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Bank of Commerce (BOCH) Surges 7.4%: Is This an Indication of Further Gains?

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Bank of Commerce shares soared 7.4% in the last trading session to close at $15.05. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3.5% loss over the past four weeks.

Bank of Commerce extended its rally for the fourth consequent day. The impressive rally was driven by the signing of merger agreement between Columbia Banking System, Inc. (COLB - Free Report) and Bank of Commerce.

The all-stock deal is valued at $266 million or $15.72 per share. Besides, the transaction, expected to close in the fourth quarter 2021, is still subject to BOCH’s shareholders and regulatory approvals.

Under the terms of the deal, Bank of Commerce shareholders will receive 0.40 shares of Columbia common stock for each share of Bank of Commerce The deal is expected to be 3% accretive to Columbia’s earnings in 2022 and 4% in 2023.

This transaction will mark Columbia’s foray into the California market. Further, the combined company will have more than 150 branches and $19 billion in assets across Washington, Oregon, Idaho and California.

Notably, as Bank of Commerce shoot up to end the last trading session at $15.05, which is slightly lower than what Columbia has offered, there is a still some upside left in the stock.

This bank holding company is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of +34.8%. Revenues are expected to be $16 million, up 8.6% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Bank of Commerce, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on BOCH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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