Vernon Hill, Commerce Bancorp's chief executive officer, is fearless when it comes to standing up to rivals like JP Morgan Chase & Co and First Union Corp.
Hill, who says his bank offers better service, has declared war on the competition as he tries to convince customers that Commerce is "America's most convenient bank," with longer branch hours and full services on Saturdays and Sundays.
"We see this as an attack," Hill said. "They have the market share and we're going to take it."
Now he's expanding Commerce into New York and Philadelphia, markets dominated by much larger banks. Hill expects to have 400 branches in the New York City area and 200 in Philadelphia and its Pennsylvania suburbs by 2006.
"If Commerce were to build branches in the entire Boston-to-Washington corridor, out of nowhere it would become one of the 10 biggest banks in the US," said William Black, managing director of Second Curve Capital, which owns about 408,000 Commerce shares. Hill's success at locating branches is helping win the war.
Sites are chosen by a committee that studies traffic patterns, proximity to potential customers and the competition. Investors are profiting. Commerce shares have risen 37 percent in the past year, and returned an average of 35 percent annually in the past decade, outperforming General Electric Co and Microsoft Corp.
Shares of Commerce rose US$0.45 to US$41.05 in trading Friday.
`No One Doing What They Do' Hill, who founded the bank in 1973 at age 27, was paid US$1.5 million in salary and bonus last year.
"Great companies get rewarded with great stock prices," Black said. "Looking at Commerce against other banks, they should have a higher stock price. There's no one doing what they do."
Commerce assets rose to US$11.3 billion by the end of last year from US$3 billion in 1995. The company has 4 percent of deposits in New Jersey, its largest market, making it the state's No. 6 bank.
FleetBoston Financial Corp is the state's No. 1, bank with 20 percent of deposits.
During December, 100,000 people with jars of change exchanged the coins for free at Commerce's 185 branches, using the bank's coin-counting machines. Many weren't Commerce customers. Providing the service all year is part of Hill's plan to show potential customers they can be happy with a bank.
Coin-counting machines in supermarkets typically charge an exchange fee of about 9 percent.
"We made 100,000 people happy just by letting them have their coins counted for free," he said. "There's nothing earth- shattering about this."
Commerce branches are open until 8pm on weeknights and 4pm on Sundays. Branches of many rivals aren't open past 2pm on Saturdays and are closed Sundays.
Customers are noticing. In November, 43 percent of Commerce's new customers were from Fleet or Summit Bancorp, Hill said. Fleet bought Summit last year to become New Jersey's top bank.
"We haven't emphasized that kind of service," Fleet Chief Executive Officer Chad Gifford said. "I respect what Commerce has done. I don't think it means all our branches [must be] open on weekends. I think it means some will have to be."
Commerce's "Sink the Fleet" plan aims to take customers from its Boston-based rival. Employees get US$25 for each new account they create for a former Fleet or Summit customer.
Commerce deposits rose to US$10.2 billion at the end of 2001, more than tripling since 1995 and up from US$637 million at the end of 1988.
RSS