Commerce Bancorp of Cherry Hill, N.J., shed more light Friday on some previously announced initiatives, among them a proposal to offer more stock and ongoing branch expansion.
The company also gave earnings guidance for this year and next, and once again it addressed some of Wall Street's concerns about its balance sheet.
In a press release it said it had filed a preliminary prospectus with the Securities and Exchange Commission to offer five million shares of its common stock, and possibly 5.75 million if demand warrants. The offering is subject to market conditions, it said.
The $21 billion-asset company also filed an 8K unscheduled event filing with the SEC in a question-and-answer format like the "frequently asked questions" section on many companies' Web sites.
C. Edward Jordan, Commerce's head of investor relations, said the questions answered in the filing are among the most popular posed to him by analysts and prospective investors. Commerce was due to present at a financial services conference sponsored by Lehman Brothers Holdings today and wanted to get the information out ahead of that event, he said.
In one of the answers, Commerce said it expects to meet or exceed the current analyst outlook for earnings for next year. The 11 analysts surveyed by Thomson First Call expect earnings per share to come in at $2.53 this year and $2.89 in 2004. Commerce has met the analyst consensus for the past 10 quarters.
It also gave details on how rising interest rates are likely to affect its securities portfolio. Some analysts had raised concerns about its hefty exposure to mortgage-backed securities, a popular product among bankers that Commerce uses to invest its deposits.
"In general, in a rising-rate environment the value of our core deposits increases more than the decline in the value of our investment portfolio," the SEC filing said.
Mr. Jordan said that management will go on a road show immediately after the Lehman conference and expects to price the stock offering sometime next week.
It is designed to fund Commerce's rapid expansion. Mr. Jordan said Vernon Hill, Commerce's chairman and chief executive officer, will announce by yearend where the company will expand first - north or south of its New Jersey, Pennsylvania and New York bases. In total, it expects to built about 1,000 branches.
Investors reacted positively Friday, pushing the stock up 3.8%. Shares were falling for most of the year and were under pressure from a large stake of short positions.
Gary B. Townsend, an analyst with Friedman, Billings, Ramsey & Co. in Arlington, Va., said that though much of the information in the filing repeated earlier announcements and filings, it "left the short-sellers with no leg to stand on."
But others were less impressed. Adam C. Barkstrom of Legg Mason Wood Walker, a longtime critic of Commerce, wrote in an e-mail to investors that "management has only superficially addressed some of concerns."
