They're shimmying into the Tweeter Center arena now, 5,000 strong, drinks in hand, silver New Year's hats emblazoned with wow! atop their heads, while the piped-in music blares custom-made lyrics to the tune of Lou Bega's “Mambo No. 5”:
- A little bit of Monica on the phone
Helping out a customer who's at home
A little bit of David at his desk
Making every customer feel their best…
A little bit of Commerce Bank here and now
Is just enough to make you feel that WOW!
In war, every attack is preceded by careful reconnaissance missions. That's why Vernon Hill takes a helicopter to New York three or four times a month. He meets there with his recently hired lieutenant, David Slackman, the man heading the New York invasion, and they travel the city in a chauffeured car, surveying the terrain of Commerce's next battleground. Slackman briefs Hill on his latest intelligence operations. He has been “shopping the competition”-walking into Chase and Citibank branches and gauging the quality of customer service by asking for, say, a small business loan application. He regales Hill with tales of the dumbfounded looks he receives, of flustered customer service reps scurrying off to find the manager, unsure where the form is or if it even exists. He tells Hill of the Chase branch right near their forthcoming 6th Avenue site where there is nowhere to sit while you open an account and where he stood for 20 minutes before someone reluctantly asked if he could be helped. “I'm too lucky,” responds Hill, gazing out the window. It's only four o'clock on a weekday, but as he cruises past a Chase branch, Hill notices that it's closed. “This is the city that never sleeps,” he says. “Except for the banks.” Slackman points out an hsbc branch-Hong Kong Shanghai Bank-and observes, “Ninety-seven percent of their customers don't know it's a Hong Kong bank. They try and keep that a secret.” Hill mulls this over. “How about this for an ad?” he says finally. “'Do You Really Want Your Money Going to Red China?'” They ponder the in-your-face idea. A longtime admirer of Commerce's renegade style, Slackman, at 53, jumped over from New York's Atlantic Bank last March, after concluding that the Commerce way can't be copied; since it's all about culture, an existing bank would have to start from scratch to do it right. (This is why Hill won't acquire other banks; it would taint his pool of true believers.) “Would an ad like that work here, on the Upper West Side?” Slackman asks. “Oh, right,” Hill says. “The liberals up here would want their money going to Red China.” Both men point excitedly each time they see a woman pushing a baby carriage. They call the Upper East and West sides “vertical suburbia,” viewing the residents as kin to their customers in the South Jersey 'burbs and along the Main Line. Hill instructs the driver to stop at various locations he's considering and snaps photos with a digital camera he retrieves from the trunk, so he'll remember each site. “Site selection is an art, not a science,” Hill says, clicking away at an Upper East Side corner property. One of his side businesses is Mt. Laurel's Site Development, Inc., a company he started in the late '60s, before founding the bank. Site Development handles the all-important first step for any retail operation: For a fee, it finds a site and works out all the related zoning and traffic issues. Way back in 1969, Hill's first client was McDonald's; he'd drive Ray Kroc around South Jersey in search of locations. Today, Site Development has a staff of 19 and acts as a broker for most of Commerce's branches, so Hill is in the unusual position of profiting as a Commerce contractor, in addition to his ceo role. (Last year, Site Development, Inc., was paid $1.1 million by Commerce.) Hill argues that this allows him to make sure the all-important site selection process is done right. Even before those car rides with Ray Kroc, Hill had an affinity for fast-food retail. He still recalls his excitement 45 years ago, when he was a 10-year-old growing up in Northern Virginia and his father took him to McDonald's for the first time. Other kids were enthralled by the big arches, the clown mascot, the junk food. Not Vernon: “I can still remember wondering, how the hell can you make money selling hamburgers for 15 cents apiece?” he says. “I mean, I just couldn't get over that. Still can't, really.” His father, Vernon Hill Sr., was a successful real estate broker with 14 offices who had this advice for his son: “Never work for anybody but yourself.” In the mid-'60s, Hill attended early morning classes at Wharton and then worked from 11 a.m. to 6 p.m. at Haddon Township's First People's Bank, a local bank started by Bill Rohrer in 1959. Rohrer was a Chevy dealer, and Hill watched as his boss's car-dealer mentality informed his running of the bank. First People's stayed open late, and focused on gathering deposits. Meantime, as much of South Jersey began to morph into strip malls, Rohrer had Hill make loans to franchises such as 7-Eleven, Wawa and, of course, McDonald's. It was this experience that led directly to Hill's creation of Commerce Bank. “A lot of us knew Vernon from being involved in real estate at that time,” recalls 70-year-old Morton Kerr, chairman of the board of Markeim-Chalmers, Inc., a real estate firm, and one of the original Commerce board members. “He was a 26-year-old kid who called about 15 of us to a meeting in his office on Haddon Avenue in Haddonfield. I'll never forget it. He said, 'We're going to start a bank.' And he said we'd each have to put up between $250,000 and $500,000. This was 1973-who had that kind of money? But he'd arranged for all of us to borrow it. If you could put up $100,000, he got us loans for $400,000. Only seven of us didn't get up and walk out, but we still thought he was crazy. We thought it would be a half-assed thing, but what the hell? We were young, and it would be glamorous to say we owned a bank.” Hill put up about 10 percent of the $1.5 million he raised. Commerce was born in a one-room office, with nine employees, on Route 70 in Marlton. If you had invested $10,000 with Hill back then, it would be worth $2 million today. An original flyer of $100,000 would now yield $20 million. “Did we think this would happen?” asks Kerr, sounding as if, all these years later, he still can't quite believe it. “Are you kidding me?”
“Wait a minute,” says Vernon Hill, interrupting an employee during one of his monthly senior staff meetings. He's just spotted someone who works for him taking notes-with a CoreStates pen. “Can I see that pen?” All eyes are fixed on the pen as it passes to him; all eyes stay glued to the ceo as he methodically disassembles the pen and, holding its parts, stands and walks to the corner of the conference room, where he deposits them in a trash can. Without saying a word, he sits down again and reaches into his breast pocket, removing a Commerce pen and holding it out to the aide next to him, who dutifully passes it down to the red-faced employee. “That guy, uh, is no longer with us,” says Glenn Holck, president of Commerce's Pennsylvania operation, chuckling as he recounts the incident. When Holck was at CoreStates, he sat in meetings every day. To Hill, meetings are where you talk about the work you're going to do instead of actually doing it. So senior staff meetings at Commerce are limited to the third Wednesday of every month, and the agenda is always the same: Each market-Holck, representing Pennsylvania, is one-reports on its performance in three areas: deposits, fees and loans. The reports are easy because Hill has invested in a state-of-the-art computer system that allows every Commerce employee to hit a key and check how each branch is doing every single day in all three areas, then compare that performance to its month-end goals. “At CoreStates, if somebody asked how your business was doing, you'd say 'Okay,' and no one-including you-knew if that was true,” says Holck. “Here, everybody knows. And they know Mr. Hill is checking the numbers.” He's also checking the e-mail updates that every manager is required to send him every Monday by noon. Holck once made the mistake of skipping a Monday; the following Monday, just hours after he'd sent the update, his phone rang. As usual, Hill offered no greeting. “Perhaps I should just pay you for every other week,” he said-before hanging up. Good soldiers like Holck insist that Hill's hectoring is simply a form of mentoring. But it is certainly the stuff of legend at Commerce. Hill still conducts the year-end job reviews of his senior managers-an appointment few anticipate eagerly. “How'd your department do this year?” he'll ask. If the answer gets past two sentences, he'll bark: “Too many words! Let's try again: How'd you do?” “You have to learn how to talk to Mr. Hill,” says Commerce University dean Debi Jacovelli. “I have a tendency to ramble, so he'll blurt out, 'Will you just shut up and listen?' It's forced me to get to the point much quicker.” Like Attila, Hill is known to leave bodies in his wake, particularly on the loan side, where his lenders either sink or swim. Loan officers who fail to meet agreed-upon goals-say, $20 million in new business-tend to disappear mysteriously, like dissidents in Third World republics. There's even an office catchphrase for the phenomenon: ddtb, as in Don't Drag The Bodies. “If you're talking about someone who is behind plan, all you have to say is 'ddtb,' and it's understood what's happening,” says Holck. “You don't need to say anything else.” Commerce loyalists like Holck and Jacovelli characterize Hill's style as eccentric and quirky, but others see his warrior mentality as representative of something darker. He is a man who demands that his branch managers smile constantly and that his drive-in tellers hand out doggie biscuits to customers with canines in the car, but he rarely practices what he preaches. He walks the halls grunting greetings to staffers-if he says hello at all. Even on the Galloway golf course, where Hill is an 11 handicap, his demeanor hardly smacks of the common touch: No one is allowed to play the hole behind him or the three holes ahead of him. More important, Hill doesn't seem to have the same zeal for customer service when it comes to making loans. He personally approves every loan in excess of $5 million, which has resulted in some embarrassing last-minute about-faces for Commerce. One businessman received a call from the bank saying it couldn't meet the terms proffered by its own term sheet-because, the businessman presumed, Hill had crunched the numbers and changed his mind. Another businessman says he discovered at closing that Commerce's interest rate had suddenly changed, and fees had been added: “It's a classic bait and switch,” he fumed. (A former Commerce loan officer and fan of Hill's confirms these weren't isolated incidents-that Hill's last-minute dictums often force his people to go back to borrowers and rework agreed-upon terms.) “Most ceos of a bank our size don't get involved in loan approval,” says Hill, making no apology. “But I've got a good bullshit detector. If a deal doesn't smell right, I step in-often late in the process.” As Hill's ostentatious home, “Villa Collina,” nears completion-all he'll say about it is, “That's my wife's project”- some critics take issue with his compensation. Last year, he earned roughly $1.2 million in salary, bonus and perks, and exercised $856,858 in stock options; he holds some $33 million in unexercised options. Then there are the fees taken in by his Site Development Corporation, and the $3.6 million for branch and office decorating and design that was paid to Interarch, the Mt. Laurel interior design and architectural firm owned by Shirley Hill, Vernon's wife. When word spreads that Mrs. Hill is on her way to the Cherry Hill headquarters, employees routinely rush to roll up the window shades in their offices, knowing of her fondness for natural sunlight. Hill laughingly boasts that when he assigned Shirley the job of designing Commerce's Philadelphia offices, on Market Street, he “gave her an unlimited budget-and she exceeded it.” Vernon Hill makes no bones about the fact that he is well paid-or that he loves to spend. In that sense, he's the antithesis of once-hyped Albert Dunlap, the cost-cutting ceo who dismantled Scott Paper here before selling it and moving on to Sunbeam. “What a horse's ass,” Hill says of Dunlap, whom he sees as someone who tears down, in contrast to his own pro-growth agenda. Thus far, there have been few if any complaints from the board or anyone else about Hill's spending-presumably because the bank has been doing so spectacularly well under his leadership. Might that change if the stock drops? Possibly. But it seems unlikely, unless, as his competitors are hoping, the invasion of New York turns out to be Hill's Waterloo. He is guarding against that possibility by launching a measured rollout, beginning with the two branches next month. “There's an unstoppable nature to the Commerce strategy,” says Lehman analyst Vandervliet. “They won't take no for an answer. They are going to have their way with the market.”
Vernon Hill is in the backseat of the car, checking his e-mail on a handheld BlackBerry, the portable personal organizer that makes the PalmPilot seem Jurassic. Hill, of course, has provided BlackBerrys to everyone in his company who needs one. “You know what's giving me agita now? It's not the New York rents,” David Slackman says from the front passenger seat, looking back at his boss. “And I'm not worried about growing the deposits. My issue is getting good branch managers. A lot of the people I'm meeting, they're fat, dumb and happy.” “Of course,” Hill says. “At a lot of these hundred-year-old New York branches, you can just retire while you continue working, and nobody bothers you. We're better off gambling with the second or third level down, taking an assistant manager as a branch manager.” “But that's what I'm saying,” Slackman says. “A lot of the assistant managers are terrible here. I talked to a 60-year-old career assistant manager at Citibank-” “What does he make?” “Sixty thousand dollars. And he says, Oh, I'm too old to leave and head up a branch, I'm going to retire soon.” Slackman shakes his head. “He's not looking to be challenged. I left that meeting and turned to whoever I was with and said, That guy's a loser. Scratch him from the list.” Vernon Hill breaks into that wide, thin-lipped smile. “Hey, what do the kids say?” he asks as he raises his right hand, clenched in a fist but for his L-shaped index finger and thumb, and puts it to his forehead: “Loooserrrr!” Slackman laughs, and now he joins in, putting his L to his forehead and moaning, “Loooserrrr!” As Vernon Hill sees it, the world is divided into winners and losers. And like his role models Attila and Genghis, he is determined to be in the first group, and to throw a whole lot of people-in this case, sleek-suited, genteel bankers-into the other. As the car arrives at the heliport pad, Vernon Hill is checking Commerce stock on the BlackBerry, but he's still chortling like a mischievous teen, laughing and coughing out “Loooserrrr” again and again.