Commerce Bank
Commerce Bancorp’s profit tumbled 47 percent in the fourth quarter as a book of loans to real estate developers soured amid flagging property values, the bank said.
Commerce Bank earned $33.4 million, or 17 cents per share, in the fourth quarter, compared with $62.8 million, or 32 cents per share, in the fourth quarter of 2006.
Analysts expected profit of 30 cents per share, according to a Thomson Financial survey.
Profit from lending climbed 14 percent to $370.7 million. The bank’s portfolio also grew 14 percent, to $17.64 billion.
However, Commerce said the credit quality in its portfolio weakened, forcing the bank to set aside $55 million to cover bad loans. The provision is more than five times bigger than the reserve established in the fourth quarter of 2006.
Commerce said it expects more missed payments from residential developers, who have increasingly defaulted on their loans as property values slip, making it more difficult to wring cash out of their properties.
The bank wrote off $27.7 million in loans, or 0.63 percent of its loan portfolio on an annualized basis, during the fourth quarter, compared with 0.12 percent in the fourth quarter of 2006.
Commerce, which runs 470 branches, mainly in the New York and Philadelphia areas, during the fourth quarter agreed to sell itself to Toronto-Dominion Bank cash advance loan. The company will ask shareholders to vote on the sale Feb. 6.
For 2007, Commerce earned $140.3 million, or 71 cents per share, compared with $299.3 million, or $1.55 per share, in 2006.
Filed under: finance by John