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

Includes: CBH-OLD, TD
by: Vernon Hill

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