(May 17) – “Let’s face it: Almost no one likes banks. If it isn’t the fees, it’s the long lines or the short hours or the surly tellers,” writes Jathon Sapsford in today’s Wall Street Journal.
“Now, walk into any branch of Commerce Bancorp, a community lender based here: Free checking. Free money orders. Weekday teller service from 7:30 in the morning to 8 at night. And branch service with real tellers on weekends and holidays — even a few hours on Sundays.
“Most banks say the average customers don’t make them much money, so they slap them with complicated fees or push them to those irksome automated phone centers. Commerce has a different approach that borrows more from McDonald’s than from Banking 101: Rather than squeeze customers, it looks for volume.
“Commerce takes the basic service and branding concepts found at fast-food giants — right down to the big red “C” in front of each branch, evoking the golden arches — and applies them to its branches. It keeps long hours. It moves teller lines by reducing many teller functions to one-touch keystrokes, making deposit receipts almost as easy as supersizing an Extra Value Meal. It even has bathrooms in each branch. Is this any way to run a bank in the year 2000?
“Yes, says Vernon W. Hill II, the founder, president and chairman of Commerce — who is 55 and also owns a string of Burger King outlets. At a time when polls suggest service in America is hitting all-time lows — not just at banks, but at telephone companies, airlines and department stores, too — Mr. Hill is showing that good service can be good business.
“Earnings are growing by 16%, compared with about 9% for the industry. Commerce’s lending business, focusing on small companies, has a nonperforming-loan rate of 0.18%, which is relatively low for the industry. The stock has surged 278% during the past five years, compared with 118% for the average bank stock — giving Mr. Hill’s 2.5% chunk of the company a market value of about $31 million.
“The measure Mr. Hill likes the most, though, is deposits. Driven mainly by checking and savings accounts, the total had doubled in the past five years to $5.6 billion by the end of 1999. The numbers reflect a sharp increase in branch openings in the past two years — to 120 from 88 — but Mr. Hill notes that he usually opens a new branch only after the existing ones hit capacity. And while deposits are growing from a relatively small base, the rate is still faster than that of any other publicly held bank in the U.S., says James McCormick, president of First Manhattan Consulting Group. “This is off-the-chart performance for a bank,” he says.