For Commerce Bancshares Corp., parent company of Commerce Bank & Trust Co., Mercantile Capital Corp. was cheap at $26.5 million in cash – and a convenient way to up Worcester-based Commerce’s visibility in Boston.
Over the past week or so since the acquisition closed, Commerce Bank & Trust Co.’s signs have been replacing Mercantile Bank & Trust Co. signs at its three Boston branches, perhaps most noticeably along the Mass. Pike adjacent to Fenway Park.
Mercantile Capital Corp. is the parent company of Mercantile Bank & Trust Co.
Mercantile’s other branches are in Boston’s Brighton and South End neighborhoods.
Combined, the two banks will have assets of $1.6 billion – $1.4 billion of it coming from Commerce – and 16 offices. The purchase price equals $9.05 for each of Mercantile’s 2.9 million shares outstanding.
Brian Thompson, Commerce Bank president and CEO, said Boston and Worcester are no longer quite the islands they once seemed to be. Demographic changes and technology have closed the social gap between the two, and banks are finding it easier to do business in both cities, Thompson told Banker & Tradesman.
“It is pretty close, Boston and Worcester, and not just in mileage, but everything that has happened in between, and that’s to the benefit of both cities,” Thompson said.
Thompson was careful to point out that “we are not a Boston bank, like say, Eastern Bank. We have three neighborhood offices.”
Picking Spots
Still, Commerce does have an existing customer base in Boston, and in Mercantile it found a bank that also serves specialty clients. In that niche, Commerce does aircraft and classic car lending, for example. Mercantile is a leading lender for city taxi medallions.
And it just so happens that Commerce Bancshares chairman Duddie Massad grew up just around the corner from what was Mercantile’s South End location.
If all this seems to have an air of smoothness to it, it does. During its first full day of business at what were Mercantile’s Boston locations, customers were availed of all the service and technology they expected on any other day, Thompson said.
“There were no surprises,” Thompson said. “People were using their ATM cards and internet banking, all the things you hope will work.”
Expanding into Boston is cheap and easy, at least in this case. So why not do more of it?
Well, Commerce is not a stock bank and doesn’t plan to become one, Thompson said. It has to pick its spots. Mercantile “was affordable, and we paid cash,” he noted. “It allows us to bring the Commerce name to the east, but we’re still Central Mass.-based.”
Thompson said Commerce plans to expand further, but perhaps not at a breakneck pace.
“Our goal is to be a successful bank. We don’t wish to go public and issue stock. We’re taking things as they come,” he said.
Peter Alden, a fellow Worcester banker as president and CEO of Bay State Savings Bank, agreed. He told Banker & Tradesman banks are looking to expand, but not necessarily with any geographical focus.
“There are more banks looking for opportunities in the market in general anyway, but looking for opportunities where you can find them, whether it’s in Boston or in your own back yard,” Alden said.
