Cherry Hill
A cherry is the fruit of many plants of the genus ''Prunus'', and is a fleshy drupe (stone fruit).
Commercial cherries are obtained from cultivars of several species, such as the sweet ''Prunus avium'' and the sour ''Prunus cerasus''. The nam ...
,
New Jersey
New Jersey is a U.S. state, state in the Mid-Atlantic States, Mid-Atlantic and Northeastern United States, Northeastern regions of the United States. It is bordered on the north and east by the state of New York (state), New York; on the ea ...
–based
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Becau ...
created in 1973. In 2007, it was purchased by
Toronto-Dominion Bank
Toronto-Dominion Bank (french: links=no, Banque Toronto-Dominion), doing business as TD Bank Group (french: links=no, Groupe Banque TD), is a Canadian multinational banking and financial services corporation headquartered in Toronto, Ontario. T ...
, which merged Commerce with
TD Banknorth
TD Banknorth, formerly Banknorth, was a wholly owned subsidiary of the Toronto-Dominion Bank which conducted banking and insurance activities, primarily serving the northeastern area of the United States, headquartered in Portland, Maine. The bank ...
to form TD Bank, N.A.; all of its banks and branches were given the TD Bank logo.
History
The company was founded in 1973 by
fast-food restaurant
A fast-food restaurant, also known as a quick-service restaurant (QSR) within the industry, is a specific type of restaurant that serves fast-food cuisine and has minimal table service. The food served in fast-food restaurants is typical ...
franchise
Franchise may refer to:
Business and law
* Franchising, a business method that involves licensing of trademarks and methods of doing business to franchisees
* Franchise, a privilege to operate a type of business such as a cable television p ...
owner
Vernon Hill
Vernon W. Hill II (born August 18, 1945) is an American businessman, the founder and former chairman of Metro Bank, a UK retail bank with 77 stores, and assets of £7.4b ($10.6b). He was also the founder, former chairman, president and CEO of ...
, a graduate of the
Wharton School
The Wharton School of the University of Pennsylvania ( ; also known as Wharton Business School, the Wharton School, Penn Wharton, and Wharton) is the business school of the University of Pennsylvania, a private Ivy League research university in ...
of the
University of Pennsylvania
The University of Pennsylvania (also known as Penn or UPenn) is a private research university in Philadelphia. It is the fourth-oldest institution of higher education in the United States and is ranked among the highest-regarded universit ...
. Hill sought to bring
fast food
Fast food is a type of mass-produced food designed for commercial resale, with a strong priority placed on speed of service. It is a commercial term, limited to food sold in a restaurant or store with frozen, preheated or precooked ingredie ...
convenience to banking and expanded Commerce from one location to over 435 in thirty-three years. With growth of over sixty-five new stores opening annually, the company had planned to reach at least 800 stores by 2010. During the early-mid 2000s, television advertisements for Commerce Bank featured
Kelly Ripa
Kelly Ripa (; born October 2, 1970) is an American actress and talk show host. Since 2001, she has been the co-host of the syndicated morning talk show '' Live! with Kelly and Ryan'' in various formats.
As an actress, Ripa's best known roles i ...
and
Regis Philbin
Regis Francis Xavier Philbin (; August 25, 1931 – July 25, 2020)Archived aGhostarchiveand thWayback Machine was an American television presenter, talk show host, game show host, comedian, actor, and singer. Once called "the hardest working ma ...
. In 2006, Commerce purchased eMoney Advisor for $32 million in stock.
In 2004, two Commerce executives were sentenced to more than two years in prison after being convicted of approving loans to Philadelphia’s treasurer (who was sentenced to ten years in prison) and others in order to get the inside track on city banking business.
The federal Office of the Comptroller of Currency and the Federal Reserve’s investigation of insider dealing at Commerce (unrelated to the Philadelphia case) led to a settlement with the bank (no charges were filed) that included restrictions on the bank’s expansion. Hill then retired as chairman, president and chief executive officer.
Hill sued Commerce in 2008, saying he was fired without cause and was owed more than $57 million in severance and damages. In 2013, a federal court ruled that Commerce could not legally pay Hill because the bank had refused to “to certify it had no reason to believe Hill had committed fraud, breached his fiduciary duty or abused his insider privileges.”
Business model
Commerce's philosophy was that they were retailers, not bankers, and went so far as to call their various locations stores, not branches.
Features that Commerce offered its customers included:
*"America's most convenient bank"
*Seven-day lobby or drive-thru hours in
Center City Philadelphia
Center City includes the central business district and central neighborhoods of Philadelphia. It comprises the area that made up the City of Philadelphia prior to the Act of Consolidation, 1854, which extended the city borders to be coterminous wi ...
and
Manhattan
Manhattan (), known regionally as the City, is the most densely populated and geographically smallest of the five Boroughs of New York City, boroughs of New York City. The borough is also coextensive with New York County, one of the List of co ...
with the exception of branches in
Paramus, New Jersey
Paramus ( Waggoner, Walter H ''The New York Times'', February 16, 1966. Accessed October 16, 2018. "Paramus – pronounced puh-RAHM-us, with the accent on the second syllable – may have taken its name from 'perremus' or 'perymus,' Indian for ...
(
Bergen County
Bergen County is the most populous county in the U.S. state of New Jersey.requires most businesses to be closed on Sunday)
*Instant creation of ATM cards on the spot at the time of account opening
*No overdraft fees on debit card usage
*Free "
penny arcade
''Penny Arcade'' is a webcomic focused on video games and video game culture, written by Jerry Holkins and illustrated by Mike Krahulik. The comic debuted in 1998 on the website ''loonygames.com''. Since then, Holkins and Krahulik have estab ...
" coin counting machines for both customers and non-customers
*No-fee Visa gift cards for customers
*Lollipops and dog biscuits in the lobby and drive-thru
*Foreign ATM fee reimbursement (if you maintain a daily balance of $2,500 through the statement cycle)
*"No Stupid Fees, No Stupid Hours"
Commerce Bank's business model generated what some called a cult following in the areas where they had stores. Commerce offered its customers merchandising giveaways such as coffee mugs, pens and pencils; in 2006 alone, the locations gave out 28 million free pens.
It was called Mc-Bank because Vernon Hill used his knowledge of the fast food chains he owned and applied it to the banking industry.
This model was described in the
case study
A case study is an in-depth, detailed examination of a particular case (or cases) within a real-world context. For example, case studies in medicine may focus on an individual patient or ailment; case studies in business
Business is the pract ...
HBS 9-603-080 from Harvard Business School, published in 2002.
Commerce had high expenses, leading to less profit than its competitors: In 2004, “stratospheric” capital expenditures resulted in a net income per employee of $25,000, compared to $135,000 per employee for another fast-growing bank in the same region. Operating profit margin declined to 16 percent in 2006 from 26 percent in 2004. An example of such high costs: To enter New York City’s Chinatown market, the company likely spent $306,790 on gifts of rice cookers for fourteen thousand new accounts opened for as little as $250.
Commerce had the lowest deposit rates in each of the local markets it served. But Commerce choosing to be “worst in class on some service dimensions,” including “dismal deposit rates,” generated additional capital for funding extended business hours and in-depth customer service, and free checking accounts “in exchange for little or no interest.”
Commerce’s Penny Arcade coin-counting deposit machines could be used without charge even by noncustomers, and raised funds for medical research and hurricane relief. Later, some were retired by successor TD Bank in 2016 “in the wake of lawsuits claiming that the machines were short-changing customers.
Mascots
Commerce Bank had an official
mascot
A mascot is any human, animal, or object thought to bring luck, or anything used to represent a group with a common public identity, such as a school, professional sports team, society, military unit, or brand name. Mascots are also used as fic ...
, ''Mr. C'', whose costume was the Commerce Bank logo, a red letter "C", with black arms and black legs. He always had a huge smile and large bushy eyebrows. ''Mr. C.'' was retired as a result of the TD acquisition.
Expansion
While most of Commerce Bank's growth was organic, there were five large acquisitions:
*early 1990s - Four branch offices were purchased from Long Island-based Anchor Savings Bank: Cherry Hill Mall, Bellmawr, Woodcrest and West Deptford.
*January 21, 1997 - Independence Bancorp, Inc. became Commerce Bank/North.
*August 13, 1998 - Community First Banking Company and its subsidiary Tinton Falls State Bank became Commerce Bank/Shore.
*September 17, 1998 - Prestige Financial Corp. and its subsidiary, Prestige State Bank became Commerce Bank/Central
*July 25, 2005 - Palm Beach County Bank established Commerce Bank in Southeast Florida.
Controversies
Loans to its own executives and directors totaled $145.7 million in 2003. Commerce said these loans were appropriate because they were made in the ordinary course of business and on ordinary terms.
Commerce also contracted with entities controlled by Vernon Hill and his family for interior design (InterArch, owned by Vernon Hill’s spouse) and real estate (Vernon Hill was a personal investor in Commerce’s rent-generating properties; and his son earned brokerage commissions when his private firm found properties for new Commerce branch locations; and Commerce paid for employees’ use of Galloway National Golf Club, owned by Vernon Hill).
Commerce Bank Harrisburg
Commerce Bank had an independent franchise in the
Central Pennsylvania
South Central Pennsylvania is a region of the U.S. state of Pennsylvania that includes the fourteen counties of Adams, Cumberland, Dauphin, Franklin, Huntingdon, Juniata, Lancaster, Lebanon, Mifflin, Perry, Snyder, and York. Portions of west ...
region called Pennsylvania Commerce Bancorp, Inc, locally known as Commerce Bank Harrisburg. Commerce Bank shared a call center with Commerce Bank Harrisburg and owned approximately 11% of its stock. When Commerce Bank was acquired by TD Bank in 2007, Commerce Bank Harrisburg was not included in the sale. In November 2008, Commerce Bank Harrisburg announced plans to acquire Republic First Bank of Philadelphia in a tax-free all-stock transaction and would be known as Metro Bank as the result of a merger. That following August, Commerce Bank Harrisburg extended its deadline to acquire Republic First after it was unable to gain timely regulatory approval. But in March 2010 both boards of directors voted to terminate their merger agreement due to uncertainty that the merger application would receive regulatory approval. In June 2009, Commerce Bank Harrisburg announced it was going ahead with rebrand to Metro Bank (Metro Bancorp Inc), because its license to use the Commerce Bank brand and red “C” logo, granted by Commerce Bank was expiring. On February 12, 2016, Metro Bank ceased to exist after its US$474 million merger with First National Bank was completed.
Metro Bank had 33 branches in Berks, Cumberland, Dauphin, Lancaster, Lebanon, and York counties. It was headquartered in Swatara Township, just outside Harrisburg.
"Commerce Bank" brand
Several banks in the United States have traded under the name "Commerce Bank" or similar names, leading to brand confusion. As a result, Commerce Bank and Trust Company in Worcester, Massachusetts successfully sued TD Bank to stop it from using the name "TD Commerce Bank", which it had planned to trade under following its acquisition of Commerce Bancorp. However,
Commerce Bancshares
Commerce Bancshares, Inc. (NASDAQ: CBSH) is a registered bank holding company based in Missouri, United States, with primary hubs in Kansas City and St. Louis. It is the corporate parent of Commerce Bank, which offers a diversified line of fin ...
, in Kansas City, Missouri, and
Commerce National Bank
First Merchants Corporation (Nasdaq: FRME) is a financial holding company in Central Indiana, headquartered in Muncie, Indiana
Muncie ( ) is an incorporated city and the county seat, seat of Delaware County, Indiana, Delaware County, Indiana. Pr ...
, in Columbus, Ohio both still exist and do business under their respective names, even though they are unaffiliated with the now-defunct Commerce Bancorp.
TD Bank acquisition
On October 2, 2007, TD Bank Financial Group (TDBFG) and Commerce Bancorp, Inc. announced that they had signed a definitive deal agreement for TDBFG to acquire Commerce Bank in a 75% stock and 25% cash transaction valued at US$8.5 billion.
Under the agreement, Commerce shareholders received 0.4142 shares of a TD common share and US$10.50 in cash in exchange for each common share of Commerce Bancorp Inc. The consideration was negotiated on the basis of US$42.00 per share value for Commerce Bank. The transaction value based on the October 1, 2007 closing price of TD common shares is $42.37.
After TD Bank acquired Commerce Bancorp, Vernon Hill subsequently left that company and instead joined Republic Bank, recreating Republic Bank as a 'retail store' bank.
See also
*
Metro Bank (UK)
Metro Bank plc is a retail and commercial bank operating in the United Kingdom, founded by Anthony Thomson and Vernon Hill in 2010. At its launch it was the first new high street bank to launch in the United Kingdom in over 150 years. It is ...
*
Republic Bank
Republic Bank Limited is a leading Caribbean financial institution headquartered in Trinidad and Tobago. It has operations in Anguilla, Barbados, the British Virgin Islands, the Cayman Islands, Dominica, Ghana, Grenada, Guyana, St. Kitts and ...