Call it the Commerce effect.
Though Commerce Bank, the lead subsidiary of Commerce Bancorp Inc. in Cherry Hill, N.J., is not scheduled to open its first branch in the Washington area until June 24, local banks have spent the past year bracing for its arrival by adding branches, extending lobby hours, and beefing up marketing.
Chevy Chase Bank went so far as to install coin-counting machines in its lobbies - a service Commerce has offered for six years.
Companies that are preparing to compete in the Washington market are also adding Commerce-like touches.
PNC Financial Services Group Inc. of Pittsburgh, which expects to complete its purchase of the $5.8 billion-asset Riggs National Corp. on May 13, on Wednesday unveiled plans for the D.C. market that include slashing its automated teller machine fees, extending weekday hours and adding Sunday hours, and building dozens of branches.
Though the $80 billion-asset regional did not directly attribute its marketing push to Commerce's imminent arrival, PNC has no immediate plans to add hours or aggressively build branches in its other markets.
Kerry J. Donley, the executive vice president for retail banking at Virginia Commerce Bancorp in Arlington, said Commerce's entry has put pressure on area banks to extend their branch networks, stay open longer, and come up with new products and services.
"All of us have done a fair amount of research on Commerce," Mr. Donley said. "Clearly they're going to have a major impact."
The $32 billion-asset company is counting on that.
Brian Monday, Commerce's senior vice president in charge of the Washington region, said the company intends to open as many as 10 new branches in the market by yearend and follow with build monthly until it has about 200 offices from Baltimore down through the Capital and into the northern Virginia suburbs.
Founded in 1973, Commerce was among the first banks to adopt mass-retailing techniques. In addition to ushering in coin-counting machines, it was a pioneer in staying open late on weekdays and offering Sunday hours. It has built an extensive network of branches and ATMs to lend substance to its claim of being "America's Most Convenient Bank."
Deposit-gathering is Commerce's main focus, and few banks do it better. For years the company has far outpaced the industry average in year-over-year deposit growth, and 2004 was no exception. Commerce's total deposits rose 34%; the increase for all banks and thrifts was 10%.
And Commerce has demonstrated that it can thrive as a relative newcomer in a highly competitive market. It opened its first New York City branch in 2001 and now has 63 branches there and in surrounding suburbs.
Mr. Monday, a longtime Washington commercial lender who recently joined Commerce from SunTrust Banks Inc., said the area residents who are familiar with Commerce have told him they intend to move their accounts to it as soon as a branch opens nearby.
But he said that most have never heard of Commerce and that it faces the challenge of building awareness. The company is sponsoring local events, such as the upcoming Smithsonian Kite Festival on the National Mall, and is running time and temperature updates on local newscasts.
But if consumers aren't necessarily aware of Commerce, other banks certainly are.
"There are a number of competitors that have already started to change what they're doing," said Mr. Monday, pointing to the trend of adding branches and extending operating hours.
In a conference call Wednesday, Peter A. Converse, Virginia Commerce's chief executive officer, said the expansion into Greater Washington by Commerce of New Jersey prompted what he called "a defensive, competitive move on our part."
Last year, about the same time that Commerce unveiled its plans for the area, his $1.2 billion-asset bank accelerated its branch-building. Virginia Commerce has opened four branches in the past nine months, with plans for another two before yearend. It has also doubled its marketing budget, Mr. Converse said.
Similarly, the $1.2 billion-asset Cardinal Financial Corp., in Tysons Corner, Va., has opened nine branches since the beginning of 2004.
Chevy Chase's vice chairman and spokesman, Alexander R.M. Boyle, did not return calls, but there appears to be little doubt that Commerce has grabbed the attention of the McLean, Va., thrift.
The $14 billion-asset Chevy Chase actually seems intent on mimicking parts of Commerce's business plan. Besides installing the coin-counters, it is advertising itself as "the region's most convenient bank." Commerce's trademarked slogan is "America's Most Convenient Bank."
John Maxwell, the CEO of the $450 million-asset James Monroe Bancorp in Arlington, Va., said its marketing strategy has been "somewhat influenced" by Commerce. But other factors have played a role in Monroe's decision to step up branch-building - specifically explosive economic growth in the Washington area, he said.
"Just the fact that Commerce is coming here indicates how strong the market is," Mr. Maxwell said.
Mr. Monday said Commerce would simplify the process of switching banks in Washington by issuing new customers ATM and debit cards when they open their accounts, not days later through the mail. To keep lines short, each branch will have 20 to 25 employees, he said.
Commerce wants to be formidable on the loan side as well. It plans to hire senior loan officers with established track records serving nonprofit groups, real estate and health-care firms, and government contractors, Mr. Monday said.
Alan Kline contributed to this story.
