Beginning next year, Cherry Hill, N.J.-based Commerce Bank plans to build 25 new branches in Fairfield County.

It bills itself as “America’s most convenient bank” thanks to its seven-day-a-week, extended-hour branches, but Cherry Hill, N.J.-based Commerce Bank’s recently announced entrance into the Fairfield County banking market won’t be without its challenges.

Last week, the bank announced plans to eventually build 25 new branches in the county, starting in 2005 with five “prototype stores” in Fairfield, Darien, Norwalk, Greenwich and Stamford. The Fairfield location will be the first and is scheduled to open sometime in the spring.

Bank executives hope Commerce’s foray into Fairfield County will be as successful as its previous expansion into Westchester County. The demographics in the two counties are similar, according to John Tolomer, Commerce Bank’s senior vice president and marketing manager.

“Fairfield County’s demographics fit with the Commerce model,” he said. “We think our banking model will be well received.”

The 31-year-old bank’s fiercest competition likely will come from Bridgeport-based People’s Bank, which has a long history in Fairfield County and has branches in Super Stop & Shop locations across the state. Like Commerce Bank’s branches, the People’s supermarket branches are open seven days a week.

“We welcome the competition,” said People’s spokesman Brent Digiorgio.

People’s has been the No. 1 bank in Fairfield County for years, he added, and the Stop & Shop branches allow People’s to compete with Commerce Bank’s extended branch hours.

“We feel we’re competitive on that front, as well,” Digiorgio said. “We have an enviable position in Fairfield [County].”

‘A Unique Strategy’

Still, Commerce Bank’s model should help it compete with established Fairfield County banks, although it will be difficult, according to John Carusone, president of the Hartford-based Bank Analysis Center.

“I think Commerce is formidable competition with a unique strategy based on providing the maximum of convenience,” he said.

But major infiltration into Fairfield County can be risky, especially for a plan like Commerce Bank’s, which is entirely based upon startup branches, Carusone said. Fairfield County is one of the most competitive banking markets in the country and competitors like People’s are well entrenched in that market, he said.

But Commerce Bank has a “unique strategic differentiation,” with its focus on attracting deposits, which allows the bank to save money and offer lower loan rates, Carusone said.

“They are a deposit-driven organization,” he noted.

That could spur a competitive reaction among competing banks and Fairfield County consumers could see higher returns on deposits and lower loan rates, Carusone added.

“It should be good for consumers,” he said.

Tolomer said he hopes the bank’s acceptance in Westchester County will be mirrored in Fairfield County.

“It’s always a challenge to go into a new market,” he said.

One of the biggest hurdles is name recognition, but Tolomer also is hoping that with many Fairfield County residents commuting to Westchester County or to New York City, where Commerce Bank has more of a presence, the bank will become more recognizable.

“As the new bank on the block, there’s always a challenge about awareness,” Tolomer said.

The bank’s expansion into Fairfield County will be a “natural extension” of its current branch network, said spokesman David Flaherty. The bank already has 305 branches in metro New York, Long Island, metro Philadelphia and New Jersey. In addition to the expansion into Fairfield County, the bank will expand within its metro New York and metro Philadelphia footprint by adding about 1,800 new positions annually, according to a release from the bank. Tolomer said the new Fairfield County stores will add about 15 to 20 new positions per store, plus other positions like commercial lenders.

Added Vernon W. Hill, the bank’s founder and chairman: “Commerce is a growth retailer and our move into Connecticut is an ideal extension of the momentum we have been gaining by exceeding the expectations of the retail and commercial customers we are serving in New York City and on Long Island.”

Commerce Bank opened in 1973 in Marlton, N.J. It has assets of more than $29 billion and has been expanding rapidly, according to a release from the bank. By the end of 2004, the bank will have opened 50 new locations this year and will continue working toward its goal of creating a branch network of more than 700 locations and total assets of $104 billion over the next four years.

The bank so far does not have concrete plans to move into the rest of New England, Tolomer said.

“That’s a longer-term goal,” he said.

Aside from branches that are open seven days a week for extended hours, the bank also offers amenities such as free online banking, free coin counting machines for customers and non-customers, free personal checking and a full-service, 24-hour bank-by-phone system.