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, 1999
  
                                         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                                         27,785,094
  --------------------------------------------------------------------------------
       (Title of Class)                             (No. of Shares Outstanding
                                                             as of 8/06/99)
  
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                        INDEX
  <TABLE>
  <CAPTION>
                                                                                                         Page
  <S>          <C>                                                                                       <C>
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Balance Sheets (unaudited)
                June 30, 1999 and December 31, 1998........................................................1
  
                Consolidated  Statements of Income  (unaudited) Three months ended
                June 30, 1999 and June 30, 1998 and six months ended
                June 30, 1999 and June 30, 1998............................................................2
  
                Consolidated Statements of Cash Flows (unaudited)
                Six months ended June 30, 1999 and
                June 30, 1998..............................................................................3
  
                Notes to Consolidated Financial Statements (unaudited).....................................4
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operation.........................................................7
  
  Item 3.       Quantitative and Qualitative Disclosures About Market Risk................................14
  
  PART II.      OTHER INFORMATION
  
  Item 4.       Submission of Matters to a Vote of Security Holders.......................................15
  
  Item 6.       Exhibits and Reports on Form 8-K..........................................................15
  
  </TABLE>
  
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                                     (unaudited)
  <TABLE>
  <CAPTION>
                    -----------------------------------------------------------------------------------------------
                                                                                     June 30,       December 31,
                                                                                   --------------------------------
                    (dollars in thousands)                                             1999              1998
                    -----------------------------------------------------------------------------------------------
  <S>                                                                                  <C>               <C>
  Assets            Cash and due from banks                                            $293,453          $267,220
                    Federal funds sold                                                        0            10,395
                                                                                   -------------    --------------
                         Cash and cash equivalents                                      293,453           277,615
                    Loans held for sale                                                   8,701            22,418
                    Trading securities                                                  105,784            85,359
                    Securities available for sale                                     1,525,297         1,305,004
                    Securities held to maturity                                       1,022,378         1,220,874
                         (market value 06/99-$1,000,669; 12/98-$1,223,667)
                    Loans                                                             2,689,589         2,280,326
                         Less allowance for loan losses                                  34,868            31,265
                                                                                   -------------    --------------
                                                                                      2,654,721         2,249,061
                    Bank premises and equipment, net                                    167,545           147,448
                    Other assets                                                        142,151           116,411
                                                                                   -------------    --------------
                                                                                     $5,920,030        $5,424,190
                                                                                   =============    ==============
  
  Liabilities       Deposits:
                         Demand:
                             Interest-bearing                                        $1,774,850        $1,682,958
                             Noninterest-bearing                                      1,244,679         1,162,126
                         Savings                                                      1,044,425           973,324
                         Time                                                         1,142,270         1,110,400
                                                                                   -------------    --------------
                             Total deposits                                           5,206,224         4,928,808
  
                    Other borrowed money                                                244,561            27,845
                    Other liabilities                                                    57,103            60,027
                    Obligation to Employee Stock Ownership Plan (ESOP)                      769             1,282
                    Trust Capital Securities - Commerce Capital Trust I                  57,500            57,500
                    Long-term debt                                                       23,000            23,000
                                                                                   -------------    --------------
                                                                                      5,589,157         5,098,462
  
  
  Stockholders'     Common stock, 27,809,998 shares
  Equity                 issued (27,373,983 shares in 1998)                              43,453            40,988
                    Capital in excess of par or stated value                            297,848           236,928
                    Retained earnings                                                    12,225            43,712
                    Accumulated other comprehensive income                             (20,260)             7,006
                                                                                   -------------    --------------
                                                                                        333,266           328,634
                    Less commitment to ESOP                                                 769             1,282
  
                    Less treasury stock, at cost                                          1,624             1,624
                                                                                   -------------    --------------
                             Total stockholders' equity                                 330,873           325,728
                                                                                   -------------    --------------
  
                                                                                     $5,920,030        $5,424,190
                                                                                   =============    ==============
  
  See accompanying notes
  
  </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)     1999           1998           1999           1998
                ---------------------------------------------------------------------------------------------------------
  <S>                                                               <C>            <C>           <C>             <C>
  Interest      Interest and fees on loans                          $52,561        $40,727       $100,564        $78,155
  income        Interest on investments                              40,767         39,258         79,774         77,549
                Other interest                                          228            329            384            856
                                                               -------------   ------------   ------------   ------------
                         Total interest income                       93,556         80,314        180,722        156,560
                                                               -------------   ------------   ------------   ------------
  
  Interest      Interest on deposits:
  expense            Demand                                          10,068          8,976         19,693         16,891
                     Savings                                          5,120          5,057          9,915         10,060
                     Time                                            14,678         15,465         29,685         30,371
                                                               -------------   ------------   ------------   ------------
                         Total interest on deposits                  29,866         29,498         59,293         57,322
                Interest on other borrowed money                      2,080            943          2,855          2,945
                Interest on long-term debt                            1,781          1,782          3,563          3,564
                                                               -------------   ------------   ------------   ------------
                         Total interest expense                      33,727         32,223         65,711         63,831
                                                               -------------   ------------   ------------   ------------
  
                Net interest income                                  59,829         48,091        115,011         92,729
                Provision for loan losses                             2,274          1,951          4,458          3,388
                                                               -------------   ------------   ------------   ------------
                Net interest income after provision for
                     loan losses                                     57,555         46,140        110,553         89,341
  
  Noninterest   Deposit charges and service fees                     10,812          8,845         20,552         17,331
  income        Other operating income                               16,249         12,847         33,377         25,844
                Net investment securities gains                         400            920          1,265            929
                                                               -------------   ------------   ------------   ------------
                         Total noninterest income                    27,461         22,612         55,194         44,104
                                                               -------------   ------------   ------------   ------------
  
  Noninterest   Salaries                                             23,788         18,865         47,300         36,575
  expense       Benefits                                              4,841          4,211          9,897          7,998
                Occupancy                                             5,207          4,191         10,300          8,562
                Furniture and equipment                               7,611          6,010         14,554         11,747
                Office                                                4,853          3,860         10,151          7,867
                Audit and regulatory fees and assessments               632            545          1,204          1,099
                Marketing                                             2,503          1,803          4,166          3,736
                Other real estate (net)                                 495            405            969            825
                Other                                                11,069          7,986         19,935         14,388
                                                               -------------   ------------   ------------   ------------
                         Total noninterest expenses                  60,999         47,876        118,476         92,797
                                                               -------------   ------------   ------------   ------------
  
                Income before income taxes                           24,017         20,876         47,271         40,648
                Provision for federal and state income taxes          8,001          7,327         15,774         14,316
                                                               -------------   ------------   ------------   ------------
                Net income                                           16,016         13,549         31,497         26,332
                                                               =============   ============   ============   ============
  
                Net  income per common and common equivalent share:
                         Basic                                        $0.58          $0.50          $1.14          $0.99
                                                               -------------   ------------   ------------   ------------
                         Diluted                                      $0.56          $0.48          $1.10          $0.94
                                                               -------------   ------------   ------------   ------------
                Average common and common equivalent
                   shares outstanding:
                         Basic                                       27,592         26,841         27,360         26,554
                                                               -------------   ------------   ------------   ------------
                         Diluted                                     28,652         28,123         28,585         27,980
                                                               -------------   ------------   ------------   ------------
                Cash dividends declared, common stock                 $0.22          $0.18          $0.43          $0.35
                                                               =============   ============   ============   ============
  </TABLE>
  
                                                See accompanying notes
  
                                         2
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  <TABLE>
  <CAPTION>
                    ------------------------------------------------------------------------------------------------------
                                                                                                 Six Months Ended
                                                                                                     June 30,
                                                                                         ---------------------------------
                    (dollars in thousands)                                                     1999               1998
                    ------------------------------------------------------------------------------------------------------
  <S>                                                                                        <C>                <C>
  Operating         Net income                                                               $31,497            $26,332
  activities        Adjustments to reconcile net income to net cash
                       provided by operating activities:
                         Provision for loan losses                                             4,458              3,388
                         Provision for depreciation, amortization and accretion               15,194             12,092
                         Gains on sales of securities available for sale                      (1,265)              (911)
                         Proceeds from sales of mortgages held for sale                       67,111             42,429
                         Originations of mortgages held for sale                             (53,394)           (33,903)
                         Net loan (chargeoffs)                                                  (855)              (888)
                         Net increase in trading securities                                  (20,425)           (27,187)
                         Increase in other assets                                            (10,816)           (15,516)
                         (Decrease) increase in other liabilities                             (2,924)            20,618
                    ------------------------------------------------------------------------------------------------------
                               Net cash provided by financing activities                      28,581             26,454
  
  Investing         Proceeds from the sales of securities available for sale                 201,469            266,330
  activities        Proceeds from the maturity of securities available for sale              180,020            140,210
                    Proceeds from the maturity of securities held to maturity                153,592            145,930
                    Purchase of securities available for sale                               (552,775)          (398,057)
                    Purchase of securities held to maturity                                  (49,759)          (312,677)
                    Net increase in loans                                                   (415,169)          (298,407)
                    Proceeds from sales of loans                                               5,906              6,262
                    Purchases of premises and equipment                                      (30,560)           (24,112)
                    ------------------------------------------------------------------------------------------------------
                               Net cash used by financing activities                        (507,276)          (474,521)
  
  Financing         Net increase in demand and savings deposits                              245,546            377,016
  activities        Net increase in time deposits                                             31,870            161,113
                    Net increase(decrease) in other borrowed money                           216,716            (33,781)
                    Dividends paid                                                           (11,228)            (9,038)
                    Proceeds from issuance of common stock under
                    dividend reinvestment and other stock plans                               11,486              4,209
                    Issuance of common stock                                                                      9,432
                    Other                                                                        143                121
                    ------------------------------------------------------------------------------------------------------
                               Net cash provided by financing activities                     494,533            509,072
  
                    Increase in cash and cash equivalents                                     15,838             61,005
                    Cash and cash equivalents at beginning of year                           277,615            204,776
                    ------------------------------------------------------------------------------------------------------
                    Cash and cash equivalents at end of period                              $293,453           $265,781
                    ======================================================================================================
  
                    Supplemental  disclosures of cash flow information:
                       Cash paid during the period for:
                         Interest                                                            $65,543            $61,005
                         Income taxes                                                         12,553             14,350
                       Other noncash activities:
                         Transfer of securities to securities available for sale              91,010
                    ------------------------------------------------------------------------------------------------------
  </TABLE>
  
  See accompanying notes
  
                                         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  Community  First
  Banking  Company  (CFBC),  Tinton  Falls,  New Jersey,  and the former  Prestige
  Financial  Corp.  (PFC),  Flemington,  New Jersey,  for all  periods  presented.
  Effective January 15, 1999, Commerce Bancorp,  Inc. (the Company) acquired CFBC,
  and CFBC's  wholly-owned  bank  subsidiary,  Tinton Falls State Bank, was merged
  with and into Commerce  Bank/Shore,  N.A. Also  effective  January 15, 1999, the
  Company acquired PFC, and PFC's  wholly-owned  bank  subsidiary,  Prestige State
  Bank, was  re-chartered  as a national bank and renamed  Commerce  Bank/Central,
  N.A. The  transactions  were  accounted  for as poolings of  interests.  Certain
  amounts in prior periods have been reclassified for comparative purposes.
  
  These condensed  consolidated financial statements should be read in conjunction
  with the audited  financial  statements  and the notes  thereto  included in the
  registrant's  Annual Report on Form 10-K for the period ended December 31, 1998.
  The results for the three  months  ended June 30, 1999 and the six months  ended
  June 30, 1999 are not necessarily indicative of the results that may be expected
  for the year ended December 31, 1999.
  
  The consolidated  financial statements include the accounts of Commerce Bancorp,
  Inc. and all of its subsidiaries,  including  Commerce Bank, N.A. (Commerce NJ),
  Commerce   Bank/Pennsylvania,   N.A.,   Commerce   Bank/Shore,   N.A.,  Commerce
  Bank/North,  Commerce  Bank/Central,  N.A.,  Commerce  Capital Trust I, Commerce
  National Insurance  Services,  Inc. (Commerce  Insurance),  and Commerce Capital
  Markets,  Inc.  (CCMI).  All  material   intercompany   transactions  have  been
  eliminated.
  
  B.   Commitments
  
  In the normal course of business,  there are various outstanding  commitments to
  extend credit, such as letters of credit and unadvanced loan commitments,  which
  are  not  reflected  in  the  accompanying  consolidated  financial  statements.
  Management  does  not  anticipate  any  material  losses  as a  result  of these
  transactions.
  
  C.   Comprehensive Income
  
  Total  comprehensive  income,  which for the  Company  included  net  income and
  unrealized  gains and losses on the  Company's  available  for sale  securities,
  amounted to $(5.4) million and $13.2 million, respectively, for the three months
  ended June 30, 1999 and 1998.  For the six months  ended June 30, 1999 and 1998,
  total comprehensive income was $4.2 million and $29.3 million, respectively.
  
  
                                         4
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  D.   Segment Information
  
  Selected segment information is as follows:
  <TABLE>
  <CAPTION>
  -------------------------------------------------------------------------------------------------------------------------
                                                   Three Months Ended                       Three Months Ended
                                                      June 30, 1999                            June 30, 1998
                                          Community      Parent/                   Community      Parent/
                                            Banks         Other        Total         Banks         Other        Total
  -------------------------------------------------------------------------------------------------------------------------
  <S>                                       <C>           <C>          <C>           <C>           <C>          <C>
  Net interest income                       $61,535       $(1,706)     $59,829       $49,615       $(1,524)     $48,091
  Provision for loan losses                   2,274            --        2,274         1,951            --        1,951
                                        -----------------------------------------------------------------------------------
  
  Net interest income after provision        59,261        (1,706)      57,555        47,664        (1,524)      46,140
  Noninterest income                         15,459        12,002       27,461        14,409         8,203       22,612
  Noninterest expense                        50,228        10,771       60,999        40,402         7,474       47,876
                                        -----------------------------------------------------------------------------------
  Income before income taxes                 24,492          (475)      24,017        21,671          (795)      20,876
  Income tax expense                          8,004            (3)       8,001         7,667          (340)       7,327
                                        -----------------------------------------------------------------------------------
  Net income                                $16,488         $(472)     $16,016       $14,004         $(455)     $13,549
                                        ===================================================================================
  
  Average assets (in millions)           $5,166,133      $594,205   $5,760,338    $4,297,344      $462,958   $4,760,302
                                        ===================================================================================
  
  -------------------------------------------------------------------------------------------------------------------------
                                                    Six Months Ended                         Six Months Ended
                                                      June 30, 1999                            June 30, 1998
                                          Community      Parent/                   Community      Parent/
                                            Banks         Other        Total         Banks         Other        Total
  -------------------------------------------------------------------------------------------------------------------------
  Net interest income                      $118,334       $(3,323)    $115,011       $95,920       $(3,191)     $92,729
  Provision for loan losses                   4,458            --        4,458         3,388            --        3,388
                                        -----------------------------------------------------------------------------------
  
  Net interest income after provision       113,876        (3,323)     110,553        92,532        (3,191)      89,341
  Noninterest income                         30,247        24,947       55,194        27,498        16,606       44,104
  Noninterest expense                        97,322        21,154      118,476        78,728        14,069       92,797
                                        -----------------------------------------------------------------------------------
  Income before income taxes                 46,801           470       47,271        41,302          (654)      40,648
  Income tax expense                         15,333           441       15,774        14,588          (272)      14,316
                                        -----------------------------------------------------------------------------------
  Net income                                $31,468           $29      $31,497       $26,714         $(382)     $26,332
                                        ===================================================================================
  
  Average assets (in millions)           $4,970,813      $628,795   $5,599,608    $4,173,437      $443,873   $4,617,310
                                        ===================================================================================
  </TABLE>
  
  E.   Recent Accounting Statement
  
  In June 1998, the Financial  Accounting Standards Board issued Statement No. 133
  "Accounting for Derivative  Instruments and Hedging  Activities"  (FAS 133). FAS
  133 will require the Company to recognize all  derivatives  on the balance sheet
  at fair  value.  Derivatives  that are not hedges must be adjusted to fair value
  through  income.  If the  derivative is a hedge,  depending on the nature of the
  hedge, changes in the fair value of the derivative will either be offset against
  the change in fair value of the hedged  asset or liability  through  earnings or
  recognized in other comprehensive  income until the hedged item is recognized in
  earnings. The ineffective portion of a derivative's change in fair value will be
  immediately  recognized in earnings.  FAS 133 becomes  effective for the Company
  beginning  January 1, 2001.  Although early adoption is allowed in any quarterly
  period  after June 1998,  the Company has no plans to adopt FAS 133 prior to the
  effective date. Based on the Company's minimal use of derivatives at the current
  time,  management  does not expect the adoption of FAS 133 to have a significant
  effect on  results of  operations  or the  financial  position  of the  Company.
  However,  the impact from adopting FAS 133 will depend on the nature and purpose
  of the derivative instruments in use by the Company at that time.
  
                                         5
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  F.   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.
  
  G.   Earnings Per Share
  
  The  calculation  of earnings per share  follows (in  thousands,  except for per
  share amounts):
  <TABLE>
  <CAPTION>
                                                              Three Months Ended                  Six Months Ended
                                                                   June 30                            June 30
                                                     -------------------------------------------------------------------
                                                            1999              1998             1999              1998
  ----------------------------------------------------------------------------------------------------------------------
  Basic:
  <S>                                                     <C>               <C>               <C>               <C>
  Net income applicable to common stock                   $ 16,016          $ 13,549          $31,497           $26,332
                                                     ==============    ==============   ==============    ==============
  
  Average common shares outstanding                         27,592            26,841           27,360            26,554
                                                     ==============    ==============   ==============    ==============
  
  Net income per common share - basic                       $ 0.58            $ 0.50           $ 1.14            $ 0.99
                                                     ==============    ==============   ==============    ==============
  
  Diluted:
  Net income applicable to common stock
  on a diluted basis                                      $ 16,016          $ 13,549          $31,497           $26,332
                                                     ==============    ==============   ==============    ==============
  
  Average common shares outstanding                         27,592            26,841           27,360            26,554
  Additional shares considered in diluted
  computation assuming:
  Exercise of stock options                                  1,060             1,282            1,225             1,215
  Conversion of preferred stock                                                                                     211
                                                     ==============    ==============   ==============    ==============
  Average common shares outstanding
  on a diluted basis                                        28,652            28,123           28,585            27,980
                                                     ==============    ==============   ==============    ==============
  
  Net income per common share - diluted                     $ 0.56            $ 0.48           $ 1.10            $ 0.94
                                                     ==============    ==============   ==============    ==============
  </TABLE>
  
  
                                         6
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operation
  
  Capital Resources
  
  At June 30, 1999,  stockholders' equity totaled $330.9 million or 5.59% of total
  assets,  compared to $325.7  million or 6.01% of total  assets at  December  31,
  1998.
  
  The table below presents the Company's and Commerce NJ's risk-based and leverage
  ratios at June 30, 1999 and 1998:
  <TABLE>
  <CAPTION>
                                                                               Per Regulatory Guidelines
                                                                   ---------------------------------------------------
                                                 Actual                    Minimum              "Well Capitalized"
                                           Amount      Ratio         Amount      Ratio          Amount      Ratio
  --------------------------------------------------------------------------------------------------------------------
  <S>                                      <C>            <C>        <C>             <C>        <C>             <C>
  June 30, 1999
  Company
         Risk based capital ratios:
         Tier 1                             $404,078       11.41%     $141,636        4.00%      $212,453        6.00%
         Total capital                       457,346       12.92       283,271        8.00        354,089       10.00
       Leverage ratio                        404,078        7.01       230,516        4.00        288,146        5.00
  
  Commerce NJ Risk based capital ratios:
         Tier 1                             $208,291       10.68%     $ 77,981        4.00%      $116,972        6.00%
         Total capital                       227,489       11.67       155,962        8.00        194,953       10.00
       Leverage ratio                        208,291        6.43       129,570        4.00        161,963        5.00
  
  June 30, 1998
  Company
       Risk based capital ratios:
         Tier 1                             $361,975       14.22%    $ 101,808        4.00%      $152,712        6.00%
         Total capital                       411,625       16.17       203,616        8.00        254,520       10.00
       Leverage ratio                        361,975        7.63       142,347        3.00        237,245        5.00
  
  Commerce NJ Risk based capital ratios:
         Tier 1                             $185,102       12.86%     $ 57,569        4.00%      $ 86,353        6.00%
         Total capital                       200,314       13.92       115,137        8.00        143,922       10.00
       Leverage ratio                        185,102        6.50        85,464        3.00        142,441        5.00
  </TABLE>
  
  At June 30, 1999,  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 that as of June 30, 1999, the Company
  and its subsidiaries  meet all capital  adequacy  requirements to which they are
  subject.
  
  Deposits
  
  Total deposits at June 30, 1999 were $5.21 billion,  up $883.5  million,  or 20%
  over total deposits of $4.32 billion at June 30, 1998, and up by $277.4 million,
  or 6% from  year-end  1998.  Deposit  growth during the first six months of 1999
  included core deposit growth in all categories as well as growth from the public
  sector.  The Company  experienced  "same-store  core deposit growth" of 20.1% at
  June 30, 1999 as compared  to  deposits a year ago for those  branches  open for
  more than two years.
  
                                         7
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Interest Rate Sensitivity and Liquidity
  
  The Company's risk of loss arising from adverse changes in the fair market value
  of financial instruments, or market risk, is composed primarily of interest rate
  risk.  The  primary  objective  of  the  Company's  asset/liability   management
  activities  is to maximize net interest  income,  while  maintaining  acceptable
  levels of interest rate risk. The Company's  Asset/Liability Committee (ALCO) is
  responsible for  establishing  policies to limit exposure to interest rate risk,
  and to ensure  procedures  are  established  to  monitor  compliance  with these
  policies. The guidelines established by ALCO are reviewed by the Company's Board
  of Directors.
  
  Management considers the simulation of net interest income in different interest
  rate environments to be the best indicator of the Company's  interest rate risk.
  Income  simulation  analysis  captures not only the  potential of all assets and
  liabilities to mature or reprice, but also the probability that they will do so.
  Income  simulation also attends to the relative  interest rate  sensitivities of
  these  items,  and  projects  their  behavior  over an extended  period of time.
  Finally,  income simulation permits management to assess the probable effects on
  the balance  sheet not only of changes in interest  rates,  but also of proposed
  strategies for responding to them.
  
  The Company's  income  simulation  model analyzes  interest rate  sensitivity by
  projecting net income over the next 24 months in a flat rate scenario versus net
  income in alternative  interest rate scenarios.  Management  continually reviews
  and  refines  its  interest  rate risk  management  process in  response  to the
  changing   economic   climate.   Currently,   the  Company's  model  projects  a
  proportionate  200 basis point change during the next year, with rates remaining
  constant in the second year.  The  Company's  ALCO policy has  established  that
  interest income  sensitivity will be considered  acceptable if net income in the
  above  interest  rate  scenario  is  within  15% of net  income in the flat rate
  scenario in the first year and within 30% over the two year time frame.  At June
  30, 1999,  the  Company's  income  simulation  model  indicates net income would
  increase  by 0.70% and  decrease  by 6.04% in the first year and over a two year
  time frame, respectively,  if rates decreased as described above, as compared to
  a decrease of 2.74% and 8.06%, respectively, at June 30, 1998. At June 30, 1999,
  the model  projects  that net income  would  decrease  by 4.38% and 2.76% in the
  first year and over a two year time frame,  respectively,  if rates increased as
  described above, as compared to a decrease of 2.85% and 2.81%, respectively,  at
  June 30,  1998.  All of these net income  projections  are within an  acceptable
  level of interest rate risk pursuant to the policy established by ALCO.
  
  In the event the Company's  interest rate risk models  indicate an  unacceptable
  level of risk, the Company could undertake a number of actions that would reduce
  this risk,  including the sale of a portion of its available for sale portfolio,
  the use of risk  management  strategies such as interest rate swaps and caps, or
  the extension of the maturities of its short-term borrowings.
  
  Management  also  monitors  interest  rate risk by  utilizing a market  value of
  equity model. The model assesses the impact of a change in interest rates on the
  market value of all the  Company's  assets and  liabilities,  as well as any off
  balance  sheet items.  The model  calculates  the market value of the  Company's
  assets and liabilities in excess of book value in the current rate scenario, and
  then  compares the excess of market value over book value given an immediate 200
  basis point change in rates.  The Company's ALCO policy indicates that the level
  of interest  rate risk is  unacceptable  if the immediate 200 basis point change
  would  result in the loss of 60% or more of the excess of market value over book
  value in the current rate scenario. At June 30, 1999, the market value of equity
  model indicates an acceptable level of interest rate risk.
  
  Liquidity  involves the Company's ability to raise funds to support asset growth
  or decrease assets to meet deposit  withdrawals  and other  borrowing  needs, to
  maintain reserve requirements and to otherwise operate the Company on an ongoing
  basis.  The  Company's  liquidity  needs  are  primarily  met by  growth in core
  deposits,  its  cash  and  federal  funds  sold  position,  cash  flow  from its
  amortizing  investment  and loan  portfolios,  as well as the use of  short-term
  borrowings, as required.
  
                                         8
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Short-Term Borrowings
  
  Short-term borrowings,  or other borrowed money, consist primarily of securities
  sold under agreements to repurchase and overnight lines of credit,  and are used
  to meet  short term  funding  needs.  At June 30,  1999,  short-term  borrowings
  aggregated $244.6 million and had an average rate of 5.43%, as compared to $27.8
  million at an average rate of 4.98% at December 31, 1998.
  
  Interest Earning Assets
  
  For the six month period ended June 30, 1999,  interest earning assets increased
  $427.4 million from $4.91 billion to $5.35 billion.  This increase was primarily
  in investment securities and the loan portfolio as described below.
  
  Loans
  
  During the first six months of 1999,  loans increased  $405.7 million from $2.25
  billion to $2.65  billion.  At June 30,  1999,  loans  represented  51% of total
  deposits and 45% of total assets. All segments of the loan portfolio experienced
  growth in the first six months of 1999,  including  loans  secured by commercial
  real estate properties, commercial loans, and consumer loans.
  
  Investments
  
  In total, for the first six months of 1999,  securities  increased $42.2 million
  from $2.61 billion to $2.65 billion.  Deposit  growth and other funding  sources
  were used to increase the Company's investment portfolio. The available for sale
  portfolio  increased $220.3 million to $1.53 billion at June 30, 1999 from $1.31
  billion at December  31, 1998,  and the  securities  held to maturity  portfolio
  decreased $198.5 million to $1.02 billion at June 30, 1999 from $1.22 billion at
  year-end 1998. In connection with the  acquisitions of CFBC and PFC,  management
  reclassified  $91.0  million of investment  securities  from held to maturity to
  available for sale during the first quarter of 1999.  Unrealized losses on those
  securities  transferred  were  approximately  $330  thousand.  The  portfolio of
  trading securities  increased $20.4 million from year-end 1998 to $105.8 million
  at June 30, 1999. At June 30, 1999, the average life of the investment portfolio
  was  approximately  4.4 years, and the duration was  approximately 3.4 years. At
  June 30, 1999, total securities represented 45% of total assets.
  
  Net Income
  
  Net income for the second quarter of 1999 was $16.0 million, an increase of $2.5
  million or 18% over the $13.5 million  recorded for the second  quarter of 1998.
  Net income for the first six months of 1999 was $31.5  million,  an  increase of
  $5.2 million or 20% over the $26.3  million  recorded in the first six months of
  1998.  On a per share basis,  diluted net income for the second  quarter of 1999
  and the first six months of 1999 were $0.56 and $1.10 per common share  compared
  to $0.48 and $.94 per common share for the respective 1998 periods.
  
  Return on average assets (ROA) and return on average equity (ROE) for the second
  quarter  of 1999 were  1.11% and  18.98%,  respectively,  compared  to 1.14% and
  17.65%,  respectively,  for the same 1998 period.  ROA and ROE for the first six
  months of 1999 were 1.12% and 18.87%, respectively, compared to 1.14% and 17.57%
  a year ago.
  
  Net Interest Income
  
  Net interest  income  totaled $59.8  million for the second  quarter of 1999, an
  increase  of $11.7  million or 24% from $48.1  million in the second  quarter of
  1998.  Net  interest  income  for the first six  months of 1998  totaled  $115.0
  million,  up $22.3  million  or 24% from  the  first  six  months  of 1998.  The
  improvement in net interest  income for both periods was due primarily to volume
  increases in the loan and investment portfolios.
  
                                         9
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Noninterest Income
  
  Noninterest  income  totaled  $27.5  million for the second  quarter of 1999, an
  increase  of $4.8  million  or 21% from $22.6  million in the second  quarter of
  1998. The increase was due primarily to increased other operating income,  which
  rose $3.4  million  over the prior year,  including  increased  revenues of $2.4
  million from Commerce Insurance,  the Company's insurance brokerage  subsidiary,
  and $800  thousand  from CCMI.  In  addition,  deposit  charges and service fees
  increased  $2.0 million over the second  quarter of 1998 primarily due to higher
  transaction  volumes.  The Company also recorded $400 thousand in net investment
  securities  gains in the second  quarter of 1999, as compared to $920 thousand a
  year ago.
  
  For the first six months of 1999,  noninterest income totaled $55.2 million,  an
  increase of $11.1  million or 25% from $44.1  million in the first six months of
  1998.  Other  operating  income rose $7.5  million  over the first six months of
  1998,  including  increased revenues of $4.5 million from Commerce Insurance and
  $2.3 million from CCMI.  Deposit charges and service fees rose $3.2 million over
  the prior year  primarily  due to higher  transaction  volumes,  and the Company
  recorded $1.3 million in net investment securities gains in the first six months
  of 1999 as compared to $929 thousand a year ago.
  
  Noninterest Expense
  
  For the second quarter of 1999,  noninterest  expense totaled $61.0 million,  an
  increase of $13.1 million or 27% over the same period in 1998.  Contributing  to
  this  increase was new branch  activity  over the past twelve  months,  with the
  number of branches  increasing from 89 at June 30, 1998 to 104 at June 30, 1999,
  and the growth of Commerce  Insurance  and CCMI.  With the addition of these new
  offices,  staff,  facilities,  and  related  expenses  rose  accordingly.  Other
  noninterest  expenses  rose $3.1 million over the second  quarter of 1998.  This
  increase  resulted  primarily  from higher bank  card-related  service  charges,
  increased  business   development   expenses,   and  increased   provisions  for
  non-credit-related losses.
  
  For the first six months of 1999, noninterest expense totaled $118.5 million, an
  increase of $25.7  million or 28% over $92.8  million in the first six months of
  1998.  Contributing  to this increase was new branch  activity and the growth of
  Commerce National and CCMI as noted above. Other noninterest  expenses rose $5.5
  million over the first six months of 1998. This increase resulted primarily from
  higher  bank  card-related  service  charges,   increased  business  development
  expenses, and increased provisions for non-credit-related losses.
  
  The Company's operating efficiency ratio (noninterest expenses,  less other real
  estate expense, divided by net interest income plus noninterest income excluding
  non-recurring  gains) was 69.56% for the first six months of 1999 as compared to
  67.67% for the same 1998 period.  The Company's  efficiency  ratio remains above
  its peer group primarily due to its aggressive growth expansion activities.
  
  Loan and Asset Quality
  
  Total  non-performing  assets  (non-performing  loans  and  other  real  estate,
  excluding  loans past due 90 days or more and still  accruing  interest) at June
  30, 1999 were $13.4 million,  or 0.23% of total assets compared to $14.7 million
  or 0.27% of total  assets at  December  31,  1998 and $14.8  million or 0.30% of
  total assets at June 30, 1998.
  
  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,  1999
  were $9.3  million or 0.34% of total loans  compared to $8.6 million or 0.38% of
  total  loans at December  31,  1998 and $9.1  million or 0.47% of total loans at
  June  30,  1998.  At June 30,  1999,  loans  past due 90 days or more and  still
  accruing  interest  amounted  to $693  thousand  compared  to $945  thousand  at
  December 31, 1998 and $1.2 million at June 30, 1998. Additional loans considered
  as potential  problem  loans by the Company's  internal  loan review  department
  ($20.6  million at June 30,  1999) have been  evaluated  as to risk  exposure in
  determining the adequacy of the allowance for loan losses.
  
                                         10
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Other real estate (ORE) at June 30, 1999  totaled $4.1 million  compared to $6.1
  million at December 31, 1998 and $5.6 million at June 30, 1998. These properties
  have been  written  down to the  lower of cost or fair  value  less  disposition
  costs.
  
  On pages 13 and 14 are tabular  presentation  showing detailed information about
  the Company's  non-performing  loans and assets and an analysis of the Company's
  allowance for loan losses and other related data for June 30, 1999, December 31,
  1998, and June 30, 1998.
  
  Year 2000
  
  The Company began the process of preparing its computer systems and applications
  for the Year 2000 in 1996. The process  involves  identifying and resolving date
  recognition  problems in computer systems and software,  and to a lesser extent,
  other operating equipment, that could be caused by the date change from December
  31, 1999 to January 1, 2000.
  
  The Company has completed its assessment of all business processes that could be
  affected by the Year 2000 issue.  Each business  process  assessment  included a
  review of the information  systems used in that process,  including hardware and
  software,  involvement of third parties, and any other operating equipment.  The
  Company licenses substantially all software used in conducting its business from
  third party  vendors.  All vendors have been  contacted  regarding the Year 2000
  issue, and the Company  continues to track the progress each vendor is making in
  reaching  Year 2000  compliance.  The Company is also working  with  significant
  customers and counterparties to monitor their Year 2000 efforts. The Company has
  all  necessary  changes  in place and tested for all  mission  critical  systems
  (those systems defined as absolutely  essential to the daily business  operation
  of the Company).  Additionally,  the Company has completed certification testing
  with all mission  critical service  providers.  Changes for 95% of the remaining
  systems are in place and testing has been substantially  completed.  Contingency
  plans have been completed and validated.
  
  The Company believes it is taking the appropriate steps to address all Year 2000
  issues.  Despite  the  Company's  efforts to address  the Year 2000  problem and
  develop  contingency  plans  in the  event  of  Year  2000  failures,  including
  non-compliance  by third parties  (including  loan  customers),  there can be no
  assurance  that the Year 2000 issue  will not  materially  adversely  impact the
  Company's  financial  position,  results of operations,  or  relationships  with
  customers, vendors, or others.
  
  The  Company  estimates  the  total  cost of the Year 2000  compliance  process,
  including internal and external personnel and any required hardware and software
  modifications, will not exceed $1.0 million.
  
  Forward-Looking Statements
  
  The  Company  may  from  time  to time  make  written  or oral  "forward-looking
  statements",  including  statements  contained in the Company's filings with the
  Securities and Exchange Commission (including this Form 10-Q), in its reports to
  stockholders and in other communications by the Company,  which are made in good
  faith by the Company  pursuant to the "safe  harbor"  provisions  of the Private
  Securities Litigation Reform Act of 1995.
  
  These  forward-looking   statements  include  statements  with  respect  to  the
  Company's  beliefs,  plans,  objectives,  goals,  expectations,   anticipations,
  estimates  and   intentions,   that  are  subject  to   significant   risks  and
  uncertainties  and are subject to change based on various factors (some of which
  are beyond the Company's control). The words "may", "could", "should",  "would",
  believe",  "anticipate",  "estimate",  "expect",  "intend",  "plan" and  similar
  expressions are intended to identify forward-looking  statements.  The following
  factors, among others, could cause the Company's financial performance to differ
  materially from that expressed in such forward-looking  statements: the strength
  of the United States economy in general and the strength of the local  economies
  in which the Company conducts operations; the effects of, and changes in, trade,
  monetary and fiscal policies,  including  interest rate policies of the Board of
  Governors of the Federal Reserve System (the "FRB"); inflation;  interest rates,
  market and monetary  fluctuations;  the timely  development of  competitive  new
  products and  services by the Company and the  acceptance  of such  products and
  services by customers;  the willingness of customers to substitute  competitors'
  products and services  for the  Company's  products and services and vice versa;
  the impact of changes in financial  services'  laws and  regulations  (including
  laws  concerning  taxes,  banking,  securities  and  insurance);   technological
  changes; future acquisitions;  the
  
                                         11
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  expense  savings  and revenue  enhancements  from  acquisitions  being less than
  expected;  the growth and  profitability  of the  Company's  noninterest  or fee
  income  being  less  than   expected;   unanticipated   regulatory  or  judicial
  proceedings;  changes in consumer spending and saving habits; and the success of
  the Company at managing the risks involved in the foregoing.
  
  The  Company  cautions  that the  foregoing  list of  important  factors  is not
  exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
  statement,  whether written or oral, that may be made from time to time by or on
  behalf of the Company.
  
  
  
  
  
  
  
                                         12
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1999 and the preceding four quarters:  (dollar  amounts in
  thousands)
  <TABLE>
  <CAPTION>
                                                      June 30,      March 31,    December 31,   September 30,    June 30,
                                                       1999           1999          1998            1998          1998
                                               --------------------------------------------------------------------------
  Non-accrual loans:
  <S>                                                 <C>           <C>            <C>            <C>             <C>
     Commercial                                       $3,104        $2,821         $2,466         $2,417          $2,021
     Consumer                                            787           846            831            782             851
     Real estate:
       Construction                                      115           115            189            587             603
       Mortgage                                        5,144         4,937          4,849          4,631           5,500
                                               --------------------------------------------------------------------------
           Total non-accrual loans                     9,150         8,719          8,335          8,417           8,975
                                               --------------------------------------------------------------------------
  
  Restructured loans:
     Commercial                                           16            16             17             17              18
     Consumer
     Real estate:
       Construction
       Mortgage                                          110           117            217            104             109
                                               --------------------------------------------------------------------------
           Total restructured loans                      126           133            234            121             127
                                               --------------------------------------------------------------------------
  
  Total non-performing loans                           9,276         8,852          8,569          8,538           9,102
                                               --------------------------------------------------------------------------
  
  Other real estate                                    4,118         5,645          6,081          5,409           5,649
                                               --------------------------------------------------------------------------
  
  Total non-performing assets                         13,394        14,497         14,650         13,947          14,751
                                               --------------------------------------------------------------------------
  
  Loans past due 90 days or more
     and still accruing                                  693           696            945          2,622           1,187
                                               --------------------------------------------------------------------------
  
  Total non-performing assets and
     loans past due 90 days or more                  $14,087       $15,193        $15,595        $16,569         $15,938
                                               ==========================================================================
  
  Total non-performing loans as a
     percentage of total period-end loans              0.34%         0.36%          0.38%          0.41%           0.47%
  
  Total non-performing assets as a
     percentage of total period-end assets             0.23%         0.26%          0.27%          0.27%           0.30%
  
  Total non-performing assets and loans
     past due 90 days or more as a
     percentage of total period-end assets             0.24%         0.27%          0.29%          0.33%           0.32%
  
  Allowance for loan losses as a percentage
     of total non-performing loans                      376%          374%           365%           332%            293%
  
  Allowance for loan losses as a percentage
     of total period-end loans                         1.30%         1.34%          1.37%          1.36%           1.36%
  
  Total non-performing assets and loans
     past due 90 days or more as a
     percentage of stockholders' equity and
     allowance for loan losses                            4%            4%             4%             5%              5%
  
  </TABLE>
  
  
                                         13
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  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
                                                                 06/30/99           06/30/98           12/31/98
                                                                -----------        -----------         ----------
  <S>                                                              <C>                <C>                <C>
  Balance at beginning of period                                   $31,265            $24,150            $24,150
  Provisions charged to operating expenses                           4,458              3,388              8,762
                                                                -----------        -----------         ----------
                                                                    35,723             27,538             32,912
  
  Recoveries on loans charged-off:
  Commercial                                                           366                173                418
  Consumer                                                             119                191                305
  Real estate                                                           68                 18                764
                                                                -----------        -----------         ----------
  Total recoveries                                                     553                382              1,487
  
  Loans charged-off:
  Commercial                                                          (877)              (338)            (1,281)
  Consumer                                                            (454)              (667)            (1,352)
  Real estate                                                          (77)              (265)              (501)
                                                                -----------        -----------         ----------
  Total charge-offs                                                 (1,408)            (1,270)            (3,134)
                                                                -----------        -----------         ----------
  Net charge-offs                                                     (855)              (888)            (1,647)
                                                                -----------        -----------         ----------
  
  Balance at end of period                                         $34,868            $26,650            $31,265
                                                                ===========        ===========         ==========
  
  Net charge-offs as a percentage of
  average loans outstanding                                           0.07%              0.10%              0.08%
  </TABLE>
  
  Item 3:  Quantitative and Qualitative Disclosures About Market Risk
  
  See Item 2 -  Management's  Discussion  and Analysis of Financial  Condition and
  Results of Operation, Interest Rate Sensitivity and Liquidity.
  
  
  
  
  
  
  
                                         14
  <PAGE>
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  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 May 25, 1999.  The only item of business  acted upon at the
                    Annual  Meeting was the election of 12 directors  for one year
                    terms. The number of votes cast for, against, or withheld, was
                    as follows:
  
                    (i)     Election of directors:
  <TABLE>
  <CAPTION>
                    Name of                                                 (Withhold Authority)
                    Nominee                          For                          Against
                    -------                          ---                          -------
  <S>                                           <C>                             <C>
                    Vernon W. Hill, II           24,050,683                        92,791
                    C. Edward Jordan, Jr.        24,051,565                        91,909
                    David Baird, IV              24,064,076                        79,398
                    Robert C. Beck               23,988,092                       155,382
                    Jack R Bershad               23,981,932                       161,542
                    Joseph M. Buckelew           24,040,529                       102,945
                    Morton N. Kerr               24,044,719                        98,755
                    Steven M. Lewis              24,050,313                        93,161
                    Daniel J. Ragone             24,054,243                        89,231
                    William A. Schwartz, Jr.     24,064,834                        78,640
                    Joseph T. Tarquini, Jr       24,064,939                        78,535
                    Frank C. Videon, Sr.         24,052,008                        91,466
  </TABLE>
  
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                    No reports on Form 8-K were filed during the second quarter
                    ended June 30, 1999.
  
  
  
                                         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)
  
  
  
  
  
  
  
  
  
  
        August 12, 1999                       /s/ THOMAS J. SUKAY
            (Date)                              THOMAS J. SUKAY
                                               SENIOR VICE PRESIDENT
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
  
  
                                         16
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 71042}]
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": "99685902"}, "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, 1999
  
                                         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                                         27,785,094
  --------------------------------------------------------------------------------
       (Title of Class)                             (No. of Shares Outstanding
                                                             as of 8/06/99)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                        INDEX
  Page
  PART I.       FINANCIAL INFORMATION
  
  Item 1.       Financial Statements
  
                Consolidated Balance Sheets (unaudited)
                June 30, 1999 and December 31, 1998........................................................1
  
                Consolidated  Statements of Income  (unaudited) Three months ended
                June 30, 1999 and June 30, 1998 and six months ended
                June 30, 1999 and June 30, 1998............................................................2
  
                Consolidated Statements of Cash Flows (unaudited)
                Six months ended June 30, 1999 and
                June 30, 1998..............................................................................3
  
                Notes to Consolidated Financial Statements (unaudited).....................................4
  
  Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operation.........................................................7
  
  Item 3.       Quantitative and Qualitative Disclosures About Market Risk................................14
  
  PART II.      OTHER INFORMATION
  
  Item 4.       Submission of Matters to a Vote of Security Holders.......................................15
  
  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)                                             1999              1998
                    -----------------------------------------------------------------------------------------------
  Assets            Cash and due from banks                                            $293,453          $267,220
                    Federal funds sold                                                        0            10,395
                                                                                   -------------    --------------
                         Cash and cash equivalents                                      293,453           277,615
                    Loans held for sale                                                   8,701            22,418
                    Trading securities                                                  105,784            85,359
                    Securities available for sale                                     1,525,297         1,305,004
                    Securities held to maturity                                       1,022,378         1,220,874
                         (market value 06/99-$1,000,669; 12/98-$1,223,667)
                    Loans                                                             2,689,589         2,280,326
                         Less allowance for loan losses                                  34,868            31,265
                                                                                   -------------    --------------
                                                                                      2,654,721         2,249,061
                    Bank premises and equipment, net                                    167,545           147,448
                    Other assets                                                        142,151           116,411
                                                                                   -------------    --------------
                                                                                     $5,920,030        $5,424,190
                                                                                   =============    ==============
  
  Liabilities       Deposits:
                         Demand:
                             Interest-bearing                                        $1,774,850        $1,682,958
                             Noninterest-bearing                                      1,244,679         1,162,126
                         Savings                                                      1,044,425           973,324
                         Time                                                         1,142,270         1,110,400
                                                                                   -------------    --------------
                             Total deposits                                           5,206,224         4,928,808
  
                    Other borrowed money                                                244,561            27,845
                    Other liabilities                                                    57,103            60,027
                    Obligation to Employee Stock Ownership Plan (ESOP)                      769             1,282
                    Trust Capital Securities - Commerce Capital Trust I                  57,500            57,500
                    Long-term debt                                                       23,000            23,000
                                                                                   -------------    --------------
                                                                                      5,589,157         5,098,462
  
  Stockholders'     Common stock, 27,809,998 shares
  Equity                 issued (27,373,983 shares in 1998)                              43,453            40,988
                    Capital in excess of par or stated value                            297,848           236,928
                    Retained earnings                                                    12,225            43,712
                    Accumulated other comprehensive income                             (20,260)             7,006
                                                                                   -------------    --------------
                                                                                        333,266           328,634
                    Less commitment to ESOP                                                 769             1,282
  
                    Less treasury stock, at cost                                          1,624             1,624
                                                                                   -------------    --------------
                             Total stockholders' equity                                 330,873           325,728
                                                                                   -------------    --------------
  
                                                                                     $5,920,030        $5,424,190
                                                                                   =============    ==============
  
  See accompanying notes
  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)     1999           1998           1999           1998
                ---------------------------------------------------------------------------------------------------------
  Interest      Interest and fees on loans                          $52,561        $40,727       $100,564        $78,155
  income        Interest on investments                              40,767         39,258         79,774         77,549
                Other interest                                          228            329            384            856
                                                               -------------   ------------   ------------   ------------
                         Total interest income                       93,556         80,314        180,722        156,560
                                                               -------------   ------------   ------------   ------------
  
  Interest      Interest on deposits:
  expense            Demand                                          10,068          8,976         19,693         16,891
                     Savings                                          5,120          5,057          9,915         10,060
                     Time                                            14,678         15,465         29,685         30,371
                                                               -------------   ------------   ------------   ------------
                         Total interest on deposits                  29,866         29,498         59,293         57,322
                Interest on other borrowed money                      2,080            943          2,855          2,945
                Interest on long-term debt                            1,781          1,782          3,563          3,564
                                                               -------------   ------------   ------------   ------------
                         Total interest expense                      33,727         32,223         65,711         63,831
                                                               -------------   ------------   ------------   ------------
  
                Net interest income                                  59,829         48,091        115,011         92,729
                Provision for loan losses                             2,274          1,951          4,458          3,388
                                                               -------------   ------------   ------------   ------------
                Net interest income after provision for
                     loan losses                                     57,555         46,140        110,553         89,341
  
  Noninterest   Deposit charges and service fees                     10,812          8,845         20,552         17,331
  income        Other operating income                               16,249         12,847         33,377         25,844
                Net investment securities gains                         400            920          1,265            929
                                                               -------------   ------------   ------------   ------------
                         Total noninterest income                    27,461         22,612         55,194         44,104
                                                               -------------   ------------   ------------   ------------
  
  Noninterest   Salaries                                             23,788         18,865         47,300         36,575
  expense       Benefits                                              4,841          4,211          9,897          7,998
                Occupancy                                             5,207          4,191         10,300          8,562
                Furniture and equipment                               7,611          6,010         14,554         11,747
                Office                                                4,853          3,860         10,151          7,867
                Audit and regulatory fees and assessments               632            545          1,204          1,099
                Marketing                                             2,503          1,803          4,166          3,736
                Other real estate (net)                                 495            405            969            825
                Other                                                11,069          7,986         19,935         14,388
                                                               -------------   ------------   ------------   ------------
                         Total noninterest expenses                  60,999         47,876        118,476         92,797
                                                               -------------   ------------   ------------   ------------
  
                Income before income taxes                           24,017         20,876         47,271         40,648
                Provision for federal and state income taxes          8,001          7,327         15,774         14,316
                                                               -------------   ------------   ------------   ------------
                Net income                                           16,016         13,549         31,497         26,332
                                                               =============   ============   ============   ============
  
                Net  income per common and common equivalent share:
                         Basic                                        $0.58          $0.50          $1.14          $0.99
                                                               -------------   ------------   ------------   ------------
                         Diluted                                      $0.56          $0.48          $1.10          $0.94
                                                               -------------   ------------   ------------   ------------
                Average common and common equivalent
                   shares outstanding:
                         Basic                                       27,592         26,841         27,360         26,554
                                                               -------------   ------------   ------------   ------------
                         Diluted                                     28,652         28,123         28,585         27,980
                                                               -------------   ------------   ------------   ------------
                Cash dividends declared, common stock                 $0.22          $0.18          $0.43          $0.35
                                                               =============   ============   ============   ============
  See accompanying notes
  
                                         2
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (unaudited)
  ------------------------------------------------------------------------------------------------------
                                                                                                 Six Months Ended
                                                                                                     June 30,
                                                                                         ---------------------------------
                    (dollars in thousands)                                                     1999               1998
                    ------------------------------------------------------------------------------------------------------
  Operating         Net income                                                               $31,497            $26,332
  activities        Adjustments to reconcile net income to net cash
                       provided by operating activities:
                         Provision for loan losses                                             4,458              3,388
                         Provision for depreciation, amortization and accretion               15,194             12,092
                         Gains on sales of securities available for sale                      (1,265)              (911)
                         Proceeds from sales of mortgages held for sale                       67,111             42,429
                         Originations of mortgages held for sale                             (53,394)           (33,903)
                         Net loan (chargeoffs)                                                  (855)              (888)
                         Net increase in trading securities                                  (20,425)           (27,187)
                         Increase in other assets                                            (10,816)           (15,516)
                         (Decrease) increase in other liabilities                             (2,924)            20,618
                    ------------------------------------------------------------------------------------------------------
                               Net cash provided by financing activities                      28,581             26,454
  
  Investing         Proceeds from the sales of securities available for sale                 201,469            266,330
  activities        Proceeds from the maturity of securities available for sale              180,020            140,210
                    Proceeds from the maturity of securities held to maturity                153,592            145,930
                    Purchase of securities available for sale                               (552,775)          (398,057)
                    Purchase of securities held to maturity                                  (49,759)          (312,677)
                    Net increase in loans                                                   (415,169)          (298,407)
                    Proceeds from sales of loans                                               5,906              6,262
                    Purchases of premises and equipment                                      (30,560)           (24,112)
                    ------------------------------------------------------------------------------------------------------
                               Net cash used by financing activities                        (507,276)          (474,521)
  
  Financing         Net increase in demand and savings deposits                              245,546            377,016
  activities        Net increase in time deposits                                             31,870            161,113
                    Net increase(decrease) in other borrowed money                           216,716            (33,781)
                    Dividends paid                                                           (11,228)            (9,038)
                    Proceeds from issuance of common stock under
                    dividend reinvestment and other stock plans                               11,486              4,209
                    Issuance of common stock                                                                      9,432
                    Other                                                                        143                121
                    ------------------------------------------------------------------------------------------------------
                               Net cash provided by financing activities                     494,533            509,072
  
                    Increase in cash and cash equivalents                                     15,838             61,005
                    Cash and cash equivalents at beginning of year                           277,615            204,776
                    ------------------------------------------------------------------------------------------------------
                    Cash and cash equivalents at end of period                              $293,453           $265,781
                    ======================================================================================================
  
                    Supplemental  disclosures of cash flow information:
                       Cash paid during the period for:
                         Interest                                                            $65,543            $61,005
                         Income taxes                                                         12,553             14,350
                       Other noncash activities:
                         Transfer of securities to securities available for sale              91,010
                    ------------------------------------------------------------------------------------------------------
  See accompanying notes
  
                                         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  Community  First
  Banking  Company  (CFBC),  Tinton  Falls,  New Jersey,  and the former  Prestige
  Financial  Corp.  (PFC),  Flemington,  New Jersey,  for all  periods  presented.
  Effective January 15, 1999, Commerce Bancorp,  Inc. (the Company) acquired CFBC,
  and CFBC's  wholly-owned  bank  subsidiary,  Tinton Falls State Bank, was merged
  with and into Commerce  Bank/Shore,  N.A. Also  effective  January 15, 1999, the
  Company acquired PFC, and PFC's  wholly-owned  bank  subsidiary,  Prestige State
  Bank, was  re-chartered  as a national bank and renamed  Commerce  Bank/Central,
  N.A. The  transactions  were  accounted  for as poolings of  interests.  Certain
  amounts in prior periods have been reclassified for comparative purposes.
  
  These condensed  consolidated financial statements should be read in conjunction
  with the audited  financial  statements  and the notes  thereto  included in the
  registrant's  Annual Report on Form 10-K for the period ended December 31, 1998.
  The results for the three  months  ended June 30, 1999 and the six months  ended
  June 30, 1999 are not necessarily indicative of the results that may be expected
  for the year ended December 31, 1999.
  
  The consolidated  financial statements include the accounts of Commerce Bancorp,
  Inc. and all of its subsidiaries,  including  Commerce Bank, N.A. (Commerce NJ),
  Commerce   Bank/Pennsylvania,   N.A.,   Commerce   Bank/Shore,   N.A.,  Commerce
  Bank/North,  Commerce  Bank/Central,  N.A.,  Commerce  Capital Trust I, Commerce
  National Insurance  Services,  Inc. (Commerce  Insurance),  and Commerce Capital
  Markets,  Inc.  (CCMI).  All  material   intercompany   transactions  have  been
  eliminated.
  
  B.   Commitments
  
  In the normal course of business,  there are various outstanding  commitments to
  extend credit, such as letters of credit and unadvanced loan commitments,  which
  are  not  reflected  in  the  accompanying  consolidated  financial  statements.
  Management  does  not  anticipate  any  material  losses  as a  result  of these
  transactions.
  
  C.   Comprehensive Income
  
  Total  comprehensive  income,  which for the  Company  included  net  income and
  unrealized  gains and losses on the  Company's  available  for sale  securities,
  amounted to $(5.4) million and $13.2 million, respectively, for the three months
  ended June 30, 1999 and 1998.  For the six months  ended June 30, 1999 and 1998,
  total comprehensive income was $4.2 million and $29.3 million, respectively.
  
                                         4
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  D.   Segment Information
  
  Selected segment information is as follows:
  -------------------------------------------------------------------------------------------------------------------------
                                                   Three Months Ended                       Three Months Ended
                                                      June 30, 1999                            June 30, 1998
                                          Community      Parent/                   Community      Parent/
                                            Banks         Other        Total         Banks         Other        Total
  -------------------------------------------------------------------------------------------------------------------------
  Net interest income                       $61,535       $(1,706)     $59,829       $49,615       $(1,524)     $48,091
  Provision for loan losses                   2,274            --        2,274         1,951            --        1,951
                                        -----------------------------------------------------------------------------------
  
  Net interest income after provision        59,261        (1,706)      57,555        47,664        (1,524)      46,140
  Noninterest income                         15,459        12,002       27,461        14,409         8,203       22,612
  Noninterest expense                        50,228        10,771       60,999        40,402         7,474       47,876
                                        -----------------------------------------------------------------------------------
  Income before income taxes                 24,492          (475)      24,017        21,671          (795)      20,876
  Income tax expense                          8,004            (3)       8,001         7,667          (340)       7,327
                                        -----------------------------------------------------------------------------------
  Net income                                $16,488         $(472)     $16,016       $14,004         $(455)     $13,549
                                        ===================================================================================
  
  Average assets (in millions)           $5,166,133      $594,205   $5,760,338    $4,297,344      $462,958   $4,760,302
                                        ===================================================================================
  
  -------------------------------------------------------------------------------------------------------------------------
                                                    Six Months Ended                         Six Months Ended
                                                      June 30, 1999                            June 30, 1998
                                          Community      Parent/                   Community      Parent/
                                            Banks         Other        Total         Banks         Other        Total
  -------------------------------------------------------------------------------------------------------------------------
  Net interest income                      $118,334       $(3,323)    $115,011       $95,920       $(3,191)     $92,729
  Provision for loan losses                   4,458            --        4,458         3,388            --        3,388
                                        -----------------------------------------------------------------------------------
  
  Net interest income after provision       113,876        (3,323)     110,553        92,532        (3,191)      89,341
  Noninterest income                         30,247        24,947       55,194        27,498        16,606       44,104
  Noninterest expense                        97,322        21,154      118,476        78,728        14,069       92,797
                                        -----------------------------------------------------------------------------------
  Income before income taxes                 46,801           470       47,271        41,302          (654)      40,648
  Income tax expense                         15,333           441       15,774        14,588          (272)      14,316
                                        -----------------------------------------------------------------------------------
  Net income                                $31,468           $29      $31,497       $26,714         $(382)     $26,332
                                        ===================================================================================
  
  Average assets (in millions)           $4,970,813      $628,795   $5,599,608    $4,173,437      $443,873   $4,617,310
                                        ===================================================================================
  E.   Recent Accounting Statement
  
  In June 1998, the Financial  Accounting Standards Board issued Statement No. 133
  "Accounting for Derivative  Instruments and Hedging  Activities"  (FAS 133). FAS
  133 will require the Company to recognize all  derivatives  on the balance sheet
  at fair  value.  Derivatives  that are not hedges must be adjusted to fair value
  through  income.  If the  derivative is a hedge,  depending on the nature of the
  hedge, changes in the fair value of the derivative will either be offset against
  the change in fair value of the hedged  asset or liability  through  earnings or
  recognized in other comprehensive  income until the hedged item is recognized in
  earnings. The ineffective portion of a derivative's change in fair value will be
  immediately  recognized in earnings.  FAS 133 becomes  effective for the Company
  beginning  January 1, 2001.  Although early adoption is allowed in any quarterly
  period  after June 1998,  the Company has no plans to adopt FAS 133 prior to the
  effective date. Based on the Company's minimal use of derivatives at the current
  time,  management  does not expect the adoption of FAS 133 to have a significant
  effect on  results of  operations  or the  financial  position  of the  Company.
  However,  the impact from adopting FAS 133 will depend on the nature and purpose
  of the derivative instruments in use by the Company at that time.
  
                                         5
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  F.   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.
  
  G.   Earnings Per Share
  
  The  calculation  of earnings per share  follows (in  thousands,  except for per
  share amounts):
  Three Months Ended                  Six Months Ended
                                                                   June 30                            June 30
                                                     -------------------------------------------------------------------
                                                            1999              1998             1999              1998
  ----------------------------------------------------------------------------------------------------------------------
  Basic:
  Net income applicable to common stock                   $ 16,016          $ 13,549          $31,497           $26,332
                                                     ==============    ==============   ==============    ==============
  
  Average common shares outstanding                         27,592            26,841           27,360            26,554
                                                     ==============    ==============   ==============    ==============
  
  Net income per common share - basic                       $ 0.58            $ 0.50           $ 1.14            $ 0.99
                                                     ==============    ==============   ==============    ==============
  
  Diluted:
  Net income applicable to common stock
  on a diluted basis                                      $ 16,016          $ 13,549          $31,497           $26,332
                                                     ==============    ==============   ==============    ==============
  
  Average common shares outstanding                         27,592            26,841           27,360            26,554
  Additional shares considered in diluted
  computation assuming:
  Exercise of stock options                                  1,060             1,282            1,225             1,215
  Conversion of preferred stock                                                                                     211
                                                     ==============    ==============   ==============    ==============
  Average common shares outstanding
  on a diluted basis                                        28,652            28,123           28,585            27,980
                                                     ==============    ==============   ==============    ==============
  
  Net income per common share - diluted                     $ 0.56            $ 0.48           $ 1.10            $ 0.94
                                                     ==============    ==============   ==============    ==============
  6
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Item 2.  Management's Discussion and Analysis of Financial Condition and
           Results of Operation
  
  Capital Resources
  
  At June 30, 1999,  stockholders' equity totaled $330.9 million or 5.59% of total
  assets,  compared to $325.7  million or 6.01% of total  assets at  December  31,
  1998.
  
  The table below presents the Company's and Commerce NJ's risk-based and leverage
  ratios at June 30, 1999 and 1998:
  Per Regulatory Guidelines
                                                                   ---------------------------------------------------
                                                 Actual                    Minimum              "Well Capitalized"
                                           Amount      Ratio         Amount      Ratio          Amount      Ratio
  --------------------------------------------------------------------------------------------------------------------
  June 30, 1999
  Company
         Risk based capital ratios:
         Tier 1                             $404,078       11.41%     $141,636        4.00%      $212,453        6.00%
         Total capital                       457,346       12.92       283,271        8.00        354,089       10.00
       Leverage ratio                        404,078        7.01       230,516        4.00        288,146        5.00
  
  Commerce NJ Risk based capital ratios:
         Tier 1                             $208,291       10.68%     $ 77,981        4.00%      $116,972        6.00%
         Total capital                       227,489       11.67       155,962        8.00        194,953       10.00
       Leverage ratio                        208,291        6.43       129,570        4.00        161,963        5.00
  
  June 30, 1998
  Company
       Risk based capital ratios:
         Tier 1                             $361,975       14.22%    $ 101,808        4.00%      $152,712        6.00%
         Total capital                       411,625       16.17       203,616        8.00        254,520       10.00
       Leverage ratio                        361,975        7.63       142,347        3.00        237,245        5.00
  
  Commerce NJ Risk based capital ratios:
         Tier 1                             $185,102       12.86%     $ 57,569        4.00%      $ 86,353        6.00%
         Total capital                       200,314       13.92       115,137        8.00        143,922       10.00
       Leverage ratio                        185,102        6.50        85,464        3.00        142,441        5.00
  At June 30, 1999,  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 that as of June 30, 1999, the Company
  and its subsidiaries  meet all capital  adequacy  requirements to which they are
  subject.
  
  Deposits
  
  Total deposits at June 30, 1999 were $5.21 billion,  up $883.5  million,  or 20%
  over total deposits of $4.32 billion at June 30, 1998, and up by $277.4 million,
  or 6% from  year-end  1998.  Deposit  growth during the first six months of 1999
  included core deposit growth in all categories as well as growth from the public
  sector.  The Company  experienced  "same-store  core deposit growth" of 20.1% at
  June 30, 1999 as compared  to  deposits a year ago for those  branches  open for
  more than two years.
  
                                         7
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Interest Rate Sensitivity and Liquidity
  
  The Company's risk of loss arising from adverse changes in the fair market value
  of financial instruments, or market risk, is composed primarily of interest rate
  risk.  The  primary  objective  of  the  Company's  asset/liability   management
  activities  is to maximize net interest  income,  while  maintaining  acceptable
  levels of interest rate risk. The Company's  Asset/Liability Committee (ALCO) is
  responsible for  establishing  policies to limit exposure to interest rate risk,
  and to ensure  procedures  are  established  to  monitor  compliance  with these
  policies. The guidelines established by ALCO are reviewed by the Company's Board
  of Directors.
  
  Management considers the simulation of net interest income in different interest
  rate environments to be the best indicator of the Company's  interest rate risk.
  Income  simulation  analysis  captures not only the  potential of all assets and
  liabilities to mature or reprice, but also the probability that they will do so.
  Income  simulation also attends to the relative  interest rate  sensitivities of
  these  items,  and  projects  their  behavior  over an extended  period of time.
  Finally,  income simulation permits management to assess the probable effects on
  the balance  sheet not only of changes in interest  rates,  but also of proposed
  strategies for responding to them.
  
  The Company's  income  simulation  model analyzes  interest rate  sensitivity by
  projecting net income over the next 24 months in a flat rate scenario versus net
  income in alternative  interest rate scenarios.  Management  continually reviews
  and  refines  its  interest  rate risk  management  process in  response  to the
  changing   economic   climate.   Currently,   the  Company's  model  projects  a
  proportionate  200 basis point change during the next year, with rates remaining
  constant in the second year.  The  Company's  ALCO policy has  established  that
  interest income  sensitivity will be considered  acceptable if net income in the
  above  interest  rate  scenario  is  within  15% of net  income in the flat rate
  scenario in the first year and within 30% over the two year time frame.  At June
  30, 1999,  the  Company's  income  simulation  model  indicates net income would
  increase  by 0.70% and  decrease  by 6.04% in the first year and over a two year
  time frame, respectively,  if rates decreased as described above, as compared to
  a decrease of 2.74% and 8.06%, respectively, at June 30, 1998. At June 30, 1999,
  the model  projects  that net income  would  decrease  by 4.38% and 2.76% in the
  first year and over a two year time frame,  respectively,  if rates increased as
  described above, as compared to a decrease of 2.85% and 2.81%, respectively,  at
  June 30,  1998.  All of these net income  projections  are within an  acceptable
  level of interest rate risk pursuant to the policy established by ALCO.
  
  In the event the Company's  interest rate risk models  indicate an  unacceptable
  level of risk, the Company could undertake a number of actions that would reduce
  this risk,  including the sale of a portion of its available for sale portfolio,
  the use of risk  management  strategies such as interest rate swaps and caps, or
  the extension of the maturities of its short-term borrowings.
  
  Management  also  monitors  interest  rate risk by  utilizing a market  value of
  equity model. The model assesses the impact of a change in interest rates on the
  market value of all the  Company's  assets and  liabilities,  as well as any off
  balance  sheet items.  The model  calculates  the market value of the  Company's
  assets and liabilities in excess of book value in the current rate scenario, and
  then  compares the excess of market value over book value given an immediate 200
  basis point change in rates.  The Company's ALCO policy indicates that the level
  of interest  rate risk is  unacceptable  if the immediate 200 basis point change
  would  result in the loss of 60% or more of the excess of market value over book
  value in the current rate scenario. At June 30, 1999, the market value of equity
  model indicates an acceptable level of interest rate risk.
  
  Liquidity  involves the Company's ability to raise funds to support asset growth
  or decrease assets to meet deposit  withdrawals  and other  borrowing  needs, to
  maintain reserve requirements and to otherwise operate the Company on an ongoing
  basis.  The  Company's  liquidity  needs  are  primarily  met by  growth in core
  deposits,  its  cash  and  federal  funds  sold  position,  cash  flow  from its
  amortizing  investment  and loan  portfolios,  as well as the use of  short-term
  borrowings, as required.
  
                                         8
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Short-Term Borrowings
  
  Short-term borrowings,  or other borrowed money, consist primarily of securities
  sold under agreements to repurchase and overnight lines of credit,  and are used
  to meet  short term  funding  needs.  At June 30,  1999,  short-term  borrowings
  aggregated $244.6 million and had an average rate of 5.43%, as compared to $27.8
  million at an average rate of 4.98% at December 31, 1998.
  
  Interest Earning Assets
  
  For the six month period ended June 30, 1999,  interest earning assets increased
  $427.4 million from $4.91 billion to $5.35 billion.  This increase was primarily
  in investment securities and the loan portfolio as described below.
  
  Loans
  
  During the first six months of 1999,  loans increased  $405.7 million from $2.25
  billion to $2.65  billion.  At June 30,  1999,  loans  represented  51% of total
  deposits and 45% of total assets. All segments of the loan portfolio experienced
  growth in the first six months of 1999,  including  loans  secured by commercial
  real estate properties, commercial loans, and consumer loans.
  
  Investments
  
  In total, for the first six months of 1999,  securities  increased $42.2 million
  from $2.61 billion to $2.65 billion.  Deposit  growth and other funding  sources
  were used to increase the Company's investment portfolio. The available for sale
  portfolio  increased $220.3 million to $1.53 billion at June 30, 1999 from $1.31
  billion at December  31, 1998,  and the  securities  held to maturity  portfolio
  decreased $198.5 million to $1.02 billion at June 30, 1999 from $1.22 billion at
  year-end 1998. In connection with the  acquisitions of CFBC and PFC,  management
  reclassified  $91.0  million of investment  securities  from held to maturity to
  available for sale during the first quarter of 1999.  Unrealized losses on those
  securities  transferred  were  approximately  $330  thousand.  The  portfolio of
  trading securities  increased $20.4 million from year-end 1998 to $105.8 million
  at June 30, 1999. At June 30, 1999, the average life of the investment portfolio
  was  approximately  4.4 years, and the duration was  approximately 3.4 years. At
  June 30, 1999, total securities represented 45% of total assets.
  
  Net Income
  
  Net income for the second quarter of 1999 was $16.0 million, an increase of $2.5
  million or 18% over the $13.5 million  recorded for the second  quarter of 1998.
  Net income for the first six months of 1999 was $31.5  million,  an  increase of
  $5.2 million or 20% over the $26.3  million  recorded in the first six months of
  1998.  On a per share basis,  diluted net income for the second  quarter of 1999
  and the first six months of 1999 were $0.56 and $1.10 per common share  compared
  to $0.48 and $.94 per common share for the respective 1998 periods.
  
  Return on average assets (ROA) and return on average equity (ROE) for the second
  quarter  of 1999 were  1.11% and  18.98%,  respectively,  compared  to 1.14% and
  17.65%,  respectively,  for the same 1998 period.  ROA and ROE for the first six
  months of 1999 were 1.12% and 18.87%, respectively, compared to 1.14% and 17.57%
  a year ago.
  
  Net Interest Income
  
  Net interest  income  totaled $59.8  million for the second  quarter of 1999, an
  increase  of $11.7  million or 24% from $48.1  million in the second  quarter of
  1998.  Net  interest  income  for the first six  months of 1998  totaled  $115.0
  million,  up $22.3  million  or 24% from  the  first  six  months  of 1998.  The
  improvement in net interest  income for both periods was due primarily to volume
  increases in the loan and investment portfolios.
  
                                         9
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Noninterest Income
  
  Noninterest  income  totaled  $27.5  million for the second  quarter of 1999, an
  increase  of $4.8  million  or 21% from $22.6  million in the second  quarter of
  1998. The increase was due primarily to increased other operating income,  which
  rose $3.4  million  over the prior year,  including  increased  revenues of $2.4
  million from Commerce Insurance,  the Company's insurance brokerage  subsidiary,
  and $800  thousand  from CCMI.  In  addition,  deposit  charges and service fees
  increased  $2.0 million over the second  quarter of 1998 primarily due to higher
  transaction  volumes.  The Company also recorded $400 thousand in net investment
  securities  gains in the second  quarter of 1999, as compared to $920 thousand a
  year ago.
  
  For the first six months of 1999,  noninterest income totaled $55.2 million,  an
  increase of $11.1  million or 25% from $44.1  million in the first six months of
  1998.  Other  operating  income rose $7.5  million  over the first six months of
  1998,  including  increased revenues of $4.5 million from Commerce Insurance and
  $2.3 million from CCMI.  Deposit charges and service fees rose $3.2 million over
  the prior year  primarily  due to higher  transaction  volumes,  and the Company
  recorded $1.3 million in net investment securities gains in the first six months
  of 1999 as compared to $929 thousand a year ago.
  
  Noninterest Expense
  
  For the second quarter of 1999,  noninterest  expense totaled $61.0 million,  an
  increase of $13.1 million or 27% over the same period in 1998.  Contributing  to
  this  increase was new branch  activity  over the past twelve  months,  with the
  number of branches  increasing from 89 at June 30, 1998 to 104 at June 30, 1999,
  and the growth of Commerce  Insurance  and CCMI.  With the addition of these new
  offices,  staff,  facilities,  and  related  expenses  rose  accordingly.  Other
  noninterest  expenses  rose $3.1 million over the second  quarter of 1998.  This
  increase  resulted  primarily  from higher bank  card-related  service  charges,
  increased  business   development   expenses,   and  increased   provisions  for
  non-credit-related losses.
  
  For the first six months of 1999, noninterest expense totaled $118.5 million, an
  increase of $25.7  million or 28% over $92.8  million in the first six months of
  1998.  Contributing  to this increase was new branch  activity and the growth of
  Commerce National and CCMI as noted above. Other noninterest  expenses rose $5.5
  million over the first six months of 1998. This increase resulted primarily from
  higher  bank  card-related  service  charges,   increased  business  development
  expenses, and increased provisions for non-credit-related losses.
  
  The Company's operating efficiency ratio (noninterest expenses,  less other real
  estate expense, divided by net interest income plus noninterest income excluding
  non-recurring  gains) was 69.56% for the first six months of 1999 as compared to
  67.67% for the same 1998 period.  The Company's  efficiency  ratio remains above
  its peer group primarily due to its aggressive growth expansion activities.
  
  Loan and Asset Quality
  
  Total  non-performing  assets  (non-performing  loans  and  other  real  estate,
  excluding  loans past due 90 days or more and still  accruing  interest) at June
  30, 1999 were $13.4 million,  or 0.23% of total assets compared to $14.7 million
  or 0.27% of total  assets at  December  31,  1998 and $14.8  million or 0.30% of
  total assets at June 30, 1998.
  
  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,  1999
  were $9.3  million or 0.34% of total loans  compared to $8.6 million or 0.38% of
  total  loans at December  31,  1998 and $9.1  million or 0.47% of total loans at
  June  30,  1998.  At June 30,  1999,  loans  past due 90 days or more and  still
  accruing  interest  amounted  to $693  thousand  compared  to $945  thousand  at
  December 31, 1998 and $1.2 million at June 30, 1998. Additional loans considered
  as potential  problem  loans by the Company's  internal  loan review  department
  ($20.6  million at June 30,  1999) have been  evaluated  as to risk  exposure in
  determining the adequacy of the allowance for loan losses.
  
                                         10
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  Other real estate (ORE) at June 30, 1999  totaled $4.1 million  compared to $6.1
  million at December 31, 1998 and $5.6 million at June 30, 1998. These properties
  have been  written  down to the  lower of cost or fair  value  less  disposition
  costs.
  
  On pages 13 and 14 are tabular  presentation  showing detailed information about
  the Company's  non-performing  loans and assets and an analysis of the Company's
  allowance for loan losses and other related data for June 30, 1999, December 31,
  1998, and June 30, 1998.
  
  Year 2000
  
  The Company began the process of preparing its computer systems and applications
  for the Year 2000 in 1996. The process  involves  identifying and resolving date
  recognition  problems in computer systems and software,  and to a lesser extent,
  other operating equipment, that could be caused by the date change from December
  31, 1999 to January 1, 2000.
  
  The Company has completed its assessment of all business processes that could be
  affected by the Year 2000 issue.  Each business  process  assessment  included a
  review of the information  systems used in that process,  including hardware and
  software,  involvement of third parties, and any other operating equipment.  The
  Company licenses substantially all software used in conducting its business from
  third party  vendors.  All vendors have been  contacted  regarding the Year 2000
  issue, and the Company  continues to track the progress each vendor is making in
  reaching  Year 2000  compliance.  The Company is also working  with  significant
  customers and counterparties to monitor their Year 2000 efforts. The Company has
  all  necessary  changes  in place and tested for all  mission  critical  systems
  (those systems defined as absolutely  essential to the daily business  operation
  of the Company).  Additionally,  the Company has completed certification testing
  with all mission  critical service  providers.  Changes for 95% of the remaining
  systems are in place and testing has been substantially  completed.  Contingency
  plans have been completed and validated.
  
  The Company believes it is taking the appropriate steps to address all Year 2000
  issues.  Despite  the  Company's  efforts to address  the Year 2000  problem and
  develop  contingency  plans  in the  event  of  Year  2000  failures,  including
  non-compliance  by third parties  (including  loan  customers),  there can be no
  assurance  that the Year 2000 issue  will not  materially  adversely  impact the
  Company's  financial  position,  results of operations,  or  relationships  with
  customers, vendors, or others.
  
  The  Company  estimates  the  total  cost of the Year 2000  compliance  process,
  including internal and external personnel and any required hardware and software
  modifications, will not exceed $1.0 million.
  
  Forward-Looking Statements
  
  The  Company  may  from  time  to time  make  written  or oral  "forward-looking
  statements",  including  statements  contained in the Company's filings with the
  Securities and Exchange Commission (including this Form 10-Q), in its reports to
  stockholders and in other communications by the Company,  which are made in good
  faith by the Company  pursuant to the "safe  harbor"  provisions  of the Private
  Securities Litigation Reform Act of 1995.
  
  These  forward-looking   statements  include  statements  with  respect  to  the
  Company's  beliefs,  plans,  objectives,  goals,  expectations,   anticipations,
  estimates  and   intentions,   that  are  subject  to   significant   risks  and
  uncertainties  and are subject to change based on various factors (some of which
  are beyond the Company's control). The words "may", "could", "should",  "would",
  believe",  "anticipate",  "estimate",  "expect",  "intend",  "plan" and  similar
  expressions are intended to identify forward-looking  statements.  The following
  factors, among others, could cause the Company's financial performance to differ
  materially from that expressed in such forward-looking  statements: the strength
  of the United States economy in general and the strength of the local  economies
  in which the Company conducts operations; the effects of, and changes in, trade,
  monetary and fiscal policies,  including  interest rate policies of the Board of
  Governors of the Federal Reserve System (the "FRB"); inflation;  interest rates,
  market and monetary  fluctuations;  the timely  development of  competitive  new
  products and  services by the Company and the  acceptance  of such  products and
  services by customers;  the willingness of customers to substitute  competitors'
  products and services  for the  Company's  products and services and vice versa;
  the impact of changes in financial  services'  laws and  regulations  (including
  laws  concerning  taxes,  banking,  securities  and  insurance);   technological
  changes; future acquisitions;  the
  
                                         11
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  expense  savings  and revenue  enhancements  from  acquisitions  being less than
  expected;  the growth and  profitability  of the  Company's  noninterest  or fee
  income  being  less  than   expected;   unanticipated   regulatory  or  judicial
  proceedings;  changes in consumer spending and saving habits; and the success of
  the Company at managing the risks involved in the foregoing.
  
  The  Company  cautions  that the  foregoing  list of  important  factors  is not
  exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
  statement,  whether written or oral, that may be made from time to time by or on
  behalf of the Company.
  
                                         12
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1999 and the preceding four quarters:  (dollar  amounts in
  thousands)
  June 30,      March 31,    December 31,   September 30,    June 30,
                                                       1999           1999          1998            1998          1998
                                               --------------------------------------------------------------------------
  Non-accrual loans:
  Commercial                                       $3,104        $2,821         $2,466         $2,417          $2,021
     Consumer                                            787           846            831            782             851
     Real estate:
       Construction                                      115           115            189            587             603
       Mortgage                                        5,144         4,937          4,849          4,631           5,500
                                               --------------------------------------------------------------------------
           Total non-accrual loans                     9,150         8,719          8,335          8,417           8,975
                                               --------------------------------------------------------------------------
  
  Restructured loans:
     Commercial                                           16            16             17             17              18
     Consumer
     Real estate:
       Construction
       Mortgage                                          110           117            217            104             109
                                               --------------------------------------------------------------------------
           Total restructured loans                      126           133            234            121             127
                                               --------------------------------------------------------------------------
  
  Total non-performing loans                           9,276         8,852          8,569          8,538           9,102
                                               --------------------------------------------------------------------------
  
  Other real estate                                    4,118         5,645          6,081          5,409           5,649
                                               --------------------------------------------------------------------------
  
  Total non-performing assets                         13,394        14,497         14,650         13,947          14,751
                                               --------------------------------------------------------------------------
  
  Loans past due 90 days or more
     and still accruing                                  693           696            945          2,622           1,187
                                               --------------------------------------------------------------------------
  
  Total non-performing assets and
     loans past due 90 days or more                  $14,087       $15,193        $15,595        $16,569         $15,938
                                               ==========================================================================
  
  Total non-performing loans as a
     percentage of total period-end loans              0.34%         0.36%          0.38%          0.41%           0.47%
  
  Total non-performing assets as a
     percentage of total period-end assets             0.23%         0.26%          0.27%          0.27%           0.30%
  
  Total non-performing assets and loans
     past due 90 days or more as a
     percentage of total period-end assets             0.24%         0.27%          0.29%          0.33%           0.32%
  
  Allowance for loan losses as a percentage
     of total non-performing loans                      376%          374%           365%           332%            293%
  
  Allowance for loan losses as a percentage
     of total period-end loans                         1.30%         1.34%          1.37%          1.36%           1.36%
  
  Total non-performing assets and loans
     past due 90 days or more as a
     percentage of stockholders' equity and
     allowance for loan losses                            4%            4%             4%             5%              5%
  13
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  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
                                                                 06/30/99           06/30/98           12/31/98
                                                                -----------        -----------         ----------
  Balance at beginning of period                                   $31,265            $24,150            $24,150
  Provisions charged to operating expenses                           4,458              3,388              8,762
                                                                -----------        -----------         ----------
                                                                    35,723             27,538             32,912
  
  Recoveries on loans charged-off:
  Commercial                                                           366                173                418
  Consumer                                                             119                191                305
  Real estate                                                           68                 18                764
                                                                -----------        -----------         ----------
  Total recoveries                                                     553                382              1,487
  
  Loans charged-off:
  Commercial                                                          (877)              (338)            (1,281)
  Consumer                                                            (454)              (667)            (1,352)
  Real estate                                                          (77)              (265)              (501)
                                                                -----------        -----------         ----------
  Total charge-offs                                                 (1,408)            (1,270)            (3,134)
                                                                -----------        -----------         ----------
  Net charge-offs                                                     (855)              (888)            (1,647)
                                                                -----------        -----------         ----------
  
  Balance at end of period                                         $34,868            $26,650            $31,265
                                                                ===========        ===========         ==========
  
  Net charge-offs as a percentage of
  average loans outstanding                                           0.07%              0.10%              0.08%
  Item 3:  Quantitative and Qualitative Disclosures About Market Risk
  
  See Item 2 -  Management's  Discussion  and Analysis of Financial  Condition and
  Results of Operation, Interest Rate Sensitivity and Liquidity.
  
                                         14
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  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 May 25, 1999.  The only item of business  acted upon at the
                    Annual  Meeting was the election of 12 directors  for one year
                    terms. The number of votes cast for, against, or withheld, was
                    as follows:
  
                    (i)     Election of directors:
  Name of                                                 (Withhold Authority)
                    Nominee                          For                          Against
                    -------                          ---                          -------
  Vernon W. Hill, II           24,050,683                        92,791
                    C. Edward Jordan, Jr.        24,051,565                        91,909
                    David Baird, IV              24,064,076                        79,398
                    Robert C. Beck               23,988,092                       155,382
                    Jack R Bershad               23,981,932                       161,542
                    Joseph M. Buckelew           24,040,529                       102,945
                    Morton N. Kerr               24,044,719                        98,755
                    Steven M. Lewis              24,050,313                        93,161
                    Daniel J. Ragone             24,054,243                        89,231
                    William A. Schwartz, Jr.     24,064,834                        78,640
                    Joseph T. Tarquini, Jr       24,064,939                        78,535
                    Frank C. Videon, Sr.         24,052,008                        91,466
  Item 6.           Exhibits and Reports on Form 8-K
  
                    No reports on Form 8-K were filed during the second quarter
                    ended June 30, 1999.
  
                                         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)
  
        August 12, 1999                       /s/ THOMAS J. SUKAY
            (Date)                              THOMAS J. SUKAY
                                               SENIOR VICE PRESIDENT
                                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
  
                                         16