Press Release: Exchange Ratio Adjusted For Commerce Bancshares, Inc.'s Pending Acquisition Of Finemark Holdings, Inc

Let’s dig into the relative performance of Commerce Bancshares and its peers as we unravel the now-completed Q3 regional banks earnings season.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

The 94 regional banks stocks we track reported a satisfactory Q3. As a group, revenues missed analysts’ consensus estimates by 1.1%.

In light of this news, share prices of the companies have held steady as they are up 1.3% on average since the latest earnings results.

Commerce Bancshares

Founded in 1865 during the post-Civil War economic boom, Commerce Bancshares (NASDAQGS:CBSH) is a Midwest-focused bank holding company that provides retail, commercial, and wealth management services to individuals and businesses.

Commerce Bancshares reported revenues of $448.9 million, up 5.6% year on year. This print exceeded analysts’ expectations by 0.5%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts’ EPS estimates and a miss of analysts’ net interest income estimates.

In making this announcement, John Kemper, Chief Executive Officer, said, “Commerce delivered another strong quarter, underscoring the resilience of our diversified operating model and the dedication of our talented team. Our third quarter results reflect steady loan balances, robust fee income, and disciplined expense management, all of which contributed to another period of high profitability.

Unsurprisingly, the stock is down 4.1% since reporting and currently trades at $54.36.

Read our full report on Commerce Bancshares here, it’s free for active Edge members.

Best Q3: Customers Bancorp

Originally founded with a "high-tech, high-touch" branch-light banking strategy, Customers Bancorp is a bank holding company that provides commercial and consumer banking services through its Customers Bank subsidiary, with a focus on business lending and digital banking.

Customers Bancorp reported revenues of $232.1 million, up 38.5% year on year, outperforming analysts’ expectations by 7%. The business had a stunning quarter with a solid beat of analysts’ net interest income estimates and an impressive beat of analysts’ revenue estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $64.97.

Is now the time to buy Customers Bancorp? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: The Bancorp

Operating behind the scenes of many popular fintech apps and prepaid cards you might use daily, The Bancorp is a bank holding company that specializes in providing banking services to fintech companies and offering specialty lending products.

The Bancorp reported revenues of $174.6 million, up 38.8% year on year, falling short of analysts’ expectations by 10%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ net interest income estimates.

As expected, the stock is down 19.7% since the results and currently trades at $61.99.

Read our full analysis of The Bancorp’s results here.

Cadence Bank

With roots dating back to 1885 and a strategic focus on middle-market commercial lending, Cadence Bancorporation is a bank holding company that provides commercial banking, retail banking, and wealth management services to middle-market businesses and individuals.

Cadence Bank reported revenues of $519.3 million, up 15.1% year on year. This result lagged analysts' expectations by 0.6%. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ tangible book value per share estimates but a slight miss of analysts’ revenue estimates.

The stock is up 2.6% since reporting and currently trades at $38.03.

Read our full, actionable report on Cadence Bank here, it’s free for active Edge members.

UMB Financial

With roots dating back to 1913 and a name derived from "United Missouri Bank," UMB Financial is a financial holding company that provides banking, asset management, and fund services to commercial, institutional, and individual customers.

UMB Financial reported revenues of $678.3 million, up 67% year on year. This print beat analysts’ expectations by 3.5%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ revenue estimates and a decent beat of analysts’ tangible book value per share estimates.

The stock is down 3.2% since reporting and currently trades at $108.68.

Read our full, actionable report on UMB Financial here, it’s free for active Edge members.

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Commerce Bancshares jumped 2.8%. Is now the time to buy Commerce Bancshares? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Bank of Hawaii jumped 2.8%. Is now the time to buy Bank of Hawaii? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company SouthState jumped 2.7%. Is now the time to buy SouthState? Access our full analysis report here, it’s free for active Edge members.
• Thrifts & Mortgage Finance company PennyMac Mortgage Investment Trust jumped 2.7%. Is now the time to buy PennyMac Mortgage Investment Trust? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Commerce Bancshares (CBSH)

Commerce Bancshares’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was about 1 month ago when the stock dropped 4.7% on the news that the company reported third-quarter financial results that missed analyst expectations for both revenue and earnings per share. 

The bank reported earnings of $1.06 per share, falling short of the consensus estimate of $1.10. Revenue for the quarter came in at $441 million, missing forecasts of $446.4 million. Delving deeper into the results, other key metrics also failed to meet expectations. Net interest income, a crucial measure of a bank's core lending profitability, was $279.5 million, below the consensus estimate of $285.7 million. Additionally, the bank's efficiency ratio of 55.3%, a measure of expenses relative to revenue, was weaker than the 54.7% analysts had projected. Overall, the broad-based misses pointed to a challenging quarter for the bank.

Commerce Bancshares is down 12% since the beginning of the year, and at $54.36 per share, it is trading 23.2% below its 52-week high of $70.82 from November 2024. Investors who bought $1,000 worth of Commerce Bancshares’s shares 5 years ago would now be looking at an investment worth $1,018.