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 June 30, 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                                  15,893,337
           (Title of Class)                      (No. of Shares Outstanding
                                                       as of  8/08/97)
  
  
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                              417,000
           (Title of Class)                      (No. of Shares Outstanding
                                                       as of  8/08/97)
  
  
  <PAGE>
  
  
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  
  
  
                                        INDEX
  
  
  
                                                                              Page
  
  
  PART I.   FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
            Consolidated Balance Sheets (unaudited)
               June 30, 1997 and December 31, 1996 ..........................1
  
            Consolidated Statements of Income (unaudited) 
              Three months ended June 30, 1997 and June 30, 1996 
              and six months ended June 30, 1997 and June 30, 1996 ..........2
  
            Consolidated Statements of Cash Flows (unaudited)
               Six months ended June 30, 1997 and June 30, 1996 .............3
  
            Notes to Consolidated Financial Statements (unaudited) ........4-5
  
  Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operation ...........................6-13
  
  PART II.  OTHER INFORMATION
  
  Item 4.   Submission of Matters to a Vote of Security Holders ............14
  
  Item 6.   Exhibits and Reports on Form 8-K ...............................15
  
  <PAGE>
                       Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                                           June 30,         December 31,
       (dollars in thousands)                                                                1997              1996
  <S>                                                                                     <C>               <C>       
  Assets
       Cash and due from banks                                                            $  183,937        $  181,858
       Federal funds sold                                                                                       26,975
                                                                                          ----------        ----------
                 Cash and cash equivalents                                                   183,937           208,833
       Mortgages held for sale                                                                 2,675             1,314
       Trading securities                                                                     25,677            15,327
       Securities available for sale                                                         939,782           767,487
       Securities held to maturity:
            U.S. Government agency and mortgage-backed obligations                           890,995           797,045
            Obligations of state and political subdivisions                                   24,706            22,674
            Other securities                                                                  18,986            17,793
                                                                                          ----------        ----------
                 Total securities held to maturity
                      (market value 1997-$914,019; 1996-$815,888)                            934,687           837,512
       Loans                                                                               1,361,884         1,266,855
                 Less allowance for loan losses                                               20,371            17,975
                                                                                          ----------        ----------
                                                                                           1,341,513         1,248,880
       Bank premises and equipment, net                                                      100,031            94,339
       Other assets                                                                           69,677            58,460
                                                                                          ----------        ----------
                                                                                          $3,597,979        $3,232,152
                                                                                          ==========        ==========
  
  Liabilities
       Deposits:
            Demand:
              Interest-bearing                                                            $  972,697        $  884,310
              Noninterest-bearing                                                            701,623           626,664
            Savings                                                                          691,820           638,660
            Time                                                                             821,139           770,036
                                                                                          ----------        ----------
              Total deposits                                                               3,187,279         2,919,670
  
       Other borrowed money                                                                   90,000            70,000
       Other liabilities                                                                      15,727            12,185
       Obligation to Employee Stock Ownership Plan (ESOP)                                      2,821             3,333
       Trust Capital Securities - Commerce Capital Trust I                                    57,500
       Long-term debt                                                                         23,000            23,000
                                                                                          ----------        ----------
                                                                                           3,376,327         3,028,188
  
  Stockholders'
  Equity
       Common stock, 15,828,784 shares issued (15,689,167 shares in 1996)                     24,732            23,546
       Series C preferred stock, 417,000 shares authorized, issued and outstanding
            (liquidating preference: $18.00 per share totaling $7,506)                         7,506             7,506
       Series A preferred stock                                                                                     30
       Capital in excess of par or stated value                                              168,310           144,551
       Retained earnings                                                                      25,549            36,086
                                                                                          ----------        ----------
                                                                                             226,097           211,719
       Less commitment to ESOP                                                                 2,821             4,403
       Less treasury stock, at cost, 100,159 shares in 1997
            (267,378 in 1996)                                                                  1,624             3,352
                                                                                          ----------        ----------
                 Total stockholders' equity                                                  221,652           203,964
                                                                                          ----------        ----------
  
                                                                                          $3,597,979        $3,232,152
                                                                                          ==========        ==========
  </TABLE>
                                         1
  <PAGE>
                       Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                                Three Months Ended        Six Months Ended
                                                                    June 30,                  June 30,
            (dollars in thousands, 
            except per share amounts)                          1997         1996         1997         1996
  <S>                                                        <C>          <C>          <C>          <C>     
  Interest
  income    Interest and fees on loans                       $ 29,819     $ 25,575     $ 57,932     $ 49,981
            Interest on investments                            29,010       23,166       55,824       44,848
            Other interest                                        319          352          731        1,553
                                                             --------     --------     --------     --------
              Total interest income                            59,148       49,093      114,487       96,382
                                                             --------     --------     --------     --------
  
  Interest
  expense   Interest on deposits:
              Demand                                            5,838        4,839       11,309        9,285
              Savings                                           4,108        3,152        7,878        6,165
              Time                                             10,926        9,417       21,592       19,737
                                                             --------     --------     --------     --------
                Total interest on deposits                     20,872       17,408       40,779       35,187
            Interest on other borrowed money                    1,004          612        1,464          643
            Interest on long-term debt                            818          506        1,324        1,012
                                                             --------     --------     --------     --------
                Total interest expense                         22,694       18,526       43,567       36,842
                                                             --------     --------     --------     --------
  
            Net interest income                                36,454       30,567       70,920       59,540
            Provision for loan losses                           1,326          774        2,952        1,568
                                                             --------     --------     --------     --------
            Net interest income after
                 provision for loan losses                     35,128       29,793       67,968       57,972
  
  Non-
  interest
  income    Deposit charges and service fees                    6,463        5,291       12,661       10,327
            Other operating income                              7,108        2,107       13,859        3,545
            Net investment securities gains                         0           48            0          819
                                                             --------     --------     --------     --------
              Total noninterest income                         13,571        7,446       26,520       14,691
                                                             --------     --------     --------     --------
  
  Non-
  interest
  expense   Salaries                                           12,669        9,044       24,571       17,423
            Benefits                                            2,949        2,155        5,695        4,415
            Occupancy                                           3,260        2,943        6,594        5,951
            Furniture and equipment                             4,440        3,397        8,481        6,492
            Office                                              3,305        2,614        6,394        4,981
            Audit and regulatory fees and assessments             379          470          754          893
            Marketing                                           1,421        1,144        2,660        2,247
            Other real estate (net)                               492          501          961        1,006
            Other                                               4,192        3,354        8,203        6,537
                                                             --------     --------     --------     --------
              Total noninterest expenses                       33,107       25,622       64,313       49,945
                                                             --------     --------     --------     --------
  
            Income before income taxes                         15,592       11,617       30,175       22,718
            Provision for federal and state income taxes        5,558        4,107       10,707        8,047
                                                             --------     --------     --------     --------
            Net income                                         10,034        7,510       19,468       14,671
  
            Dividends on preferred stocks                         140          280          281          561
                                                             --------     --------     --------     --------
            Net income applicable to common stock            $  9,894     $  7,230     $ 19,187     $ 14,110
                                                             ========     ========     ========     ========
  
            Net income per common and common
             equivalent share:
              Primary                                        $   0.60     $   0.51     $   1.17     $   1.00
                                                             --------     --------     --------     --------
              Fully diluted                                  $   0.58     $   0.48     $   1.14     $   0.93
                                                             --------     --------     --------     --------
            Average common and common equivalent
             shares outstanding:
              Primary                                          16,438       14,137       16,368       14,078
                                                             --------     --------     --------     --------
              Fully diluted                                    17,155       15,536       17,127       15,492
                                                             --------     --------     --------     --------
            Cash dividends declared, common stock            $   0.20     $   0.17     $   0.40     $   0.33
                                                             ========     ========     ========     ========
  </TABLE>
                                         2
  <PAGE>
  
                       Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                                      Six Months Ended June 30,
                       (dollars in thousands)                                            1997            1996
  <S>                                                                                 <C>               <C>   
  Operating
  activities           Net income                                                     $  19,468         14,671
                       Adjustments to reconcile net income to net cash
                         provided by operating activities:
                           Provision for loan losses                                      2,952          1,568
                           Provision for depreciation, amortization and accretion         8,124          7,892
                           Gains on sales of securities available for sale                                (899)
                           Proceeds from sales of mortgages held for sale                10,598         13,442
                           Originations of mortgages held for sale                      (11,959)       (11,504)
                           Net loan (chargeoffs)                                           (556)        (1,055)
                           Net (increase) in trading securities                         (10,350)        (2,763)
                           (Increase) decrease in other assets                          (11,145)         6,384
                           Increase in other liabilities                                  3,542          2,238
                                                                                      ---------      ---------
                                Net cash provided by operating activities                10,674         29,974
  
  Investing
  activities          Proceeds from the sales of securities available for sale                0         56,583
                      Proceeds from the maturity of securities available for sale        60,692         25,912
                      Proceeds from the maturity of securities held to maturity          53,481         49,874
                      Purchase of securities available for sale                        (151,963)      (225,202)
                      Purchase of securities held to maturity                          (234,236)       (42,981)
                      Net increase in loans                                            (101,598)      (141,171)
                      Proceeds from sales of loans                                        6,569          4,290
                      Purchases of premises and equipment                               (12,141)       (12,692)
                                                                                      ---------      ---------
                                Net cash used by investing activities                  (379,196)      (285,387)
  
  Financing
  activities          Net increase in demand and savings deposits                       216,506        137,499
                      Net increase in time deposits                                      51,103         23,263
                      Net increase in other borrowed money                               20,000         61,800
                      Dividends paid                                                     (5,730)        (4,549)
                      Proceeds from issuance of Trust Capital Securities                 57,500
                      Proceeds from issuance of common stock under
                        dividend reinvestment and other stock plans                       3,103          2,228
  
                      Other                                                               1,144            213
                                                                                      ---------      ---------
                                Net cash provided  by financing activities              343,626        220,454
  
                      Decrease in cash and cash equivalents                             (24,896)       (34,959)
                      Cash and cash equivalents at beginning of year                    208,833        209,857
                                                                                      ---------      ---------
                      Cash and cash equivalents at end of period                      $ 183,937      $ 174,898
                                                                                      =========      =========
  
                      Supplemental disclosures of cash flow information:
                        Cash paid during the period for:
                          Interest                                                    $  44,088      $  36,063
                          Income taxes                                                   11,547          8,241
                                                                                      ---------      ---------
  </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  of  Bergen  County,   New  Jersey,   for  all  periods  presented.
       Independence Bancorp was merged into Commerce Bancorp,  Inc. on January 21,
       1997 and its wholly-owned bank subsidiary, Independence Bank of New Jersey,
       was 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 June 30, 1997 and the six
       months ended June 30, 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., Commerce Bank/North, and Commerce Capital Trust
       I. 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.
  
                                         4
  <PAGE>
  
  
  C.   Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
            The Company has  guaranteed a debt  obligation  of its Employee  Stock
       Ownership Plan ("ESOP") which originated at $7,500,000 and has been reduced
       to $2,821,000 through principal reductions. Accordingly, the loan amount is
       reflected in the Company's consolidated balance sheet as a liability and an
       equal amount, representing deferred employee benefits, has been recorded as
       a deduction from  stockholders'  equity. The ESOP obtained the loan in 1990
       to acquire a new class of Company  Cumulative  Convertible  Preferred Stock
       (Series C) at a price of $18.00 per share. The loan was refinanced in 1994,
       and is payable in quarterly installments with the final payment due January
       28, 2000. The loan bears interest at a variable rate, although the rate can
       be fixed at future  repricing  dates in accordance with the loan agreement.
       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 June 30, 1997 and June 30, 1996 of $.03 and $.04 per
       share, respectively,  and an increase in primary earnings per share for the
       six  months  ended  June 30,  1997  and June 30,  1996 of $.06 and $.07 per
       share,  respectively.  The impact of Statement  128 on the  calculation  of
       fully diluted  earnings per share for these  quarters is not expected to be
       material.
  
  E.   Trust Capital Securities
  
            On June 9, 1997,  the  Company  issued  $57.5  million of 8.75%  Trust
       Capital  Securities  through  Commerce  Capital  Trust  I, a  newly  formed
       Delaware business trust subsidiary of the Company.  The net proceeds of the
       offering  will be used for general  corporate  purposes,  which may include
       contributions to subsidiary banks to fund their  operations,  the financing
       of one or  more  future  acquisitions,  repayment  of  indebtedness  of the
       Company or of its subsidiary banks,  investments in or extensions of credit
       to  its  subsidiaries,  or  the  repurchase  of  shares  of  the  Company's
       outstanding common stock. All $57.5 million of the Trust Capital Securities
       qualify as Tier 1 capital for regulatory capital purposes.
  
                                         5
  <PAGE>
  
  Item 2.   Management's Discussion and Analysis of Financial Condition and 
            Results of Operation
  
            Capital Resources
  
                 At June 30, 1997,  stockholders' equity totaled $221.7 million or
            6.16% of total  assets,  compared to $204.0  million or 6.31% of total
            assets at December 31, 1996.
  
                 On June 9, 1997,  the Company issued $57.5 million of 8.75% Trust
            Capital  Securities  through  Commerce Capital Trust I, a newly formed
            Delaware business trust subsidiary of the Company. The net proceeds of
            the offering will be used for general  corporate  purposes,  which may
            include  contributions to subsidiary  banks to fund their  operations,
            the  financing  of one  or  more  future  acquisitions,  repayment  of
            indebtedness of the Company or of its subsidiary banks, investments in
            or  extensions  of credit to its  subsidiaries,  or the  repurchase of
            shares of the Company's outstanding common stock. All $57.5 million of
            the Trust Capital  Securities qualify as Tier 1 capital for regulatory
            capital purposes.
  
                 The  table  below   presents  the  Company's  and  Commerce  NJ's
            risk-based and leverage ratios at June 30, 1997 and 1996:
  
  <TABLE>
  <CAPTION>
                                                                                 Per Regulatory Guidelines
                                                      Actual                    Minimum              "Well Capitalized"
                                              Amount         Ratio       Amount         Ratio       Amount         Ratio
  <S>                                        <C>             <C>        <C>             <C>        <C>              <C>  
  June 30, 1997
  Company
     Risk based capital ratios:
       Tier 1                                $280,148        15.58%     $ 71,914        4.00%      $107,872         6.00%
       Total capital                          323,519        17.99       143,829        8.00        179,786        10.00
     Leverage ratio                           280,148         8.14       103,237        3.00        172,062         5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                $152,428        12.70%     $ 48,020        4.00%      $ 72,030         6.00%
       Total capital                          165,604        13.79        96,040        8.00        120,051        10.00
     Leverage ratio                           152,428         6.74        67,878        3.00        113,130         5.00
  
  June 30, 1996
  Company
     Risk based capital ratios:
       Tier 1                                $186,451        12.23%     $ 60,963        4.00%      $ 91,445         6.00%
       Total capital                          225,978        14.83       121,927        8.00        152,409        10.00
     Leverage ratio                           186,451         6.44        86,863        3.00        144,771         5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                $142,282        13.83%     $ 41,154        4.00%      $ 61,731         6.00%
       Total capital                          153,473        14.92        82,308        8.00        102,885        10.00
     Leverage ratio                           142,282         7.21        59,229        3.00         98,716         5.00
  </TABLE>
  
                                         6
  <PAGE>
  
                 At June 30, 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 June 30,  1997,  that the  Company and its
            subsidiaries meet all capital adequacy  requirements to which they are
            subject.
  
  
  
  
  
            Deposits
  
                 Total  deposits  at June 30, 1997 were $3.19  billion,  up $497.3
            million, or 18% over total deposits of $2.69 billion at June 30, 1996,
            and up by $267.6  million,  or 9% from year-end  1996.  Deposit growth
            during the first six months of 1997 was largely from core  deposits in
            all categories.  In addition, the Company experienced "same-store core
            deposit  growth" of 9.5% at June 30,  1997 as  compared  to deposits a
            year ago for those branches open for more than two years.
  
            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 June 30,
            1997, the Company's  income  simulation  model indicates an acceptable
            level of interest rate risk.
  
                                         7
  <PAGE>
  
                 In the event the Company's  interest rate risk models indicate an
            unacceptable  level of risk,  the Company could  undertake a number of
            actions that would reduce this risk,  including  the sale of a portion
            of its available  for sale  portfolio,  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 60% or more of the
            excess of market value over book value in the current  rate  scenario.
            At June 30,  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 six
            months of 1997, these borrowings were used as an additional  source of
            funding for the investment  portfolio and to fund loan growth. At June
            30, 1997,  short-term  borrowings  aggregated $90.0 million and had an
            average rate of 5.67%.
  
            Interest Earning Assets
  
                 For the six month period ended June 30,  1997,  interest  earning
            assets  increased  $349.2 million from $2.92 billion to $3.26 billion.
            This  increase was  primarily in  investment  securities  and the loan
            portfolio as described below.
  
            Loans
  
                 During  the  first  six  months of 1997,  loans  increased  $95.0
            million from $1.27 billion to $1.36 billion.  At June 30, 1997,  loans
            represented 43% of total deposits and 38% 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.
  
                                         8
  <PAGE>
  
            Investments
  
                 In total, for the first six months of 1997,  securities increased
            $279.8 million from $1.62 billion to $1.90 billion. Deposit growth and
            other funding  sources were used to increase the Company's  investment
            portfolio.  The available for sale  portfolio  rose $172.3  million to
            $939.8   million  from  $767.5  million  at  year-end  1996,  and  the
            securities  held to  maturity  portfolio  increased  $97.2  million to
            $934.7 million from $837.5 million. At June 30, 1997, the average life
            of the  investment  portfolio  was  approximately  5.9 years,  and the
            duration  was  approximately  4.4  years.  At  June  30,  1997,  total
            securities  and  Federal  funds  sold  aggregated  $1.90  billion  and
            represented 53% of total assets.
  
            Net Income
  
                 Net income for the second quarter of 1997 was $10.0  million,  an
            increase of $2.5 million over the $7.5 million recorded for the second
            quarter of 1996. Net income for the first six months of 1997 was $19.5
            million,  an increase of $4.8 million over the $14.7 million  recorded
            in the first six months of 1996.  On a per share basis,  fully diluted
            net income for the second  quarter of 1997 and the first six months of
            1997 were $.58 and $1.14 per common  share  compared  to $.48 and $.93
            per common share for the respective 1996 periods.
  
                 Return on average assets (ROA) and return on average equity (ROE)
            for the second  quarter of 1997 were 1.17% and  19.15%,  respectively,
            compared to 1.04% and 16.97%, respectively,  for the same 1996 period.
            ROA and ROE for the first six  months of 1997 were  1.17% and  18.71%,
            respectively, compared to 1.04% and 16.39% a year ago.
  
            Net Interest Income
  
                 Net interest  income totaled $36.5 million for the second quarter
            of 1997,  an increase of $5.9 million or 19% from $30.6 million in the
            second quarter of 1996.  Net interest  income for the first six months
            of 1997 totaled $70.9 million,  up $11.4 million or 19% from the first
            six months of 1996. The  improvement  in net interest  income for both
            periods  was  due  primarily  to  volume  increases  in the  loan  and
            investment portfolios.
  
            Noninterest Income
  
                 Noninterest  income  totaled $13.6 million for the second quarter
            of 1997,  an increase of $6.1  million or 82% from $7.4 million in the
            second  quarter of 1996.  The increase was due  primarily to increased
            other operating  income,  which rose $5.0 million over the prior year,
            including  $3.9 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 second
            quarter of 1996 due to higher transaction volumes.
  
                                         9
  <PAGE>
  
                 For the first  six  months of 1997,  noninterest  income  totaled
            $26.5 million,  an increase of $11.8 million or 81% from $14.7 million
            in the first six months of 1996.  Other  operating  income  rose $10.3
            million over the first six months of 1996,  including  $8.6 million of
            revenues from  Commerce  Insurance.  Deposit  charges and service fees
            rose  $2.3  million  over the  prior  year due to  higher  transaction
            volumes.   These  increases   offset  a  decrease  in  net  investment
            securities gains of $819 thousand from the first six months of 1996.
  
            Noninterest Expense
  
                 For the second quarter of 1997, noninterest expense totaled $33.1
            million,  an increase  of $7.5  million or 29% 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 62 at
            June 30, 1996 to 69 at June 30,  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
            $838 thousand over the first quarter of 1996.  This increase  resulted
            primarily from higher bank card-related services charges and increased
            provisions for non-credit-related losses.
  
                 For the first six  months of 1997,  noninterest  expense  totaled
            $64.3 million,  an increase of $14.4 million or 29% over $49.9 million
            in the first six months of 1996. Contributing to this increase was new
            branch  activity  and the  formation  of Commerce  Insurance  as noted
            above. Other noninterest expenses rose $1.7 million over the first six
            months of 1996. This increase resulted primarily from higher bank-card
            related service charges,  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 65.02% for the
            first six  months  of 1997 as  compared  to  66.66%  for the same 1996
            period. The Company's efficiency ratio remains slightly above its peer
            group primarily due to its aggressive growth expansion  activities and
            investments in technology.
  
            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 June 30, 1997 were $17.3 million, or .48% of total assets
            compared to $19.5 million or .60% of total assets at December 31, 1996
            and $19.6 million or .66% of total assets at June 30, 1996.
  
                 Total  non-performing  loans  (non-accrual loans and restructured
            loans,  excluding  loans  past due 90 days or more and still  accruing
            interest)  at June 30, 1997 were $10.3  million or .76% of total loans
            compared to $11.2  million or .89% of total loans at December 31, 1996
            and $11.0 million or .93% of total loans at June 30, 1996. At June 30,
            1997,  loans  past due 90 days or more  and  still  accruing  interest
            amounted to $458  thousand  compared to $259  thousand at December 31,
            1996 and $923 thousand at June 30, 1996.  Additional  loans considered
            as  potential  problem  loans by the  Company's  internal  loan review
            department  ($14.0 million at June 30, 1997) have been evaluated as to
            risk  exposure in  determining  the adequacy of the allowance for loan
            losses.
  
                                         10
  <PAGE>
  
                 Other real estate  (ORE) at June 30, 1997  totaled  $7.0  million
            compared to $8.3 million at December 31, 1996 and $8.6 million at June
            30, 1996. These properties have been written down to the lower of cost
            or fair value less disposition costs.
  
                 On  pages 12 and 13 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 June 30, 1997, December 31, 1996, and June 30, 1996.
  
                                         11
  <PAGE>
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1997 and the preceding four quarters:  (dollar  amounts in
  thousands)
  
  <TABLE>
  <CAPTION>
                                                June 30,     March 31,   December 31, September 30,  June 30,
                                                  1997         1997         1996         1996         1996
  <S>                                           <C>          <C>          <C>          <C>          <C>    
  Non-accrual loans:
    Commercial                                  $ 1,057      $ 1,349      $ 1,595      $ 1,293      $ 1,230
    Consumer                                      1,254        1,109          956        1,247        1,093
    Real Estate:
      Construction                                2,155        2,155        2,156        2,196        1,687
      Mortgage                                    5,818        6,074        6,005        6,032        6,931
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,284       10,687       10,712       10,768       10,941
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       20           21           21           21           22
    Consumer                                                                   29           29           59
    Real Estate:
      Construction
      Mortgage                                                                481          500
                                                -------      -------      -------      -------      -------
        Total restructured loans                     20           21          531          550           81
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,304       10,708       11,243       11,318       11,022
                                                -------      -------      -------      -------      -------
  
  Other real estate                               7,035        8,042        8,252        8,323        8,606
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    17,339       18,750       19,495       19,641       19,628
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              458          300          259          632          923
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $17,797      $19,050      $19,754      $20,273      $20,551
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.76%        0.82%        0.89%        0.92%        0.93%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.48%        0.56%        0.60%        0.64%        0.66%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.49%        0.57%        0.61%        0.66%        0.69%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           198%         183%         160%         149%         150%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.50%        1.42%        1.38%        1.39%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         7%           9%           9%          10%          10%
  </TABLE>
  
                                         12
  <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
                                                   Six Months Ended            Ended
                                               06/30/97       06/30/96       12/31/96
  <S>                                          <C>            <C>            <C>     
  Balance at beginning of period               $ 17,975       $ 16,014       $ 16,014
  Provisions charged to operating expenses        2,952          1,568          4,857
                                               --------       --------       --------
                                                 20,927         17,582         20,871
  Recoveries on loans charged-off:
    Commercial                                      104            112            286
    Consumer                                        134            134            274
    Real estate                                      42             72             95
                                               --------       --------       --------
  Total recoveries                                  280            318            655
  
  Loans charged-off:
    Commercial                                     (369)          (274)        (1,202)
    Consumer                                       (432)          (395)        (1,046)
    Real estate                                     (35)          (704)        (1,303)
                                               --------       --------       --------
  Total charged-off                                (836)        (1,373)        (3,551)
                                               --------       --------       --------
  Net charge-offs                                  (556)        (1,055)        (2,896)
                                               --------       --------       --------
  
  Balance at end of period                     $ 20,371       $ 16,527       $ 17,975
                                               ========       ========       ========
  
  
  
  Net charge-offs as a percentage of
  average loans outstanding                        0.08%          0.19%          0.25%
  </TABLE>
  
                                         13
  <PAGE>
  
                             PART II. OTHER INFORMATION
  
  
  Item 4.   Submission of Matters to a Vote of Securities Holders
  
            The Annual Meeting of the  Registrant's  Shareholders was held on June
            17, 1997.  The only items of business acted upon at the Annual Meeting
            were (i) the  election  of nine  directors  for one year  terms;  (ii)
            approval of the amendment to the  Company's  Restated  Certificate  of
            Incorporation  to increase  the number of shares of Common  Stock that
            the Company is authorized to issue by 30,000,000 shares and the number
            of shares of Preferred  Stock that the Company is  authorized to issue
            by 5,000,000 shares; and (iii) approval of the Commerce Bancorp,  Inc.
            1997  Employee  Stock  Option  Plan.  The  number  of votes  cast for,
            against, or withheld,  as well as the number of abstentions and broker
            non-votes was as follows:
  
            (i)  Election of directors:
  
             Name of                                (Withhold Authority) 
             Nominee                       For           Against
  
             Vernon W. Hill II          14,307,516       135,981
             C. Edward Jordan, Jr.      14,310,791       132,706
             David Baird, IV            14,308,724       134,773
             Robert C. Beck             14,188,388       255,109
             Jack R Bershad             14,179,749       263,748
             Joseph M. Buckelew         14,298,689       144,808
             Steven M. Lewis            14,310,881       132,616 
             Morton N. Kerr             14,301,479       142,018
             Daniel J. Ragone           14,296,997       146,500 
             Joseph T. Tarquini, Jr     14,124,991       132,506 
  
            (ii) Approval of the amendment to the Company's  Restated  Certificate
                 of Incorporation to increase the number of shares of Common Stock
                 that the Company is authorized to issue by 30,000,000  shares and
                 the  number of shares of  Preferred  Stock  that the  Company  is
                 authorized to issue by 5,000,000 shares:
  
                                                                      Broker
                    For             Against         Abstain          Non-Vote
                 8,948,995         2,685,048        98,970          2,710,484
  
            (iii)Approval  of the  Commerce  Bancorp,  Inc.  1997  Employee  Stock
                 Option Plan:
  
                                                                      Broker
                    For             Against         Abstain          Non-Vote
                 9,016,928         2,881,733        136,057         2,408,779
  
                                         14
  <PAGE>
  
  Item 6.   Exhibits and Reports on Form 8-K
  
            (a)  Exhibit 11 - Computation of Net Income Per Share
  
                 No reports on Form 8-K were filed during the second quarter ended
                 June 30, 1997.
  
                                         15
  
  
  <PAGE>
  
  
                                     SIGNATURES
  
  
  
  
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
  
                                               COMMERCE BANCORP, INC.
                                                     (Registrant)
  
  
  
  
                                         16
  
  
  
  
  
  August 13,1997
     (Date)                                        C. EDWARD JORDAN, JR.
                                                 EXECUTIVE VICE PRESIDENT
                                              (PRINCIPAL FINANCIAL OFFICER)
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 56838}]
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": "97661296"}, "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 June 30, 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                                  15,893,337
           (Title of Class)                      (No. of Shares Outstanding
                                                       as of  8/08/97)
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                              417,000
           (Title of Class)                      (No. of Shares Outstanding
                                                       as of  8/08/97)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                              Page
  
  PART I.   FINANCIAL INFORMATION
  
  Item 1.   Financial Statements
  
            Consolidated Balance Sheets (unaudited)
               June 30, 1997 and December 31, 1996 ..........................1
  
            Consolidated Statements of Income (unaudited) 
              Three months ended June 30, 1997 and June 30, 1996 
              and six months ended June 30, 1997 and June 30, 1996 ..........2
  
            Consolidated Statements of Cash Flows (unaudited)
               Six months ended June 30, 1997 and June 30, 1996 .............3
  
            Notes to Consolidated Financial Statements (unaudited) ........4-5
  
  Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operation ...........................6-13
  
  PART II.  OTHER INFORMATION
  
  Item 4.   Submission of Matters to a Vote of Security Holders ............14
  
  Item 6.   Exhibits and Reports on Form 8-K ...............................15
  Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  June 30,         December 31,
       (dollars in thousands)                                                                1997              1996
  Assets
       Cash and due from banks                                                            $  183,937        $  181,858
       Federal funds sold                                                                                       26,975
                                                                                          ----------        ----------
                 Cash and cash equivalents                                                   183,937           208,833
       Mortgages held for sale                                                                 2,675             1,314
       Trading securities                                                                     25,677            15,327
       Securities available for sale                                                         939,782           767,487
       Securities held to maturity:
            U.S. Government agency and mortgage-backed obligations                           890,995           797,045
            Obligations of state and political subdivisions                                   24,706            22,674
            Other securities                                                                  18,986            17,793
                                                                                          ----------        ----------
                 Total securities held to maturity
                      (market value 1997-$914,019; 1996-$815,888)                            934,687           837,512
       Loans                                                                               1,361,884         1,266,855
                 Less allowance for loan losses                                               20,371            17,975
                                                                                          ----------        ----------
                                                                                           1,341,513         1,248,880
       Bank premises and equipment, net                                                      100,031            94,339
       Other assets                                                                           69,677            58,460
                                                                                          ----------        ----------
                                                                                          $3,597,979        $3,232,152
                                                                                          ==========        ==========
  
  Liabilities
       Deposits:
            Demand:
              Interest-bearing                                                            $  972,697        $  884,310
              Noninterest-bearing                                                            701,623           626,664
            Savings                                                                          691,820           638,660
            Time                                                                             821,139           770,036
                                                                                          ----------        ----------
              Total deposits                                                               3,187,279         2,919,670
  
       Other borrowed money                                                                   90,000            70,000
       Other liabilities                                                                      15,727            12,185
       Obligation to Employee Stock Ownership Plan (ESOP)                                      2,821             3,333
       Trust Capital Securities - Commerce Capital Trust I                                    57,500
       Long-term debt                                                                         23,000            23,000
                                                                                          ----------        ----------
                                                                                           3,376,327         3,028,188
  
  Stockholders'
  Equity
       Common stock, 15,828,784 shares issued (15,689,167 shares in 1996)                     24,732            23,546
       Series C preferred stock, 417,000 shares authorized, issued and outstanding
            (liquidating preference: $18.00 per share totaling $7,506)                         7,506             7,506
       Series A preferred stock                                                                                     30
       Capital in excess of par or stated value                                              168,310           144,551
       Retained earnings                                                                      25,549            36,086
                                                                                          ----------        ----------
                                                                                             226,097           211,719
       Less commitment to ESOP                                                                 2,821             4,403
       Less treasury stock, at cost, 100,159 shares in 1997
            (267,378 in 1996)                                                                  1,624             3,352
                                                                                          ----------        ----------
                 Total stockholders' equity                                                  221,652           203,964
                                                                                          ----------        ----------
  
                                                                                          $3,597,979        $3,232,152
                                                                                          ==========        ==========
  1
  Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  Three Months Ended        Six Months Ended
                                                                    June 30,                  June 30,
            (dollars in thousands, 
            except per share amounts)                          1997         1996         1997         1996
  Interest
  income    Interest and fees on loans                       $ 29,819     $ 25,575     $ 57,932     $ 49,981
            Interest on investments                            29,010       23,166       55,824       44,848
            Other interest                                        319          352          731        1,553
                                                             --------     --------     --------     --------
              Total interest income                            59,148       49,093      114,487       96,382
                                                             --------     --------     --------     --------
  
  Interest
  expense   Interest on deposits:
              Demand                                            5,838        4,839       11,309        9,285
              Savings                                           4,108        3,152        7,878        6,165
              Time                                             10,926        9,417       21,592       19,737
                                                             --------     --------     --------     --------
                Total interest on deposits                     20,872       17,408       40,779       35,187
            Interest on other borrowed money                    1,004          612        1,464          643
            Interest on long-term debt                            818          506        1,324        1,012
                                                             --------     --------     --------     --------
                Total interest expense                         22,694       18,526       43,567       36,842
                                                             --------     --------     --------     --------
  
            Net interest income                                36,454       30,567       70,920       59,540
            Provision for loan losses                           1,326          774        2,952        1,568
                                                             --------     --------     --------     --------
            Net interest income after
                 provision for loan losses                     35,128       29,793       67,968       57,972
  
  Non-
  interest
  income    Deposit charges and service fees                    6,463        5,291       12,661       10,327
            Other operating income                              7,108        2,107       13,859        3,545
            Net investment securities gains                         0           48            0          819
                                                             --------     --------     --------     --------
              Total noninterest income                         13,571        7,446       26,520       14,691
                                                             --------     --------     --------     --------
  
  Non-
  interest
  expense   Salaries                                           12,669        9,044       24,571       17,423
            Benefits                                            2,949        2,155        5,695        4,415
            Occupancy                                           3,260        2,943        6,594        5,951
            Furniture and equipment                             4,440        3,397        8,481        6,492
            Office                                              3,305        2,614        6,394        4,981
            Audit and regulatory fees and assessments             379          470          754          893
            Marketing                                           1,421        1,144        2,660        2,247
            Other real estate (net)                               492          501          961        1,006
            Other                                               4,192        3,354        8,203        6,537
                                                             --------     --------     --------     --------
              Total noninterest expenses                       33,107       25,622       64,313       49,945
                                                             --------     --------     --------     --------
  
            Income before income taxes                         15,592       11,617       30,175       22,718
            Provision for federal and state income taxes        5,558        4,107       10,707        8,047
                                                             --------     --------     --------     --------
            Net income                                         10,034        7,510       19,468       14,671
  
            Dividends on preferred stocks                         140          280          281          561
                                                             --------     --------     --------     --------
            Net income applicable to common stock            $  9,894     $  7,230     $ 19,187     $ 14,110
                                                             ========     ========     ========     ========
  
            Net income per common and common
             equivalent share:
              Primary                                        $   0.60     $   0.51     $   1.17     $   1.00
                                                             --------     --------     --------     --------
              Fully diluted                                  $   0.58     $   0.48     $   1.14     $   0.93
                                                             --------     --------     --------     --------
            Average common and common equivalent
             shares outstanding:
              Primary                                          16,438       14,137       16,368       14,078
                                                             --------     --------     --------     --------
              Fully diluted                                    17,155       15,536       17,127       15,492
                                                             --------     --------     --------     --------
            Cash dividends declared, common stock            $   0.20     $   0.17     $   0.40     $   0.33
                                                             ========     ========     ========     ========
  2
  Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  Six Months Ended June 30,
                       (dollars in thousands)                                            1997            1996
  Operating
  activities           Net income                                                     $  19,468         14,671
                       Adjustments to reconcile net income to net cash
                         provided by operating activities:
                           Provision for loan losses                                      2,952          1,568
                           Provision for depreciation, amortization and accretion         8,124          7,892
                           Gains on sales of securities available for sale                                (899)
                           Proceeds from sales of mortgages held for sale                10,598         13,442
                           Originations of mortgages held for sale                      (11,959)       (11,504)
                           Net loan (chargeoffs)                                           (556)        (1,055)
                           Net (increase) in trading securities                         (10,350)        (2,763)
                           (Increase) decrease in other assets                          (11,145)         6,384
                           Increase in other liabilities                                  3,542          2,238
                                                                                      ---------      ---------
                                Net cash provided by operating activities                10,674         29,974
  
  Investing
  activities          Proceeds from the sales of securities available for sale                0         56,583
                      Proceeds from the maturity of securities available for sale        60,692         25,912
                      Proceeds from the maturity of securities held to maturity          53,481         49,874
                      Purchase of securities available for sale                        (151,963)      (225,202)
                      Purchase of securities held to maturity                          (234,236)       (42,981)
                      Net increase in loans                                            (101,598)      (141,171)
                      Proceeds from sales of loans                                        6,569          4,290
                      Purchases of premises and equipment                               (12,141)       (12,692)
                                                                                      ---------      ---------
                                Net cash used by investing activities                  (379,196)      (285,387)
  
  Financing
  activities          Net increase in demand and savings deposits                       216,506        137,499
                      Net increase in time deposits                                      51,103         23,263
                      Net increase in other borrowed money                               20,000         61,800
                      Dividends paid                                                     (5,730)        (4,549)
                      Proceeds from issuance of Trust Capital Securities                 57,500
                      Proceeds from issuance of common stock under
                        dividend reinvestment and other stock plans                       3,103          2,228
  
                      Other                                                               1,144            213
                                                                                      ---------      ---------
                                Net cash provided  by financing activities              343,626        220,454
  
                      Decrease in cash and cash equivalents                             (24,896)       (34,959)
                      Cash and cash equivalents at beginning of year                    208,833        209,857
                                                                                      ---------      ---------
                      Cash and cash equivalents at end of period                      $ 183,937      $ 174,898
                                                                                      =========      =========
  
                      Supplemental disclosures of cash flow information:
                        Cash paid during the period for:
                          Interest                                                    $  44,088      $  36,063
                          Income taxes                                                   11,547          8,241
                                                                                      ---------      ---------
  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  of  Bergen  County,   New  Jersey,   for  all  periods  presented.
       Independence Bancorp was merged into Commerce Bancorp,  Inc. on January 21,
       1997 and its wholly-owned bank subsidiary, Independence Bank of New Jersey,
       was 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 June 30, 1997 and the six
       months ended June 30, 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., Commerce Bank/North, and Commerce Capital Trust
       I. 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.
  
                                         4
  C.   Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
            The Company has  guaranteed a debt  obligation  of its Employee  Stock
       Ownership Plan ("ESOP") which originated at $7,500,000 and has been reduced
       to $2,821,000 through principal reductions. Accordingly, the loan amount is
       reflected in the Company's consolidated balance sheet as a liability and an
       equal amount, representing deferred employee benefits, has been recorded as
       a deduction from  stockholders'  equity. The ESOP obtained the loan in 1990
       to acquire a new class of Company  Cumulative  Convertible  Preferred Stock
       (Series C) at a price of $18.00 per share. The loan was refinanced in 1994,
       and is payable in quarterly installments with the final payment due January
       28, 2000. The loan bears interest at a variable rate, although the rate can
       be fixed at future  repricing  dates in accordance with the loan agreement.
       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 June 30, 1997 and June 30, 1996 of $.03 and $.04 per
       share, respectively,  and an increase in primary earnings per share for the
       six  months  ended  June 30,  1997  and June 30,  1996 of $.06 and $.07 per
       share,  respectively.  The impact of Statement  128 on the  calculation  of
       fully diluted  earnings per share for these  quarters is not expected to be
       material.
  
  E.   Trust Capital Securities
  
            On June 9, 1997,  the  Company  issued  $57.5  million of 8.75%  Trust
       Capital  Securities  through  Commerce  Capital  Trust  I, a  newly  formed
       Delaware business trust subsidiary of the Company.  The net proceeds of the
       offering  will be used for general  corporate  purposes,  which may include
       contributions to subsidiary banks to fund their  operations,  the financing
       of one or  more  future  acquisitions,  repayment  of  indebtedness  of the
       Company or of its subsidiary banks,  investments in or extensions of credit
       to  its  subsidiaries,  or  the  repurchase  of  shares  of  the  Company's
       outstanding common stock. All $57.5 million of the Trust Capital Securities
       qualify as Tier 1 capital for regulatory capital purposes.
  
                                         5
  Item 2.   Management's Discussion and Analysis of Financial Condition and 
            Results of Operation
  
            Capital Resources
  
                 At June 30, 1997,  stockholders' equity totaled $221.7 million or
            6.16% of total  assets,  compared to $204.0  million or 6.31% of total
            assets at December 31, 1996.
  
                 On June 9, 1997,  the Company issued $57.5 million of 8.75% Trust
            Capital  Securities  through  Commerce Capital Trust I, a newly formed
            Delaware business trust subsidiary of the Company. The net proceeds of
            the offering will be used for general  corporate  purposes,  which may
            include  contributions to subsidiary  banks to fund their  operations,
            the  financing  of one  or  more  future  acquisitions,  repayment  of
            indebtedness of the Company or of its subsidiary banks, investments in
            or  extensions  of credit to its  subsidiaries,  or the  repurchase of
            shares of the Company's outstanding common stock. All $57.5 million of
            the Trust Capital  Securities qualify as Tier 1 capital for regulatory
            capital purposes.
  
                 The  table  below   presents  the  Company's  and  Commerce  NJ's
            risk-based and leverage ratios at June 30, 1997 and 1996:
  Per Regulatory Guidelines
                                                      Actual                    Minimum              "Well Capitalized"
                                              Amount         Ratio       Amount         Ratio       Amount         Ratio
  June 30, 1997
  Company
     Risk based capital ratios:
       Tier 1                                $280,148        15.58%     $ 71,914        4.00%      $107,872         6.00%
       Total capital                          323,519        17.99       143,829        8.00        179,786        10.00
     Leverage ratio                           280,148         8.14       103,237        3.00        172,062         5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                $152,428        12.70%     $ 48,020        4.00%      $ 72,030         6.00%
       Total capital                          165,604        13.79        96,040        8.00        120,051        10.00
     Leverage ratio                           152,428         6.74        67,878        3.00        113,130         5.00
  
  June 30, 1996
  Company
     Risk based capital ratios:
       Tier 1                                $186,451        12.23%     $ 60,963        4.00%      $ 91,445         6.00%
       Total capital                          225,978        14.83       121,927        8.00        152,409        10.00
     Leverage ratio                           186,451         6.44        86,863        3.00        144,771         5.00
  
  Commerce NJ Risk based capital ratios:
       Tier 1                                $142,282        13.83%     $ 41,154        4.00%      $ 61,731         6.00%
       Total capital                          153,473        14.92        82,308        8.00        102,885        10.00
     Leverage ratio                           142,282         7.21        59,229        3.00         98,716         5.00
  6
  At June 30, 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 June 30,  1997,  that the  Company and its
            subsidiaries meet all capital adequacy  requirements to which they are
            subject.
  
            Deposits
  
                 Total  deposits  at June 30, 1997 were $3.19  billion,  up $497.3
            million, or 18% over total deposits of $2.69 billion at June 30, 1996,
            and up by $267.6  million,  or 9% from year-end  1996.  Deposit growth
            during the first six months of 1997 was largely from core  deposits in
            all categories.  In addition, the Company experienced "same-store core
            deposit  growth" of 9.5% at June 30,  1997 as  compared  to deposits a
            year ago for those branches open for more than two years.
  
            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 June 30,
            1997, the Company's  income  simulation  model indicates an acceptable
            level of interest rate risk.
  
                                         7
  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 60% or more of the
            excess of market value over book value in the current  rate  scenario.
            At June 30,  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 six
            months of 1997, these borrowings were used as an additional  source of
            funding for the investment  portfolio and to fund loan growth. At June
            30, 1997,  short-term  borrowings  aggregated $90.0 million and had an
            average rate of 5.67%.
  
            Interest Earning Assets
  
                 For the six month period ended June 30,  1997,  interest  earning
            assets  increased  $349.2 million from $2.92 billion to $3.26 billion.
            This  increase was  primarily in  investment  securities  and the loan
            portfolio as described below.
  
            Loans
  
                 During  the  first  six  months of 1997,  loans  increased  $95.0
            million from $1.27 billion to $1.36 billion.  At June 30, 1997,  loans
            represented 43% of total deposits and 38% 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.
  
                                         8
  Investments
  
                 In total, for the first six months of 1997,  securities increased
            $279.8 million from $1.62 billion to $1.90 billion. Deposit growth and
            other funding  sources were used to increase the Company's  investment
            portfolio.  The available for sale  portfolio  rose $172.3  million to
            $939.8   million  from  $767.5  million  at  year-end  1996,  and  the
            securities  held to  maturity  portfolio  increased  $97.2  million to
            $934.7 million from $837.5 million. At June 30, 1997, the average life
            of the  investment  portfolio  was  approximately  5.9 years,  and the
            duration  was  approximately  4.4  years.  At  June  30,  1997,  total
            securities  and  Federal  funds  sold  aggregated  $1.90  billion  and
            represented 53% of total assets.
  
            Net Income
  
                 Net income for the second quarter of 1997 was $10.0  million,  an
            increase of $2.5 million over the $7.5 million recorded for the second
            quarter of 1996. Net income for the first six months of 1997 was $19.5
            million,  an increase of $4.8 million over the $14.7 million  recorded
            in the first six months of 1996.  On a per share basis,  fully diluted
            net income for the second  quarter of 1997 and the first six months of
            1997 were $.58 and $1.14 per common  share  compared  to $.48 and $.93
            per common share for the respective 1996 periods.
  
                 Return on average assets (ROA) and return on average equity (ROE)
            for the second  quarter of 1997 were 1.17% and  19.15%,  respectively,
            compared to 1.04% and 16.97%, respectively,  for the same 1996 period.
            ROA and ROE for the first six  months of 1997 were  1.17% and  18.71%,
            respectively, compared to 1.04% and 16.39% a year ago.
  
            Net Interest Income
  
                 Net interest  income totaled $36.5 million for the second quarter
            of 1997,  an increase of $5.9 million or 19% from $30.6 million in the
            second quarter of 1996.  Net interest  income for the first six months
            of 1997 totaled $70.9 million,  up $11.4 million or 19% from the first
            six months of 1996. The  improvement  in net interest  income for both
            periods  was  due  primarily  to  volume  increases  in the  loan  and
            investment portfolios.
  
            Noninterest Income
  
                 Noninterest  income  totaled $13.6 million for the second quarter
            of 1997,  an increase of $6.1  million or 82% from $7.4 million in the
            second  quarter of 1996.  The increase was due  primarily to increased
            other operating  income,  which rose $5.0 million over the prior year,
            including  $3.9 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 second
            quarter of 1996 due to higher transaction volumes.
  
                                         9
  For the first  six  months of 1997,  noninterest  income  totaled
            $26.5 million,  an increase of $11.8 million or 81% from $14.7 million
            in the first six months of 1996.  Other  operating  income  rose $10.3
            million over the first six months of 1996,  including  $8.6 million of
            revenues from  Commerce  Insurance.  Deposit  charges and service fees
            rose  $2.3  million  over the  prior  year due to  higher  transaction
            volumes.   These  increases   offset  a  decrease  in  net  investment
            securities gains of $819 thousand from the first six months of 1996.
  
            Noninterest Expense
  
                 For the second quarter of 1997, noninterest expense totaled $33.1
            million,  an increase  of $7.5  million or 29% 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 62 at
            June 30, 1996 to 69 at June 30,  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
            $838 thousand over the first quarter of 1996.  This increase  resulted
            primarily from higher bank card-related services charges and increased
            provisions for non-credit-related losses.
  
                 For the first six  months of 1997,  noninterest  expense  totaled
            $64.3 million,  an increase of $14.4 million or 29% over $49.9 million
            in the first six months of 1996. Contributing to this increase was new
            branch  activity  and the  formation  of Commerce  Insurance  as noted
            above. Other noninterest expenses rose $1.7 million over the first six
            months of 1996. This increase resulted primarily from higher bank-card
            related service charges,  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 65.02% for the
            first six  months  of 1997 as  compared  to  66.66%  for the same 1996
            period. The Company's efficiency ratio remains slightly above its peer
            group primarily due to its aggressive growth expansion  activities and
            investments in technology.
  
            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 June 30, 1997 were $17.3 million, or .48% of total assets
            compared to $19.5 million or .60% of total assets at December 31, 1996
            and $19.6 million or .66% of total assets at June 30, 1996.
  
                 Total  non-performing  loans  (non-accrual loans and restructured
            loans,  excluding  loans  past due 90 days or more and still  accruing
            interest)  at June 30, 1997 were $10.3  million or .76% of total loans
            compared to $11.2  million or .89% of total loans at December 31, 1996
            and $11.0 million or .93% of total loans at June 30, 1996. At June 30,
            1997,  loans  past due 90 days or more  and  still  accruing  interest
            amounted to $458  thousand  compared to $259  thousand at December 31,
            1996 and $923 thousand at June 30, 1996.  Additional  loans considered
            as  potential  problem  loans by the  Company's  internal  loan review
            department  ($14.0 million at June 30, 1997) have been evaluated as to
            risk  exposure in  determining  the adequacy of the allowance for loan
            losses.
  
                                         10
  Other real estate  (ORE) at June 30, 1997  totaled  $7.0  million
            compared to $8.3 million at December 31, 1996 and $8.6 million at June
            30, 1996. These properties have been written down to the lower of cost
            or fair value less disposition costs.
  
                 On  pages 12 and 13 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 June 30, 1997, December 31, 1996, and June 30, 1996.
  
                                         11
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1997 and the preceding four quarters:  (dollar  amounts in
  thousands)
  June 30,     March 31,   December 31, September 30,  June 30,
                                                  1997         1997         1996         1996         1996
  Non-accrual loans:
    Commercial                                  $ 1,057      $ 1,349      $ 1,595      $ 1,293      $ 1,230
    Consumer                                      1,254        1,109          956        1,247        1,093
    Real Estate:
      Construction                                2,155        2,155        2,156        2,196        1,687
      Mortgage                                    5,818        6,074        6,005        6,032        6,931
                                                -------      -------      -------      -------      -------
        Total non-accrual loans                  10,284       10,687       10,712       10,768       10,941
                                                -------      -------      -------      -------      -------
  
  Restructured loans
    Commercial                                       20           21           21           21           22
    Consumer                                                                   29           29           59
    Real Estate:
      Construction
      Mortgage                                                                481          500
                                                -------      -------      -------      -------      -------
        Total restructured loans                     20           21          531          550           81
                                                -------      -------      -------      -------      -------
  
    Total non-performing loans                   10,304       10,708       11,243       11,318       11,022
                                                -------      -------      -------      -------      -------
  
  Other real estate                               7,035        8,042        8,252        8,323        8,606
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                    17,339       18,750       19,495       19,641       19,628
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              458          300          259          632          923
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $17,797      $19,050      $19,754      $20,273      $20,551
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.76%        0.82%        0.89%        0.92%        0.93%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.48%        0.56%        0.60%        0.64%        0.66%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.49%        0.57%        0.61%        0.66%        0.69%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           198%         183%         160%         149%         150%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.50%        1.50%        1.42%        1.38%        1.39%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                         7%           9%           9%          10%          10%
  12
  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
                                                   Six Months Ended            Ended
                                               06/30/97       06/30/96       12/31/96
  Balance at beginning of period               $ 17,975       $ 16,014       $ 16,014
  Provisions charged to operating expenses        2,952          1,568          4,857
                                               --------       --------       --------
                                                 20,927         17,582         20,871
  Recoveries on loans charged-off:
    Commercial                                      104            112            286
    Consumer                                        134            134            274
    Real estate                                      42             72             95
                                               --------       --------       --------
  Total recoveries                                  280            318            655
  
  Loans charged-off:
    Commercial                                     (369)          (274)        (1,202)
    Consumer                                       (432)          (395)        (1,046)
    Real estate                                     (35)          (704)        (1,303)
                                               --------       --------       --------
  Total charged-off                                (836)        (1,373)        (3,551)
                                               --------       --------       --------
  Net charge-offs                                  (556)        (1,055)        (2,896)
                                               --------       --------       --------
  
  Balance at end of period                     $ 20,371       $ 16,527       $ 17,975
                                               ========       ========       ========
  
  Net charge-offs as a percentage of
  average loans outstanding                        0.08%          0.19%          0.25%
  13
  PART II. OTHER INFORMATION
  
  Item 4.   Submission of Matters to a Vote of Securities Holders
  
            The Annual Meeting of the  Registrant's  Shareholders was held on June
            17, 1997.  The only items of business acted upon at the Annual Meeting
            were (i) the  election  of nine  directors  for one year  terms;  (ii)
            approval of the amendment to the  Company's  Restated  Certificate  of
            Incorporation  to increase  the number of shares of Common  Stock that
            the Company is authorized to issue by 30,000,000 shares and the number
            of shares of Preferred  Stock that the Company is  authorized to issue
            by 5,000,000 shares; and (iii) approval of the Commerce Bancorp,  Inc.
            1997  Employee  Stock  Option  Plan.  The  number  of votes  cast for,
            against, or withheld,  as well as the number of abstentions and broker
            non-votes was as follows:
  
            (i)  Election of directors:
  
             Name of                                (Withhold Authority) 
             Nominee                       For           Against
  
             Vernon W. Hill II          14,307,516       135,981
             C. Edward Jordan, Jr.      14,310,791       132,706
             David Baird, IV            14,308,724       134,773
             Robert C. Beck             14,188,388       255,109
             Jack R Bershad             14,179,749       263,748
             Joseph M. Buckelew         14,298,689       144,808
             Steven M. Lewis            14,310,881       132,616 
             Morton N. Kerr             14,301,479       142,018
             Daniel J. Ragone           14,296,997       146,500 
             Joseph T. Tarquini, Jr     14,124,991       132,506 
  
            (ii) Approval of the amendment to the Company's  Restated  Certificate
                 of Incorporation to increase the number of shares of Common Stock
                 that the Company is authorized to issue by 30,000,000  shares and
                 the  number of shares of  Preferred  Stock  that the  Company  is
                 authorized to issue by 5,000,000 shares:
  
                                                                      Broker
                    For             Against         Abstain          Non-Vote
                 8,948,995         2,685,048        98,970          2,710,484
  
            (iii)Approval  of the  Commerce  Bancorp,  Inc.  1997  Employee  Stock
                 Option Plan:
  
                                                                      Broker
                    For             Against         Abstain          Non-Vote
                 9,016,928         2,881,733        136,057         2,408,779
  
                                         14
  Item 6.   Exhibits and Reports on Form 8-K
  
            (a)  Exhibit 11 - Computation of Net Income Per Share
  
                 No reports on Form 8-K were filed during the second quarter ended
                 June 30, 1997.
  
                                         15
  SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                               COMMERCE BANCORP, INC.
                                                     (Registrant)
  
                                         16
  
  August 13,1997
     (Date)                                        C. EDWARD JORDAN, JR.
                                                 EXECUTIVE VICE PRESIDENT
                                              (PRINCIPAL FINANCIAL OFFICER)