01 September 2005

Commerce Bank

When I returned from St. Louis to New York in 1999, a top priority was to open a new bank account. At the time, I had two Commerce Bank accounts, one at Commerce Bank of Missouri, a law school remnant, and one at Commerce Bank of Cherry Hill, NJ from my high school and college days. So I went to my neighborhood Chase Bank at I believe was 109th and Broadway. And I left that Chase branch with my two Commerce accounts intact. Chase's service was unwelcoming and the requirements to open a checking account would have forced me to go on a tri-state scavenger hunt for all the random documentation they demanded. And my small sums would not have survived the minimum balance fees, and the per check fees, and atm withdrawal fees.

Keeping my money in an out-of-state account was difficult. Until my direct deposit went through, I was stuck mailing my paychecks home to my mom to deposit them. But I kept the account anyway, as Commerce had just started expanding into North Jersey. The branch nearest to me was now Hackensack, in Bergen County. It was just a matter of time before they crossed the Hudson.

Here's an example of their superior service: Penny is a cartoon character that helps you count coins for free via a computerized interface, even if you don't have an account. The Commerce near my office has three Penny counting stations, including one low to the ground for the wee ones. And if you guess the amount of your change within $1.99, you win a bank. Yes, it's in the shape of Commerce's logo which isn't much to look at. But who am I to quibble with logo design?

I appreciate that they are expanding and spreading their superior service around the region, and now the country with their recent acquisition of Palm Beach County Bank in Florida. So before I gush any more, let's examine CBH's IBD and CNBC Stock Scouter scores:

IBD SmartSelect® Corporate Ratings
Commerce Bancorp Inc Nj (CBH) Ratings as of 9/1/2005

Earnings Per Share (EPS) Rating - 90 - Commerce Bancorp Inc Nj has outperformed 90% of all publicly-traded companies based on its short and long term earnings growth rates.
Relative Price Strength (RS) Rating - 73 - Commerce Bancorp Inc Nj has outperformed 73% of all publicly-traded companies in terms of its stock price performance over the last 12 months.
Industry Group Relative Strength (Grp RS)Rating - D+ - Commerce Bancorp Inc Nj belongs to an industry group that has performed in the bottom 40% of the 197 industry groups tracked by Investor's Business Daily, measured over the last six months.
(This grade dropped from a C- to a D+ today)
Sales + Profit Margins + ROE (SMR) Rating - A - Commerce Bancorp Inc Nj rates in the top 20% of all publicly-traded companies based on four fundamental factors used by many analysts today: a company's sales growth rate over the last three quarters, before- and after-tax profit margins, and return on equity (ROE).
Accumulation/ Distribution (Acc/Dis) Rating - B+ - Commerce Bancorp Inc Nj stock has been experiencing moderate buying, based on its daily price and volume changes over the last 13 weeks.
(This grade dropped from an A- to a B+ today as buying of the stock has slowed.)

CNBC's Stock Scouter score of 8 (This grade dropped from 10 today)
Quick Summary
Pro Earnings growth in the past year is holding steady compared to earnings growth in the past three years. Neutral
One or more analysts has modestly increased quarterly earnings estimates for CBH. Positive
The price-to-sales multiple is slightly higher than the average for all stocks in the StockScouter universe. Positive/Neutral for a medium- to large-sized company like CBH
Shares are being heavily sold by financial institutions. Neutral for a large company like CBH

Recently, the stock has had a nice run. The Cramer effect, from him touting Commerce whenever a caller asks about a bank stock, has probably helped. Cramer's Philly pride shine through in his endorsement of Commerce. He describes CBH more as a retailer than a bank, which allows us to discount the IBD Industry Group grade of D+. CBH would be a solid purchase if the stock price comes down at all, so, onto the WershovenistPig Stock Watch List it goes.

1 comment:

Anonymous said...

I agree with your assessment about Commerce but I have some reservations about their rapid expansion efforts. For example, I opened my acct. in New Jersey so when I was living in Manhattan, depositing checks was a problem - they needed to know the branch number of the location in NJ where I had openend my acct, I had to fill out a special deposit form, etc. I think in terms of systems intergration and IT issues - particularly as Commerce continues to grow, might be an issue. Sometimes too much too fast is not a good thing.