Back to top

Image: Bigstock

Canadian Imperial Bank Of Commerce Pushes Into US Market, Purchasing PrivateBancorp

Read MoreHide Full Article

In the most recent move by a Canadian bank tapping into the U.S. market for growth, Canadian Imperial Bank of Commerce (CM - Free Report) agreed to purchase Chicago, IL-based PrivateBancorp Inc. for approximately $3.8 billion in cash and stock. The bank’s offer values PrivateBancorp at $47 per share.

In Canada there are 5 big banks that essentially dominate the domestic banking and wealth management sectors, and with the prospect of rising credit losses from heavy energy sector lending and sluggish economic growth, the group is looking to other markets for growth. CM is hoping that the acquisition of PrivateBancorp will more than double its earnings from the U.S. to 10%.

The acquisition of PVTB will be the bank’s largest, and is expected to close by the end of March 2017. For PrivateBancorp the deal adds financial strength, the benefits of a large bank and a new market in Canada that it can provide services to. PrivateBancorp is a commercial and private banking services company will upwards of $2 billion in annual revenues. Majority of its loans are in the manufacturing, health-care, and finance and insurance sectors.

Of the 5 big Canadian banks, CM has the most domestically-focused loan portfolio, with almost 90% of its earnings coming from the market. With such a heavy amount of its business coming domestically, pressures to expand into other region was mounting, and it was likely only a matter of time until a deal like this was made.

Bottom Line

Canadian Imperial Bank of Commerce is currently a Zacks Rank #1 (Strong Buy) stock, and increased revenues and profits from this deal in future could add further to the strength of the bank and its stock. Only time will tell, but the bank and its investors are surely hoping that the largest acquisition in its history will provide for growth and positive returns moving forward.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 DaysClick to get this free report >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Canadian Imperial Bank of Commerce (CM) - free report >>