Commerce Bank, N.a. Rating Upgraded to A2 by Moody’s Investor Services
CHERRY HILL, N.J.–(BUSINESS WIRE)–June 12, 2001
Commerce Bancorp, Inc. (NYSE:CBH) announced today that Moody’s Investors Services has raised the ratings of Commerce Bank, N.A., deposits to A2 and the issuer rating of its holding company, Commerce Bancorp, Inc., to A3.
The rating agency said its move reflects “Commerce Bank’s continuing success in growing its banking franchise, particularly in core deposits, as well as its good intrinsic financial strength…” These rating upgrades follow previous upgrades in August 2000. Commerce Bank, N.A. now joins an elite group of approximately 49 U.S. banks with a rating of A2 or better.
“These rating upgrades by Moody’s are indicative of the overall strength of our unique retail banking model,” remarked Vernon W. Hill, II, Chairman and President of Commerce Bancorp, Inc. “In an industry marked by little or no growth, Commerce continues to consistently produce dramatic increases in low cost core deposits which are the foundation of our sound growth and profitability.”
As a growth retailer, Commerce focuses on gathering core deposits through its rapidly growing network of 156 branches that spans New Jersey, Eastern Pennsylvania and Delaware. At March 31, 2001, the Company’s deposits exceeded $8.1 billion, a $2.0 billion increase or 33% over total deposits of $6.1 billion a year earlier. Additionally, during the first three months of 2001, Commerce’s core deposits rose $407 million.
“With a deposit to loan ratio of around 180%, the core liquidity position of Commerce Bank is among the most robust in the U.S. banking industry. The company also has good capital ratios and a solid earnings profile,” noted Moody’s.
The Moody’s rating upgrades also recognizes the success of Commerce Bank’s lending activities. By implementing a strategy that combines strong underwriting standards with effective collection policies, Commerce is among the industry’s leaders in minimizing non-performing assets.
Non-performing assets at March 31, 2001 totaled $20.9 million or 0.23% of total assets, and net charge-offs for the first three months of 2001 were $1.1 million or .12% of average loans outstanding. Non-performing assets and loans past due 90 days or more represented 4% of stockholders’ equity and the allowance for loan losses at March 31, 2001.
Commerce also maintains a loan portfolio that is diversified in terms of both loan size and type. In recent years, Commerce has broadened its loan activities to extend beyond its original focus on commercial real estate.
Today, Commerce is a leading originator of loans to small-to-medium size businesses, an active lender in residential mortgages and home equity credit lines, maintains an active middle market lending group, and is one of the region’s most active healthcare lenders.
To support the Company’s overall expansion efforts, Commerce is building new branches at a time when many of the nation’s other banks are attempting to reduce expenses by eliminating or consolidating branch offices and forcing customers to use alternate delivery channels.
During the course of 2001, Commerce will open approximately 30-35 new branches as it continues to build-out its Metropolitan Philadelphia and Metropolitan New York markets. Commerce also plans to continue its rapid expansion by opening 30-35 new branches per year over each of the next five years, as it moves towards its goal of 325 branches and assets of $20 billion by 2005.
As a result of the recent positive review by Moody’s, the following Commerce ratings were upgraded:
Commerce Bancorp, Inc.
— Issuer rating to A3 from Baa1.
— Junior subordinated debt to Baa1 from Baa3.
Commerce Bank, N.A.
— The rating on the bank for long-term deposits to A2 from A3.
— The rating on the bank’s other senior obligations to A2 from
— The bank’s issuer rating to A2 from A3.
— The bank’s financial strength rating to C+ from C.
— The short-term deposit rating to Prime-1 (P-1) from Prime-2
— The bank’s other senior obligations to Prime-1 (P-1) from
Commerce Capital Trust I
— Preferred stock to “a3” from “baa2”. On introduction of the
new rating scale this will become Baa1.
Commerce Bancorp, Inc., headquartered in Cherry Hill, New Jersey presently has $9.3 billion in assets and $8.4 billion in deposits.
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