Investors Like Success Of 3 Banks in Missouri

Midwestern banks have fared better than their coastal counsins during the current recession, especially three banks in Missouri.

Boatmen's Bancshares and Mercantile Bancorp in St. Louis and Commerce Bancshares in Kansas City boast solid financial profiles and operate franchises that could make them tempting to larger buyers.

Friday, Boatmen's shares traded at $45.75, off $1.25 in a falling stock market. Mercantile was up 75 cents, to $37.25, and Commerce was up 50 cents, to $33.25.

Factors in Success

Several factors have helped this market performance:

* "The Midwest was spared the deleterious effects of declining real estate values - since there was no surge in property values during the 1980s," noted Christopher M. Siedman and Fay Y. Wong of Fitch Investors Service Inc., New York.

Commercial property vacancy rates have been declining for three years in St. Louis and Kansas City, according to Anthony J. Polini, a bank stock analyst at A.G. Edwards & Sons, St. Louis.

* The Missouri banks got a jump on competitors by building their franchises after bank holding company laws were eased, chiefly by merging 30 banks into a half dozen.

Boatmen's Reach

That has positioned them for out-of-state expansion, particularly into Illinois but also into Iowa and Oklahoma and - beginning July 1 - into Kansas.

Boatmen's, the state's largest banking company, with $17.2 billion of assets at Sept. 30, operates eight bank subsidiaries in central and southern Illinois and a $600 million bank in Memphis. It has just bought two banks in Oklahoma City and is acquiring First Interstate Bank of Iowa, Des Moines.

With its shares trading at about 130% of book value and 11 times next year's expected earnings, Boatmen's is poised for a 10% gain in earnings next year, Mr. Polini said.

Apart from a small bank in Alton, Ill., Mercantile keeps $8 billion of assets in its home state, where it focuses on building its share in local markets, the Fitch analysts said. "So far, all the acquisitions have been nondilutive," said Mr. Polini.

Family's Stake in Commerce

On the western side of the state, Commerce, with assets of $6.3 billion, is planning to make "substantial inroads" into Kansas when legal barriers fall next year, the Fitch analysts said.

Commerce is less vulnerable because of the Kemper family's substantial ownership stake. The Kempers own 10% of the company's stock, and David Kemper recently succeeded his father, James, as chairman.

Already reeling from congressional moves to limit finance charges on credit cards, banking stocks fell sharply along with other issues as the stock market was hit by a heavy round of futures-related program selling that unnerved other investors.

Table : Missouri Banks Show Their Stuff Chargeoffs/ Equity/ Return/ loans assets assetsBoatmen's Bancshares 0.87% 8.14% 0.96%Commerce Bancshares 0.56 7.65 0.95Mercantile Bancorp. 0.76 6.73 0.90Average bank(*) 0.95 6.69 0.82

(*) Average third quarter results for 143 banks with over two-thirds of U.S. commercial banking industry assets

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