Commerce Bancshares: Financial Winner

NEW YORK ( TheStreet) -- Commerce Bancshares ( CBSH) was the winner among the largest U.S. financial names on Tuesday, with shares rising 2% to close at $40.45.

The broad indexes all pulled back as investors fretted over events in Europe, as Greece's conservative New Democracy party failed to form a new government after winning the most votes in Sunday's election. A failure to form a new government willing to cooperate with the austerity measures required under the European bailout deal increase the likelihood of Greece defaulting on its debt and exiting the euro.

The KBW Bank Index ( I:BKX) declined 1% to close at 47.24, with 21 of the 24 index components showing declines.

Commerce Bancshares has seen its stock return 7% year-to-date, following a 3% return during 2011, which was rather solid performance considering that the KBW Bank Index dropped 25% last year.

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The Kansas City, Mo., lender's shares trade for 1.7 times tangible book value, according to Thomson Reuters Bank Insight, and for 13.5 times the consensus 2013 earnings estimate of $2.99 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $2.95 cents.

Based on a 23-cent quarterly payout, the shares have a dividend yield of 1.95%.

Commerce Bancshares has achieved quarterly operating returns on average assets ranging from 1.20% to 1.49% over the past five quarters, according to Thomson Reuters Bank insight. Out of the 24 component names of the KBW Bank Index, only Commerce, Cullen/Frost Bankers ( CFR), New York Community Bancorp ( NYB), U.S. Bancorp ( USB), and Wells Fargo ( WFC) have achieved ROA exceeding 1.00% for the past five quarters.

FIG Partners analyst John Rodis rates Commerce "Market Perform," with a $43 price target and said in April that although he remained "positive" on Commerce, the upside was "not enough to warrant a higher rating."

Rodis estimates that Commerce will earn $2.91 a share this year, followed by EPS of $3.00 during 2013.

The analyst called Commerce "one of the better performing regional banks in our coverage and the industry for that matter," adding that "with a relatively 'clean' and lower-risk balance sheet, the Company has a tremendous amount of operating flexibility."

Interested in more on Commerce Bancshares? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.