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, 1997
  
                                         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                                 15,704,561
           (Title of Class)                    (No. of Shares Outstanding
                                                       as of 5/08/97)
  
  
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                             417,000
           (Title of Class)                    (No. of Shares Outstanding
                                                       as of 5/08/97)
  
  
  <PAGE>
  
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                           Page
  
  
  PART I.           FINANCIAL INFORMATION
  
  Item 1.           Financial Statements
  
                    Consolidated Balance Sheets (unaudited)
                             March 31, 1997 and December 31, 1996
  
                    Consolidated  Statements  of Income  (unaudited)  
                             Three months ended March 31, 1997 and 
                             March 31, 1996
  
  
                    Consolidated Statements of Cash Flows (unaudited)
                             Three months ended March 31, 1997 and
                              March 31, 1996
  
                    Notes to Consolidated Financial Statements (unaudited)
  
  Item 2.           Management's Discussion and Analysis of Financial
                             Condition and Results of Operation
  
  PART II.          OTHER INFORMATION
  
  Item 4.           Submission of Matters to a Vote of Security Holders
  
  Item 6.           Exhibits and Reports on Form 8-K
  
  
  <PAGE>
                       Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                                                               March 31,         December 31,
                   (dollars in thousands)                                                        1997               1996
  <S>                                                                                          <C>                <C>     
  Assets           Cash and due from banks                                                     $181,918           $181,859
                   Federal funds sold                                                            25,650             26,975
                                                                                             ----------         ----------
                                  Cash and cash equivalents                                     207,568            208,834
                   Mortgages held for sale                                                        1,818              1,314
                   Trading securities                                                             8,165             15,327
                   Securities available for sale                                                812,418            767,487
                   Securities held to maturity:
                                U.S. Government agency and mortgage-backed obligations          823,524            797,045
                                Obligations of state and political subdivisions                  22,638             22,674
                                Other securities                                                 17,970             17,793
                                                                                             ----------         ----------
                                  Total securities held to maturity
                                   (market value 1997-$828,344; 1996-$816,910)                  864,132            837,512
                   Loans                                                                      1,305,779          1,266,815
                                Less allowance for loan losses                                   19,544             17,975
                                                                                             ----------         ----------
                                                                                              1,286,235          1,248,840
                   Bank premises and equipment, net                                              95,692             94,339
                   Other assets                                                                  69,334             58,563
                                                                                             ----------         ----------
                                                                                             $3,345,362         $3,232,216
                                                                                             ==========         ==========
  
  Liabilities      Deposits:
                                Demand:
                                  Interest-bearing                                             $956,632           $884,310
                                  Noninterest-bearing                                           635,976            626,664
                                Savings                                                         657,827            638,660
                                Time                                                            822,024            770,036
                                                                                             ----------         ----------
                                  Total deposits                                              3,072,459          2,919,670
  
                   Other borrowed money                                                          25,000             70,000
                   Other liabilities                                                             17,397             12,141
                   Obligation to Employee Stock Ownership Plan (ESOP)                             3,077              3,333
                   Long-term debt                                                                23,000             23,000
                                                                                             ----------         ----------
                                                                                              3,140,933          3,028,144
  
  Stockholders'    Common stock, 15,721,180 shares issued (14,717,764 shares in 1996)            24,564             23,343
  Equity           Series C preferred stock, 417,000 shares authorized, issued
                                and outstanding (liquidating preference:
                                 $18.00 per share totaling $7,506)                                7,506              7,506
                   Capital in excess of par or stated value                                     166,101            142,193
                   Retained earnings                                                             10,959             35,987
                                                                                             ----------         ----------
                                                                                                209,130            209,029
                   Less commitment to ESOP                                                        3,077              3,333
                   Less treasury stock, at cost, 100,159 common shares
                                in 1997 and 1996                                                  1,624              1,624
                                                                                             ----------         ----------
                                  Total stockholders' equity                                    204,429            204,072
                                                                                             ----------         ----------
                                                                                             $3,345,362         $3,232,216
                                                                                             ==========         ==========
  </TABLE>
                                         1
  
  <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)          1997         1996
  <S>                                                                    <C>          <C>    
  Interest     Interest and fees on loans                                $28,113      $24,433
  income       Interest on investments                                    26,480       21,319
               Other interest                                                746        1,564
                                                                          ------       ------
                    Total interest income                                 55,339       47,316
                                                                          ------       ------
  
  Interest     Interest on deposits:
  expense         Demand                                                   5,471        4,446
                  Savings                                                  3,770        3,013
                  Time                                                    10,666       10,347
                                                                          ------       ------
                    Total interest on deposits                            19,907       17,806
               Interest on other borrowed money                              460           31
               Interest on long-term debt                                    506          506
                                                                          ------       ------
                    Total interest expense                                20,873       18,343
                                                                          ------       ------
  
               Net interest income                                        34,466       28,973
               Provision for loan losses                                   1,626          794
                                                                          ------       ------
               Net interest income after provision for loan losses        32,840       28,179
  
  Noninterest  Deposit charges and service fees                            6,198        5,036
  income       Other operating income                                      6,751        1,438
               Net investment securities gains                                 0          771
                                                                          ------       ------
                    Total noninterest income                              12,949        7,245
                                                                          ------       ------
  
  Noninterest  Salaries                                                   11,902        8,440
  expense      Benefits                                                    2,746        2,260
               Occupancy                                                   3,334        3,008
               Furniture and equipment                                     4,041        3,095
               Office                                                      3,089        2,367
               Audit and regulatory fees and assessments                     375          423
               Marketing                                                   1,239        1,103
               Other real estate (net)                                       469          505
               Other                                                       4,011        3,180
                                                                          ------       ------
                    Total noninterest expenses                            31,206       24,381
                                                                          ------       ------
  
               Income before income taxes                                 14,583       11,043
               Provision for federal and state income taxes                5,149        3,940
                                                                          ------       ------
               Net income                                                  9,434        7,103
  
               Dividends on preferred stocks                                 141          254
                                                                          ======       ======
               Net income applicable to common stock                      $9,293       $6,849
                                                                          ======       ======
  
               Net income per common and common equivalent share:
                  Primary                                                  $0.57        $0.46
                                                                          ------       ------
                  Fully diluted                                            $0.56        $0.44
                                                                          ------       ------
               Average common and common equivalent shares outstanding:
                  Primary                                                 16,292       15,022
                                                                          ------       ------
                  Fully diluted                                           16,908       15,638
                                                                          ------       ------
               Cash dividends declared, common stock                       $0.20        $0.16
                                                                          ======       ======
  </TABLE>
                                         2
  <PAGE>
                       Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                                                            Three Months Ended March 31,
                          (dollars in thousands)                                                1997          1996
  <S>                                                                                          <C>             <C>  
  Operating activities     Net income                                                          $9,434          7,103
                           Adjustments to reconcile net income to net cash
                              provided by operating activities:
                                 Provision for loan losses                                      1,626            794
                                 Provision for depreciation, amortization and accretion         4,113          4,121
                                 Gains on sales of securities available for sale                 (771)
                                 Proceeds from sales of mortgages held for sale                 3,492          2,105
                                 Originations of mortgages held for sale                       (3,996)        (3,376)
                                 Net loan (chargeoffs)                                            (57)          (552)
                                 Net (increase)decrease in trading securities                   7,162          3,693
                                 (Increase) decrease in other assets                           (5,636)         7,419
                                 Increase in other liabilities                                  5,256          7,377
                                                                                             --------       --------
                                Net cash provided by operating activities                      21,394         27,913
  
   Investing activities    Proceeds from the sales of securities available for sale                 0         28,942
                           Proceeds from the maturity of securities available for sale         44,655         22,508
                           Proceeds from the maturity of securities held to maturity           24,461         18,807
                           Purchase of securities available for sale                          (20,336)      (124,589)
                           Purchase of securities held to maturity                           (135,039)       (16,525)
                           Net increase in loans                                              (41,677)       (40,924)
                           Proceeds from sales of loans                                         2,713          1,791
                           Purchases of premises and equipment                                 (4,561)        (3,240)
                                                                                             --------       --------
                                 Net cash used by investing activities                       (129,784)      (113,230)
  
   Financing activities    Net increase in demand and savings deposits                        100,801         22,051
                           Net increase in time deposits                                       51,988         39,092
                           Net (decrease) in other borrowed money                             (45,000)
                           Dividends paid                                                      (2,612)        (2,233)
                           Proceeds from issuance of common stock under
                                dividend reinvestment and other stock plans                     1,837          1,304
                            Other                                                                 109             19
                                                                                             --------       --------
                                 Net cash provided by financing activities                    107,123         60,233
  
                           Decrease in cash and cash equivalents                               (1,266)       (25,084)
                           Cash and cash equivalents at beginning of year                     208,834        209,857
                                                                                             --------       --------
                           Cash and cash equivalents at end of period                        $207,568       $184,773
                                                                                             --------       --------
  
  
                           Supplemental disclosures of cash flow information:
                             Cash paid during the period for:
                               Interest                                                       $19,877        $18,444
                               Income taxes                                                       535            131
                             Other noncash activities
                               Transfer of securities to securities available for sale        $82,933             $0
  </TABLE>
                                         3
  <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.   The  accompanying
           financial  statements  include the consolidated  accounts of the former
           Independence  Bancorp,  Bergen  County,  New  Jersey,  for all  periods
           presented.  Independence Bancorp was merged into Commerce Bancorp, Inc.
           on January 21, 1997 and its wholly-owned  subsidiary bank, Independence
           Bank of New Jersey,  was thereafter  renamed Commerce  Bank/North.  The
           transaction  was  accounted  for as a  pooling  of  interests.  Certain
           amounts  in  prior  periods  have  been  reclassified  for  comparative
           purposes.  No  restructuring  charges were recorded in connection  with
           this acquisition.
  
                    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,  1996.  The results for the three  months ended March 31,
           1997 are not necessarily indicative of the results that may be expected
           for the year ended December 31, 1997.
  
                    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.,  and  Commerce
           Bank/North.   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.
  
  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 $3,077,000 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.
  
                                         4
  <PAGE>
  
           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.  As the
           Company makes annual  contributions to the ESOP,  these  contributions,
           plus dividends from the Company's  Series C Preferred Stock held by the
           ESOP, will be used to repay the loan.
  
  D.       Recent Accounting Statement
  
                             In February, 1997, the Financial Accounting Standards
           Board issued Statement No. 128, "Earnings per Share," which is required
           to be adopted on December 31, 1997.  At that time,  the Company will be
           required to change the method  currently  used to compute  earnings per
           share and to restate all prior periods.  Under the new requirements for
           calculating  primary  earnings per share,  the dilutive effect of stock
           options  will be  excluded.  The  impact  is  expected  to result in an
           increase in primary earnings per share for the quarters ended March 31,
           1997 and March 31, 1996 of $.03 and $.01 per share,  respectively.  The
           impact of Statement 128 on the calulation of fully diluted earnings per
           share for these quarters is not expected to be material.
  
                                         5
  <PAGE>
  
  
  
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
          of Operation
  
           Capital Resources
  
                    At March 31, 1997, stockholders' equity totaled $204.4 million
           or 6.11% of total assets,  compared to $204.1 million or 6.31% of total
           assets at December 31, 1996.
  
                    The table below  presents  the  Company's  and  Commerce  NJ's
           risk-based and leverage ratios at March 31, 1997 and 1996:
  
  <TABLE>
  <CAPTION>
                                                                     Per Regulatory Guidelines
                                            Actual                Minimum          "Well Capitalized"
                                      Amount        Ratio    Amount        Ratio    Amount       Ratio
  
  March 31, 1997
  Company
     Risk based capital ratios:
  <S>                               <C>             <C>      <C>            <C>    <C>              <C>
       Tier 1                       $213,082        12.65%   $67,369        4.00%  $101,054         6.00%
       Total capital                 255,626        15.18    134,739        8.00    168,424        10.00
     Leverage ratio                  213,082         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
  
  
  March 31, 1996
  Company
     Risk based capital ratios:
       Tier 1                       $179,270        12.66%   $56,644        4.00%   $84,966         6.00%
       Total capital                 218,526        15.43    113,288        8.00    141,611        10.00
     Leverage ratio                  179,270         6.48     83,019        3.00    138,365         5.00
  
  Commerce NJ 
     Risk based capital ratios:
       Tier 1                       $138,680        14.45%   $38,396        4.00%   $57,593         6.00%
       Total capital                 149,701        15.60     76,791        8.00     95,989        10.00
     Leverage ratio                  138,680         7.35     56,572        3.00     94,287         5.00
  </TABLE>
  
  
                  At March 31, 1997, 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,  1997,  that the  Company  and its  subsidiaries  meet all
           capital adequacy requirements to which they are subject.
  
  
                                         6
  <PAGE>
  
           Deposits
  
                    Total deposits at March 31, 1997 were $3.07 billion, up $482.1
           million, or 19% over total deposits of $2.59 billion at March 31, 1996,
           and up by $152.8  million,  or 5% from year-end  1996.  Deposit  growth
           during the first three months of 1997 was largely from core deposits in
           all categories.  In addition, the Company experienced  "same-store core
           deposit  growth" of 11.2% at March 31,  1997 as  compared to deposits a
           year ago.
  
           Interest Rate Sensitivity and Liquidity
  
                    An interest  rate  sensitive  asset or  liability is one that,
           within a defined time period, either matures or experiences an interest
           rate change in line with general market interest  rates.  The objective
           of  interest  rate  risk  management  is  to  monitor  and  manage  the
           sensitivity of net interest income to changing interest rates and other
           factors in order to meet the Company's overall financial goals.
  
                    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  Asset/Liability Committee (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,  1997,  the
           Company's  income  simulation  model  indicates an acceptable  level of
           interest rate risk.
  
                    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,  or 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 70% or 
  
  
                                         7
  <PAGE>
  
           more of the excess of market  value over book value in the current rate
           scenario. At March 31, 1997, 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 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 of
           securities sold under  agreement to repurchase.  During the first three
           months of 1997, these  borrowings were used as an additional  source of
           funding for the investment  portfolio and to fund loan growth. At March
           31, 1997,  short-term  borrowings aggregated $25.0 million, as compared
           to $70.0  million at  December  31,  1996,  and had an average  rate of
           5.77%.
  
           Interest Earning Assets
  
                    For the three  month  period  ended March 31,  1997,  interest
           earning  assets  increased  $102.5  million from $2.92 billion to $3.02
           billion.  This increase was primarily in investment  securities and the
           loan portfolio as described below.
  
           Loans
  
                    During the first three months of 1997,  loans  increased $39.0
           million from $1.27 billion to $1.31 billion.  At March 31, 1997,  loans
           represented 42% of total deposits and 39% of total assets.
  
                    The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                  In  total,  for the  first  three  months  of  1997,  securities
           increased  $64.4 million from $1.62 billion to $1.68  billion.  Deposit
           growth and other  funding  sources were used to increase the  Company's
           investment  portfolio.  The  available  for sale  portfolio  rose $44.9
           million to $812.4 million from $767.5 million at year-end 1996, and the
           securities held to maturity portfolio increased $26.6 million to $864.1
           million from $837.5 million. At March 31, 1997, the average life of the
           investment  portfolio was approximately 6.2 years, and the duration was
           approximately 4.5 years.
  
                  Short-term  investments  (Federal  funds  sold)  decreased  $1.3
           million from $27.0  million at year-end  1996 to $25.7 million at March
           31, 1997. At March 31, 1997,  total  securities  and Federal funds sold
           aggregated $1.71 billion and represented 51% of total assets.
  
                  In connection  with the  acquisition  of  Independence  Bancorp,
           management  reclassified  $83.8 million of investment  securities  from
           held to maturity to available for sale during the first quarter.
           Unrealized losses on those securities transferred were $840 thousand.
  
                                         8
  <PAGE>
  
           Net Income
  
                  Net income for the first  quarter of 1997 was $9.4  million,  an
           increase of $2.3 million  over the $7.1 million  recorded for the first
           quarter of 1996. On a per share basis, fully diluted net income for the
           first  quarter of 1997 was $.56 per common  share  compared to $.44 per
           common share for the first quarter of 1996.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  first   quarter  of  1997  were   1.17%  and   18.26%,
           respectively,  compared to 1.02% and 15.70%, respectively, for the same
           1996 period.
  
            Net Interest Income
  
                  Net interest  income totaled $34.5 million for the first quarter
           of 1997,  an increase of $5.5 million or 19% from $29.0  million in the
           first quarter of 1996. The  improvement in net interest  income was due
           primarily to volume increases in the loan and investment portfolios.
  
           Noninterest Income
  
                  Noninterest  income  totaled $12.9 million for the first quarter
           of 1997,  an increase of $5.7  million or 79% from $7.2  million in the
           first  quarter of 1996.  The  increase  was due  primarily to increased
           other  operating  income,  which rose $5.3 million over the prior year,
           including  $4.7 million of revenues  from Commerce  National  Insurance
           Services, Inc. (Commerce Insurance), the insurance brokerage subsidiary
           formed in the fourth quarter of 1996. In addition,  deposit charges and
           service fees  increased $1.2 million from the first quarter of 1996 due
           to higher transaction volumes. These increases offset a decrease in net
           investment  securities gains of $771 thousand from the first quarter of
           1996.
  
           Noninterest Expense
  
                    For the first  quarter of 1997,  noninterest  expense  totaled
           $31.2 million,  an increase of $6.8 million or 28% over the same period
           in 1996. Contributing to this increase was new branch activity over the
           past twelve months,  with the number of branches  increasing from 59 at
           March 31, 1996 to 68 at March 31, 1997,  and the  formation of Commerce
           Insurance in the fourth quarter of 1996. With the addition of these new
           offices and the insurance business,  staff, facilities,  marketing, and
           related expenses rose accordingly. Other noninterest expenses rose $831
           thousand  over the  first  quarter  of  1996.  This  increase  resulted
           primarily from expenses associated with the acquisition of Independence
           Bancorp and increased provisions for non-credit-related losses.
  
                    The  Company's   operating   efficiency   ratio   (noninterest
           expenses,  less other real estate,  divided by net interest income plus
           noninterest  income excluding  non-recurring  gains) was 64.83% for the
           first  three  months of 1997 as  compared  to 67.36%  for the same 1996
           period.
  
            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, 1997 were $18.8  million,  or
  
                                         9
  <PAGE>
  
           .56% of total assets  compared to $19.5 million or .60% of total assets
           at December 31, 1996 and $19.9 million or .71% of total assets at March
           31, 1996.
  
                    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, 1997 were $10.7  million or .82% of total loans
           compared to $11.2  million or .89% of total loans at December  31, 1996
           and $10.2  million or .93% of total loans at March 31,  1996.  At March
           31, 1997,  loans past due 90 days or more and still  accruing  interest
           amounted to $300  thousand  compared to $259  thousand at December  31,
           1996 and $693 thousand at March 31, 1996.  Additional  loans considered
           as  potential  problem  loans by the  Company's  internal  loan  review
           department  ($13.8 million at March 31, 1997) have been evaluated as to
           risk  exposure in  determining  the adequacy of the  allowance for loan
           losses.
  
                    Other real estate (ORE) at March 31, 1997 totaled $8.0 million
           compared to $8.3 million at December 31, 1996 and $9.7 million at March
           31, 1996.  These properties have been written down to the lower of cost
           or fair value less disposition costs.
  
                    On pages 11 and 12 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, 1997, December 31, 1996, and March 31, 1996.
  
                                         10
  <PAGE>
  
       The following summary presents information  regarding  non-performing loans
       and assets as of March 31, 1997 and the preceding  four  quarters:  (dollar
       amounts in thousands)
  
  <TABLE>
  <CAPTION>
                                                March 31,    Dec. 31,     Sept. 30,     June 30,    March 31,
                                                  1997         1996         1996         1996         1996
  <S>                                            <C>          <C>          <C>          <C>          <C>   
  Non-accrual loans:
    Commercial                                   $1,349       $1,595       $1,293       $1,230       $1,436
    Consumer                                      1,109          956        1,247        1,093        1,063
    Real Estate:
      Construction                                2,155        2,156        2,196        1,687        1,787
      Mortgage                                    6,074        6,005        6,032        6,931        5,611
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,687       10,712       10,768       10,941        9,897
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       21           21           21           22          144
    Consumer                                                      29           29           59           60
    Real Estate:
      Construction
      Mortgage                                                   481          500                        84
                                                -------      -------      -------      -------      -------
        Total restructured loans                     21          531          550           81          288
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,708       11,243       11,318       11,022       10,185
                                                -------      -------      -------      -------      -------
  
  Other real estate                               8,042        8,252        8,323        8,606        9,694
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    18,750       19,495       19,641       19,628       19,879
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              300          259          632          923          693
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $19,050      $19,754      $20,273      $20,551      $20,572
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.82%        0.89%        0.92%        0.93%        0.93%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.56%        0.60%        0.64%        0.66%        0.71%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.57%        0.61%        0.66%        0.69%        0.73%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           183%         160%         149%         150%         160%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.42%        1.38%        1.39%        1.49%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         9%           9%          10%          10%          11%
  </TABLE>
  
                                         11
  
  <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
                                              03/31/97       03/31/96     12/31/96
  <S>                                          <C>             <C>           <C>    
  Balance at beginning of period                $17,975        $16,014        $16,014
  Provisions charged to operating expenses        1,626            794          4,857
                                               --------       --------       --------
                                                 19,601         16,808         20,871
  Recoveries on loans charged-off:
    Commercial                                       53             66            286
    Consumer                                         72             94            274
    Real estate                                      18              8             95
                                               --------       --------       --------
  Total recoveries                                  143            168            655
  
  Loans charged-off:
    Commercial                                      (42)          (186)        (1,202)
    Consumer                                       (158)          (169)        (1,046)
    Real estate                                       0           (365)        (1,303)
                                               --------       --------       --------
  Total charged-off                                (200)          (720)        (3,551)
                                               --------       --------       --------
  Net charge-offs                                   (57)          (552)        (2,896)
                                               --------       --------       --------
  
  Balance at end of period                      $19,544        $16,256        $17,975
                                               ========       ========       ========
  
  
  Net charge-offs as a percentage of
  average loans outstanding                        0.02%          0.21%          0.25%
  </TABLE>
                                         12
  <PAGE>
  
                             PART II. OTHER INFORMATION
  
  
  Item 4.           Submission of Matters to a Vote of Securities Holders
  
                    A Special Meeting of the  Registrants's  Shareholders was held
  on January 8, 1997. The only item of business acted upon at the Special  Meeting
  was a proposal to approve  the  issuance  of shares of the  Registrant's  common
  stock in connection  with the merger of  Independence  Bancorp with and into the
  Registrant.  The  number  of votes  cast for and  against  the  proposal  was as
  follows:
  
                    For        Against        Abstain   Broker-Non-Votes
                 7,345,964      891,638        50,617          0
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                    (a)      Exhibit 11 - Computation of Net Income Per Share
  
                             A  Current  Report  on Form 8-K , dated  January  28,
                             1997, relating to the consummation of the acquisition
                             of Independence  Bancorp,  Inc. was filed on February
                             4, 1997.
  
                                         13
  <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 14,1997
      (Date)                                 C. EDWARD JORDAN, JR.
                                            EXECUTIVE VICE PRESIDENT
                                          (PRINCIPAL FINANCIAL OFFICER)
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 50770}]
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": "97607952"}, "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, 1997
  
                                         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                                 15,704,561
           (Title of Class)                    (No. of Shares Outstanding
                                                       as of 5/08/97)
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                             417,000
           (Title of Class)                    (No. of Shares Outstanding
                                                       as of 5/08/97)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                           Page
  
  PART I.           FINANCIAL INFORMATION
  
  Item 1.           Financial Statements
  
                    Consolidated Balance Sheets (unaudited)
                             March 31, 1997 and December 31, 1996
  
                    Consolidated  Statements  of Income  (unaudited)  
                             Three months ended March 31, 1997 and 
                             March 31, 1996
  
                    Consolidated Statements of Cash Flows (unaudited)
                             Three months ended March 31, 1997 and
                              March 31, 1996
  
                    Notes to Consolidated Financial Statements (unaudited)
  
  Item 2.           Management's Discussion and Analysis of Financial
                             Condition and Results of Operation
  
  PART II.          OTHER INFORMATION
  
  Item 4.           Submission of Matters to a Vote of Security Holders
  
  Item 6.           Exhibits and Reports on Form 8-K
  Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  March 31,         December 31,
                   (dollars in thousands)                                                        1997               1996
  Assets           Cash and due from banks                                                     $181,918           $181,859
                   Federal funds sold                                                            25,650             26,975
                                                                                             ----------         ----------
                                  Cash and cash equivalents                                     207,568            208,834
                   Mortgages held for sale                                                        1,818              1,314
                   Trading securities                                                             8,165             15,327
                   Securities available for sale                                                812,418            767,487
                   Securities held to maturity:
                                U.S. Government agency and mortgage-backed obligations          823,524            797,045
                                Obligations of state and political subdivisions                  22,638             22,674
                                Other securities                                                 17,970             17,793
                                                                                             ----------         ----------
                                  Total securities held to maturity
                                   (market value 1997-$828,344; 1996-$816,910)                  864,132            837,512
                   Loans                                                                      1,305,779          1,266,815
                                Less allowance for loan losses                                   19,544             17,975
                                                                                             ----------         ----------
                                                                                              1,286,235          1,248,840
                   Bank premises and equipment, net                                              95,692             94,339
                   Other assets                                                                  69,334             58,563
                                                                                             ----------         ----------
                                                                                             $3,345,362         $3,232,216
                                                                                             ==========         ==========
  
  Liabilities      Deposits:
                                Demand:
                                  Interest-bearing                                             $956,632           $884,310
                                  Noninterest-bearing                                           635,976            626,664
                                Savings                                                         657,827            638,660
                                Time                                                            822,024            770,036
                                                                                             ----------         ----------
                                  Total deposits                                              3,072,459          2,919,670
  
                   Other borrowed money                                                          25,000             70,000
                   Other liabilities                                                             17,397             12,141
                   Obligation to Employee Stock Ownership Plan (ESOP)                             3,077              3,333
                   Long-term debt                                                                23,000             23,000
                                                                                             ----------         ----------
                                                                                              3,140,933          3,028,144
  
  Stockholders'    Common stock, 15,721,180 shares issued (14,717,764 shares in 1996)            24,564             23,343
  Equity           Series C preferred stock, 417,000 shares authorized, issued
                                and outstanding (liquidating preference:
                                 $18.00 per share totaling $7,506)                                7,506              7,506
                   Capital in excess of par or stated value                                     166,101            142,193
                   Retained earnings                                                             10,959             35,987
                                                                                             ----------         ----------
                                                                                                209,130            209,029
                   Less commitment to ESOP                                                        3,077              3,333
                   Less treasury stock, at cost, 100,159 common shares
                                in 1997 and 1996                                                  1,624              1,624
                                                                                             ----------         ----------
                                  Total stockholders' equity                                    204,429            204,072
                                                                                             ----------         ----------
                                                                                             $3,345,362         $3,232,216
                                                                                             ==========         ==========
  1
  Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  Three Months Ended
                                                                             March 31,
               (dollars in thousands, except per share amounts)          1997         1996
  Interest     Interest and fees on loans                                $28,113      $24,433
  income       Interest on investments                                    26,480       21,319
               Other interest                                                746        1,564
                                                                          ------       ------
                    Total interest income                                 55,339       47,316
                                                                          ------       ------
  
  Interest     Interest on deposits:
  expense         Demand                                                   5,471        4,446
                  Savings                                                  3,770        3,013
                  Time                                                    10,666       10,347
                                                                          ------       ------
                    Total interest on deposits                            19,907       17,806
               Interest on other borrowed money                              460           31
               Interest on long-term debt                                    506          506
                                                                          ------       ------
                    Total interest expense                                20,873       18,343
                                                                          ------       ------
  
               Net interest income                                        34,466       28,973
               Provision for loan losses                                   1,626          794
                                                                          ------       ------
               Net interest income after provision for loan losses        32,840       28,179
  
  Noninterest  Deposit charges and service fees                            6,198        5,036
  income       Other operating income                                      6,751        1,438
               Net investment securities gains                                 0          771
                                                                          ------       ------
                    Total noninterest income                              12,949        7,245
                                                                          ------       ------
  
  Noninterest  Salaries                                                   11,902        8,440
  expense      Benefits                                                    2,746        2,260
               Occupancy                                                   3,334        3,008
               Furniture and equipment                                     4,041        3,095
               Office                                                      3,089        2,367
               Audit and regulatory fees and assessments                     375          423
               Marketing                                                   1,239        1,103
               Other real estate (net)                                       469          505
               Other                                                       4,011        3,180
                                                                          ------       ------
                    Total noninterest expenses                            31,206       24,381
                                                                          ------       ------
  
               Income before income taxes                                 14,583       11,043
               Provision for federal and state income taxes                5,149        3,940
                                                                          ------       ------
               Net income                                                  9,434        7,103
  
               Dividends on preferred stocks                                 141          254
                                                                          ======       ======
               Net income applicable to common stock                      $9,293       $6,849
                                                                          ======       ======
  
               Net income per common and common equivalent share:
                  Primary                                                  $0.57        $0.46
                                                                          ------       ------
                  Fully diluted                                            $0.56        $0.44
                                                                          ------       ------
               Average common and common equivalent shares outstanding:
                  Primary                                                 16,292       15,022
                                                                          ------       ------
                  Fully diluted                                           16,908       15,638
                                                                          ------       ------
               Cash dividends declared, common stock                       $0.20        $0.16
                                                                          ======       ======
  2
  Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  Three Months Ended March 31,
                          (dollars in thousands)                                                1997          1996
  Operating activities     Net income                                                          $9,434          7,103
                           Adjustments to reconcile net income to net cash
                              provided by operating activities:
                                 Provision for loan losses                                      1,626            794
                                 Provision for depreciation, amortization and accretion         4,113          4,121
                                 Gains on sales of securities available for sale                 (771)
                                 Proceeds from sales of mortgages held for sale                 3,492          2,105
                                 Originations of mortgages held for sale                       (3,996)        (3,376)
                                 Net loan (chargeoffs)                                            (57)          (552)
                                 Net (increase)decrease in trading securities                   7,162          3,693
                                 (Increase) decrease in other assets                           (5,636)         7,419
                                 Increase in other liabilities                                  5,256          7,377
                                                                                             --------       --------
                                Net cash provided by operating activities                      21,394         27,913
  
   Investing activities    Proceeds from the sales of securities available for sale                 0         28,942
                           Proceeds from the maturity of securities available for sale         44,655         22,508
                           Proceeds from the maturity of securities held to maturity           24,461         18,807
                           Purchase of securities available for sale                          (20,336)      (124,589)
                           Purchase of securities held to maturity                           (135,039)       (16,525)
                           Net increase in loans                                              (41,677)       (40,924)
                           Proceeds from sales of loans                                         2,713          1,791
                           Purchases of premises and equipment                                 (4,561)        (3,240)
                                                                                             --------       --------
                                 Net cash used by investing activities                       (129,784)      (113,230)
  
   Financing activities    Net increase in demand and savings deposits                        100,801         22,051
                           Net increase in time deposits                                       51,988         39,092
                           Net (decrease) in other borrowed money                             (45,000)
                           Dividends paid                                                      (2,612)        (2,233)
                           Proceeds from issuance of common stock under
                                dividend reinvestment and other stock plans                     1,837          1,304
                            Other                                                                 109             19
                                                                                             --------       --------
                                 Net cash provided by financing activities                    107,123         60,233
  
                           Decrease in cash and cash equivalents                               (1,266)       (25,084)
                           Cash and cash equivalents at beginning of year                     208,834        209,857
                                                                                             --------       --------
                           Cash and cash equivalents at end of period                        $207,568       $184,773
                                                                                             --------       --------
  
                           Supplemental disclosures of cash flow information:
                             Cash paid during the period for:
                               Interest                                                       $19,877        $18,444
                               Income taxes                                                       535            131
                             Other noncash activities
                               Transfer of securities to securities available for sale        $82,933             $0
  3
  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.   The  accompanying
           financial  statements  include the consolidated  accounts of the former
           Independence  Bancorp,  Bergen  County,  New  Jersey,  for all  periods
           presented.  Independence Bancorp was merged into Commerce Bancorp, Inc.
           on January 21, 1997 and its wholly-owned  subsidiary bank, Independence
           Bank of New Jersey,  was thereafter  renamed Commerce  Bank/North.  The
           transaction  was  accounted  for as a  pooling  of  interests.  Certain
           amounts  in  prior  periods  have  been  reclassified  for  comparative
           purposes.  No  restructuring  charges were recorded in connection  with
           this acquisition.
  
                    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,  1996.  The results for the three  months ended March 31,
           1997 are not necessarily indicative of the results that may be expected
           for the year ended December 31, 1997.
  
                    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.,  and  Commerce
           Bank/North.   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.
  
  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 $3,077,000 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.
  
                                         4
  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.  As the
           Company makes annual  contributions to the ESOP,  these  contributions,
           plus dividends from the Company's  Series C Preferred Stock held by the
           ESOP, will be used to repay the loan.
  
  D.       Recent Accounting Statement
  
                             In February, 1997, the Financial Accounting Standards
           Board issued Statement No. 128, "Earnings per Share," which is required
           to be adopted on December 31, 1997.  At that time,  the Company will be
           required to change the method  currently  used to compute  earnings per
           share and to restate all prior periods.  Under the new requirements for
           calculating  primary  earnings per share,  the dilutive effect of stock
           options  will be  excluded.  The  impact  is  expected  to result in an
           increase in primary earnings per share for the quarters ended March 31,
           1997 and March 31, 1996 of $.03 and $.01 per share,  respectively.  The
           impact of Statement 128 on the calulation of fully diluted earnings per
           share for these quarters is not expected to be material.
  
                                         5
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
          of Operation
  
           Capital Resources
  
                    At March 31, 1997, stockholders' equity totaled $204.4 million
           or 6.11% of total assets,  compared to $204.1 million or 6.31% of total
           assets at December 31, 1996.
  
                    The table below  presents  the  Company's  and  Commerce  NJ's
           risk-based and leverage ratios at March 31, 1997 and 1996:
  Per Regulatory Guidelines
                                            Actual                Minimum          "Well Capitalized"
                                      Amount        Ratio    Amount        Ratio    Amount       Ratio
  
  March 31, 1997
  Company
     Risk based capital ratios:
  Tier 1                       $213,082        12.65%   $67,369        4.00%  $101,054         6.00%
       Total capital                 255,626        15.18    134,739        8.00    168,424        10.00
     Leverage ratio                  213,082         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
  
  March 31, 1996
  Company
     Risk based capital ratios:
       Tier 1                       $179,270        12.66%   $56,644        4.00%   $84,966         6.00%
       Total capital                 218,526        15.43    113,288        8.00    141,611        10.00
     Leverage ratio                  179,270         6.48     83,019        3.00    138,365         5.00
  
  Commerce NJ 
     Risk based capital ratios:
       Tier 1                       $138,680        14.45%   $38,396        4.00%   $57,593         6.00%
       Total capital                 149,701        15.60     76,791        8.00     95,989        10.00
     Leverage ratio                  138,680         7.35     56,572        3.00     94,287         5.00
  At March 31, 1997, 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,  1997,  that the  Company  and its  subsidiaries  meet all
           capital adequacy requirements to which they are subject.
  
                                         6
  Deposits
  
                    Total deposits at March 31, 1997 were $3.07 billion, up $482.1
           million, or 19% over total deposits of $2.59 billion at March 31, 1996,
           and up by $152.8  million,  or 5% from year-end  1996.  Deposit  growth
           during the first three months of 1997 was largely from core deposits in
           all categories.  In addition, the Company experienced  "same-store core
           deposit  growth" of 11.2% at March 31,  1997 as  compared to deposits a
           year ago.
  
           Interest Rate Sensitivity and Liquidity
  
                    An interest  rate  sensitive  asset or  liability is one that,
           within a defined time period, either matures or experiences an interest
           rate change in line with general market interest  rates.  The objective
           of  interest  rate  risk  management  is  to  monitor  and  manage  the
           sensitivity of net interest income to changing interest rates and other
           factors in order to meet the Company's overall financial goals.
  
                    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  Asset/Liability Committee (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,  1997,  the
           Company's  income  simulation  model  indicates an acceptable  level of
           interest rate risk.
  
                    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,  or 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 70% or 
  
                                         7
  more of the excess of market  value over book value in the current rate
           scenario. At March 31, 1997, 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 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 of
           securities sold under  agreement to repurchase.  During the first three
           months of 1997, these  borrowings were used as an additional  source of
           funding for the investment  portfolio and to fund loan growth. At March
           31, 1997,  short-term  borrowings aggregated $25.0 million, as compared
           to $70.0  million at  December  31,  1996,  and had an average  rate of
           5.77%.
  
           Interest Earning Assets
  
                    For the three  month  period  ended March 31,  1997,  interest
           earning  assets  increased  $102.5  million from $2.92 billion to $3.02
           billion.  This increase was primarily in investment  securities and the
           loan portfolio as described below.
  
           Loans
  
                    During the first three months of 1997,  loans  increased $39.0
           million from $1.27 billion to $1.31 billion.  At March 31, 1997,  loans
           represented 42% of total deposits and 39% of total assets.
  
                    The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                  In  total,  for the  first  three  months  of  1997,  securities
           increased  $64.4 million from $1.62 billion to $1.68  billion.  Deposit
           growth and other  funding  sources were used to increase the  Company's
           investment  portfolio.  The  available  for sale  portfolio  rose $44.9
           million to $812.4 million from $767.5 million at year-end 1996, and the
           securities held to maturity portfolio increased $26.6 million to $864.1
           million from $837.5 million. At March 31, 1997, the average life of the
           investment  portfolio was approximately 6.2 years, and the duration was
           approximately 4.5 years.
  
                  Short-term  investments  (Federal  funds  sold)  decreased  $1.3
           million from $27.0  million at year-end  1996 to $25.7 million at March
           31, 1997. At March 31, 1997,  total  securities  and Federal funds sold
           aggregated $1.71 billion and represented 51% of total assets.
  
                  In connection  with the  acquisition  of  Independence  Bancorp,
           management  reclassified  $83.8 million of investment  securities  from
           held to maturity to available for sale during the first quarter.
           Unrealized losses on those securities transferred were $840 thousand.
  
                                         8
  Net Income
  
                  Net income for the first  quarter of 1997 was $9.4  million,  an
           increase of $2.3 million  over the $7.1 million  recorded for the first
           quarter of 1996. On a per share basis, fully diluted net income for the
           first  quarter of 1997 was $.56 per common  share  compared to $.44 per
           common share for the first quarter of 1996.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  first   quarter  of  1997  were   1.17%  and   18.26%,
           respectively,  compared to 1.02% and 15.70%, respectively, for the same
           1996 period.
  
            Net Interest Income
  
                  Net interest  income totaled $34.5 million for the first quarter
           of 1997,  an increase of $5.5 million or 19% from $29.0  million in the
           first quarter of 1996. The  improvement in net interest  income was due
           primarily to volume increases in the loan and investment portfolios.
  
           Noninterest Income
  
                  Noninterest  income  totaled $12.9 million for the first quarter
           of 1997,  an increase of $5.7  million or 79% from $7.2  million in the
           first  quarter of 1996.  The  increase  was due  primarily to increased
           other  operating  income,  which rose $5.3 million over the prior year,
           including  $4.7 million of revenues  from Commerce  National  Insurance
           Services, Inc. (Commerce Insurance), the insurance brokerage subsidiary
           formed in the fourth quarter of 1996. In addition,  deposit charges and
           service fees  increased $1.2 million from the first quarter of 1996 due
           to higher transaction volumes. These increases offset a decrease in net
           investment  securities gains of $771 thousand from the first quarter of
           1996.
  
           Noninterest Expense
  
                    For the first  quarter of 1997,  noninterest  expense  totaled
           $31.2 million,  an increase of $6.8 million or 28% over the same period
           in 1996. Contributing to this increase was new branch activity over the
           past twelve months,  with the number of branches  increasing from 59 at
           March 31, 1996 to 68 at March 31, 1997,  and the  formation of Commerce
           Insurance in the fourth quarter of 1996. With the addition of these new
           offices and the insurance business,  staff, facilities,  marketing, and
           related expenses rose accordingly. Other noninterest expenses rose $831
           thousand  over the  first  quarter  of  1996.  This  increase  resulted
           primarily from expenses associated with the acquisition of Independence
           Bancorp and increased provisions for non-credit-related losses.
  
                    The  Company's   operating   efficiency   ratio   (noninterest
           expenses,  less other real estate,  divided by net interest income plus
           noninterest  income excluding  non-recurring  gains) was 64.83% for the
           first  three  months of 1997 as  compared  to 67.36%  for the same 1996
           period.
  
            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, 1997 were $18.8  million,  or
  
                                         9
  .56% of total assets  compared to $19.5 million or .60% of total assets
           at December 31, 1996 and $19.9 million or .71% of total assets at March
           31, 1996.
  
                    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, 1997 were $10.7  million or .82% of total loans
           compared to $11.2  million or .89% of total loans at December  31, 1996
           and $10.2  million or .93% of total loans at March 31,  1996.  At March
           31, 1997,  loans past due 90 days or more and still  accruing  interest
           amounted to $300  thousand  compared to $259  thousand at December  31,
           1996 and $693 thousand at March 31, 1996.  Additional  loans considered
           as  potential  problem  loans by the  Company's  internal  loan  review
           department  ($13.8 million at March 31, 1997) have been evaluated as to
           risk  exposure in  determining  the adequacy of the  allowance for loan
           losses.
  
                    Other real estate (ORE) at March 31, 1997 totaled $8.0 million
           compared to $8.3 million at December 31, 1996 and $9.7 million at March
           31, 1996.  These properties have been written down to the lower of cost
           or fair value less disposition costs.
  
                    On pages 11 and 12 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, 1997, December 31, 1996, and March 31, 1996.
  
                                         10
  The following summary presents information  regarding  non-performing loans
       and assets as of March 31, 1997 and the preceding  four  quarters:  (dollar
       amounts in thousands)
  March 31,    Dec. 31,     Sept. 30,     June 30,    March 31,
                                                  1997         1996         1996         1996         1996
  Non-accrual loans:
    Commercial                                   $1,349       $1,595       $1,293       $1,230       $1,436
    Consumer                                      1,109          956        1,247        1,093        1,063
    Real Estate:
      Construction                                2,155        2,156        2,196        1,687        1,787
      Mortgage                                    6,074        6,005        6,032        6,931        5,611
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,687       10,712       10,768       10,941        9,897
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       21           21           21           22          144
    Consumer                                                      29           29           59           60
    Real Estate:
      Construction
      Mortgage                                                   481          500                        84
                                                -------      -------      -------      -------      -------
        Total restructured loans                     21          531          550           81          288
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,708       11,243       11,318       11,022       10,185
                                                -------      -------      -------      -------      -------
  
  Other real estate                               8,042        8,252        8,323        8,606        9,694
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    18,750       19,495       19,641       19,628       19,879
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              300          259          632          923          693
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $19,050      $19,754      $20,273      $20,551      $20,572
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.82%        0.89%        0.92%        0.93%        0.93%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.56%        0.60%        0.64%        0.66%        0.71%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.57%        0.61%        0.66%        0.69%        0.73%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           183%         160%         149%         150%         160%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.42%        1.38%        1.39%        1.49%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         9%           9%          10%          10%          11%
  11
  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
                                              03/31/97       03/31/96     12/31/96
  Balance at beginning of period                $17,975        $16,014        $16,014
  Provisions charged to operating expenses        1,626            794          4,857
                                               --------       --------       --------
                                                 19,601         16,808         20,871
  Recoveries on loans charged-off:
    Commercial                                       53             66            286
    Consumer                                         72             94            274
    Real estate                                      18              8             95
                                               --------       --------       --------
  Total recoveries                                  143            168            655
  
  Loans charged-off:
    Commercial                                      (42)          (186)        (1,202)
    Consumer                                       (158)          (169)        (1,046)
    Real estate                                       0           (365)        (1,303)
                                               --------       --------       --------
  Total charged-off                                (200)          (720)        (3,551)
                                               --------       --------       --------
  Net charge-offs                                   (57)          (552)        (2,896)
                                               --------       --------       --------
  
  Balance at end of period                      $19,544        $16,256        $17,975
                                               ========       ========       ========
  
  Net charge-offs as a percentage of
  average loans outstanding                        0.02%          0.21%          0.25%
  12
  PART II. OTHER INFORMATION
  
  Item 4.           Submission of Matters to a Vote of Securities Holders
  
                    A Special Meeting of the  Registrants's  Shareholders was held
  on January 8, 1997. The only item of business acted upon at the Special  Meeting
  was a proposal to approve  the  issuance  of shares of the  Registrant's  common
  stock in connection  with the merger of  Independence  Bancorp with and into the
  Registrant.  The  number  of votes  cast for and  against  the  proposal  was as
  follows:
  
                    For        Against        Abstain   Broker-Non-Votes
                 7,345,964      891,638        50,617          0
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                    (a)      Exhibit 11 - Computation of Net Income Per Share
  
                             A  Current  Report  on Form 8-K , dated  January  28,
                             1997, relating to the consummation of the acquisition
                             of Independence  Bancorp,  Inc. was filed on February
                             4, 1997.
  
                                         13
  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 14,1997
      (Date)                                 C. EDWARD JORDAN, JR.
                                            EXECUTIVE VICE PRESIDENT
                                          (PRINCIPAL FINANCIAL OFFICER)