Vernon Hill's Second Act


Banks are closing and auctioning off branches. Bankers are pilloried, in the whole western world, by class warfare reminiscent of Hamilton/Jefferson or FDR/Pecora. Unemployment is structurally high with no job creation event on the horizon.

What to do if you are the “Greatest Banker Alive”?

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Go to London where unemployment is the highest it has been in 17 years and Europe is on the verge of a major double-dip recession and start a bank. After all, no new retail bank has been started there in over 130 years.

Sound crazy? You don’t know Vernon Hill.

This is act two off his banking career. Why does Hill think that act two of his epic banking career will be so successful? I think based on success of act one -- Commerce Bank.

Hill started Commerce Bank from scratch with a $1.5 million investment in 1973. When Commerce Bank sold 34 years later in 2007, to TD Bank, it brought $8.5 billion and had an employee count of 15,000. An investor in the original Commerce Bank would have realized a 470-times return on his investment.

In fact, the model was so revolutionary that Harvard Business School did a study on it (HBS-9-603-080), published 2002.

Hill had gotten his start in retail food franchises, starting a company that found and developed properties for McDonald’s (NYSE:MCD), even driving the legendary Ray Kroc around on location surveys. Hill still owns part of 36 different Burger Kings and Site Development, which owns or leases sites for more than 400 properties on the East Coast.

Commerce Bank had the audacity of making service a priority in retail banking. Banks were opened first in the evenings and on Saturdays -- then seven days a week. Banks encouraged pets to come in with owners, giving away free dog treats and free lollipops for the owners, even in the drive-thrus. Coins were not only counted for free but machines were installed that looked more like video arcades; they cost $40,000 each and were free both to customers and non customers.

Competitors would actually send customers with a large bag of coins to Commerce for them to be counted.

While other banks actually had meetings to see how to better secure the pens on the counter to prevent theft, Commerce Bank gave away 28 million pens in 2006 alone. Commerce rented out Radio City Music Hall for its annual awards to employees. Quite simply Commerce changed retail banking.

Hill does not believe in competing on price, but rather on service.

When Commerce kept expanding it started offering ATM fees reimbursed for customers using competitors' ATMs. Hill realized how expensive and unnecessary an ATM system is when you can rent someone else’s. Commerce in effect rented an entire ATM system without having to build it itself.

When a competitor moved upstairs in NYC, a place where they warned Hill he would not be successful -- he was -- Hill opened up a branch downstairs directly below and put a ladder outside and a sign of directions to get to competitor’s bank. To say Hill is somewhat of a maverick is like saying Usain Bolt is just pretty fast.

Commerce fans ate it up; deposits grew at an annualized 30% clip. Parties and bonuses were awarded when a competitor gave up in a market.

To understand Hill one need look no further than his (as in he owns it) golf course, Galloway National Golf Club. Hill, an avid golfer, in the early 1980s had gone to play golf on a crowded course in New Jersey. One of the most impatient people I have ever met, Hill hated waiting so badly on the group ahead of him he decided to build his own golf course. Not just any golf course, rather he and his business partner and lifelong friend, John Silvestri, scouted locations all over the East Coast and when they finally decided on a location at Galloway Township, NJ, they called Tom Fazio (considered by many the top designer in the world) to build them a world class course.

The result is a consistently top-80-ranked US course by golf magazines, Galloway National.

I got the opportunity to play golf with Hill a few years ago. I was to meet him at his “home”. I have been invited to the White House, Buckingham Palace and slept in Saddam Hussein’s palace in Baghdad. I wasn’t prepared for what I witnessed.

Driving past the Palladia inspired fountains and the Venice custom-made statues along with his own vineyard I came to the biggest house in New Jersey -- the 50,000-square-foot Villa Collina where Hill lives alone with his wife Shirley and Big Duff -- his constant companion, well-groomed and weekly massaged dog. Of course, included is the 15-foot custom made chandelier by Murano glassworks in Venice above the orchid room, and many other things a boy from Texas didn't recognize.

I then flew in a helicopter on a short ride to Hill’s golf course, landing on the driving range where golfers had to stop hitting balls because the boss had arrived and was met by his caddie of two decades and his golf cart (which reportedly is the fastest golf cart on the course).

I’m asked often what kind of golfer Hill is. The answer is 'very good.' But, when you own the course (“Vernon’s Rules” -- a hilarious ten commandments of Galloway, are posted in the locker room) and most of your partners work for you one tends to get a lot of putts given to them. I got no putts given to me.

At one point I was beating Hill and he asked if I liked the course, when I replied yes he said that was good because next time I saw it would be Google Earth. I think he was joking. I missed an eagle putt to go ahead, and Herb his caddie said, “Wise choice Mr. Layfield”

When I say that he plays to win, it doesn’t stop in business. I have never seen a man so rich enjoy so much winning a couple of hundred dollars from friends in his weekly Saturday morning game. Life is a competition to Hill, he lives to win -- but in a very positive way. He is extremely loyal, his friends and close business colleagues have rarely changed over the years.

London is now seeing what was developed over the last four decades, “No stupid fees and no stupid bank rules.” If you own a retail bank in London, be afraid, be very afraid.

Metro Bank London is the first new retail bank to be started in the UK in 139 years. 40,000 accounts have been opened in only 14 months. The 10th bank in London will open by December of this year. The goal is for 200 branches in greater London by 2020. The good old boys of UK banking better be ready, because the ones in the US weren’t.

Act two has begun.

John Layfield, formerly known as JBL, was the longest reigning WWE Champion in Smackdown television history, retiring after 17 years of pro wrestling. John, a former collegiate All-American and pro football player, is a lifelong entrepreneur who has worked as an investment banker, is series 7 and 24 qualified, and is currently an active private investor. His Internet radio show can be heard at

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