Commerce Bancshares Sees Growth Opportunity in Wealth Management Business
Commerce Bancshares, the parent company of Commerce Bank based in Kansas City, Missouri, has successfully completed its first bank M&A deal in over a decade. The move is viewed as an opportunity to continue expanding its large wealth management business. With the acquisition of FineMark Holdings, Commerce now manages $90 billion assets under administration, a significant jump from the previously recorded $82 billion.
As the corporation ventures into this new era, industry analysts are keen to observe how well Commerce Bancshares can retain the client base of the selling bank. This comes as Commerce Bancshares, which already had a robust private banking and wealth management business, looks to grow this segment following the completion of its first bank acquisition in 12 years.
Details of the Acquisition
The Kansas City-based holding company of Commerce Bank finalized the $585 million all-stock purchase of FineMark Holdings on New Year’s Day. The acquisition marks the first bank M&A transaction for John Kemper since he assumed the role of president and CEO in 2018.
FineMark Holdings, a company with $4 billion-asset, operated a full-service private bank for high-net-worth individuals, including about 300 professional athletes. The acquisition of FineMark strengthens Commerce’s existing footprint in Florida and sets the stage for it to do business in Arizona and South Carolina.
Implications of the Acquisition
Even before the deal, Commerce generated approximately 13% of its total revenues from its wealth management business. The corporation is banking on its ability to retain FineMark’s existing clients by offering a wider range of wealth management products and services. Furthermore, they are leveraging their larger balance sheet to support the credit needs of FineMark’s customer base.
As John Kemper puts it, the combination of the two franchises solidifies Commerce’s standing as a leading wealth management and private banking service. It also extends their presence into some attractive, high-growth markets.
Commerce, which post-acquisition has about $36 billion of assets, has been building its wealth management business for over two decades. The business, known as Commerce Trust, offers a full range of services including financial planning, trust and estate planning, institutional asset management, and private banking.
Looking to the Future
As Commerce Trust now manages $90 billion of assets under administration, it ranks 15th among bank-managed trust companies based on its total assets under management. The agreement to buy FineMark was about five years in the making, highlighting the strategic nature of the acquisition.
It is imperative for Commerce to retain FineMark’s client base, a point of interest for analysts like Nathan Race of Piper Sandler. He observes that while client retention is not guaranteed in acquisitions, keeping the FineMark brand could be instrumental in retaining the client base and setting the stage for growth.
The systems conversion is projected to occur in the fourth quarter of 2026 or early 2027, according to John Handy, Commerce Trust President and CEO. The long timeline is aimed at ensuring a seamless conversion for high-value clients.
Commerce operates more than 140 bank branches across seven states, mainly in Missouri and Kansas, with commercial banking offices in 11 states. As for future bank M&A deals, Commerce is focused on finding the right partner that offers a strategic fit, as opposed to merely growing their balance sheet.
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