Is it Time to Drop Commerce Bancshares from Your Portfolio?
On Nov 17, 2015, we issued an updated research report on Commerce Bancshares, Inc. CBSH. A still low interest rate environment and mounting operating expenses continue to hamper the company’s bottom-line growth.
Rising non-interest expenses continue to exert pressure on Commerce Bancshares’ financials as evident from its third-quarter 2015 results. We anticipate the overall expenses to remain elevated in the near term too, due to increased regulatory compliance costs as well as the company’s strategy to invest in franchise.
Additionally, Commerce Bancshares’ net interest margin (“NIM”) continues to face strain from a still low interest rate scenario. NIM has been persistently declining over the last four years, with the same trend continuing in the first nine months of 2015. We expect net interest income as well as NIM to remain subdued in the near term until there is a substantial rise in rates.
All these concerns are further reflected in the downward revision by analysts. Over the last 60 days, the Zacks Consensus Estimate decreased 1.8% to $2.70 per share for 2015 and 3.7% to $2.86 per share for 2016.
However, Commerce Bancshares remains well positioned for inorganic growth with a robust capital base and sturdy liquidity level. Also, the company’s initiatives in the mortgage banking area will likely accelerate fee generation, going forward.
Commerce Bancshares currently has a Zacks Rank #4 (Sell).
Better-ranked mid-west banks include Enterprise Financial Services Corp. EFSC, Civista Bancshares, Inc. CIVB and Old Second Bancorp Inc. OSBC. All these stocks hold a Zacks Rank #2 (Buy).
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COMMERCE BANCSH (CBSH): Free Stock Analysis Report
OLD SECOND BCP (OSBC): Free Stock Analysis Report
ENTERPRISE FINL (EFSC): Free Stock Analysis Report
CIVISTA BANCSH (CIVB): Free Stock Analysis Report
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