content: SECURITIES AND EXCHANGE COMMISSION
  
                               WASHINGTON, D.C. 20549
  
                                      Form 10-Q
  
  
       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                        For the quarter ended March 31, 1998
  
                                         OR
  
       ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
  
                   For the transition period from ______ to ______
  
  
                              Commission File #0-12874
  
  
                               COMMERCE BANCORP, INC.
               (Exact name of registrant as specified in its charter)
  
  
              New Jersey                                    22-2433468
     (State or other jurisdiction of              (IRS Employer Identification
      incorporation or organization)                         Number)
  
  
       Commerce Atrium, 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400
                 (Address of Principal Executive Offices) (Zip Code)
  
  
                                   (609) 751-9000
                (Registrant's telephone number, including area code)
  
  
           Indicate by check mark whether the registrant (1) has filed all reports
           required to be filed by Section 13 or 15(d) of the Securities  Exchange
           Act of 1934 during the preceding 12 months (or for such shorter  period
           that the  registrant was required to file such  report(s),  and (2) has
           been subject to such filing requirements for the past 90 days.
  
                         Yes   X                No  _______
  
  <PAGE>
                        APPLICABLE ONLY TO CORPORATE ISSUERS:
  
  
  Indicate the number of shares  outstanding  of each of the  issuer's  classes of
  common stock, as of the last practical date.
  
  
  
  
           Common Stock                                    18,011,327
           (Title of Class)                       (No. of Shares Outstanding
                                                         as of  5/08/98)
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                              Page
  
  
  PART I.           FINANCIAL INFORMATION
  
  Item 1.           Financial Statements
  
                    Consolidated Balance Sheets (unaudited)
                             March 31, 1998 and December 31, 1997
  
                    Consolidated  Statements  of Income  (unaudited) 
                             Three months ended March 31, 1998 and 
                             March 31, 1997
  
                    Consolidated Statements of Cash Flows (unaudited) 
                             Three months ended March 31, 1998 and 
                             March 31, 1997
  
                    Notes to Consolidated Financial Statements (unaudited)
  
  Item 2.           Management's Discussion and Analysis of Financial
                             Condition and Results of Operation
  
  Item 3.           Quantitative and Qualitative Disclosures About Market Risk
  
  PART II.          OTHER INFORMATION
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                                         1
  <PAGE>
                           PART I. FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
                       Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  <TABLE>
  <CAPTION>
  -----------------------------------------------------------------------------------------------------------------
                                                                                         March 31,      December 31,
                                                                                     ------------------------------
                   (dollars in thousands)                                                  1998             1997
  -----------------------------------------------------------------------------------------------------------------
  <S>                                                                                    <C>              <C>     
  Assets           Cash and due from banks                                               $180,406         $167,900
                   Federal funds sold                                                      10,900                
                                                                                     ------------------------------
                                  Cash and cash equivalents                               191,306          167,900
                   Mortgages held for sale                                                 13,489            7,260
                   Trading securities                                                       9,798            7,911
                   Securities available for sale                                        1,289,115        1,315,120
                   Securities held to maturity                                          1,028,760          874,032
                    (market value 1998-$1,026,745; 1997-$869,815)
                   Loans                                                                1,468,800        1,411,289
                                Less allowance for loan losses                             21,976           21,261
                                                                                     ------------------------------
                                                                                        1,446,824        1,390,028
                   Bank premises and equipment, net                                       116,020          111,759
                   Other assets                                                            63,358           64,957
                                                                                     ------------------------------
                                                                                       $4,158,670       $3,938,967
                                                                                     ==============================
  
  Liabilities      Deposits:
                                Demand:
                                  Interest-bearing                                     $1,178,372       $1,111,302
                                  Noninterest-bearing                                     778,895          762,843
                                Savings                                                   751,192          705,906
                                Time                                                    1,042,986          789,353
                                                                                     ------------------------------
                                  Total deposits                                        3,751,445        3,369,404
  
                   Other borrowed money                                                    25,000          223,300
                   Other liabilities                                                       27,218           12,695
                   Obligation to Employee Stock Ownership Plan (ESOP)                       2,051            2,308
                   Trust Capital Securities - Commerce Capital Trust I                     57,500           57,500
                   Long-term debt                                                          23,000           23,000
                                                                                     ------------------------------
                                                                                        3,886,214        3,688,207
  
  Stockholders'    Common stock, 18,068,447 shares issued (16,999,824 shares in 1997)      28,232           25,309
  Equity           Series C preferred stock, 417,000 shares in 1997                                          7,506
                   Capital in excess of par or stated value                               212,139          167,529
                   Retained earnings                                                       28,695           50,592
                   Accumulated other comprehensive income                                   7,065            3,756
                                                                                     ------------------------------
                                                                                          276,131          254,692
                   Less commitment to ESOP                                                  2,051            2,308
                   Less treasury stock, at cost, 100,159 shares in 1998
                                (100,159 in 1997)                                           1,624            1,624
                                                                                     ------------------------------
                                  Total stockholders' equity                              272,456          250,760
                                                                                     ------------------------------
                                                                                       $4,158,670       $3,938,967
                                                                                     ==============================
  
  </TABLE>
  
                              See accompanying notes.
  
                                         2
  <PAGE>
                       Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  <TABLE>
  <CAPTION>
  --------------------------------------------------------------------------------------
                                                                     Three Months Ended
                                                                          March 31,
                                                                ------------------------
               (dollars in thousands, except per share amounts)       1998         1997
  --------------------------------------------------------------------------------------
  <S>                                                               <C>          <C>    
  Interest     Interest and fees on loans                           $31,141      $28,113
  income       Interest on investments                               36,396       26,814
               Other interest                                           354          412
                                                                ------------------------
                    Total interest income                            67,891       55,339
                                                                ------------------------
  
  Interest     Interest on deposits:
  expense         Demand                                              7,264        5,471
                  Savings                                             4,414        3,770
                  Time                                               12,670       10,666
                                                                ------------------------
                    Total interest on deposits                       24,348       19,907
               Interest on other borrowed money                       2,001          460
               Interest on long-term debt                             1,782          506
                                                                ------------------------
                    Total interest expense                           28,131       20,873
                                                                ------------------------
  
               Net interest income                                   39,760       34,466
               Provision for loan losses                              1,210        1,626
                                                                ------------------------
               Net interest income after provision for loan losses   38,550       32,840
  
  Noninterest  Deposit charges and service fees                       8,083        6,198
  income       Other operating income                                11,805        6,751
               Net investment securities gains                          
                                                                ------------------------
                    Total noninterest income                         19,888       12,949
                                                                ------------------------
  
  Noninterest  Salaries                                              16,011       11,902
  expense      Benefits                                               3,281        2,746
               Occupancy                                              3,922        3,334
               Furniture and equipment                                5,366        4,041
               Office                                                 4,106        3,089
               Audit and regulatory fees and assessments                502          375
               Marketing                                              1,848        1,239
               Other real estate (net)                                  420          469
               Other                                                  5,239        4,011
                                                                ------------------------
                    Total noninterest expenses                       40,695       31,206
                                                                ------------------------
  
               Income before income taxes                            17,743       14,583
               Provision for federal and state income taxes           6,296        5,149
                                                                ------------------------
               Net income                                            11,447        9,434
  
               Dividends on preferred stocks                                         141
                                                                ========================
               Net income applicable to common stock                $11,447       $9,293
                                                                ========================
  
               Net income per common and common equivalent share:
                  Basic                                               $0.65        $0.57
                                                                ------------------------
                  Diluted                                             $0.61        $0.53
                                                                ------------------------
               Average common and common equivalent shares outstanding:
                  Basic                                              17,509       16,363
                                                                ------------------------
                  Diluted                                            18,750       17,684
                                                                ------------------------
               Cash dividends declared, common stock                  $0.24        $0.19
                                                                ========================
  </TABLE>
                              See accompanying notes.
  
                                         3
  <PAGE>
  
                       Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  <TABLE>
  <CAPTION>
  <S>                                                                                               <C>             <C>  
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                     Three Months Ended
                                                                                                          March 31,
                                                                                                --------------------------
                          (dollars in thousands)                                                     1998            1997
  ----------------------------------------------------------------------------------------------------------------------------
  Operating activities    Net income                                                                $11,447         9,434
                          Adjustments to reconcile net income to net cash
                             provided by operating activities:
                                Provision for loan losses                                             1,210         1,626
                                Provision for depreciation, amortization and accretion                5,221         4,113
                                Proceeds from sales of mortgages held for sale                        7,702         3,492
                                Originations of mortgages held for sale                             (13,931)       (3,996)
                                Net loan (chargeoffs)                                                  (495)          (57)
                                Net (increase) decrease in trading securities                        (1,887)        7,162
                                Decrease in other assets                                               (446)       (5,739)
                                Increase in other liabilities                                        14,523         5,212
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash provided by operating activities           23,345        21,247
  
  Investing activities    Proceeds from the sales of securities available for sale                  102,174
                          Proceeds from the maturity of securities available for sale                61,621        44,655
                          Proceeds from the maturity of securities held to maturity                  43,739        24,461
                          Purchase of securities available for sale                                (133,028)      (20,336)
                          Purchase of securities held to maturity                                  (199,105)     (135,039)
                          Net increase in loans                                                     (59,871)      (41,637)
                          Proceeds from sales of loans                                                2,360         2,713
                          Purchases of premises and equipment                                        (8,251)       (4,561)
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash used by investing activities             (190,361)     (129,744)
  
  Financing activities    Net increase in demand and savings deposits                               128,408       100,801
                          Net increase in time deposits                                             253,633        51,988
                          Net decrease in other borrowed money                                     (198,300)      (45,000)
                          Dividends paid                                                             (3,914)       (2,612)
                          Issuance of common stock                                                    8,257
                          Proceeds from issuance of common stock under
                               dividend reinvestment and other stock plans                            2,290         1,837
                          Other                                                                          49           218
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash provided  by financing activities         190,423       107,232
  
                          Increase (decrease) in cash and cash equivalents                           23,406        (1,265)
                          Cash and cash equivalents at beginning of year                            167,900       208,833
                          ----------------------------------------------------------------------------------------------------
                          Cash and cash equivalents at end of period                               $191,306      $207,568
                          ----------------------------------------------------------------------------------------------------
  
                          Supplemental disclosures of cash flow information:  Cash
                            paid during the period for:
                              Interest                                                              $26,286       $19,877
                              Income taxes                                                              125           535
                            Other noncash activities:
                              Transfer of securities to securities available for sale                              82,933
                          ----------------------------------------------------------------------------------------------------
  </TABLE>
                              See accompanying notes.
  
                                         4
  <PAGE>
  
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
  A.       Consolidated Financial Statements
  
                    The  consolidated  financial  statements  included herein have
           been prepared  without audit  pursuant to the rules and  regulations of
           the  Securities  and  Exchange  Commission.   Certain  information  and
           footnote disclosures normally included in financial statements prepared
           in accordance with generally accepted  accounting  principles have been
           condensed  or  omitted  pursuant  to such  rules and  regulations.  The
           accompanying  condensed  consolidated  financial statements reflect all
           adjustments  which are, in the opinion of  management,  necessary  to a
           fair statement of the results for the interim periods  presented.  Such
           adjustments are of a normal recurring nature.  Certain amounts in prior
           periods have been reclassified for comparative purposes.
  
                    These condensed  consolidated  financial  statements should be
           read in conjunction with the audited financial statements and the notes
           thereto included in the registrant's Annual Report for the period ended
           December  31,  1997.  The results for the three  months ended March 31,
           1998 are not necessarily indicative of the results that may be expected
           for the year ended December 31, 1998.
  
                    The consolidated  financial statements include the accounts of
           Commerce  Bancorp,  Inc.  (the  Company)  and all of its  subsidiaries,
           including    Commerce    Bank,    N.A.    (Commerce    NJ),    Commerce
           Bank/Pennsylvania,    N.A.,   Commerce   Bank/Shore,   N.A.,   Commerce
           Bank/North,  Commerce  Capital Trust I, and Commerce  Capital  Markets,
           Inc.  (CCMI).   All  material   intercompany   transactions  have  been
           eliminated.
  
  B.       Commitments
  
                    In  the  normal   course  of   business,   there  are  various
           outstanding commitments to extend credit, such as letters of credit and
           unadvanced   loan   commitments,   which  are  not   reflected  in  the
           accompanying  consolidated  financial  statements.  Management does not
           anticipate any material losses as a result of these transactions.
  
                                         5
  <PAGE>
  
  C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
                    The Company has  guaranteed a debt  obligation of its Employee
           Stock Ownership Plan (ESOP) which originated at $7,500,000 and has been
           reduced to $2,051,000 through principal  reductions.  Accordingly,  the
           loan amount is reflected in the Company's consolidated balance sheet as
           a  liability  and  an  equal  amount,  representing  deferred  employee
           benefits,  has been recorded as a deduction from stockholders'  equity.
           The ESOP  obtained  the loan in 1990 to  acquire a new class of Company
           Cumulative  Convertible Preferred Stock (Series C) at a price of $18.00
           per share. The loan was refinanced in 1994, and is payable in quarterly
           installments  with the final  payment due January  28,  2000.  The loan
           bears  interest at a variable  rate,  although the rate can be fixed at
           future repricing dates in accordance with the loan agreement. Effective
           March 1,  1998,  the  Trustees  of the ESOP  exercised  their  right to
           convert all 417,000 shares of the Series C stock into 646,904 shares of
           the Company's  common stock,  a portion of which is pledged as security
           for the loan.  As the Company makes annual  contributions  to the ESOP,
           these  contributions,  plus dividends  from the Company's  common stock
           held by the ESOP, will be used to repay the loan.
  
  D.       Recent Accounting Statements
  
                    As  of  January  1,  1998,  the  Company   adopted   Financial
           Accounting  Standards Board Statement No. 130 "Reporting  Comprehensive
           Income" (FAS 130).  FAS 130  establishes  new  standards  for reporting
           comprehensive  income,  which  includes  net  income as well as certain
           other items which result in a change to equity during the period. Prior
           period  financial  statements have been  reclassified to conform to the
           requirements  of FAS 130.  The adoption of FAS 130 had no impact on the
           Company's financial position or results of operations. During the first
           quarter of 1998 and 1997,  total  comprehensive  income,  which for the
           Company  included  net  income and  unrealized  gains and losses on the
           Company's available for sale securities,  amounted to $14.8 million and
           $701 thousand, respectively.
  
                    In June, 1997, the Financial Accounting Standards Board issued
           Statement No. 131  "Disclosures  About  Segments of an  Enterprise  and
           Related   Information"  (FAS  131).  FAS  131  requires  disclosure  of
           financial and descriptive  information about an enterprise's  operating
           segments that meet certain quantitative  thresholds.  This statement is
           effective for fiscal years  beginning  after  December 15, 1997, but is
           not required to be applied for interim reporting in the initial year of
           application.  The Company is currently evaluating the impact of FAS 131
           on the disclosures included in its annual financial statements.
  
  E.       Trust Capital Securities
  
                    On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
           Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
           formed  Delaware  business  trust  subsidiary  of the Company.  The net
           proceeds of the offering will be used for general  corporate  purposes,
           which may  include  contributions  to  subsidiary  banks to fund  their
           operations, the financing of one or more future acquisitions, repayment
           of indebtedness of the Company or of its subsidiary banks,  investments
           in or extensions of credit to its  subsidiaries,  or the  repurchase of
           shares of the Company's  outstanding common stock. All $57.5 million of
           the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
           capital purposes.
  
                                         6
  <PAGE>
  
  F.       Commerce Capital Markets, Inc.
  
                    In the  first  quarter  of 1998,  the  Company  completed  the
           acquisition  of A. H. Williams & Co.  (Williams),  Philadelphia,  PA, a
           public finance  investment  firm,  and combined  Williams with Commerce
           Capital,  the bank  securities  dealer division of Commerce NJ, to form
           Commerce Capital Markets,  Inc., a wholly-owned  nonbank  subsidiary of
           the Company engaging in certain securities  activities  permitted under
           Section 20 of the Glass-Steagall  Act. The acquisition was completed by
           the  issuance  of common  stock of the Company  totaling  approximately
           316,000  shares.  The  transaction  was  accounted  for as a pooling of
           interests.  However,  financial  statements of the periods prior to the
           acquisition have not been restated,  as the changes,  in the aggregate,
           would be immaterial.
  
  G.       Earnings Per Share
  
           The calculation of earnings per share follows (in thousands, except for
           per share amounts):
  
                                                          Three Months Ended
                                                               March 31
                                                           1998        1997
                                                         -------     -------
  
            Basic:
            Net income                                   $11,447      $9,434
            Preferred stock dividends                                    141
                                                         -------     -------
            Net income applicable to common stock        $11,447      $9,293
                                                         =======     =======
  
            Average common shares outstanding             17,509      16,363
                                                         =======     =======
  
            Net income per common share - basic            $0.65       $0.57
                                                         =======     =======
  
            Diluted:
            Net income                                   $11,447      $9,434
            Additional ESOP contribution under the
                     if-converted method                                  11
                                                         -------     -------
            Net income applicable to common stock
                     on a diluted basis                  $11,447      $9,423
                                                         =======     =======
  
            Average common shares outstanding             17,509      16,363
            Additional shares considered in diluted
                     computation assuming:
                       Exercise of stock options             817         674
                       Conversion of preferred stock         424         647
                                                         -------     -------
            Average common shares outstanding
                     on a diluted basis                   18,750      17,684
                                                         =======     =======
  
            Net income per common share - diluted          $0.61       $0.53
                                                         =======     =======
  
                                         7
  <PAGE>
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
           of Operation
  
           Capital Resources
  
                    At March 31, 1998, stockholders' equity totaled $272.5 million
           or 6.55% of total assets,  compared to $250.8 million or 6.37% of total
           assets at December 31, 1997.
  
                    On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
           Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
           formed  Delaware  business  trust  subsidiary  of the Company.  The net
           proceeds of the offering will be used for general  corporate  purposes,
           which may  include  contributions  to  subsidiary  banks to fund  their
           operations, the financing of one or more future acquisitions, repayment
           of indebtedness of the Company or of its subsidiary banks,  investments
           in or extensions of credit to its  subsidiaries,  or the  repurchase of
           shares of the Company's  outstanding common stock. All $57.5 million of
           the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
           capital purposes.
  
                    The table below  presents  the  Company's  and  Commerce  NJ's
           risk-based and leverage ratios at March 31, 1998 and 1997:
  
  <TABLE>
  <CAPTION>
  <S>                                            <C>               <C>        <C>               <C>       <C>               <C>  
                                                                                         Per Regulatory Guidelines
                                                          Actual                     Minimum                "Well Capitalized"
                                                 Amount           Ratio       Amount           Ratio      Amount            Ratio
  
  March 31, 1998
  Company
     Risk based capital ratios:
       Tier 1                                   $317,704           15.87%     $80,086           4.00%    $120,129            6.00%
       Total capital                             358,080           17.88      160,172           8.00      200,215           10.00
     Leverage ratio                              317,704            7.86      121,280           3.00      202,133            5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                   $177,218           13.08%     $54,185           4.00%     $81,278            6.00%
       Total capital                             191,617           14.15      108,371           8.00      135,464           10.00
     Leverage ratio                              177,218            6.50       81,760           3.00      136,267            5.00
  
  March 31, 1997
  Company
     Risk based capital ratios:
       Tier 1                                   $212,974           12.65%     $67,369           4.00%    $101,054            6.00%
       Total capital                             255,518           15.17      134,739           8.00      168,424           10.00
     Leverage ratio                              212,974            6.58       97,133           3.00      161,888            5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                   $149,347           13.44%     $44,463           4.00%     $66,694            6.00%
       Total capital                             161,923           14.57       88,926           8.00      111,157           10.00
     Leverage ratio                              149,347            7.01       63,918           3.00      106,530            5.00
  </TABLE>
  
                                         8
  <PAGE>
                  At March 31, 1998, the Company's consolidated capital levels and
           each of the Company's bank  subsidiaries met the regulatory  definition
           of a "well capitalized" financial institution, i.e., a leverage capital
           ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6%, and
           a total risk-based capital ratio exceeding 10%.  Management believes as
           of March 31,  1998,  that the  Company  and its  subsidiaries  meet all
           capital adequacy requirements to which they are subject.
  
           Deposits
  
                    Total deposits at March 31, 1998 were $3.75 billion, up $679.0
           million, or 22% over total deposits of $3.07 billion at March 31, 1997,
           and up by $382.0  million,  or 11% from year-end  1997.  Deposit growth
           during the first three months of 1998 included  core deposit  growth in
           all  categories as well as growth from the public  sector.  The Company
           experienced "same-store core deposit growth" of 13.1% at March 31, 1998
           as  compared to  deposits a year ago for those  branches  open for more
           than two years.
  
           Interest Rate Sensitivity and Liquidity
  
                    The Company's risk of loss arising from adverse changes in the
           fair market value of financial instruments, or market risk, is composed
           primarily of interest rate risk. The primary objective of the Company's
           asset/liability  management  activities  is to  maximize  net  interest
           income, while maintaining  acceptable levels of interest rate risk. The
           Company's   Asset/Liability   Committee   (ALCO)  is  responsible   for
           establishing  policies to limit  exposure to interest rate risk, and to
           ensure  procedures  are  established to monitor  compliance  with these
           policies.  The  guidelines  established  by ALCO  are  reviewed  by the
           Company's Board of Directors.
  
                    Management  considers the simulation of net interest income in
           different  interest rate  environments  to be the best indicator of the
           Company's  interest rate risk. Income simulation  analysis captures not
           only the potential of all assets and  liabilities to mature or reprice,
           but also the probability  that they will do so. Income  simulation also
           attends to the relative interest rate sensitivities of these items, and
           projects  their  behavior  over an  extended  period of time.  Finally,
           income simulation  permits management to assess the probable effects on
           the balance  sheet not only of changes in interest  rates,  but also of
           proposed strategies for responding to them.
  
                    The Company's income  simulation model analyzes  interest rate
           sensitivity  by projecting net income over the next 24 months in a flat
           rate scenario versus net income in alternative interest rate scenarios.
           Management  continually  reviews  and refines  its  interest  rate risk
           management  process  in  response  to the  changing  economic  climate.
           Currently, the Company's model projects a proportionate 200 basis point
           change  during the next  year,  with rates  remaining  constant  in the
           second year.  The Company's ALCO policy has  established  that interest
           income  sensitivity will be considered  acceptable if net income in the
           above  interest  rate  scenario is within 15% of net income in the flat
           rate  scenario  in the first year and within 30% over the two year time
           frame.  At March  31,  1998,  the  Company's  income  simulation  model
           indicates  net income  would  decrease  by 1.31% and 4.03% in the first
           year and over a two year time frame,  respectively,  if rates decreased
           as described  above.  The model projects that net income would decrease
           by 6.69% and 9.25% in the  first  year and over a two year time  frame,
           respectively,  if rates  increased  as  described  above.  All of these
           forecasts are within an acceptable  level of interest rate risk per the
           policies established by ALCO.
  
                                         9
  <PAGE>
  
                    In the event the Company's  interest rate risk models indicate
           an unacceptable  level of risk, the Company could undertake a number of
           actions that would reduce this risk, including the sale of a portion of
           its available for sale portfolio, the use of risk management strategies
           such  as  interest  rate  swaps  and  caps,  or  the  extension  of the
           maturities of its short-term borrowings.
  
                    Management  also  monitors  interest  rate risk by utilizing a
           market value of equity model. The model assesses the impact of a change
           in interest  rates on the market value of all the Company's  assets and
           liabilities,  as  well  as any  off  balance  sheet  items.  The  model
           calculates the market value of the Company's  assets and liabilities in
           excess of book value in the current rate  scenario,  and then  compares
           the excess of market value over book value given an immediate 200 basis
           point change in rates.  The Company's  ALCO policy  indicates  that the
           level of interest rate risk is  unacceptable if the immediate 200 basis
           point  change  would result in the loss of 60% or more of the excess of
           market value over book value in the current rate scenario. At March 31,
           1998, the market value of equity model indicates an acceptable level of
           interest rate risk.
  
                    Liquidity  involves  the  Company's  ability to raise funds to
           support asset growth or decrease assets to meet deposit withdrawals and
           other  borrowing  needs,  to  maintain  reserve   requirements  and  to
           otherwise  operate  the  Company on an  ongoing  basis.  The  Company's
           liquidity needs are primarily met by growth in core deposits,  its cash
           and  federal  funds  sold  position,  cash  flow  from  its  amortizing
           investment  and  loan  portfolios,  as well  as the  use of  short-term
           borrowings, as required.
  
           Short-Term Borrowings
  
                    Short-term  borrowings,   or  other  borrowed  money,  consist
           primarily of securities sold under  agreements to repurchase.  In 1997,
           short-term  borrowings  were used to meet  short  term  funding  needs.
           During  the first  three  months  of 1998,  the  Company  significantly
           reduced  its  short-term   borrowings,   primarily   through  increased
           deposits.  At March 31, 1998,  short-term  borrowings  aggregated $25.0
           million and had an average rate of 5.78%.
  
           Interest Earning Assets
  
                    For the three  month  period  ended March 31,  1998,  interest
           earning  assets  increased  $205.3  million from $3.62 billion to $3.82
           billion.  This increase was primarily in investment  securities and the
           loan portfolio as described below.
  
           Loans
  
                    During the first three months of 1998,  loans  increased $57.5
           million from $1.41 billion to $1.47 billion.  At March 31, 1998,  loans
           represented 39% of total deposits and 35% of total assets. The increase
           in the loan  portfolio was due primarily to loans secured by commercial
           real estate properties.
  
                                         10
  <PAGE>
           Investments
  
                  In  total,  for the  first  three  months  of  1998,  securities
           increased  $130.6 million from $2.20 billion to $2.33 billion.  Deposit
           growth and other  funding  sources were used to increase the  Company's
           investment portfolio.  The available for sale portfolio decreased $26.0
           million to $1.29 billion from $1.32  billion at December 31, 1997,  and
           the securities held to maturity  portfolio  increased $154.7 million to
           $1.03 billion at March 31, 1998 from $874.0  million at year-end  1997.
           At March 31, 1998,  the average life of the  investment  portfolio  was
           approximately  5.5 years, and the duration was approximately 4.2 years.
           At March 31, 1998, total securities represented 56% of total assets.
  
           Net Income
  
                  Net income for the first quarter of 1998 was $11.4  million,  an
           increase of $2.0 million or 21% over the $9.4 million  recorded for the
           first quarter of 1997. On a per share basis, diluted net income for the
           first quarter of 1998 was $.61 per common  share,  up 15% over the $.53
           per common share for the respective 1997 period.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  first   quarter  of  1998  were   1.13%  and   17.29%,
           respectively,  compared to 1.17% and 18.26%, respectively, for the same
           1997 period.
  
            Net Interest Income
  
                  Net interest  income totaled $39.8 million for the first quarter
           of 1998,  an increase of $5.3 million or 15% from $34.5  million in the
           first quarter of 1997. The  improvement in net interest  income was due
           primarily to volume increases in the loan and investment portfolios.
  
           Noninterest Income
  
                  Noninterest  income  totaled $19.9 million for the first quarter
           of 1998,  an increase of $6.9 million or 54% from $12.9  million in the
           first  quarter of 1997.  The  increase  was due  primarily to increased
           other  operating  income,  which rose $5.1 million over the prior year,
           including  increased  revenues of $1.5  million and $2.6  million  from
           Commerce National  Insurance  Services,  Inc., the Company's  insurance
           brokerage  subsidiary,  and CCMI,  respectively.  In addition,  deposit
           charges and service fees  increased $1.9 million from the first quarter
           of 1997 primarily due to higher transaction volumes.
  
           Noninterest Expense
  
                  For the first quarter of 1998, noninterest expense totaled $40.7
           million,  an  increase  of $9.5  million or 30% over the same period in
           1997.  Contributing  to this increase was new branch  activity over the
           past twelve months,  with the number of branches  increasing from 68 at
           March 31, 1997 to 76 at March 31,  1998,  and the  formation of CCMI in
           the first  quarter of 1998.  With the addition of these new offices and
           CCMI,  staff,   facilities,   marketing,   and  related  expenses  rose
           accordingly.  Other  noninterest  expenses  rose $1.2  million over the
           first quarter of 1997.  This increase  resulted  primarily  from higher
           bank  card-related  service  charges,  increased  business  development
           expenses, and higher legal fees.
  
                                         11
  <PAGE>
  
                  The Company's operating efficiency ratio (noninterest  expenses,
           less other real estate  expense,  divided by net  interest  income plus
           noninterest  income excluding  non-recurring  gains) was 67.52% for the
           first  three  months of 1998 as  compared  to 64.83%  for the same 1997
           period.  The  Company's  efficiency  ratio remains above its peer group
           primarily due to its aggressive growth expansion activities.
  
            Loan and Asset Quality
  
                    Total non-performing  assets  (non-performing  loans and other
           real  estate,  excluding  loans  past  due 90 days or  more  and  still
           accruing  interest) at March 31, 1998 were $17.0  million,  or 0.41% of
           total  assets  compared  to $17.4  million or 0.44% of total  assets at
           December  31, 1997 and $18.8  million or 0.56% of total assets at March
           31, 1997.
  
                    Total non-performing loans (non-accrual loans and restructured
           loans,  excluding  loans  past due 90 days or more and  still  accruing
           interest) at March 31, 1998 were $11.0  million or 0.75% of total loans
           compared to $11.6  million or 0.82% of total loans at December 31, 1997
           and $10.7  million or 0.82% of total loans at March 31, 1997.  At March
           31, 1998,  loans past due 90 days or more and still  accruing  interest
           amounted to $308  thousand  compared to $226  thousand at December  31,
           1997 and $300 thousand at March 31, 1997.  Additional  loans considered
           as  potential  problem  loans by the  Company's  internal  loan  review
           department  ($12.2 million at March 31, 1998) have been evaluated as to
           risk  exposure in  determining  the adequacy of the  allowance for loan
           losses.
  
                    Other real estate (ORE) at March 31, 1998 totaled $6.0 million
           compared to $5.8 million at December 31, 1997 and $8.0 million at March
           31, 1997.  These properties have been written down to the lower of cost
           or fair value less disposition costs.
  
                    On pages 13 and 14 are tabular  presentation  showing detailed
           information about the Company's  non-performing loans and assets and an
           analysis of the  Company's  allowance for loan losses and other related
           data for March 31, 1998, December 31, 1997, and March 31, 1997.
  
           Year 2000
  
                    The  Company  began the  process  of  preparing  its  computer
           systems  and  applications  for the  Year  2000 in  1996.  The  process
           includes   directing  its  external  service   providers  to  take  the
           appropriate  action to ensure  Year 2000  compliance,  as well as, to a
           lesser  extent,  modifying or replacing  certain  hardware and software
           maintained by the Company.  The Company  expects to have  substantially
           all of the  necessary  changes  in place  before  the end of 1998,  and
           believes  it is taking the  appropriate  steps to address all Year 2000
           issues.  The  Company  estimates  the  total  cost  of  the  Year  2000
           compliance  process,  including internal and external personnel and any
           required  hardware  and  software  modifications,  will not exceed $1.0
           million.
  
                                         12
  <PAGE>
  
  The following summary presents  information  regarding  non-performing loans and
  assets as of March 31, 1998 and the preceding four quarters:  (dollar amounts in
  thousands)
  
  <TABLE>
  <CAPTION>
                                                March 31,   December 31, September 30,  June 30,    March 31,
                                                  1998         1997          1997        1997         1997
  Non-accrual loans:
  <S>                                            <C>          <C>          <C>          <C>          <C>   
    Commercial                                   $1,764       $1,816       $1,920       $1,057       $1,349
    Consumer                                        944          703          893        1,254        1,109
    Real Estate:
      Construction                                  393        1,345        2,006        2,155        2,155
      Mortgage                                    7,742        7,706        7,533        5,818        6,074
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,843       11,570       12,352       10,284       10,687
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       19           19           20           20           21
    Consumer
    Real Estate:
      Construction
      Mortgage                                      114
                                                -------      -------      -------      -------      -------
        Total restructured loans                    133           19           20           20           21
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,976       11,589       12,372       10,304       10,708
                                                -------      -------      -------      -------      -------
  
  Other real estate                               6,029        5,845        6,673        7,035        8,042
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    17,005       17,434       19,045       17,339       18,750
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              308          226          423          458          300
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $17,313      $17,660      $19,468      $17,797      $19,050
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.75%        0.82%        0.89%        0.76%        0.82%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.41%        0.44%        0.50%        0.48%        0.56%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.42%        0.45%        0.51%        0.49%        0.57%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           200%         183%         169%         198%         183%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.51%        1.50%        1.50%        1.50%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         6%           6%           8%           7%           9%
  </TABLE>
  
                                         13
  <PAGE>
  
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and other related data: (dollar amounts in thousands)
  
  <TABLE>
  <CAPTION>
                                                                                                Year
                                                                 Three Months Ended             Ended
                                                          ------------------------------
                                                           03/31/98          03/31/97         12/31/97
                                                          ------------     -------------     ------------
  <S>                                                     <C>               <C>              <C>    
              Balance at beginning of period                  $21,261           $17,975          $17,975
              Provisions charged to operating expenses          1,210             1,626            4,668
                                                          ------------     -------------     ------------
                                                               22,471            19,601           22,643
              Recoveries on loans charged-off:
                Commercial                                         45                53              348
                Consumer                                           94                72              406
                Real estate                                         9                18              144
                                                          ------------     -------------     ------------
              Total recoveries                                    148               143              898
  
              Loans charged-off:
                Commercial                                       (189)              (42)            (964)
                Consumer                                         (271)             (158)          (1,170)
                Real estate                                      (183)                0             (146)
                                                          ------------     -------------     ------------
              Total charged-off                                  (643)             (200)          (2,280)
                                                          ------------     -------------     ------------
              Net charge-offs                                    (495)              (57)          (1,382)
                                                          ------------     -------------     ------------
  
              Balance at end of period                        $21,976           $19,544          $21,261
                                                          ============     =============     ============
  
              Net charge-offs as a percentage of
              average loans outstanding                          0.14%             0.02%            0.10%
  </TABLE>
  
  Item 3.   Quantitative and Qualitative Disclosures About Market Risk
  
                  See Item 2 -  Management's  Discussion and Analysis of Financial
           Condition  and Results of  Operation - Interest  Rate  Sensitivity  and
           Liquidity.
  
                                         14
  <PAGE>
  
                             PART II. OTHER INFORMATION
  
  Item 6. Exhibits and Reports on Form 8-K
  
  
           No reports on Form 8-K were filed during the first quarter ended March
           31, 1998.
  
                                         15
  <PAGE>
  
                                     SIGNATURES
  
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
                                                    COMMERCE BANCORP, INC.
                                                         (Registrant)
  
  
  
  
   May 14, 1998
    (Date)                                           C. EDWARD JORDAN, JR.
                                                   EXECUTIVE VICE PRESIDENT
                                                 (PRINCIPAL FINANCIAL OFFICER)
  
  
                                         16
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 58196}]
metadata_filer: {"company-data": {"conformed-name": "COMMERCE BANCORP INC /NJ/", "cik": "0000715096", "assigned-sic": "6021", "irs-number": "222433468", "state-of-incorporation": "NJ", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-12069", "film-number": "98621058"}, "business-address": {"street1": "COMMERCE ATRIUM", "street2": "1701 RTE 70 E", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400", "phone": "6097519000"}, "mail-address": {"street1": "1701 ROUTE 70 EAST", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                               WASHINGTON, D.C. 20549
  
                                      Form 10-Q
  
       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                        For the quarter ended March 31, 1998
  
                                         OR
  
       ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                   For the transition period from ______ to ______
  
                              Commission File #0-12874
  
                               COMMERCE BANCORP, INC.
               (Exact name of registrant as specified in its charter)
  
              New Jersey                                    22-2433468
     (State or other jurisdiction of              (IRS Employer Identification
      incorporation or organization)                         Number)
  
       Commerce Atrium, 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400
                 (Address of Principal Executive Offices) (Zip Code)
  
                                   (609) 751-9000
                (Registrant's telephone number, including area code)
  
           Indicate by check mark whether the registrant (1) has filed all reports
           required to be filed by Section 13 or 15(d) of the Securities  Exchange
           Act of 1934 during the preceding 12 months (or for such shorter  period
           that the  registrant was required to file such  report(s),  and (2) has
           been subject to such filing requirements for the past 90 days.
  
                         Yes   X                No  _______
  APPLICABLE ONLY TO CORPORATE ISSUERS:
  
  Indicate the number of shares  outstanding  of each of the  issuer's  classes of
  common stock, as of the last practical date.
  
           Common Stock                                    18,011,327
           (Title of Class)                       (No. of Shares Outstanding
                                                         as of  5/08/98)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                              Page
  
  PART I.           FINANCIAL INFORMATION
  
  Item 1.           Financial Statements
  
                    Consolidated Balance Sheets (unaudited)
                             March 31, 1998 and December 31, 1997
  
                    Consolidated  Statements  of Income  (unaudited) 
                             Three months ended March 31, 1998 and 
                             March 31, 1997
  
                    Consolidated Statements of Cash Flows (unaudited) 
                             Three months ended March 31, 1998 and 
                             March 31, 1997
  
                    Notes to Consolidated Financial Statements (unaudited)
  
  Item 2.           Management's Discussion and Analysis of Financial
                             Condition and Results of Operation
  
  Item 3.           Quantitative and Qualitative Disclosures About Market Risk
  
  PART II.          OTHER INFORMATION
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                                         1
  PART I. FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
                       Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  -----------------------------------------------------------------------------------------------------------------
                                                                                         March 31,      December 31,
                                                                                     ------------------------------
                   (dollars in thousands)                                                  1998             1997
  -----------------------------------------------------------------------------------------------------------------
  Assets           Cash and due from banks                                               $180,406         $167,900
                   Federal funds sold                                                      10,900                
                                                                                     ------------------------------
                                  Cash and cash equivalents                               191,306          167,900
                   Mortgages held for sale                                                 13,489            7,260
                   Trading securities                                                       9,798            7,911
                   Securities available for sale                                        1,289,115        1,315,120
                   Securities held to maturity                                          1,028,760          874,032
                    (market value 1998-$1,026,745; 1997-$869,815)
                   Loans                                                                1,468,800        1,411,289
                                Less allowance for loan losses                             21,976           21,261
                                                                                     ------------------------------
                                                                                        1,446,824        1,390,028
                   Bank premises and equipment, net                                       116,020          111,759
                   Other assets                                                            63,358           64,957
                                                                                     ------------------------------
                                                                                       $4,158,670       $3,938,967
                                                                                     ==============================
  
  Liabilities      Deposits:
                                Demand:
                                  Interest-bearing                                     $1,178,372       $1,111,302
                                  Noninterest-bearing                                     778,895          762,843
                                Savings                                                   751,192          705,906
                                Time                                                    1,042,986          789,353
                                                                                     ------------------------------
                                  Total deposits                                        3,751,445        3,369,404
  
                   Other borrowed money                                                    25,000          223,300
                   Other liabilities                                                       27,218           12,695
                   Obligation to Employee Stock Ownership Plan (ESOP)                       2,051            2,308
                   Trust Capital Securities - Commerce Capital Trust I                     57,500           57,500
                   Long-term debt                                                          23,000           23,000
                                                                                     ------------------------------
                                                                                        3,886,214        3,688,207
  
  Stockholders'    Common stock, 18,068,447 shares issued (16,999,824 shares in 1997)      28,232           25,309
  Equity           Series C preferred stock, 417,000 shares in 1997                                          7,506
                   Capital in excess of par or stated value                               212,139          167,529
                   Retained earnings                                                       28,695           50,592
                   Accumulated other comprehensive income                                   7,065            3,756
                                                                                     ------------------------------
                                                                                          276,131          254,692
                   Less commitment to ESOP                                                  2,051            2,308
                   Less treasury stock, at cost, 100,159 shares in 1998
                                (100,159 in 1997)                                           1,624            1,624
                                                                                     ------------------------------
                                  Total stockholders' equity                              272,456          250,760
                                                                                     ------------------------------
                                                                                       $4,158,670       $3,938,967
                                                                                     ==============================
  See accompanying notes.
  
                                         2
  Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  --------------------------------------------------------------------------------------
                                                                     Three Months Ended
                                                                          March 31,
                                                                ------------------------
               (dollars in thousands, except per share amounts)       1998         1997
  --------------------------------------------------------------------------------------
  Interest     Interest and fees on loans                           $31,141      $28,113
  income       Interest on investments                               36,396       26,814
               Other interest                                           354          412
                                                                ------------------------
                    Total interest income                            67,891       55,339
                                                                ------------------------
  
  Interest     Interest on deposits:
  expense         Demand                                              7,264        5,471
                  Savings                                             4,414        3,770
                  Time                                               12,670       10,666
                                                                ------------------------
                    Total interest on deposits                       24,348       19,907
               Interest on other borrowed money                       2,001          460
               Interest on long-term debt                             1,782          506
                                                                ------------------------
                    Total interest expense                           28,131       20,873
                                                                ------------------------
  
               Net interest income                                   39,760       34,466
               Provision for loan losses                              1,210        1,626
                                                                ------------------------
               Net interest income after provision for loan losses   38,550       32,840
  
  Noninterest  Deposit charges and service fees                       8,083        6,198
  income       Other operating income                                11,805        6,751
               Net investment securities gains                          
                                                                ------------------------
                    Total noninterest income                         19,888       12,949
                                                                ------------------------
  
  Noninterest  Salaries                                              16,011       11,902
  expense      Benefits                                               3,281        2,746
               Occupancy                                              3,922        3,334
               Furniture and equipment                                5,366        4,041
               Office                                                 4,106        3,089
               Audit and regulatory fees and assessments                502          375
               Marketing                                              1,848        1,239
               Other real estate (net)                                  420          469
               Other                                                  5,239        4,011
                                                                ------------------------
                    Total noninterest expenses                       40,695       31,206
                                                                ------------------------
  
               Income before income taxes                            17,743       14,583
               Provision for federal and state income taxes           6,296        5,149
                                                                ------------------------
               Net income                                            11,447        9,434
  
               Dividends on preferred stocks                                         141
                                                                ========================
               Net income applicable to common stock                $11,447       $9,293
                                                                ========================
  
               Net income per common and common equivalent share:
                  Basic                                               $0.65        $0.57
                                                                ------------------------
                  Diluted                                             $0.61        $0.53
                                                                ------------------------
               Average common and common equivalent shares outstanding:
                  Basic                                              17,509       16,363
                                                                ------------------------
                  Diluted                                            18,750       17,684
                                                                ------------------------
               Cash dividends declared, common stock                  $0.24        $0.19
                                                                ========================
  See accompanying notes.
  
                                         3
  Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  ----------------------------------------------------------------------------------------------------------------------------
                                                                                                     Three Months Ended
                                                                                                          March 31,
                                                                                                --------------------------
                          (dollars in thousands)                                                     1998            1997
  ----------------------------------------------------------------------------------------------------------------------------
  Operating activities    Net income                                                                $11,447         9,434
                          Adjustments to reconcile net income to net cash
                             provided by operating activities:
                                Provision for loan losses                                             1,210         1,626
                                Provision for depreciation, amortization and accretion                5,221         4,113
                                Proceeds from sales of mortgages held for sale                        7,702         3,492
                                Originations of mortgages held for sale                             (13,931)       (3,996)
                                Net loan (chargeoffs)                                                  (495)          (57)
                                Net (increase) decrease in trading securities                        (1,887)        7,162
                                Decrease in other assets                                               (446)       (5,739)
                                Increase in other liabilities                                        14,523         5,212
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash provided by operating activities           23,345        21,247
  
  Investing activities    Proceeds from the sales of securities available for sale                  102,174
                          Proceeds from the maturity of securities available for sale                61,621        44,655
                          Proceeds from the maturity of securities held to maturity                  43,739        24,461
                          Purchase of securities available for sale                                (133,028)      (20,336)
                          Purchase of securities held to maturity                                  (199,105)     (135,039)
                          Net increase in loans                                                     (59,871)      (41,637)
                          Proceeds from sales of loans                                                2,360         2,713
                          Purchases of premises and equipment                                        (8,251)       (4,561)
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash used by investing activities             (190,361)     (129,744)
  
  Financing activities    Net increase in demand and savings deposits                               128,408       100,801
                          Net increase in time deposits                                             253,633        51,988
                          Net decrease in other borrowed money                                     (198,300)      (45,000)
                          Dividends paid                                                             (3,914)       (2,612)
                          Issuance of common stock                                                    8,257
                          Proceeds from issuance of common stock under
                               dividend reinvestment and other stock plans                            2,290         1,837
                          Other                                                                          49           218
                          ----------------------------------------------------------------------------------------------------
                                                 Net cash provided  by financing activities         190,423       107,232
  
                          Increase (decrease) in cash and cash equivalents                           23,406        (1,265)
                          Cash and cash equivalents at beginning of year                            167,900       208,833
                          ----------------------------------------------------------------------------------------------------
                          Cash and cash equivalents at end of period                               $191,306      $207,568
                          ----------------------------------------------------------------------------------------------------
  
                          Supplemental disclosures of cash flow information:  Cash
                            paid during the period for:
                              Interest                                                              $26,286       $19,877
                              Income taxes                                                              125           535
                            Other noncash activities:
                              Transfer of securities to securities available for sale                              82,933
                          ----------------------------------------------------------------------------------------------------
  See accompanying notes.
  
                                         4
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
  A.       Consolidated Financial Statements
  
                    The  consolidated  financial  statements  included herein have
           been prepared  without audit  pursuant to the rules and  regulations of
           the  Securities  and  Exchange  Commission.   Certain  information  and
           footnote disclosures normally included in financial statements prepared
           in accordance with generally accepted  accounting  principles have been
           condensed  or  omitted  pursuant  to such  rules and  regulations.  The
           accompanying  condensed  consolidated  financial statements reflect all
           adjustments  which are, in the opinion of  management,  necessary  to a
           fair statement of the results for the interim periods  presented.  Such
           adjustments are of a normal recurring nature.  Certain amounts in prior
           periods have been reclassified for comparative purposes.
  
                    These condensed  consolidated  financial  statements should be
           read in conjunction with the audited financial statements and the notes
           thereto included in the registrant's Annual Report for the period ended
           December  31,  1997.  The results for the three  months ended March 31,
           1998 are not necessarily indicative of the results that may be expected
           for the year ended December 31, 1998.
  
                    The consolidated  financial statements include the accounts of
           Commerce  Bancorp,  Inc.  (the  Company)  and all of its  subsidiaries,
           including    Commerce    Bank,    N.A.    (Commerce    NJ),    Commerce
           Bank/Pennsylvania,    N.A.,   Commerce   Bank/Shore,   N.A.,   Commerce
           Bank/North,  Commerce  Capital Trust I, and Commerce  Capital  Markets,
           Inc.  (CCMI).   All  material   intercompany   transactions  have  been
           eliminated.
  
  B.       Commitments
  
                    In  the  normal   course  of   business,   there  are  various
           outstanding commitments to extend credit, such as letters of credit and
           unadvanced   loan   commitments,   which  are  not   reflected  in  the
           accompanying  consolidated  financial  statements.  Management does not
           anticipate any material losses as a result of these transactions.
  
                                         5
  C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
                    The Company has  guaranteed a debt  obligation of its Employee
           Stock Ownership Plan (ESOP) which originated at $7,500,000 and has been
           reduced to $2,051,000 through principal  reductions.  Accordingly,  the
           loan amount is reflected in the Company's consolidated balance sheet as
           a  liability  and  an  equal  amount,  representing  deferred  employee
           benefits,  has been recorded as a deduction from stockholders'  equity.
           The ESOP  obtained  the loan in 1990 to  acquire a new class of Company
           Cumulative  Convertible Preferred Stock (Series C) at a price of $18.00
           per share. The loan was refinanced in 1994, and is payable in quarterly
           installments  with the final  payment due January  28,  2000.  The loan
           bears  interest at a variable  rate,  although the rate can be fixed at
           future repricing dates in accordance with the loan agreement. Effective
           March 1,  1998,  the  Trustees  of the ESOP  exercised  their  right to
           convert all 417,000 shares of the Series C stock into 646,904 shares of
           the Company's  common stock,  a portion of which is pledged as security
           for the loan.  As the Company makes annual  contributions  to the ESOP,
           these  contributions,  plus dividends  from the Company's  common stock
           held by the ESOP, will be used to repay the loan.
  
  D.       Recent Accounting Statements
  
                    As  of  January  1,  1998,  the  Company   adopted   Financial
           Accounting  Standards Board Statement No. 130 "Reporting  Comprehensive
           Income" (FAS 130).  FAS 130  establishes  new  standards  for reporting
           comprehensive  income,  which  includes  net  income as well as certain
           other items which result in a change to equity during the period. Prior
           period  financial  statements have been  reclassified to conform to the
           requirements  of FAS 130.  The adoption of FAS 130 had no impact on the
           Company's financial position or results of operations. During the first
           quarter of 1998 and 1997,  total  comprehensive  income,  which for the
           Company  included  net  income and  unrealized  gains and losses on the
           Company's available for sale securities,  amounted to $14.8 million and
           $701 thousand, respectively.
  
                    In June, 1997, the Financial Accounting Standards Board issued
           Statement No. 131  "Disclosures  About  Segments of an  Enterprise  and
           Related   Information"  (FAS  131).  FAS  131  requires  disclosure  of
           financial and descriptive  information about an enterprise's  operating
           segments that meet certain quantitative  thresholds.  This statement is
           effective for fiscal years  beginning  after  December 15, 1997, but is
           not required to be applied for interim reporting in the initial year of
           application.  The Company is currently evaluating the impact of FAS 131
           on the disclosures included in its annual financial statements.
  
  E.       Trust Capital Securities
  
                    On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
           Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
           formed  Delaware  business  trust  subsidiary  of the Company.  The net
           proceeds of the offering will be used for general  corporate  purposes,
           which may  include  contributions  to  subsidiary  banks to fund  their
           operations, the financing of one or more future acquisitions, repayment
           of indebtedness of the Company or of its subsidiary banks,  investments
           in or extensions of credit to its  subsidiaries,  or the  repurchase of
           shares of the Company's  outstanding common stock. All $57.5 million of
           the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
           capital purposes.
  
                                         6
  F.       Commerce Capital Markets, Inc.
  
                    In the  first  quarter  of 1998,  the  Company  completed  the
           acquisition  of A. H. Williams & Co.  (Williams),  Philadelphia,  PA, a
           public finance  investment  firm,  and combined  Williams with Commerce
           Capital,  the bank  securities  dealer division of Commerce NJ, to form
           Commerce Capital Markets,  Inc., a wholly-owned  nonbank  subsidiary of
           the Company engaging in certain securities  activities  permitted under
           Section 20 of the Glass-Steagall  Act. The acquisition was completed by
           the  issuance  of common  stock of the Company  totaling  approximately
           316,000  shares.  The  transaction  was  accounted  for as a pooling of
           interests.  However,  financial  statements of the periods prior to the
           acquisition have not been restated,  as the changes,  in the aggregate,
           would be immaterial.
  
  G.       Earnings Per Share
  
           The calculation of earnings per share follows (in thousands, except for
           per share amounts):
  
                                                          Three Months Ended
                                                               March 31
                                                           1998        1997
                                                         -------     -------
  
            Basic:
            Net income                                   $11,447      $9,434
            Preferred stock dividends                                    141
                                                         -------     -------
            Net income applicable to common stock        $11,447      $9,293
                                                         =======     =======
  
            Average common shares outstanding             17,509      16,363
                                                         =======     =======
  
            Net income per common share - basic            $0.65       $0.57
                                                         =======     =======
  
            Diluted:
            Net income                                   $11,447      $9,434
            Additional ESOP contribution under the
                     if-converted method                                  11
                                                         -------     -------
            Net income applicable to common stock
                     on a diluted basis                  $11,447      $9,423
                                                         =======     =======
  
            Average common shares outstanding             17,509      16,363
            Additional shares considered in diluted
                     computation assuming:
                       Exercise of stock options             817         674
                       Conversion of preferred stock         424         647
                                                         -------     -------
            Average common shares outstanding
                     on a diluted basis                   18,750      17,684
                                                         =======     =======
  
            Net income per common share - diluted          $0.61       $0.53
                                                         =======     =======
  
                                         7
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
           of Operation
  
           Capital Resources
  
                    At March 31, 1998, stockholders' equity totaled $272.5 million
           or 6.55% of total assets,  compared to $250.8 million or 6.37% of total
           assets at December 31, 1997.
  
                    On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
           Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
           formed  Delaware  business  trust  subsidiary  of the Company.  The net
           proceeds of the offering will be used for general  corporate  purposes,
           which may  include  contributions  to  subsidiary  banks to fund  their
           operations, the financing of one or more future acquisitions, repayment
           of indebtedness of the Company or of its subsidiary banks,  investments
           in or extensions of credit to its  subsidiaries,  or the  repurchase of
           shares of the Company's  outstanding common stock. All $57.5 million of
           the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
           capital purposes.
  
                    The table below  presents  the  Company's  and  Commerce  NJ's
           risk-based and leverage ratios at March 31, 1998 and 1997:
  Per Regulatory Guidelines
                                                          Actual                     Minimum                "Well Capitalized"
                                                 Amount           Ratio       Amount           Ratio      Amount            Ratio
  
  March 31, 1998
  Company
     Risk based capital ratios:
       Tier 1                                   $317,704           15.87%     $80,086           4.00%    $120,129            6.00%
       Total capital                             358,080           17.88      160,172           8.00      200,215           10.00
     Leverage ratio                              317,704            7.86      121,280           3.00      202,133            5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                   $177,218           13.08%     $54,185           4.00%     $81,278            6.00%
       Total capital                             191,617           14.15      108,371           8.00      135,464           10.00
     Leverage ratio                              177,218            6.50       81,760           3.00      136,267            5.00
  
  March 31, 1997
  Company
     Risk based capital ratios:
       Tier 1                                   $212,974           12.65%     $67,369           4.00%    $101,054            6.00%
       Total capital                             255,518           15.17      134,739           8.00      168,424           10.00
     Leverage ratio                              212,974            6.58       97,133           3.00      161,888            5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                   $149,347           13.44%     $44,463           4.00%     $66,694            6.00%
       Total capital                             161,923           14.57       88,926           8.00      111,157           10.00
     Leverage ratio                              149,347            7.01       63,918           3.00      106,530            5.00
  8
  At March 31, 1998, the Company's consolidated capital levels and
           each of the Company's bank  subsidiaries met the regulatory  definition
           of a "well capitalized" financial institution, i.e., a leverage capital
           ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6%, and
           a total risk-based capital ratio exceeding 10%.  Management believes as
           of March 31,  1998,  that the  Company  and its  subsidiaries  meet all
           capital adequacy requirements to which they are subject.
  
           Deposits
  
                    Total deposits at March 31, 1998 were $3.75 billion, up $679.0
           million, or 22% over total deposits of $3.07 billion at March 31, 1997,
           and up by $382.0  million,  or 11% from year-end  1997.  Deposit growth
           during the first three months of 1998 included  core deposit  growth in
           all  categories as well as growth from the public  sector.  The Company
           experienced "same-store core deposit growth" of 13.1% at March 31, 1998
           as  compared to  deposits a year ago for those  branches  open for more
           than two years.
  
           Interest Rate Sensitivity and Liquidity
  
                    The Company's risk of loss arising from adverse changes in the
           fair market value of financial instruments, or market risk, is composed
           primarily of interest rate risk. The primary objective of the Company's
           asset/liability  management  activities  is to  maximize  net  interest
           income, while maintaining  acceptable levels of interest rate risk. The
           Company's   Asset/Liability   Committee   (ALCO)  is  responsible   for
           establishing  policies to limit  exposure to interest rate risk, and to
           ensure  procedures  are  established to monitor  compliance  with these
           policies.  The  guidelines  established  by ALCO  are  reviewed  by the
           Company's Board of Directors.
  
                    Management  considers the simulation of net interest income in
           different  interest rate  environments  to be the best indicator of the
           Company's  interest rate risk. Income simulation  analysis captures not
           only the potential of all assets and  liabilities to mature or reprice,
           but also the probability  that they will do so. Income  simulation also
           attends to the relative interest rate sensitivities of these items, and
           projects  their  behavior  over an  extended  period of time.  Finally,
           income simulation  permits management to assess the probable effects on
           the balance  sheet not only of changes in interest  rates,  but also of
           proposed strategies for responding to them.
  
                    The Company's income  simulation model analyzes  interest rate
           sensitivity  by projecting net income over the next 24 months in a flat
           rate scenario versus net income in alternative interest rate scenarios.
           Management  continually  reviews  and refines  its  interest  rate risk
           management  process  in  response  to the  changing  economic  climate.
           Currently, the Company's model projects a proportionate 200 basis point
           change  during the next  year,  with rates  remaining  constant  in the
           second year.  The Company's ALCO policy has  established  that interest
           income  sensitivity will be considered  acceptable if net income in the
           above  interest  rate  scenario is within 15% of net income in the flat
           rate  scenario  in the first year and within 30% over the two year time
           frame.  At March  31,  1998,  the  Company's  income  simulation  model
           indicates  net income  would  decrease  by 1.31% and 4.03% in the first
           year and over a two year time frame,  respectively,  if rates decreased
           as described  above.  The model projects that net income would decrease
           by 6.69% and 9.25% in the  first  year and over a two year time  frame,
           respectively,  if rates  increased  as  described  above.  All of these
           forecasts are within an acceptable  level of interest rate risk per the
           policies established by ALCO.
  
                                         9
  In the event the Company's  interest rate risk models indicate
           an unacceptable  level of risk, the Company could undertake a number of
           actions that would reduce this risk, including the sale of a portion of
           its available for sale portfolio, the use of risk management strategies
           such  as  interest  rate  swaps  and  caps,  or  the  extension  of the
           maturities of its short-term borrowings.
  
                    Management  also  monitors  interest  rate risk by utilizing a
           market value of equity model. The model assesses the impact of a change
           in interest  rates on the market value of all the Company's  assets and
           liabilities,  as  well  as any  off  balance  sheet  items.  The  model
           calculates the market value of the Company's  assets and liabilities in
           excess of book value in the current rate  scenario,  and then  compares
           the excess of market value over book value given an immediate 200 basis
           point change in rates.  The Company's  ALCO policy  indicates  that the
           level of interest rate risk is  unacceptable if the immediate 200 basis
           point  change  would result in the loss of 60% or more of the excess of
           market value over book value in the current rate scenario. At March 31,
           1998, the market value of equity model indicates an acceptable level of
           interest rate risk.
  
                    Liquidity  involves  the  Company's  ability to raise funds to
           support asset growth or decrease assets to meet deposit withdrawals and
           other  borrowing  needs,  to  maintain  reserve   requirements  and  to
           otherwise  operate  the  Company on an  ongoing  basis.  The  Company's
           liquidity needs are primarily met by growth in core deposits,  its cash
           and  federal  funds  sold  position,  cash  flow  from  its  amortizing
           investment  and  loan  portfolios,  as well  as the  use of  short-term
           borrowings, as required.
  
           Short-Term Borrowings
  
                    Short-term  borrowings,   or  other  borrowed  money,  consist
           primarily of securities sold under  agreements to repurchase.  In 1997,
           short-term  borrowings  were used to meet  short  term  funding  needs.
           During  the first  three  months  of 1998,  the  Company  significantly
           reduced  its  short-term   borrowings,   primarily   through  increased
           deposits.  At March 31, 1998,  short-term  borrowings  aggregated $25.0
           million and had an average rate of 5.78%.
  
           Interest Earning Assets
  
                    For the three  month  period  ended March 31,  1998,  interest
           earning  assets  increased  $205.3  million from $3.62 billion to $3.82
           billion.  This increase was primarily in investment  securities and the
           loan portfolio as described below.
  
           Loans
  
                    During the first three months of 1998,  loans  increased $57.5
           million from $1.41 billion to $1.47 billion.  At March 31, 1998,  loans
           represented 39% of total deposits and 35% of total assets. The increase
           in the loan  portfolio was due primarily to loans secured by commercial
           real estate properties.
  
                                         10
  Investments
  
                  In  total,  for the  first  three  months  of  1998,  securities
           increased  $130.6 million from $2.20 billion to $2.33 billion.  Deposit
           growth and other  funding  sources were used to increase the  Company's
           investment portfolio.  The available for sale portfolio decreased $26.0
           million to $1.29 billion from $1.32  billion at December 31, 1997,  and
           the securities held to maturity  portfolio  increased $154.7 million to
           $1.03 billion at March 31, 1998 from $874.0  million at year-end  1997.
           At March 31, 1998,  the average life of the  investment  portfolio  was
           approximately  5.5 years, and the duration was approximately 4.2 years.
           At March 31, 1998, total securities represented 56% of total assets.
  
           Net Income
  
                  Net income for the first quarter of 1998 was $11.4  million,  an
           increase of $2.0 million or 21% over the $9.4 million  recorded for the
           first quarter of 1997. On a per share basis, diluted net income for the
           first quarter of 1998 was $.61 per common  share,  up 15% over the $.53
           per common share for the respective 1997 period.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  first   quarter  of  1998  were   1.13%  and   17.29%,
           respectively,  compared to 1.17% and 18.26%, respectively, for the same
           1997 period.
  
            Net Interest Income
  
                  Net interest  income totaled $39.8 million for the first quarter
           of 1998,  an increase of $5.3 million or 15% from $34.5  million in the
           first quarter of 1997. The  improvement in net interest  income was due
           primarily to volume increases in the loan and investment portfolios.
  
           Noninterest Income
  
                  Noninterest  income  totaled $19.9 million for the first quarter
           of 1998,  an increase of $6.9 million or 54% from $12.9  million in the
           first  quarter of 1997.  The  increase  was due  primarily to increased
           other  operating  income,  which rose $5.1 million over the prior year,
           including  increased  revenues of $1.5  million and $2.6  million  from
           Commerce National  Insurance  Services,  Inc., the Company's  insurance
           brokerage  subsidiary,  and CCMI,  respectively.  In addition,  deposit
           charges and service fees  increased $1.9 million from the first quarter
           of 1997 primarily due to higher transaction volumes.
  
           Noninterest Expense
  
                  For the first quarter of 1998, noninterest expense totaled $40.7
           million,  an  increase  of $9.5  million or 30% over the same period in
           1997.  Contributing  to this increase was new branch  activity over the
           past twelve months,  with the number of branches  increasing from 68 at
           March 31, 1997 to 76 at March 31,  1998,  and the  formation of CCMI in
           the first  quarter of 1998.  With the addition of these new offices and
           CCMI,  staff,   facilities,   marketing,   and  related  expenses  rose
           accordingly.  Other  noninterest  expenses  rose $1.2  million over the
           first quarter of 1997.  This increase  resulted  primarily  from higher
           bank  card-related  service  charges,  increased  business  development
           expenses, and higher legal fees.
  
                                         11
  The Company's operating efficiency ratio (noninterest  expenses,
           less other real estate  expense,  divided by net  interest  income plus
           noninterest  income excluding  non-recurring  gains) was 67.52% for the
           first  three  months of 1998 as  compared  to 64.83%  for the same 1997
           period.  The  Company's  efficiency  ratio remains above its peer group
           primarily due to its aggressive growth expansion activities.
  
            Loan and Asset Quality
  
                    Total non-performing  assets  (non-performing  loans and other
           real  estate,  excluding  loans  past  due 90 days or  more  and  still
           accruing  interest) at March 31, 1998 were $17.0  million,  or 0.41% of
           total  assets  compared  to $17.4  million or 0.44% of total  assets at
           December  31, 1997 and $18.8  million or 0.56% of total assets at March
           31, 1997.
  
                    Total non-performing loans (non-accrual loans and restructured
           loans,  excluding  loans  past due 90 days or more and  still  accruing
           interest) at March 31, 1998 were $11.0  million or 0.75% of total loans
           compared to $11.6  million or 0.82% of total loans at December 31, 1997
           and $10.7  million or 0.82% of total loans at March 31, 1997.  At March
           31, 1998,  loans past due 90 days or more and still  accruing  interest
           amounted to $308  thousand  compared to $226  thousand at December  31,
           1997 and $300 thousand at March 31, 1997.  Additional  loans considered
           as  potential  problem  loans by the  Company's  internal  loan  review
           department  ($12.2 million at March 31, 1998) have been evaluated as to
           risk  exposure in  determining  the adequacy of the  allowance for loan
           losses.
  
                    Other real estate (ORE) at March 31, 1998 totaled $6.0 million
           compared to $5.8 million at December 31, 1997 and $8.0 million at March
           31, 1997.  These properties have been written down to the lower of cost
           or fair value less disposition costs.
  
                    On pages 13 and 14 are tabular  presentation  showing detailed
           information about the Company's  non-performing loans and assets and an
           analysis of the  Company's  allowance for loan losses and other related
           data for March 31, 1998, December 31, 1997, and March 31, 1997.
  
           Year 2000
  
                    The  Company  began the  process  of  preparing  its  computer
           systems  and  applications  for the  Year  2000 in  1996.  The  process
           includes   directing  its  external  service   providers  to  take  the
           appropriate  action to ensure  Year 2000  compliance,  as well as, to a
           lesser  extent,  modifying or replacing  certain  hardware and software
           maintained by the Company.  The Company  expects to have  substantially
           all of the  necessary  changes  in place  before  the end of 1998,  and
           believes  it is taking the  appropriate  steps to address all Year 2000
           issues.  The  Company  estimates  the  total  cost  of  the  Year  2000
           compliance  process,  including internal and external personnel and any
           required  hardware  and  software  modifications,  will not exceed $1.0
           million.
  
                                         12
  The following summary presents  information  regarding  non-performing loans and
  assets as of March 31, 1998 and the preceding four quarters:  (dollar amounts in
  thousands)
  March 31,   December 31, September 30,  June 30,    March 31,
                                                  1998         1997          1997        1997         1997
  Non-accrual loans:
  Commercial                                   $1,764       $1,816       $1,920       $1,057       $1,349
    Consumer                                        944          703          893        1,254        1,109
    Real Estate:
      Construction                                  393        1,345        2,006        2,155        2,155
      Mortgage                                    7,742        7,706        7,533        5,818        6,074
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,843       11,570       12,352       10,284       10,687
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       19           19           20           20           21
    Consumer
    Real Estate:
      Construction
      Mortgage                                      114
                                                -------      -------      -------      -------      -------
        Total restructured loans                    133           19           20           20           21
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,976       11,589       12,372       10,304       10,708
                                                -------      -------      -------      -------      -------
  
  Other real estate                               6,029        5,845        6,673        7,035        8,042
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    17,005       17,434       19,045       17,339       18,750
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              308          226          423          458          300
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $17,313      $17,660      $19,468      $17,797      $19,050
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.75%        0.82%        0.89%        0.76%        0.82%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.41%        0.44%        0.50%        0.48%        0.56%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.42%        0.45%        0.51%        0.49%        0.57%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           200%         183%         169%         198%         183%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.51%        1.50%        1.50%        1.50%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         6%           6%           8%           7%           9%
  13
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and other related data: (dollar amounts in thousands)
  Year
                                                                 Three Months Ended             Ended
                                                          ------------------------------
                                                           03/31/98          03/31/97         12/31/97
                                                          ------------     -------------     ------------
  Balance at beginning of period                  $21,261           $17,975          $17,975
              Provisions charged to operating expenses          1,210             1,626            4,668
                                                          ------------     -------------     ------------
                                                               22,471            19,601           22,643
              Recoveries on loans charged-off:
                Commercial                                         45                53              348
                Consumer                                           94                72              406
                Real estate                                         9                18              144
                                                          ------------     -------------     ------------
              Total recoveries                                    148               143              898
  
              Loans charged-off:
                Commercial                                       (189)              (42)            (964)
                Consumer                                         (271)             (158)          (1,170)
                Real estate                                      (183)                0             (146)
                                                          ------------     -------------     ------------
              Total charged-off                                  (643)             (200)          (2,280)
                                                          ------------     -------------     ------------
              Net charge-offs                                    (495)              (57)          (1,382)
                                                          ------------     -------------     ------------
  
              Balance at end of period                        $21,976           $19,544          $21,261
                                                          ============     =============     ============
  
              Net charge-offs as a percentage of
              average loans outstanding                          0.14%             0.02%            0.10%
  Item 3.   Quantitative and Qualitative Disclosures About Market Risk
  
                  See Item 2 -  Management's  Discussion and Analysis of Financial
           Condition  and Results of  Operation - Interest  Rate  Sensitivity  and
           Liquidity.
  
                                         14
  PART II. OTHER INFORMATION
  
  Item 6. Exhibits and Reports on Form 8-K
  
           No reports on Form 8-K were filed during the first quarter ended March
           31, 1998.
  
                                         15
  SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                                    COMMERCE BANCORP, INC.
                                                         (Registrant)
  
   May 14, 1998
    (Date)                                           C. EDWARD JORDAN, JR.
                                                   EXECUTIVE VICE PRESIDENT
                                                 (PRINCIPAL FINANCIAL OFFICER)
  
                                         16