fourth-quarter profit dropped 47%, fueled by rising loss provisioning for loans made to real estate developers and other commercial loans.
The Cherry Hill, N.J.-based bank, which agreed to a sale to
this fall, made $33.4 million, or 17 cents a share, compared to $62.8 million, or 32 cents a share, in the fourth quarter of 2006. Revenue rose 15% to $568 million in the quarter. Analysts expected the bank to earn 30 cents a share.
For the year, Commerce made $140.3 million, or 71 cents a share, down 53% from a year earlier.
The deposit-rich company recorded a $53 million provision for loan losses -- double what it set aside in the third quarter. Commerce said that the additional provision included a $12.5 million charge related to one large loan that was transferred to nonaccrual status in the third quarter, residential real estate and other real estate development exposures, along with exposures to leveraged loans in its middle market commercial loan portfolio.
Net loans charged off in the fourth quarter were $27.7 million, or 0.63% of average loans. Commerce said loans charged off in its consumer portfolio, including residential mortgages, "had no measurable change in historic loss levels."
During the fourth quarter, Commerce also recorded a pretax gain of $22 million and expenses of $8.3 million in the quarter for the sale of its insurance brokerage business and $6.7 million in pretax losses related to "equity method investments," it said.
Last year was a tumultuous year for Commerce. A series of regulatory investigations into the bank's insider-party transactions ultimately led to the ouster of Commerce's founder and now ex-CEO Vernon Hill, as part of a settlement. The scrutiny was tied in part to Commerce's real estate transactions, including the fact that the bank had used InterArch, an architectural firm owned by Hill's wife, to design branch offices.
Hill's departure cranked up speculation that the company would be put up for sale. Just a few months later, TD Bank agreed to purchase Commerce for $8.5 billion.
Commerce shareholders will vote on the deal on Feb. 6, the company said on Friday.
Last week, Hill and his wife sued Commerce, seeking $57 million in damages.
The lawsuit alleges that, among other things, "Commerce and/or its directors have violated the Hills' and InterArch's constitutional rights, breached certain contracts with Mr. Hill and InterArch, are infringing certain copyrights owned by InterArch and have intentionally inflicted emotional distress on the plaintiffs," the company said in a
Securities and Exchange Commission
"Commerce believes that the lawsuit is without merit and will defend it vigorously," according to the filing.
Commerce shares were rising fractionally in recent trading to $37.23.