained capital levels. Its balance sheet continues to
remain strong, reflecting a robust capital and deposit base.
Commerce Bancshares' financial performance is strongly influenced
by the economic conditions of the markets in which it operates.
However, it lacks considerable exposure in other parts of the
country unlike other larger national or regional banks. This
dearth of geographical diversification may cause diseconomies of
On the flip side, rising competition along with declining market
prices of products and services are apprehended to affect the
revenues of Commerce Bancshares. Further, the new proposed
capital rules by the Federal Reserve under which the banks are
required to maintain a total tier 1 ratio of 7% of risk-weighted
assets might affect the lending and investment abilities of
Other Major Banks to Consider
Other major banks that are performing better than Commerce
Bancshares and worth a look include
Huntington Bancshares Incorporated
TCF Financial Corporation
), all of which carry a Zacks Rank #2 (Buy).
ASSOC BANC CORP (ASBC): Free Stock Analysis
COMMERCE BANCSH (CBSH): Free Stock Analysis
HUNTINGTON BANC (HBAN): Free Stock Analysis
TCF FINL CORP (TCB): Free Stock Analysis
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