To hear Commerce Bancshares Inc. chairman David W. Kemper tell it, the Kansas City, Mo., company never took a break from acquisitions, it just did not come across any deals it liked.
After five years on the sidelines, the $14 billion-asset Commerce has announced two deals in the past two weeks, one of which would give it the No. 2 market share in an Illinois county where it currently ranks dead last.
Mr. Kemper, who is also Commerce's president and chief executive, said the deals do not signal any shift in strategy. Commerce has acquired more than two dozen banks since Mr. Kemper took the helm in 1991, and in an interview last week he said it is always on the lookout for acquisition candidates that would provide "more mass and better distribution."
"There have not been a lot of deals in our markets that were the right fit," he said.
Until now.
On April 5, Commerce announced it had agreed to buy the majority of the assets of Boone National Savings and Loan Association in Columbia, Mo., for $31 million. Buying the $162 million-asset Boone would double Commerce's branch count, to eight, in the Columbia market and make it No. 2 in deposits. (Boone National is the bank subsidiary of the investment firm Edward D. Jones & Co. LLP.)
On April 13, Commerce announced it was buying the $447 million-asset West Pointe Bancshares Inc. in Belleville, Ill., for $80.9 million. Mr. Kemper said buying West Point would give Commerce much more visibility - and a much bigger market share - on the Illinois side of St. Louis.
Commerce opened a branch in Siloh, Ill., in St. Clair County, three years ago, but had just 0.11% of the county's deposits on June 30, 2005, according to Federal Deposit Insurance Corp. data. West Pointe, with five branches, is No. 2 in market share in St. Clair County, with nearly 11% of its deposits.
"This is an important deal for us," Mr. Kemper said. "It's exactly the kind of deal we should be doing."
He added that the timing of two announcements was coincidental. The West Pointe deal had been in the works for months when Edward Jones put Boone National up for sale, he said.
Through its acquisitions in the 1990s, Commerce transformed itself from a small local bank to a regional force with about 340 branches in Missouri, Illinois, and Kansas.
Kevin K. Reevey, an analyst with BankAtlantic Bancorp's Ryan Beck & Co. Inc., said he expects Commerce to "continue to be opportunistic" in finding deals that would enhance its position in existing markets.
He also said that Commerce has been rumored as a takeover target, and that its recent deal announcements could be a message to larger banks that it is not for sale.
Its stock is "trading at a premium because there is takeover expectation already embedded in the share price," Mr. Reevey said. "However, we do not believe that they are willing sellers at this point in time."
Commerce's stock is up about 16% since April 30, 2005. It was trading at $52.29 midday Wednesday.
Mr. Kemper said there are not many community banks for sale in its markets, though he said that could change if earnings pressure on small banks persists for a few more quarters.
Asked if Commerce would consider acquiring outside its markets, Mr. Kemper said it is unlikely. It generally buys banks with assets of $100 million to $500 million, and would probably need something much larger if it hopes to gain meaningful market share in a new city.
"We don't want to go into a new market on a small basis," he said.
