Commerce Bancorp Sale Unlikely

Shares of New Jersey based Commerce Bancorp (CBH) soared 6% Friday and are continuing to hit multi-month highs today, jumping as much as 2% in early trading. The jump is being attributed to continued speculation that CBH will be one of the next regional bank takeover targets. I think the odds of Commerce agreeing to a sale are extremely unlikely.

Close followers of CBH are aware that the company has been growing very rapidly in recent years and their expansion plans continue. Management has been able to maintain impressive levels of organic growth and even after years of expanding their banking branch footprint in the U.S., they remain only visible in a few main states. Commerce has a large presence in New Jersey, New York, and Pennsylvania, along with a recent move into Florida. Baltimore and Washington DC are also in CBH’s sights in coming years.

Given the success of the Commerce growth strategy, and the many areas that remain untouched, selling the company to a larger, more national bank makes little sense for the company at this time. While buyout rumors have been swirling for years now, and evidently continue to do so, investors should be wary of the stock’s recent run-up and that such talk will become reality. Commerce Bancorp has years of internal growth ahead of it, which will prove profitable for shareholders even without a buyout offer.

Full Disclosure: I own shares of Commerce Bancorp (CBH) personally as well as for clients.

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