- The Washington Times - Thursday, July 3, 2003

Fast-growing Commerce Bank, which runs its branches more like retail stores than financial institutions, is shopping for space in the Washington area.

The Cherry Hill, N.J., bank is working with a local real estate firm to identify possible branch locations in the District and Northern Virginia, according to a report in this week’s Washington Business Journal.

“At any given time, we’ve got 100 different sites under consideration. This is still very early in the process,” said David Flaherty, vice president for corporate communications with the bank’s parent company, Commerce Bancorp Inc.

Roger Carlson and Scott Thiell, brokers for Madison Madison Retail, a real estate firm in the District, have been contacting landlords and telling them about Commerce Bancorp. Mr. Carlson and Mr. Thiell did not return telephone calls this week.

Commerce has made no secret of its intentions to expand into the Washington and Baltimore areas, several analysts said.

“We’ve heard the scuttlebutt that they are sniffing around,” said Adam C. Barkstrom, an analyst for research and investment firm Legg Mason Inc.

When Commerce Bancorp expands into the Washington market, it will probably force other banks to be more competitive, said Jacqueline Reeves, senior vice president of Ryan Beck & Co. Inc., a regional investment firm.

Commerce is known for staying open late — 8 p.m. some weeknights — and keeping hours seven days a week, which has appealed to customers craving better customer service from financial institutions. It bills itself as “America’s most convenient bank.”

The bank offers new customers free checking for one year. It does not charge a monthly fee for a checking or savings account as long as a minimum balance of $100 is maintained. It also does not charge customers to use an ATM or its online banking services.

“Commerce shakes things up when they enter a new market. They make their presence known,” Ms. Reeves said.

Commerce Bancorp, founded in 1973, has $17 billion in assets and 225 branches in New Jersey, New York, Pennsylvania and Delaware. The bank plans to open between 45 and 50 branches in these markets this year, and aims to have 515 branches and $59 billion in assets by the end of 2007.

All branches tend to be about the same size and share a standardized look, down to a uniform number of drive-through windows, analysts said.

“They run their branches more like retail stores, and they really emphasize customer service. It is a unique model,” said Susan Landry, vice president and research director at Gartner, a research firm in Stamford, Conn.

When Commerce Bancorp enters a new market, it typically opens multiple branches at once. This strategy of flooding the market is reminiscent of retailers such as Starbucks and McDonald’s, Ms. Landry said.

Commerce Bancorp’s founder and chairman, Vernon W. Hill II, is a Northern Virginia native who used to work in real estate. In the late 1960s, one of his first clients was McDonald’s founder Ray Kroc, who hired Mr. Hill to help him scout locations for the then-fledgling fast-food chain in New Jersey.

Commerce’s earnings have soared about 24 percent a year over the past three years, about twice the rate of its rivals. Some critics have suggested the bank is growing too fast and fear its stock will come unglued when growth slows.

Mr. Barkstrom, who has rated the stock a sell, said the bank’s branches are expensive to operate because they stay open later and on weekends.

“It may be popular with customers, but it is a very inefficient model,” Mr. Barkstrom said.

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