Vernon W. Hill has become so used to press coverage that he's now suggesting his own headlines.

The chairman and chief executive officer of $7 billion-asset Commerce Bancorp has received scads of publicity for building one of the nation's most customer-friendly banks. So when he learned that he had been named American Banker's Community Banker of the Year, he recommended that the headline read: "It's the deposits, stupid."

Indeed, no four words more accurately describe Mr. Hill's philosophy of banking. Since he founded Commerce in 1973, Mr. Hill has never wavered from his belief that a bank's "value is in its core deposit base." To put it simply: The more deposits a bank gathers, the cheaper its funds and the better its spreads.

While many banks have tried to control costs by consolidating branches and shortening hours, Commerce has taken the opposite tack. It has built close to 150 branches in New Jersey, Pennsylvania, and Delaware, all of which are open seven days a week. Within the next four years, Commerce plans to open as many as 30 branches a year and is likely to expand into New York and Connecticut.

"When I started this bank I envisioned it becoming a $1 billion bank in South Jersey," said Mr. Hill, 57. "We were concerned that our model would not work across the river in Philadelphia or in North Jersey. What we've found is that it works everywhere."

Commerce, which has been called the McDonald's of banking for its branches-everywhere strategy, models itself not on Citibank or First Union but on retailers such as Wal-Mart and Home Depot. The company rarely makes acquisitions; it builds all of its branches from the ground up, on plots of land personally selected by Mr. Hill.

"If you look at every great retailer in America, they all created a model, rolled out the model, refined the model, and acquired very few companies along the way," said Mr. Hill, who is also the largest Burger King franchisee in Greater Philadelphia. "When you do big deals, you screw up the culture and you divert your management attention away from what you want to do."

Commerce is also winning customers with service. Its training facility, "Commerce University," teaches not only the finer points of banking but appropriate customer service.

"The first week of training is spent on culture," said Mr. Hill. "That's more important than teaching them how to do their jobs."

Commerce branches, typically at highly visible intersections, are open at least from 8 a.m. to 8 p.m. on weekdays, and at least one is open until midnight on Fridays. Teller stations are always fully staffed, so lines move quickly, and all customer signatures are on file electronically, so tellers never have to risk insulting a regular customer by asking for identification.

Automated teller machines are equipped with telephones that link directly to Commerce's 24-hour call center - an amenity that came in handy recently when a customer dropped his keys behind an ATM after bank hours. Commerce even keeps buckets of dog biscuits at its drive- through windows to offer as treats to canine passengers.

"Most banks believe that the only way you can grow deposits is to pay high rates," said Mr. Hill. "But we're the lowest rate payer around and have the highest growth rate. Why? Because we're selling convenience, in every sense of the word."

The numbers seem to support Mr. Hill's argument. Though Commerce has made no acquisitions, its deposits grew 219% from 1996 through Sept. 30, 2000. Meanwhile, over that same period, deposits at banks with $1 billion to $10 billion of assets fell 22%, according to the Federal Deposit Insurance Corp.

Deposit growth has had a significant impact on Commerce's bottom line - and its stock price. Net interest income has increased at an annual rate of 19% between 1995 and 1999 and was expected to grow 23% in 2000, according to a report written in October by Merrill Lynch analysts Edward R. Najarian and Sandra J. Flanigan. Meanwhile, Commerce's stock price increased by nearly 80% in 2000 and is up by nearly 600% since March 1995.

"As bank stock investors know too well, those that achieve the best core deposit growth typically generate the best spread-based revenues," the Merrill Lynch report said.

But can Commerce keep it up? The company must hire thousands of employees in the next few years to keep pace with planned growth, and analysts have expressed concern about its ability to sustain high levels of service.

Mr. Hill expressed confidence. As Commerce continues to grow, it can afford to spend more on training and recruitment, he said.

When rival Summit Bancorp announced in October that it was being acquired by FleetBoston Financial Inc., Commerce immediately began running help wanted ads in Northern New Jersey dailies under the headline, "Attention Summit employees."

As Commerce has grown, finding good help has gotten easier, Mr. Hill said. "When you have growth company, you have a lot of things going for you."

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