Cherry Hill, N.J.-based Commerce Bancorp reported $5.5 million in net income for the third quarter, a 47% increase over the $3.7 million the bank earned in the same period last year.
In results reported Friday, the $2.2 billion-asset bank said it earned 59 cents per share. up 37% from the 43 cents it recorded in the third quarter of 1993.
Success in securities trading was primarily responsible for the bank's earnings growth, said Elizabeth Summers of Ryan. Beck & Co. Commerce has been reinvesting its maturing mortgage-backed securities investments in higher-rate securities as interest rates rise, she added.
Analysts predict strong future growth, too. "Commerce is a company that will likely continue to benefit in terms of margin and earnings from a rising-rate environment," said David Stumpf of Wheat First, Butcher & Singer.
Historically, Commerce has made more money when interest rates rise than when they drop. More than 57% of the bank's total assets come from demand deposits and savings accounts, a stable source of low-cost funding. The quarter was also strong because loan volume increased 11% over the third quarter a year ago.
