Goodbye, Commerce Bancorp: Vernon Hill Mourns the End of an Era

On Wednesday, a small part of the American Dream ended when the shareholders of Commerce Bancorp (CBH) approved its $8.5 billion sale to Toronto-Dominion Bank (TD).

I voted no.

When I founded Commerce in 1973 at age 27, with one office, nine employees, and $1.5 million in capital, I had no idea the company would grow into a $50 billion, 470-branch success story. For that matter, I didn’t know that we’d introduce innovations into the retail banking business, such as night and weekend hours and free coin-counting, that would become standard practice in many parts of the country.

So this is a bittersweet day. On the one hand, we created a huge amount of value for our shareholders over the years. On the other, the magic of Commerce and the bond among its incredible team members and customers will soon begin to slowly fade away. Nothing, however, can take away our accomplishments and our legacy of reinventing of retail banking.

Commerce truly made its customers into raving fans. We tried to turn banking from drudgery into fun—and they reacted to our efforts with incredible enthusiasm. Our customers are the ones, as much as our team members, who are responsible for our success.

Our shareholders came out very, very, well, too. Over the past 20 years, they’ve earned an average annual return of 23%, in a stock market that has returned less than half that over the same period. If you’d invested $10,000 in 1973, your stock would have been worth $108,000 in 1991 and $4.7 million today.

Toronto-Dominion, Commerce’s new owner, is a perfectly fine and respectable bank. But as I hear about T-D’s early moves to trim a little here and cut back a little there, it seems clear that the company has already begun to chip away at the Commerce magic. Like most big banks, T-D is under the impression it can cost-cut its way to prosperity. But that mindset is utterly alien to the Commerce model. We rarely stinted when it came to spending to improve the Commerce customer’s experience, and instead tried to delight our customers, not nickel-and-dime them. As T-D (whether it realizes it or not) transforms Commerce into just another bank, I’m afraid it might lose more in customer goodwill than it picks up in savings.

In any event, we’ll be chronicling the changes in the Commerce experience we expect to see, in a special “Commerce Watch” portion of this web site. Check back often and follow the evolution--both good and bad--of a great bank.

It will be sad to watch. Even so, I’m incredibly grateful to the entire Commerce family: its team members, shareholders, and, especially, customers. And I have special thanks for my wife, Shirley, whose design genius and passion was critical to our success.

It’s been a fantastic ride.

Comments

[Jeff B.:]

Vern: It's a good thing you wrote this rosy little epilogue yourself, because few others have such fond memories of Commerce Bank. The numerous scandals which tainted the bank and our Govt here in NJ are nothing to be proud of, so please don't assume you will be fondly remembered as some great financial genius. Your greed, ego and arrogance (along with your even sleazier colleague George Norcross) will only ensure that you remain a legend in your own mind. I sincerely hope that you & Norcross end up in jail, where you belong.

2008 Feb 08 10:36 AM

[Jeffrey Ber...:]

Vern: As an institutional investor in Commerce Bank I salute you. It was a pleasure to be an investor in a company that revolutionized the business model of it's industry and flattened or enlightened avery competitor whose path it crossed. I still tell people about my due diligence trip to southern New Jersey where I saw an old Mellon Branch with a lightbulb driven digital clock on top, half of whose bulbs where out. It was so quite there was tumbleweed rolling across the empty parking lot. Across the street there was a brand new gleaming Commerce Branch, with 4 drive through lanes......every one of them packed in addition to the line out the front door of the bank. You served financial services to them their way! Always a winning strategy.

Salute

2008 Feb 08 01:10 PM

[LoadedBanker:]

Get serious. Vern is going to critique this company going forward? That's credible. The ego clearly never stops, even after the music does.

Vern, you didn't invent late or Sunday hours. Many banks had tried it before you, but they were smart enough to realize the economics weren't there. Fortunately for you, that wasn't a priority for Commerce. As long as the company was enriching you and your family (when real estate, design and construction of new branches are "all in the family," how couldn't they?), it was all good in the Hill hood. Of course you're going to "spend lavishly" when your wife is being paid for the design work. Shoot, who wouldn't spend a few million more per branch than competitors when it's money in the (personal) bank? Wait, we know the answer. Ethical, law-abiding people. Even your coin counters ripped people off. Remember the Cranky Consumer article in the WSJ that showed your "innovation" was keeping 20 cent of your customers dollar?

This bank was all hype. Glad TD is taking a knife to the thing and trimming the fat. The bank might actually might be viable over the long term if they go far enough.

2008 Feb 09 09:39 AM

[User 137633:]

The only time I went into Commerce was the free coin counting. Rates were too crappy to bank there (speaking of nickel-and-diming).

2008 Feb 09 04:34 PM

[Jersey:]

Mr Hill, I'm not a very wealthy man and I'm not as savvy an investor as I would like to be, but what I am is a customer of Commerce Bank and frankly I am deeply saddened by this news. I'm just a customer of your bank but let me tell you, the fact that you didn't nickel and dime me to death, the fact that you were open whenever I needed to go to the bank and I mean whenever, the fact that there were always, always plenty of tells available, and the fact that your customer service to people like me was just as good as people with large investment accounts has really meant something special to me in these tough times we live in today. I found myself amazed by Commerce and actually left another bank to come to Commerce. Mr Hill, all I can say is thank you, it's been a pleasure doing business with you and your organization and believe me, thats not something that the average guy says about a bank these days. Best of luck to you and your family. I will miss Commerce and only hope more banks will learn what a difference they have made to this customer by making me feel feel that it still is about the customers after all. Best wishes, thank you.

2008 Feb 09 09:58 PM

[Dawson Lodge:]

Vernon, you old entrepreneur, what the hell are you going to do now? How about a Canadian oil producer ETF
with debit cards for those of us that want our bank backed with real assets? Let's talk...

2008 Feb 11 02:16 AM

[Jeff B.:]

Vernon Hill is just part of the corrupt infrastructure that keeps dirty NJ politics running on empty. His legacy, and that of his partner in crime, George Norcross is nothing for anyone to be proud of. Take your millions, and go move someplace else, Vern. I am sure there must be another state someplace that needs screwing up.

2008 Feb 11 09:50 AM

[mike s:]

Why was my comments removed ?

2008 Feb 11 11:54 AM

[Foust:]

Correct me if I'm wrong, but wasn't Mr. Hill forced to leave his position as CEO, thus setting up this purchase? It was his own shady side deals that led to this.

2008 Feb 12 01:30 PM

[LoadedBanker:]

Yes, he was forced to leave to avoid federal investigation and scrutiny by regulators. Oh, and now he's filed a lawsuit against Commerce for $57 million for wrongful termination. And this guy is seriously going to offer commentary on the bank going forward? Hey Seeking Alpha, kick him to the curb for the sake of your own credibility. He's busy tossing salads now anyway...

2008 Feb 13 11:19 AM

[Capital C:]

One American dream ends, another begins. They did you a favor Mr Hill and created an opportunity for you to move onto bigger and better things in customer service.

Commerce cost cutting will hurt their growth. The magic in not always in the money but, also in the man spending the money

2008 Feb 16 06:53 PM

[Mike Stathis:]

Geez, guys, give the man a break. He is not here as a representative of his former bank, so I don't think it's fair to take cheap shots at him on this venue. He is here to provide some insight.

If you chose to criticize the man for things in the past, you can at least be a bit more respectful about it. As well, to be fair, if you must criticize him you should also respect his achievements.

And if he has an ego, so what? He built a huge corporation. That's a rare event today, where useless CEOs enter a company for a few years, mess it up and leave with a huge golden parachute. He has a right to be proud of his accomplishments. Maybe some of you can learn something from him.

2008 May 13 01:22 AM

[philipmax:]

WOW!!

Vernon Hill takes a tiny corner bank and turns it into a $50 Billion Dollar Monster and you jokers still insist on kicking him!

Every school child knows the names of Ford and Edison. They wer innovative geniuses who revolutionized America.

But they were living in the golden age of industrialization, when men like Frank Woolworth and John Cash Penny could become enormously wealthy building retail store chains. When HJ Heinz could create a food giant with ketchup and wise distribution. When men who marketed products across the nation became hugely wealthy.

Today in in the 21st century, you hardly hear of entrepreneurial success stories that don't involve the computer industry.
You rarely see success in the brick-and-mortar world.

So when someone takes on the mundane banking experience and energizes it with stylish store-fronts, extended hours, and little niceties such as dog dishes, and of course, the 10 cent free pens (as many as you want).

Well....IT REVOLUTIONARY!!!!

The nation should be grateful to Vernon and his family for breaking down the 9-3 banking tyranny of CITI and Chase. Mr. Hill's name should be hailed in classrooms as a modern day hero just like Ford and Edison in their day.

I retell his remarkable story as often as I can because it's so amazing. Anyone who criticizes his family for their involvement has no concept of what other institutions are paying for similar services that they rendered to the super success of this bank.

Remember your marketing class and you can fully appreciate the magic of the 10 cent pen. You must admire this man for this remarkable achievement.

I have four accounts at Commerce, and, although the account features are similar to other banks, it's still a unique and pleasurable experience to enter the bank.

Oh yea... I still take a free pen home each and every time.

2008 Jul 29 10:21 PM

[User 384545:]

I couldn't have said it better myself. "All good in the Hill Hood" cracks me up.


On Feb 09 09:39 AM LoadedBanker wrote:

> Get serious. Vern is going to critique this company going forward?
> That's credible. The ego clearly never stops, even after the music
> does.
>
> Vern, you didn't invent late or Sunday hours. Many banks had tried
> it before you, but they were smart enough to realize the economics
> weren't there. Fortunately for you, that wasn't a priority for Commerce.
> As long as the company was enriching you and your family (when real
> estate, design and construction of new branches are "all in the family,"
> how couldn't they?), it was all good in the Hill hood. Of course
> you're going to "spend lavishly" when your wife is being paid for
> the design work. Shoot, who wouldn't spend a few million more per
> branch than competitors when it's money in the (personal) bank? Wait,
> we know the answer. Ethical, law-abiding people. Even your coin counters
> ripped people off. Remember the Cranky Consumer article in the WSJ
> that showed your "innovation" was keeping 20 cent of your customers
> dollar?
>
> This bank was all hype. Glad TD is taking a knife to the thing and
> trimming the fat. The bank might actually might be viable over the
> long term if they go far enough.

Mar 27 08:43 PM