Commerce Bancshares Inc. of Kansas City, Mo., and National City Corp. of Cleveland are best positioned to benefit from the positive demographic trends in Missouri, according to a Ryan Beck & Co. analyst.
Neither company has a leading deposit share in the state, but nevertheless they "hold leading positions in some of the state's most attractive markets," Kevin Reevey, an analyst at the BankAtlantic Bancorp Inc. unit, wrote in a note issued Friday.
Using data from SNL Financial LC, Mr. Reevey wrote that individuals living in Missouri are expected to create $21.4 billion of wealth from 2004 to 2009. The state also ranks 22nd in the country in terms of total wealth contribution, he wrote. (California, Texas, Florida, New York, and Illinois were the top five.)
St. Louis and Kansas City are among the top five metropolitan statistical areas in the Midwest, he wrote.
As of June 2005 the $14.3 billion-asset Commerce Bancshares had $7.86 billion of Missouri deposits, or the third-largest share (8.48%), according to data from the Federal Deposit Insurance Corp. The $141.5 billion-asset National City had $1.46 billion of deposits there, or the eighth-largest share (1.58%), according to the data, the most recent available.
The companies with the largest deposit shares in Missouri were U.S. Bancorp of Minneapolis and Bank of America Corp. of Charlotte, according to the FDIC.
Terry McEvoy, an analyst at Oppenheimer & Co., said that Nat City has been improving its retail banking platform throughout its midwestern markets, including Missouri.
"We've started to see some of the success of that initiative," he said.
However, Mr. McEvoy said that another Midwest banking company, Marshall & Ilsley Corp. of Milwaukee, is better poised to grab more market share in Missouri.
Though M&I has fewer branches there, "they have a greater amount of deposit market share," because of its more efficient platform, he said. It ranked No. 6 in deposit share, with $2.6 billion, or 2.8% of the state's total, according to Sandler O'Neill & Partners LP.
Andrew Marquardt, an analyst at Fox-Pitt, Kelton Inc., said that Commerce's competitive advantage is "they're not a big bank" and can benefit from local operations. "There is certainly value to that."
In addition, Commerce is in "a pretty favorable position, because of their loan-to-deposit ratio is one of the lowest among the bank group," he said. As a result, Commerce has "better flexibility in pricing [deposits], because they don't need to find incremental deposits to fund incremental loans."
Nat City has said it plans to build 35 to 40 branches this year, mostly in higher-growth areas, including St. Louis, Chicago, and Cincinnati.
On Monday it said that it has completed its conversion of Forbes First Financial Corp., the St. Louis parent of Pioneer Bank and Trust Co., an eight-branch company it acquired in May.
A spokeswoman from Nat City would not discuss Mr. Reevey's note. Commerce did not return a call for comment.
