Commerce Bancorp bills itself as "America's Most Convenient Bank." Its charismatic and pugnacious chairman and president, Vernon Hill, likes to refer to his branches as "stores." As the financial behemoths repented for their service sins and rushed back into retail banking in recent years, Mr. Hill's bank has served as a model.

His branches offer no-fee checking and other crowd-pleasing nostrums, such as free coin counting. Located mostly in the Northeast, they keep late hours and are open seven days a week -- including Tuesday, the Fourth of July.

Commerce even celebrates a measure of its business performance that takes a page from retailers. The company reports its "comparable store deposit growth" -- comparing how many deposits came in during given periods in branches open at least two years. It is analogous to a retailer's same-store sales number. Legions of Commerce bulls watch this cute affectation closely.

They ought to.

The growth rate is falling. In 2002, it was a spectacular 29.7 percent. Last year, it was 20.3 percent. By this year's first quarter, it had ebbed to 18 percent. That is still impressive, and the bank said last month that overall deposit growth -- a different measure -- will be a strong 24 percent in the second quarter.

But the slowdown is just one sign that Commerce's vaunted business model is breaking down. Its executives declined to comment.

The brilliance of that model had been that it could provide service bells and whistles instead of generous interest rates on deposits. But Commerce Bank hit a turning point last year that has gone largely unnoted: Deposit growth is coming at a steeper price.

When interest rates were at rock bottom in the third quarter of 2004, the cost of Commerce's deposits -- the annual rate it paid on average -- was just 0.79 percent, while competitors from Morgan Stanley's sample of about 40 similar banks averaged 0.92 percent. As competition for deposits heated up, Commerce's cost rose to 2.13 percent in the first quarter of this year, compared to the sample's 1.89 percent.

Morgan Stanley analyst Chris Chouinard forecasts that difference will widen when second-quarter figures come out. That is in part why he has slapped a bearish rating on the bank.

The increased competition has been especially tough on Commerce. The downside of having branches that are wonderful for customers and open every day is that they are expensive. That has depressed the bank's returns. Already low, they are now falling further behind their peers. Back in 2004, Commerce's return on assets was 0.51 percentage point less than the average of its midsize peers, according to SNL Financial. In the first quarter, Commerce's had fallen while its peers were steady, for a difference of 0.72 percentage point.

"I don't think they have the ability to do both: offer service and (higher) rates," Mr. Chouinard says. "People may start to question the business model."

Commerce has defied the bears for years. The shares are up 2.6 percent this year after closing Monday at $35.32. The bulls have loved the story of its spectacular deposit growth. They have stuck with the company despite surprisingly lackluster earnings per share. In 2004, the bank brought in $1.63 in earnings per share. In 2005, it was $1.61 a share. Two years ago, Commerce was forecast to earn $2.25 a share this year. But last month, the company issued cautious forecasts for the second quarter, and now Wall Street expects the bank to earn $1.66 a share for the year, according to Reuters Research.

Perhaps most worrisome are concerns about the bank's liabilities. Commerce Bank has invested its deposits in bonds that have been losing value as interest rates have risen. That has happened to everyone, but as Mr. Chouinard points out in a June 26 report, Commerce's paper losses look to be the worst among the banks he follows -- 26 percent of the capital that regulators use to assess solvency.

Of course, Commerce doesn't have to take those losses; it can just sit on those securities until they mature. The problem with that is if interest rates continue to go up -- and they probably will -- the losses will mount. Even if rates don't go up, its competitors have an edge because they can afford new, higher-yielding securities.

Here's the rub: Commerce is sitting on a big pile of potential losses and doesn't have sufficient earnings to fund growth. So to keep regulators happy, it likely will have to raise capital to stay well above minimum levels. That means a stock or a bond offering is likely soon. Unfortunately, Commerce already has made per-share-earnings matters worse: It finished the first quarter with about 183 million shares outstanding, up from 128 million five years earlier.

The bulls prefer to focus on all of those deposits in arguing that the share price is a bargain, making it an attractive takeover candidate worthy of a healthy premium. And if short-term interest rates fall or long-term rates rise enough to make the yield curve steeper, the bank's earnings are likely to rise again.

The fans long have figured the stock was worth the price because they thought Commerce had cracked the growth code. But the model wasn't so mysterious: It worked because the world was awash in cheap money. When rates were near zero, it doesn't matter what a customer gets on a certificate of deposit. Friendly service stands out. But as rates have risen, customers have started to relearn that Spinal Tap tune, "Gimme Some Money."

And that means less money for Mr. Hill's bank.