Probe Hits Commerce

Shares of Commerce Bancorp(CBH Quote) sank 5% after the bank said it is being investigated by regulators.

Commerce said it is being probed by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System for "transactions with its officers, directors and related parties, including transactions involving bank premises," it revealed in its quarterly earnings report on Tuesday.

The Cherry Hill, N.J., bank said it is "fully cooperating" with regulators.

Shares were down $1.74 to $32.98.

This is not Commerce's first bout with regulators sniffing around.

In 2004, the bank was being looked at by the U.S. District Court for the Eastern District of Pennsylvania in Philadelphia in regards to its municipal bond underwriting business -- a business it has subsequently gotten out of -- and whether it violated pay-to-play rules by making contributions to political campaigns in the area. Two former Commerce employees were convicted.

Commerce, which has $45 billion in assets, said in November that regulators had concluded that investigation.

Investigation aside, Commerce's fourth-quarter profit rose 67.5% to $78.6 million, or 40 cents a share, up from $46.9 million, or 26 cents a share, a year earlier. Revenue rose 23.8%, to $492.3 million.

Analysts were predicting the company would earn 40 cents a share on revenue of $500.3 million.

For the year, the company made $315.1 million, or $1.63 a share. That's up 11% from 2005.

Commerce opened 55 new branches in 2006, it reported. This year it plans to add around 65 branches to its total of 428.