Tucson: Commerce Bank Expands To Mesa

Commerce Bank gets Phoenix­area start

By David Wichner

ARIZONA DAILY STAR 5/11/2010

The acquisition of the assets of a failed Mesa bank by Tucson-based Commerce Bank of Arizona gives the local bank a toehold in the Phoenix area, and also protects de­positors.

Commerce Bank entered into an agreement Friday with the Federal Deposit Insurance Corp. to pur­chase most of the assets and de­posits of Towne Bank of Arizona.

On Monday, Towne Bank’s sole location at 3156 E. Baseline Road in Mesa opened as a Commerce Bank of Arizona branch office — its first outside Southern Arizona. Towne Bank employees and customers au­tomatically became part of Com­merce Bank, which has five branch­es in Southern Arizona.

Commerce Bank purchased just over $88 million in Towne Bank as­sets and about $90 million in liabil­ities consisting mainly of deposits, said Randy Yenerich, president and CEO of Commerce Bank of Ari­zona.

The FDIC and Commerce Bank of Arizona entered into a loss-share transaction on $80.1 million of Towne Bank of Arizona’s assets, under which Commerce Bank will share in the losses on assets covered under the agreement, the FDIC said.

A discount on the assets should cover Commerce Bank’s share of any losses, Yenerich said.

The failure of Towne Bank, which according to the FDIC had $120.2 million in assets and $113.2 million in deposits, is expected to cost the federal deposit insurance fund $41.8 million.

Towne Bank’s customers are able to access their accounts normally. Their accounts are insured up to $250,000.

“It is seamless to the depositors,” Yenerich said. “The benefit to the depositors of the Mesa bank is that they have a stable bank supporting them.”

The acquisition of Towne Bank will have no direct effect on existing Commerce Bank customers, except they’ll be part of a growing bank with a branch in Mesa at their serv­ice should the need arise, Yenerich said.

Towne Bank has been headed for trouble for at least two years.

In 2008, it agreed to an FDIC cease-and-desist order requiring it to revise its lending policies, reduce its concentration in real-estate loans and take other steps to boost its asset quality, capital and earn­i n gs.

Towne Bank had a “zero” star rating from Bauer Financial, a ma­jor bank-rating agency, and post­ed an $ 18.3 million loss in 2009.

At the end of 2009, 27.6 percent of Towne Bank’s assets were “nonperforming,” which includes bad loans and real estate acquired through foreclosure, according to Bauer.

The deal for Towne Bank’s as­sets had been in the works for months, Yenerich said.

Commerce Bank, which is on a list of qualifying banks that are able to bid on the assets of trou­bled banks, had been eyeing the Phoenix market for some time, he said.

“It’s a new market for us. ... To be a statewide bank, we needed to get to Phoenix, and this is one of the opportunities presented to us,” Yenerich said.

Commerce Bank of Arizona, the largest independent bank in Pima County, was founded in 2002 by a group of local investors and has three branch offices in Tucson, one in Green Valley and one in Tubac.

At year-end 2009, Commerce Bank of Arizona had $212 million in assets and was ranked four out of five possible stars, the second­highest ranking, by Bauer Finan­cial.

Contact Assistant Business Editor David Wichner at dwichner@azstarnet.com or 573-4181.