Vernon Hill is getting a little tired of community activists.

The 49-year-old chief executive of Commerce Bancorp in Cherry Hill, N.J., has been slugging it out for months with a community group in nearby Philadelphia that accuses the $2.4 billion-asset bank of discriminating against minorities.

During the last year, the 13-group Neighborhood Economic Survival Coalition, representing down-and-out north Philadelphia, has targeted Commerce's aggressive plan to open 50 branches in the Philadelphia area in the next five years. The plan does not include inner-city branches.

"Everybody knows you have to do CRA," Mr. Hill said. "But if you take CRA to its ultimate conclusion, you're forced to give in to the lowest common denominator, the guy with the local demand."

Nevertheless, pressure from the coalition has caused Commerce to increase minority lending and contribute to low-income community development. And the bank has agreed to build two branches in low-income areas of Philadelphia.

But now Mr. Hill says the group has really gone too far. Writing it off as just a "twig in the woods," he is refusing to budge on its demand that the bank actually branch into north Philadelphia.

Like many bankers, Mr. Hill dismisses last year's Chevy Chase Federal Savings branching case and as well as the frequent protests of community groups.

"That's not what the law is," he said. "I think the banking business has determined that Chevy Chase was an aberration."

To Mr. Hill, such protests are distortions of the true intent behind the federal Community Reinvestment Act. And organizations such as the coalition appear to be strong only because of the excessive public attention granted them by local and national media, he says.

"We believe, in the spirit of the CRA law, that banks should lend in the communities where they gather their deposits," he said. "We do not believe it should be used as a quota system to allocate credit in specific areas."

The media, he said, have "focused on the protest and the allocation issue more than a bank's total service."

Commerce's CRA record isn't exactly stellar, the coalition argues, noting that not one of the bank's 46 branches is in a low-income area. And the Office of the Comptroller of the Currency recently boosted its CRA ratings on two Commerce subsidiaries from 1993's "needs to improve" to "satisfactory."

Mr. Hill admitted that the coalition's protests might have more significance for Commerce if they prevented the bank from expanding. But "that's not the case," he said.

"They represent nobody," he said. "Nobody ever heard of them until they filed this protest."

But the Neighborhood Economic Survival Coalition is well known to banks in Philadelphia. Since its founding in 1992, it has negotiated with and wrung concessions out of Mellon Bank Corp., PNC Bank Corp., and CoreStates Financial Corp.

Commerce, however, is the first bank to fall victim to formal protests by the group.

Last September, the group handed Commerce a set of demands and issued an ultimatum: Beef up your lending record or we'll start protesting.

The coalition demanded that Commerce include low-income and moderate- income communities in Philadelphia in its service area and open five branches there, including three in expressly minority areas.

The group also wanted Commerce to deposit $100,000 in each of the city's six low-income credit unions and commit another $30,000 to a collaborative fund for the credit unions. And it demanded that the bank invest $500,000 in small-business microloan funds and give the coalition itself $60,000, half for administrative uses.

Following the group's CRA challenge of a routine regulatory application by Commerce, the bank in November committed to lend $25 million in Philadelphia and neighboring Pennsylvania communities. But the brunt of the coalition's attack now is directed toward forcing Commerce to put branches in minority neighborhoods outside the bank's service area.

And Commerce's lending proposals, which still don't address branching, were "nothing that we were too excited by because they weren't really stepping up in doing the types of lending and services that they do in other communities," said Chris A. Schweitzer, director of the Kensington Joint Action Council, a coalition member.

Commerce has delineated an area from suburban Philadelphia to the Jersey shore as its market area, including Atlantic City and Camden. But expect for one branch in Philadelphia's downtown, the bank has stayed out of the city - which it doesn't consider its duty to serve.

"This is a suburban bank," Mr. Hill said. "It started in the suburbs."

The fight escalated in December, with coalition officials calling the bank biased and organizing a series of public demonstrations. The group filed a discrimination complaint against Commerce with the Department of Housing and Urban Development in April.

And it handed out fliers at Commerce's annual meeting in June, and has pledged to file a separate CRA protest against each Commerce branch application in the coming years.

Mr. Hill asserts that the coalition is unfairly trying to dictate the bank's branching strategy.

"They want us to put a branch in north Philadelphia," he said. "They want to control where the branch should go, and that's simply not acceptable. The selection and location of those branches has to be left to the bank."

But he admitted that the efforts of the coalition, combined with the negative CRA ratings, have created extensive costs for Commerce and affected his bank's immediate business plan, although not the overall strategy. In particular, he said, Commerce probably would have waited a while longer before setting up any branches in Camden or adding any in Philadelphia.

"We would have eventually gotten to these places, but this has sort of speeded up the timetable," he said.

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