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, 1995
  
                                         OR
  
  ( )  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
       EXCHANGE ACT OF 1934
  
  
                  For the transition period from ______ to ______
  
  
                              Commission File #0-12874
  
  
                               COMMERCE BANCORP, INC.
               (Exact name of registrant as specified in its charter)
  
  
                     New Jersey                              22-2433468
           (State or other jurisdiction of         (IRS Employer Identification
           incorporation or organization)                     Number)
  
  
      Commerce Atrium, 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400
                (Address of Principal Executive Offices) (Zip Code)
  
  
                                   (609) 751-9000
                (Registrant's telephone number, including area code)
  
  
  Indicate by check mark whether the registrant (1) has filed all reports required
  to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
  the  preceding 12 months (or for such  shorter  period that the  registrant  was
  required  to file  such  report(s),  and (2) has  been  subject  to such  filing
  requirements for the past 90 days.
  
                             Yes __X__    No ____
  
  <PAGE>
  
  
                       APPLICABLE ONLY TO CORPORATE ISSUERS:
  
  
  Indicate the number of shares  outstanding  of each of the  issuer's  classes of
  common stock, as of the last practical date.
  
  
           Common Stock                                       10,628,135
         (Title of Class)                             (No. of Shares Outstanding
                                                            as of 08/04/95)
  
  
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                                   417,000
           (Title of Class)                           (No. of Shares Outstanding
                                                             as of 08/04/95)
  
  
  <PAGE>
  
  
                      COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  
  
  
                                       INDEX
  
  
  
                                                                              Page
  
  
  PART I.    FINANCIAL INFORMATION
  
  Item 1.    Financial Statements
  
             Consolidated Balance Sheets (Unaudited)
                       June 30, 1995 and December 31, 1994 .....................4
  
             Consolidated Statements of Income (Unaudited) 
                       Three months ended June 30,  1995 
                       and June 30, 1994 and six months
                       ended June 30, 1995 and June 30, 1994 ...................5
  
             Consolidated Statements of Cash Flows (Unaudited)
                       Six months ended June 30, 1995 and
                       June 30, 1994 ...........................................6
  
             Notes to Consolidated Financial Statements (Unaudited) ............7
  
  Item 2.    Management's Discussion and Analysis of Financial
                       Condition and Results of Operation ......................9
  
  PART II.   OTHER INFORMATION
  
  Item 4.    Submission of Matters to a Vote of Security Holders ..............17
  
  Item 6.    Exhibits and Reports on Form 8-K .................................18
  
  
  
  <PAGE>
  
                      Commerce Bancorp, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                                    (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                                    June 30,     December 31,
  (dollars in thousands)                                                                 1995          1994
  <S>                                                                             <C>           <C>
  Assets
        Cash and due from banks                                                    $  126,169    $  119,697
              Federal funds sold                                                       50,500         9,750
                                                                                   ----------    ----------
                     Cash and cash equivalents                                        176,669       129,447
              Mortgages held for sale                                                   3,112         2,263
              Securities available for sale                                           116,498       118,855
              Securities held to maturity:
                      U.S. Government agency mortgage-backed obligations            1,077,658     1,113,359
                      Collateralized mortgage obligations                               1,951         2,390
                      Obligations of state and political subdivisions                   2,379           565
                      Other securities                                                 30,066        28,819
                                                                                   ----------    ----------
                        Total securities held to maturity
                         (market value 1995-$1,080,206; 1994-$1,039,311)            1,112,054     1,145,133
              Trading securities                                                       13,813
              Loans                                                                   850,597       801,952
                      Less allowance for loan losses                                   13,084        12,036
                                                                                   ----------    ----------
                                                                                      837,513       789,916
              Bank premises and equipment, net                                         64,589        57,997
              Other assets                                                             45,992        47,679
                                                                                   ----------    ----------
                                                                                   $2,370,240    $2,291,290
                                                                                   ==========    ==========
  
  Liabilities
              Deposits:
                      Demand:
                        Interest-bearing                                           $  597,131    $  510,345
                        Noninterest-bearing                                           389,435       367,421
                      Savings                                                         481,348       488,282
                      Time                                                            689,392       468,524
                                                                                   ----------    ----------
                        Total deposits                                              2,157,306     1,834,572
              Other borrowed money                                                     34,106       312,895
              Other liabilities                                                           454         3,565
              Obligation to Employee Stock Ownership Plan (ESOP)                        4,872         5,385
              Long-term debt                                                           23,000        23,000
                                                                                   ----------    ----------
                                                                                    2,219,738     2,179,417
  
  Stockholders'
  Equity
              Common stock, 10,702,887 shares issued (8,889,506 shares in 1994)        16,723        13,234
                Series C preferred stock, 417,000 shares authorized, issued and
                outstanding (liquidating preference: $18.00 per share totaling
  $             7,506)                                                                  7,506         7,506
              Capital in excess of par or stated value                                111,463        80,033
              Retained earnings                                                        21,306        17,757
                                                                                   ----------    ----------
                                                                                      156,998       118,530
              Less commitment to ESOP                                                   4,872         5,385
              Less treasury stock, at cost, 100,159 common shares
                in 1995 (79,520 in 1994)                                                1,624         1,272
                                                                                   ----------    ----------
                           Total stockholders' equity                                 150,502       111,873
  
                                                                                   ----------    ----------
                                                                                   $2,370,240    $2,291,290
                                                                                   ==========    ==========
  </TABLE>
  
  See accompanying notes
  
                                        -4-
  
  
  
  
  <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)             1995       1994       1995        1994
  <S>                                                                    <C>        <C>        <C>         <C>
  Interest income
               Interest and fees on loans                                  $19,670    $15,728    $38,349    $31,003
               Interest on investments                                      20,783     20,658     41,865     38,648
               Other interest                                                1,141        169      1,797        411
                                                                           -------    -------    -------    -------
                    Total interest income                                   41,594     36,555     82,011     70,062
                                                                           -------    -------    -------    -------
  
  Interest expense
               Interest on deposits:
                  Demand                                                     3,878      2,322      7,286      4,495
                  Savings                                                    2,795      2,981      5,481      5,879
                  Time                                                       8,627      4,678     15,537      9,584
                                                                           -------    -------    -------    -------
                    Total interest on deposits                              15,300      9,981     28,304     19,958
               Interest on other borrowed money                              2,132      3,445      6,159      5,737
               Interest on long-term debt                                      506        506      1,012      1,012
                                                                           -------    -------    -------    -------
                    Total interest expense                                  17,938     13,932     35,475     26,707
                                                                           -------    -------    -------    -------
  
               Net interest income                                          23,656     22,623     46,536     43,355
               Provision for loan losses                                       388      1,060      1,245      2,110
                                                                           -------    -------    -------    -------
               Net interest income after provision for
                 loan losses                                                23,268     21,563     45,291     41,245
  
  Noninterest income
               Deposit charges and service fees                              3,778      3,433      7,462      6,895
               Other operating income                                        1,019        790      1,928      1,557
               Net investment securities gains                                  18                    18
                                                                           -------    -------    -------    -------
                    Total noninterest income                                 4,815      4,223      9,408      8,452
                                                                           -------    -------    -------    -------
  
  Noninterest expense
               Salaries                                                      6,347      5,524     12,599     10,909
               Benefits                                                      1,789      1,603      3,648      3,203
               Occupancy                                                     1,997      2,024      3,937      3,805
               Furniture and equipment                                       2,409      2,059      4,555      3,856
               Office                                                        1,710      1,465      3,343      2,873
               Audit and regulatory fees and assessments                     1,240      1,172      2,481      2,347
               Marketing                                                       669        707      1,326      1,246
               Other real estate (net)                                         593        655      1,291      1,455
               Other                                                         2,157      2,243      4,110      4,391
                                                                           -------    -------    -------    -------
                    Total noninterest expenses                              18,911     17,452     37,290     34,085
                                                                           -------    -------    -------    -------
  
               Income before income taxes                                    9,172      8,334     17,409     15,612
               Provision for federal and state income taxes                  3,356      3,045      6,350      5,686
                                                                           -------    -------    -------    -------
               Net income                                                    5,816      5,289     11,059      9,926
  
               Dividends on preferred stocks                                   140        393        281        786
                                                                           -------    -------    -------    -------
               Net income applicable to common stock                       $ 5,676    $ 4,896    $10,778    $ 9,140
                                                                           =======    =======    =======    =======
  
               Net income per common and common equivalent share:
                  Primary                                                  $  0.52    $  0.61    $  1.03    $  1.14
                                                                           -------    -------    -------    -------
                  Fully diluted                                            $  0.50    $  0.54    $  1.00    $  1.02
                                                                           -------    -------    -------    -------
               Average common and common equivalent shares outstanding:
                  Primary                                                   10,848      8,063     10,396      8,024
                                                                            ------      -----     ------      -----
                  Fully diluted                                             11,461      9,616     11,018      9,603
                                                                            ------      -----     ------      -----
               Cash dividends declared, common stock                       $  0.16    $  0.14    $  0.31    $  0.28
                                                                           =======    =======    =======    =======
  </TABLE>
  
  
                                        -5-
  
  <PAGE>
                      Commerce Bancorp, Inc. And Subsidiaries
                       Consolidated Statements of Cash Flows
                                    (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                                      Six Months Ended June 30,
                 (dollars in thousands)                                                  1995           1994
  <S>                                                                               <C>            <C>
  Operating 
  activities
                  Net income                                                           $  11,059     $   9,926
                  Adjustments to reconcile net income to net cash (used)
                    provided by operating activities:
                      Provision for loan losses                                            1,245         2,110
                      Provision for depreciation, amortization and accretion               6,333         9,596
                      Proceeds from sales of mortgages held for sale                       7,291        65,667
                      Originations of mortgages held for sale                             (8,140)      (26,232)
                      Net loan (chargeoffs)                                                 (197)       (1,127)
                      Net increase in trading securities                                 (13,813)
                      Increase in other assets                                              (816)       (1,810)
                      Decrease in other liabilities                                       (3,111)      (17,779)
                                                                                       ---------     ---------
                                   Net cash (used) provided by operating activities         (149)       40,351
  
  Investing
  activities
                  Proceeds from the maturity of securities available for sale              8,056        26,839
                  Proceeds from the maturity of securities held to maturity               35,028        92,139
                  Purchase of securities available for sale                                 (312)
                  Purchase of securities held to maturity                                 (3,741)     (345,975)
                  Net increase in loans                                                  (51,029)      (42,948)
                  Proceeds from sales of loans                                             2,384         2,278
                  Purchases of premises and equipment                                    (10,294)       (7,606)
                                                                                       ---------     ---------
                                   Net cash (used) by investing activities               (19,908)     (275,273)
  
  Financing
  activities
                  Net increase in demand and savings deposits                            101,866        61,894
                  Net increase (decrease)  in time deposits                              220,868       (31,594)
                  Net (decrease) increase in other borrowed money                       (278,789)      228,210
                  Issuance of common stock                                                25,774
                  Dividends paid                                                          (3,376)       (2,946)
                  Proceeds from issuance of common stock under
                    dividend reinvestment and other stock plans                            1,190         1,041
                  Purchase of treasury stock                                                (352)         (117)
                  Other                                                                       98            98
                                                                                       ---------     ---------
                                   Net cash provided by financing activities              67,279       256,586
  
                  Increase  in cash and cash equivalents                                  47,222        21,664
                  Cash and cash equivalents at beginning of year                         129,447       105,725
                                                                                       ---------     ---------
                  Cash and cash equivalents at end of period                           $ 176,669     $ 127,389
                                                                                       ---------     ---------
  
                  Supplemental disclosures of cash flow
                    information: Cash paid during the period for:
                       Interest                                                        $  35,475       $25,063
                       Income taxes                                                        7,088         5,754
                                                                                       ---------     ---------
  </TABLE>
  
  
                                        -6-
  
  <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.   These  condensed
           consolidated  financial  statements  should be read in conjunction with
           the audited financial  statements and the notes thereto included in the
           registrant's  Annual Report for the period ended December 31, 1994. The
           results  for the three  months  ended  June 30,  1995,  and for the six
           months  ended  June 30,  1995  are not  necessarily  indicative  of the
           results that may be expected for the year ended December 31, 1995.
  
                    The consolidated  financial statements include the accounts of
           Commerce  Bancorp,  Inc. (the  "Company") and all of its  subsidiaries,
           including    Commerce   Bank,   N.A.    ("Commerce    NJ"),    Commerce
           Bank/Pennsylvania,  N.A.  and  Commerce  Bank/Shore,  N.A. All material
           intercompany  transactions  have been eliminated.  Certain amounts from
           1994 have been reclassified to conform with 1995 presentation.
  
  B.       Commitments
  
                    In  the  normal   course  of   business,   there  are  various
           outstanding commitments to extend credit, such as letters of credit and
           unadvanced   loan   commitments,   which  are  not   reflected  in  the
           accompanying  consolidated  financial  statements.  Management does not
           anticipate any material losses as a result of these transactions.
  
  C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
                    The Company has  guaranteed a debt  obligation of its Employee
           Stock  Ownership Plan ("ESOP")  which  originated at $7,500,000 and has
           been reduced to $4,872,000 through principal  reductions.  Accordingly,
           the loan amount is  reflected  in the  Company's  consolidated  balance
           sheet  as a  liability  and  an  equal  amount,  representing  deferred
           employee benefits,  has been recorded as a deduction from stockholders'
           equity.  The ESOP  obtained  the loan in 1990 to acquire a new class of
           Company Cumulative Convertible Preferred Stock (Series C) at a price of
           $18.00 per share.  The loan was  refinanced in 1994,  and is payable in
           quarterly installments with the final payment due January 28, 2000. The
           loan bears interest at a variable rate,  although the rate can be fixed
           at 
  
                                        -7-
  
  <PAGE>
  
           future  repricing dates in accordance  with the loan agreement.  As the
           Company makes annual  contributions to the ESOP,  these  contributions,
           plus dividends from the Company's  Series C Preferred Stock held by the
           ESOP, will be used to repay the loan.
  
  
  D.       Issuance of Common Stock
  
                    On February 15, 1995, the Company  publicly  issued  1,725,000
           shares of common  stock.  Net proceeds to the Company were  $25,774,000
           after deducting expenses of $1,826,000.  The proceeds are earmarked for
           general  corporate  purposes,  including  providing  additional  equity
           capital to the  Company's  bank  subsidiaries  to support the Company's
           branch expansion growth strategy.
  
                                        -8-
  
  <PAGE>
  
  
  Item 2.  Management's  Discussion  and Analysis of Financial  Condition  and
           Results of Operation Capital Resources
  
                    At June 30, 1995,  stockholders' equity totaled $150.5 million
           or 6.35% of total assets,  compared to $111.9 million or 4.88% of total
           assets at December 31, 1994. On February 15, 1995,  the Company  issued
           1,725,000  shares of common  stock,  resulting in net proceeds of $25.8
           million.
  
                    The table below  presents a comparison  of the  Company's  and
           each of its three  bank  subsidiaries  risk-based  capital  ratios  and
           leverage ratios to the minimum regulatory  requirements for the periods
           indicated.
  
  <TABLE>
  <CAPTION>
                                                                                                          Capital
                                                                                                          Excess
                                                                                        Minimum            as of
                                                  June 30,            June 30,        Regulatory         June 30,
                                                    1995                1994         Requirements          1995
                                                    ----                ----         ------------          ----
                                                                                                      (in thousands)
  <S>                                             <C>              <C>              <C>               <C> 
           Company
                  Risk based capital ratios:
                    Tier 1                          12.62%              9.60%          4.00%             $98,650
                    Total capital                   15.77              12.77           8.00               88,930
                  Leverage ratio                     6.17               4.49           3.00-5.00          74,090 (1)
  
           Commerce NJ
                  Risk based capital ratios:
                    Tier 1                          14.45%             11.17%          4.00%             $95,290
                    Total capital                   15.59              12.19           8.00               69,250
                  Leverage ratio                     6.99               5.15           3.00-5.00          75,320 (1)
  
           Commerce PA
                  Risk based capital ratios:
                    Tier 1                          12.24%             11.67%          4.00%            $  9,140
                    Total capital                   13.34              12.72           8.00                5,920
                  Leverage ratio                     6.35               5.83           3.00-5.00           7,170 (1)
  
           Commerce Shore Risk based capital 
             ratios:
                    Tier 1                          12.39%             13.44%          4.00%             $10,760
                    Total capital                   13.49              14.70           8.00                7,050
                  Leverage ratio                     6.08               6.26           3.00-5.00           8,050 (1)
  <FN>
           (1) Based on a minimum regulatory requirement of 3.00%
  </FN>
  </TABLE>
  
                  At June 30, 1995, 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%.
  
                                        -9-
  <PAGE>
  
           Deposits
  
                    Total deposits at June 30, 1995 were $2.16 billion,  up $382.1
           million,  or 22% over total deposits of $1.78 billion at June 30, 1994,
           and up by $322.7  million,  or 18% from year-end  1994.  Deposit growth
           during the first six months of 1995 was largely from the public sector,
           supported  by growth in core  deposits,  particularly  savings and time
           deposits.
  
           Interest Rate Sensitivity and Liquidity
  
                    An interest  rate  sensitive  asset or  liability is one that,
           within a defined time period, either matures or experiences an interest
           rate change in line with general market interest  rates.  Historically,
           the most common method of estimating  interest rate risk was to measure
           the  maturity  and  repricing  relationships  between  interest-earning
           assets and  interest-bearing  liabilities  at  specific  points in time
           ("GAP"), typically one year. Under this method, a company is considered
           liability sensitive when the amount of its interest-bearing liabilities
           exceeds the amount of its  interest-earning  assets within the one year
           horizon.  The  following  table  illustrates  the GAP  position  of the
           Company as of June 30, 1995:
  
  <TABLE>
  <CAPTION>
                                                              1-90      91-180      181-365     1-5     Beyond
                                                              Days       Days        Days      Years    5 Years    Total
  <S>                                                     <C>          <C>        <C>       <C>       <C>        <C>
           Rate Sensitive:
           Interest-earning assets
             Loans                                           $ 437         $13        $27      $246       $120    $   843
             Investment securities                              46          32         73       397        694      1,242
             Federal funds sold                                 51                                                     51
                                                            ------      ------      -----     -----      -----      -----
           Total interest-earning assets                       534          45        100       643        814      2,136
                                                            ------      ------      -----     -----      -----      -----
           Interest-bearing liabilities
             Deposits
                Transaction accounts                           347                                         731      1,078
                Time                                           341          67        145       124         13        690
             Other borrowed money                               34                                                     34
             Long-term debt                                                                                 23         23
                                                            ------      ------      -----     -----      -----      -----
           Total interest-bearing liabilities                  722          67        145       124        767      1,825
                                                            ------      ------      -----     -----      -----      -----
  
           Period GAP                                         (188)        (22)       (45)      519         47     $  311
                                                            ------      ------      -----     -----      -----      -----
           Cumulative GAP                                   $ (188)      $(210)     $(255)    $ 264       $311
                                                            =======      ======     ======    =====       ====
  </TABLE>
  
  
           The  Company's  negative GAP position  has been  significantly  reduced
           during the first six months of 1995, primarily through the reduction in
           the balance of short-term  borrowings  from $312.9  million at December
           31, 1994 to $34.1 million at June 30, 1995.
  
                    Management   utilizes   additional  tools,   including  income
           simulation  analysis,  which  provide  a  more  meaningful  measure  of
           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.
  
                                        -10-
  
  <PAGE>
  
                    The Company's  income  simulation model is used to predict the
           impact on net interest  income of a 200 basis point increase in general
           market interest rates over the next twelve months.  The Company's Asset
           Liability  Committee  has  determined  that  in  the  current  economic
           environment, as much as a 5% decrease in net interest income over a two
           year period  compared to projected  net interest  income in a flat rate
           scenario is an  acceptable  level of interest  rate risk.  Based on its
           interest rate sensitivity  analysis prepared as of June 30, 1995, it is
           projected  that net interest  income would be reduced by  approximately
           1.6% over the next two years as a result of a 200 basis point  increase
           in general market  interest rates  occurring  proportionately  over the
           next twelve months.
  
                    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.  In  order  to  reduce  the
           potential  impact  from a dramatic  increase  in  interest  rates,  the
           Company  entered into  interest-rate  cap  agreements  during the first
           quarter of 1995.  The strike price of the  agreements  exceeds  current
           market interest rates. The agreements are for a notional amount of $200
           million for a period of two years.
  
                    Liquidity  involves  the  Company's  ability to raise funds to
           support asset growth or decrease assets to meet deposit withdrawals and
           other  borrowing  needs,  to  maintain  reserve   requirements  and  to
           otherwise  operate  the  Company on an  ongoing  basis.  The  Company's
           liquidity  needs  are met by  growth  in core  deposits,  its  cash and
           federal funds sold position,  cash flow from its amortizing  investment
           and loan portfolios, as well as the use of short-term borrowings.
  
           Short-Term Borrowings
  
                    Short-term   borrowings   consist  of  securities  sold  under
           agreement to repurchase.  These  borrowings  were used as an additional
           source of funding for the investment  portfolio and to fund loan growth
           during 1994.  At December 31, 1994,  short-term  borrowings  aggregated
           $312.9  million and had an average rate of 5.94%.  During the first six
           months of 1995,  the  Company  significantly  reduced  its  outstanding
           short-term  borrowings,  primarily through increased deposits.  At June
           30, 1995,  short-term  borrowings  aggregated  $34.1 million and had an
           average rate of 5.65%.
  
           Interest Earning Assets
  
                    For the six month period ended June 30, 1995, interest earning
           assets  increased  $68.6 million from $2.07  billion to $2.15  billion.
           This increase was primarily in the loan portfolio which increased $48.6
           million.
  
           Loans
  
                    During the first six  months of 1995,  loans  increased  $48.6
           million from $802.0 million to $850.6 million.  At June 30, 1995, loans
           represented 39% of total deposits and 36% of total assets.
  
                                        -11-
  
  <PAGE>
  
                    The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                  During the first six months of 1995, total securities  decreased
           $21.6  million  from  $1.26  billion to $1.24  billion,  as a result of
           payments  on  the  existing  portfolio.   For  the  six  month  period,
           securities  available for sale  decreased from $118.9 million to $116.5
           million,  and securities held to maturity  decreased from $1.15 billion
           to $1.11 billion.  Trading  securities  increased to $13.8 million as a
           result of the  establishment  of Commerce  Capital,  a bank  securities
           dealer department of Commerce NJ. At June 30, 1995, the average life of
           the investment portfolio is approximately 7.7 years.
  
                    Short-term  investments  (Federal funds sold)  increased $40.7
           million from $9.8  million to $50.5  million.  At June 30, 1995,  total
           securities  and  Federal  funds  sold  aggregated   $1.29  billion  and
           represented 55% of total assets.
  
           Net Income
  
                    Net income for the second quarter of 1995 was $5.8 million, an
           increase of $527 thousand over the $5.3 million recorded for the second
           quarter of 1994.  Net income for the first six months of 1995 was $11.1
           million,  an increase of $1.2 million over the $9.9 million recorded in
           the first six months of 1994.  These increases were due to increases in
           net  interest  income,  as well as  reduced  loan loss  provisions  and
           increases  in  noninterest   income  which  offset  increased  overhead
           expenses. On a per share basis, fully-diluted net income for the second
           quarter  of 1995 and for the six months of 1995 were $.50 and $1.00 per
           common  share  compared  to $.54 and  $1.02  per  common  share for the
           respective 1994 periods. Net income per share for the second quarter of
           1995 and for the first six months of 1995 were impacted by the issuance
           of 1,725,000 shares of common stock via an underwritten public offering
           in the first quarter of 1995.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  second   quarter  of  1995  were  0.99%  and   16.05%,
           respectively,  compared to 0.94% and 20.36%, respectively, for the same
           1994  period.  ROA and ROE for the first six  months of 1995 were 0.95%
           and 16.30%, respectively, compared to 0.90% and 19.40% a year ago.
  
           Net Interest Income
  
                    Net  interest  income  totaled  $23.7  million  for the second
           quarter of 1995,  an increase of $1.1 million or 5%, from $22.6 million
           in the second  quarter of 1994.  Net interest  income for the first six
           months of 1995 totaled  $46.5  million,  up $3.2 million or 7% from the
           first six months of 1994. The  improvement  in net interest  income for
           both  reporting  periods was due  primarily to volume  increases in the
           loan portfolio.
  
           Noninterest Income
  
                  Noninterest  income in 1995  increased  $592  thousand  and $956
           thousand for the three and six months ended June 30, respectively, over
           the  comparable  1994 periods.  These  increases  were due primarily to
           increased deposit charges and service fees.
  
                                        -12-
  <PAGE>
  
  
  
            Noninterest Expense
  
                   For the second  quarter of 1995,  noninterest  expense  totaled
           $18.9  million,  an increase of $1.4  million,  or 8.4%,  over the same
           period in 1994.  Contributing  to this increase was new branch activity
           over the past  twelve  months.  As a result  of the  addition  of these
           offices, staff, facilities, and related expenses rose accordingly.
  
                    Salaries  increased  $823  thousand due  primarily to the 5.1%
           increase in the number of full time  equivalent  (FTE)  employees  from
           1,118 at June  30,1994 to 1,175 at June  30,1995.  The  increase in the
           number of FTE employees  results  primarily  from the branch  expansion
           activities   which  have  occurred  during  the  past  year.   Benefits
           associated with these increased salaries rose $186 thousand.  Furniture
           and equipment and office  expenses  increased by $350 thousand and $245
           thousand,  respectively,  due to  additional  branch  offices  and  the
           ongoing  refurbishment  of  existing  facilities.   Increased  expenses
           included depreciation,  software,  postage and stationery and supplies.
           Occupancy expenses decreased by $27 thousand, as a result of the second
           quarter  of 1994  being  impacted  by the  costs  associated  with  the
           termination of a maintenance contract.
  
                   Audit  and  regulatory  fees  and  assessments   increased  $68
           thousand over the second quarter of 1994 due to increased  deposits and
           associated   Federal  deposit  insurance  premiums  on  such  deposits.
           Marketing  expense  decreased by $38  thousand  due to a refocusing  of
           advertising  programs.  Other real  estate  expenses  decreased  by $62
           thousand as compared to the second  quarter of 1994.  This  decrease is
           consistent with the decrease in the other real estate portfolio.  Other
           noninterest  expenses  for the  second  quarter of 1995  decreased  $86
           thousand from 1994.  The decrease  resulted  primarily  from  decreased
           printing expenses and lower provisions for non-credit-related losses.
  
                   For the first six months of 1995,  noninterest  expense totaled
           $37.3 million, an increase of $3.2 million, or 9.4%, over the first six
           months of 1994.  Contributing  to this increase was new branch activity
           as noted above.
  
                   Salaries and benefits increased $1.7 million and $445 thousand,
           respectively,  due  to the  increase  in the  number  of FTE  employees
           resulting  primarily  from  branch  expansion  activities.   Occupancy,
           furniture  and  equipment,   and  office  expenses  increased  by  $132
           thousand,  $699  thousand,  and  $470  thousand,  respectively,  due to
           expenses  associated  with the increased  number of branch  facilities.
           Increased  expenses  included  building  rent  and real  estate  taxes,
           depreciation, software, telecommunications, postage, and stationary and
           supplies.
  
                    Audit and regulatory  fees and  assessments  increased by $134
           thousand  over the first six months of 1994 due to  increased  deposits
           and associated  Federal  deposit  insurance  premiums on such deposits.
           Marketing  expense  increased by $80  thousand,  due to a refocusing of
           advertising  programs.   Other  real  estate  expenses  decreased  $164
           thousand as compared  to the first six months of 1994,  reflecting  the
           decrease in the other real estate portfolio. Other noninterest expenses
           for the first six months of 1995 decreased $281 thousand from 1994. The
           decrease resulted  primarily from decreased printing expenses and lower
           provisions for non-credit-related losses.
  
                   One  key  measure  used  to  monitor  progress  in  controlling
           overhead  expenses  is the ratio of  noninterest  expenses  to  average
           assets.  For the first six  months of 1995,  this ratio  equaled  3.21%
           versus 3.09% for the comparable 1994 period.  The operating  efficiency
           ratio (noninterest expenses,  less other real estate expenses,  divided
           by net interest income plus noninterest income excluding  non-recurring
           gains)  was  64.35%  for the first six  months of 1995 as  compared  to
           62.98% for the same 1994 period.
  
                                        -13-
  
  <PAGE>
  
           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,  1995 were $18.8  million,  or .79% of
           total  assets  compared  to $22.3  million  or .97% of total  assets at
           December  31, 1994 and $25.7  million or 1.12% of total  assets at June
           30, 1994.
  
                    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, 1995 were $10.2  million or 1.20% of total loans
           compared to $11.8  million or 1.47% of total loans at December 31, 1994
           and $9.7 million or 1.31% of total loans at June 30, 1994.  At June 30,
           1995,  loans  past  due 90 days or more  and  still  accruing  interest
           amounted to $86 thousand compared to $211 thousand at December 31, 1994
           and $154  thousand at June 30, 1994.  Additional  loans  considered  as
           potential   problem  loans  by  the  Company's   internal  loan  review
           department ($7.8 million at June 30, 1995, $7.0 million at December 31,
           1994 and $6.7 million at June 30, 1994) have been  evaluated as to risk
           exposure in determining the adequacy of the allowance for loan losses.
  
                    Other real estate  (ORE) at June 30, 1995 totaled $8.6 million
           compared  to $10.5  million at December  31, 1994 and $16.0  million at
           June 30, 1994.  These properties have been written down to the lower of
           cost or fair value less disposition costs.
  
                    On pages 15 and 16 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, 1995, December 31, 1994, and June 30, 1994.
  
                                        -14-
  
  <PAGE>
  
  
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1995 and the preceding four quarters:  (dollar  amounts in
  thousands)
  
  <TABLE>
  <CAPTION>
                                               June 30,     March 31,     Dec. 31,      Sept. 30,     June 30,
                                                 1995         1995          1994          1994          1994
  <S>                                        <C>           <C>           <C>           <C>          <C>
  Non-accrual loans:
    Commercial                                 $   897       $ 1,379       $ 1,624       $ 1,810       $ 2,369
    Consumer                                     1,063         1,025         1,427         1,629         1,603
    Real Estate:
      Construction                                 911           955           955           922           956
      Mortgage                                   7,003         7,201         7,240         5,908         4,477
                                               -------       -------       -------       -------       -------
        Total non-accrual loans                  9,874        10,560        11,246        10,269         9,405
                                               -------       -------       -------       -------       -------
  
  Restructured loans
    Commercial                                     140           142           143           157           160
    Consumer                                        70            29            29
    Real Estate:
      Construction
      Mortgage                                      85           302           404           280           132
                                               -------       -------       -------       -------       -------
        Total restructured loans                   295           473           576           437           292
                                               -------       -------       -------       -------       -------
  
    Total non-performing loans                  10,169        11,033        11,822        10,706         9,697
                                               -------       -------       -------       -------       -------
  
  Other real estate                              8,591         9,880        10,517        13,170        15,953
                                               -------       -------       -------       -------       -------
  
  Total non-performing assets                   18,760        20,913        22,339        23,876        25,650
                                               -------       -------       -------       -------       -------
  
  Loans past due 90 days or more
    and still accruing                              86            92           211           199           154
                                               -------       -------       -------       -------       -------
  
  Total non-performing assets and
    loans past due 90 days or more             $18,846       $21,005       $22,550       $24,075       $25,804
                                               =======       =======       =======       =======       =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                         1.20%         1.35%         1.47%         1.40%         1.31%
  
  Total non-performing assets as a
    percentage of total period-end assets         0.79%         0.92%         0.97%         1.06%         1.12%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets         0.80%         0.92%         0.98%         1.07%         1.13%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                          129%          117%          102%          106%          113%
  
  Allowance for loan losses as a percentage
    of total period-end loans                     1.54%         1.57%         1.50%         1.48%         1.48%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                       12%           13%           18%           20%           22%
  </TABLE>
  
                                        -15-
  
  <PAGE>
  
  
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and othe related data: (dollar amounts in thousands)
  
  <TABLE>
  <CAPTION>
                                                                                                    Year
                                                                       Six Months Ended            Ended
                                                                  06/30/95        06/30/94        12/31/94
  <S>                                                            <C>            <C>              <C>
                 Balance at beginning of period                     $12,036         $10,023         $10,023
                 Provisions charged to operating expenses             1,245           2,110           4,210
                                                                    -------         -------         -------
                                                                     13,281          12,133          14,233
                 Recoveries on loans charged-off:
                   Commercial                                            71              33             100
                   Consumer                                             112              68             123
                   Real estate                                          266               0              22
                                                                    -------         -------         -------
                 Total recoveries                                       449             101             245
  
                 Loans charged-off:
                   Commercial                                          (366)           (792)         (1,519)
                   Consumer                                            (207)           (268)           (530)
                   Real estate                                          (73)           (168)           (393)
                                                                    -------         -------         -------
                 Total charged-off                                     (646)         (1,228)         (2,442)
                                                                    -------         -------         -------
                 Net charge-offs                                       (197)         (1,127)         (2,197)
                                                                    -------         -------         -------
  
                 Balance at end of period                           $13,084         $11,006         $12,036
                                                                    =======         =======         =======
  
  
  
                 Net charge-offs as a percentage of
                 average loans outstanding                             0.05%           0.31%           0.29%
  </TABLE>
  
                                        -16-
  
  <PAGE>
  
                             PART II. OTHER INFORMATION
  
  Item 4.           Submission of Matters to a Vote of  Securities Holders
  
                          The Annual Meeting of the Registrant's  Shareholders was
                    held on June 20, 1995. The only item of business acted upon at
                    the Annual  Meeting was the election of nine directors for one
                    year  terms.  The number of votes  cast for and  against as to
                    each nominee for director was as follows:
  
                    Name of  
                    Nominee                       For        Against
  
                    Vernon W. Hill, II         9,010,656      73,411
                    C. Edward Jordan, Jr.      9,076,561      67,506
                    David Baird, IV            9,076,808      67,259
                    Robert C. Beck             8,975,982     168,085
                    Jack R Bershad             8,973,687     170,380
                    Morton N. Kerr             9,075,323      68,744
                    Steven M. Lewis            9,076,222      67,845
                    Daniel J. Ragone           9.068,794      75,273
                    Joseph T. Tarquini, Jr.    9,075,228      68,839
  
  
  
  
  
                                        -17-
  
  <PAGE>
  
  
  Item 6.           Exhibits and Reports on Form 8-K
  
                    (a)      Exhibit 11 - Computation of Net Income Per Share
  
                             No reports  on Form 8-K were filed  during the second
                    quarter ended June 30, 1995.
  
  
  
  
                                        -18-
  
  
  <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 14, 1995
    (Date)                                        C. EDWARD JORDAN, JR.
                                                 EXECUTIVE VICE PRESIDENT
                                               (PRINCIPAL FINANCIAL OFFICER)
  
  
  
  
                                        -19-
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 58388}]
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, 1995
  
                                         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                                       10,628,135
         (Title of Class)                             (No. of Shares Outstanding
                                                            as of 08/04/95)
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                                   417,000
           (Title of Class)                           (No. of Shares Outstanding
                                                             as of 08/04/95)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                       INDEX
  
                                                                              Page
  
  PART I.    FINANCIAL INFORMATION
  
  Item 1.    Financial Statements
  
             Consolidated Balance Sheets (Unaudited)
                       June 30, 1995 and December 31, 1994 .....................4
  
             Consolidated Statements of Income (Unaudited) 
                       Three months ended June 30,  1995 
                       and June 30, 1994 and six months
                       ended June 30, 1995 and June 30, 1994 ...................5
  
             Consolidated Statements of Cash Flows (Unaudited)
                       Six months ended June 30, 1995 and
                       June 30, 1994 ...........................................6
  
             Notes to Consolidated Financial Statements (Unaudited) ............7
  
  Item 2.    Management's Discussion and Analysis of Financial
                       Condition and Results of Operation ......................9
  
  PART II.   OTHER INFORMATION
  
  Item 4.    Submission of Matters to a Vote of Security Holders ..............17
  
  Item 6.    Exhibits and Reports on Form 8-K .................................18
  Commerce Bancorp, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                                    (unaudited)
  June 30,     December 31,
  (dollars in thousands)                                                                 1995          1994
  Assets
        Cash and due from banks                                                    $  126,169    $  119,697
              Federal funds sold                                                       50,500         9,750
                                                                                   ----------    ----------
                     Cash and cash equivalents                                        176,669       129,447
              Mortgages held for sale                                                   3,112         2,263
              Securities available for sale                                           116,498       118,855
              Securities held to maturity:
                      U.S. Government agency mortgage-backed obligations            1,077,658     1,113,359
                      Collateralized mortgage obligations                               1,951         2,390
                      Obligations of state and political subdivisions                   2,379           565
                      Other securities                                                 30,066        28,819
                                                                                   ----------    ----------
                        Total securities held to maturity
                         (market value 1995-$1,080,206; 1994-$1,039,311)            1,112,054     1,145,133
              Trading securities                                                       13,813
              Loans                                                                   850,597       801,952
                      Less allowance for loan losses                                   13,084        12,036
                                                                                   ----------    ----------
                                                                                      837,513       789,916
              Bank premises and equipment, net                                         64,589        57,997
              Other assets                                                             45,992        47,679
                                                                                   ----------    ----------
                                                                                   $2,370,240    $2,291,290
                                                                                   ==========    ==========
  
  Liabilities
              Deposits:
                      Demand:
                        Interest-bearing                                           $  597,131    $  510,345
                        Noninterest-bearing                                           389,435       367,421
                      Savings                                                         481,348       488,282
                      Time                                                            689,392       468,524
                                                                                   ----------    ----------
                        Total deposits                                              2,157,306     1,834,572
              Other borrowed money                                                     34,106       312,895
              Other liabilities                                                           454         3,565
              Obligation to Employee Stock Ownership Plan (ESOP)                        4,872         5,385
              Long-term debt                                                           23,000        23,000
                                                                                   ----------    ----------
                                                                                    2,219,738     2,179,417
  
  Stockholders'
  Equity
              Common stock, 10,702,887 shares issued (8,889,506 shares in 1994)        16,723        13,234
                Series C preferred stock, 417,000 shares authorized, issued and
                outstanding (liquidating preference: $18.00 per share totaling
  $             7,506)                                                                  7,506         7,506
              Capital in excess of par or stated value                                111,463        80,033
              Retained earnings                                                        21,306        17,757
                                                                                   ----------    ----------
                                                                                      156,998       118,530
              Less commitment to ESOP                                                   4,872         5,385
              Less treasury stock, at cost, 100,159 common shares
                in 1995 (79,520 in 1994)                                                1,624         1,272
                                                                                   ----------    ----------
                           Total stockholders' equity                                 150,502       111,873
  
                                                                                   ----------    ----------
                                                                                   $2,370,240    $2,291,290
                                                                                   ==========    ==========
  See accompanying notes
  
                                        -4-
  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)             1995       1994       1995        1994
  Interest income
               Interest and fees on loans                                  $19,670    $15,728    $38,349    $31,003
               Interest on investments                                      20,783     20,658     41,865     38,648
               Other interest                                                1,141        169      1,797        411
                                                                           -------    -------    -------    -------
                    Total interest income                                   41,594     36,555     82,011     70,062
                                                                           -------    -------    -------    -------
  
  Interest expense
               Interest on deposits:
                  Demand                                                     3,878      2,322      7,286      4,495
                  Savings                                                    2,795      2,981      5,481      5,879
                  Time                                                       8,627      4,678     15,537      9,584
                                                                           -------    -------    -------    -------
                    Total interest on deposits                              15,300      9,981     28,304     19,958
               Interest on other borrowed money                              2,132      3,445      6,159      5,737
               Interest on long-term debt                                      506        506      1,012      1,012
                                                                           -------    -------    -------    -------
                    Total interest expense                                  17,938     13,932     35,475     26,707
                                                                           -------    -------    -------    -------
  
               Net interest income                                          23,656     22,623     46,536     43,355
               Provision for loan losses                                       388      1,060      1,245      2,110
                                                                           -------    -------    -------    -------
               Net interest income after provision for
                 loan losses                                                23,268     21,563     45,291     41,245
  
  Noninterest income
               Deposit charges and service fees                              3,778      3,433      7,462      6,895
               Other operating income                                        1,019        790      1,928      1,557
               Net investment securities gains                                  18                    18
                                                                           -------    -------    -------    -------
                    Total noninterest income                                 4,815      4,223      9,408      8,452
                                                                           -------    -------    -------    -------
  
  Noninterest expense
               Salaries                                                      6,347      5,524     12,599     10,909
               Benefits                                                      1,789      1,603      3,648      3,203
               Occupancy                                                     1,997      2,024      3,937      3,805
               Furniture and equipment                                       2,409      2,059      4,555      3,856
               Office                                                        1,710      1,465      3,343      2,873
               Audit and regulatory fees and assessments                     1,240      1,172      2,481      2,347
               Marketing                                                       669        707      1,326      1,246
               Other real estate (net)                                         593        655      1,291      1,455
               Other                                                         2,157      2,243      4,110      4,391
                                                                           -------    -------    -------    -------
                    Total noninterest expenses                              18,911     17,452     37,290     34,085
                                                                           -------    -------    -------    -------
  
               Income before income taxes                                    9,172      8,334     17,409     15,612
               Provision for federal and state income taxes                  3,356      3,045      6,350      5,686
                                                                           -------    -------    -------    -------
               Net income                                                    5,816      5,289     11,059      9,926
  
               Dividends on preferred stocks                                   140        393        281        786
                                                                           -------    -------    -------    -------
               Net income applicable to common stock                       $ 5,676    $ 4,896    $10,778    $ 9,140
                                                                           =======    =======    =======    =======
  
               Net income per common and common equivalent share:
                  Primary                                                  $  0.52    $  0.61    $  1.03    $  1.14
                                                                           -------    -------    -------    -------
                  Fully diluted                                            $  0.50    $  0.54    $  1.00    $  1.02
                                                                           -------    -------    -------    -------
               Average common and common equivalent shares outstanding:
                  Primary                                                   10,848      8,063     10,396      8,024
                                                                            ------      -----     ------      -----
                  Fully diluted                                             11,461      9,616     11,018      9,603
                                                                            ------      -----     ------      -----
               Cash dividends declared, common stock                       $  0.16    $  0.14    $  0.31    $  0.28
                                                                           =======    =======    =======    =======
  -5-
  Commerce Bancorp, Inc. And Subsidiaries
                       Consolidated Statements of Cash Flows
                                    (unaudited)
  Six Months Ended June 30,
                 (dollars in thousands)                                                  1995           1994
  Operating 
  activities
                  Net income                                                           $  11,059     $   9,926
                  Adjustments to reconcile net income to net cash (used)
                    provided by operating activities:
                      Provision for loan losses                                            1,245         2,110
                      Provision for depreciation, amortization and accretion               6,333         9,596
                      Proceeds from sales of mortgages held for sale                       7,291        65,667
                      Originations of mortgages held for sale                             (8,140)      (26,232)
                      Net loan (chargeoffs)                                                 (197)       (1,127)
                      Net increase in trading securities                                 (13,813)
                      Increase in other assets                                              (816)       (1,810)
                      Decrease in other liabilities                                       (3,111)      (17,779)
                                                                                       ---------     ---------
                                   Net cash (used) provided by operating activities         (149)       40,351
  
  Investing
  activities
                  Proceeds from the maturity of securities available for sale              8,056        26,839
                  Proceeds from the maturity of securities held to maturity               35,028        92,139
                  Purchase of securities available for sale                                 (312)
                  Purchase of securities held to maturity                                 (3,741)     (345,975)
                  Net increase in loans                                                  (51,029)      (42,948)
                  Proceeds from sales of loans                                             2,384         2,278
                  Purchases of premises and equipment                                    (10,294)       (7,606)
                                                                                       ---------     ---------
                                   Net cash (used) by investing activities               (19,908)     (275,273)
  
  Financing
  activities
                  Net increase in demand and savings deposits                            101,866        61,894
                  Net increase (decrease)  in time deposits                              220,868       (31,594)
                  Net (decrease) increase in other borrowed money                       (278,789)      228,210
                  Issuance of common stock                                                25,774
                  Dividends paid                                                          (3,376)       (2,946)
                  Proceeds from issuance of common stock under
                    dividend reinvestment and other stock plans                            1,190         1,041
                  Purchase of treasury stock                                                (352)         (117)
                  Other                                                                       98            98
                                                                                       ---------     ---------
                                   Net cash provided by financing activities              67,279       256,586
  
                  Increase  in cash and cash equivalents                                  47,222        21,664
                  Cash and cash equivalents at beginning of year                         129,447       105,725
                                                                                       ---------     ---------
                  Cash and cash equivalents at end of period                           $ 176,669     $ 127,389
                                                                                       ---------     ---------
  
                  Supplemental disclosures of cash flow
                    information: Cash paid during the period for:
                       Interest                                                        $  35,475       $25,063
                       Income taxes                                                        7,088         5,754
                                                                                       ---------     ---------
  -6-
  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.   These  condensed
           consolidated  financial  statements  should be read in conjunction with
           the audited financial  statements and the notes thereto included in the
           registrant's  Annual Report for the period ended December 31, 1994. The
           results  for the three  months  ended  June 30,  1995,  and for the six
           months  ended  June 30,  1995  are not  necessarily  indicative  of the
           results that may be expected for the year ended December 31, 1995.
  
                    The consolidated  financial statements include the accounts of
           Commerce  Bancorp,  Inc. (the  "Company") and all of its  subsidiaries,
           including    Commerce   Bank,   N.A.    ("Commerce    NJ"),    Commerce
           Bank/Pennsylvania,  N.A.  and  Commerce  Bank/Shore,  N.A. All material
           intercompany  transactions  have been eliminated.  Certain amounts from
           1994 have been reclassified to conform with 1995 presentation.
  
  B.       Commitments
  
                    In  the  normal   course  of   business,   there  are  various
           outstanding commitments to extend credit, such as letters of credit and
           unadvanced   loan   commitments,   which  are  not   reflected  in  the
           accompanying  consolidated  financial  statements.  Management does not
           anticipate any material losses as a result of these transactions.
  
  C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
                    The Company has  guaranteed a debt  obligation of its Employee
           Stock  Ownership Plan ("ESOP")  which  originated at $7,500,000 and has
           been reduced to $4,872,000 through principal  reductions.  Accordingly,
           the loan amount is  reflected  in the  Company's  consolidated  balance
           sheet  as a  liability  and  an  equal  amount,  representing  deferred
           employee benefits,  has been recorded as a deduction from stockholders'
           equity.  The ESOP  obtained  the loan in 1990 to acquire a new class of
           Company Cumulative Convertible Preferred Stock (Series C) at a price of
           $18.00 per share.  The loan was  refinanced in 1994,  and is payable in
           quarterly installments with the final payment due January 28, 2000. The
           loan bears interest at a variable rate,  although the rate can be fixed
           at 
  
                                        -7-
  future  repricing dates in accordance  with the loan agreement.  As the
           Company makes annual  contributions to the ESOP,  these  contributions,
           plus dividends from the Company's  Series C Preferred Stock held by the
           ESOP, will be used to repay the loan.
  
  D.       Issuance of Common Stock
  
                    On February 15, 1995, the Company  publicly  issued  1,725,000
           shares of common  stock.  Net proceeds to the Company were  $25,774,000
           after deducting expenses of $1,826,000.  The proceeds are earmarked for
           general  corporate  purposes,  including  providing  additional  equity
           capital to the  Company's  bank  subsidiaries  to support the Company's
           branch expansion growth strategy.
  
                                        -8-
  Item 2.  Management's  Discussion  and Analysis of Financial  Condition  and
           Results of Operation Capital Resources
  
                    At June 30, 1995,  stockholders' equity totaled $150.5 million
           or 6.35% of total assets,  compared to $111.9 million or 4.88% of total
           assets at December 31, 1994. On February 15, 1995,  the Company  issued
           1,725,000  shares of common  stock,  resulting in net proceeds of $25.8
           million.
  
                    The table below  presents a comparison  of the  Company's  and
           each of its three  bank  subsidiaries  risk-based  capital  ratios  and
           leverage ratios to the minimum regulatory  requirements for the periods
           indicated.
  Capital
                                                                                                          Excess
                                                                                        Minimum            as of
                                                  June 30,            June 30,        Regulatory         June 30,
                                                    1995                1994         Requirements          1995
                                                    ----                ----         ------------          ----
                                                                                                      (in thousands)
  Company
                  Risk based capital ratios:
                    Tier 1                          12.62%              9.60%          4.00%             $98,650
                    Total capital                   15.77              12.77           8.00               88,930
                  Leverage ratio                     6.17               4.49           3.00-5.00          74,090 (1)
  
           Commerce NJ
                  Risk based capital ratios:
                    Tier 1                          14.45%             11.17%          4.00%             $95,290
                    Total capital                   15.59              12.19           8.00               69,250
                  Leverage ratio                     6.99               5.15           3.00-5.00          75,320 (1)
  
           Commerce PA
                  Risk based capital ratios:
                    Tier 1                          12.24%             11.67%          4.00%            $  9,140
                    Total capital                   13.34              12.72           8.00                5,920
                  Leverage ratio                     6.35               5.83           3.00-5.00           7,170 (1)
  
           Commerce Shore Risk based capital 
             ratios:
                    Tier 1                          12.39%             13.44%          4.00%             $10,760
                    Total capital                   13.49              14.70           8.00                7,050
                  Leverage ratio                     6.08               6.26           3.00-5.00           8,050 (1)
  (1) Based on a minimum regulatory requirement of 3.00%
  At June 30, 1995, 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%.
  
                                        -9-
  Deposits
  
                    Total deposits at June 30, 1995 were $2.16 billion,  up $382.1
           million,  or 22% over total deposits of $1.78 billion at June 30, 1994,
           and up by $322.7  million,  or 18% from year-end  1994.  Deposit growth
           during the first six months of 1995 was largely from the public sector,
           supported  by growth in core  deposits,  particularly  savings and time
           deposits.
  
           Interest Rate Sensitivity and Liquidity
  
                    An interest  rate  sensitive  asset or  liability is one that,
           within a defined time period, either matures or experiences an interest
           rate change in line with general market interest  rates.  Historically,
           the most common method of estimating  interest rate risk was to measure
           the  maturity  and  repricing  relationships  between  interest-earning
           assets and  interest-bearing  liabilities  at  specific  points in time
           ("GAP"), typically one year. Under this method, a company is considered
           liability sensitive when the amount of its interest-bearing liabilities
           exceeds the amount of its  interest-earning  assets within the one year
           horizon.  The  following  table  illustrates  the GAP  position  of the
           Company as of June 30, 1995:
  1-90      91-180      181-365     1-5     Beyond
                                                              Days       Days        Days      Years    5 Years    Total
  Rate Sensitive:
           Interest-earning assets
             Loans                                           $ 437         $13        $27      $246       $120    $   843
             Investment securities                              46          32         73       397        694      1,242
             Federal funds sold                                 51                                                     51
                                                            ------      ------      -----     -----      -----      -----
           Total interest-earning assets                       534          45        100       643        814      2,136
                                                            ------      ------      -----     -----      -----      -----
           Interest-bearing liabilities
             Deposits
                Transaction accounts                           347                                         731      1,078
                Time                                           341          67        145       124         13        690
             Other borrowed money                               34                                                     34
             Long-term debt                                                                                 23         23
                                                            ------      ------      -----     -----      -----      -----
           Total interest-bearing liabilities                  722          67        145       124        767      1,825
                                                            ------      ------      -----     -----      -----      -----
  
           Period GAP                                         (188)        (22)       (45)      519         47     $  311
                                                            ------      ------      -----     -----      -----      -----
           Cumulative GAP                                   $ (188)      $(210)     $(255)    $ 264       $311
                                                            =======      ======     ======    =====       ====
  The  Company's  negative GAP position  has been  significantly  reduced
           during the first six months of 1995, primarily through the reduction in
           the balance of short-term  borrowings  from $312.9  million at December
           31, 1994 to $34.1 million at June 30, 1995.
  
                    Management   utilizes   additional  tools,   including  income
           simulation  analysis,  which  provide  a  more  meaningful  measure  of
           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.
  
                                        -10-
  The Company's  income  simulation model is used to predict the
           impact on net interest  income of a 200 basis point increase in general
           market interest rates over the next twelve months.  The Company's Asset
           Liability  Committee  has  determined  that  in  the  current  economic
           environment, as much as a 5% decrease in net interest income over a two
           year period  compared to projected  net interest  income in a flat rate
           scenario is an  acceptable  level of interest  rate risk.  Based on its
           interest rate sensitivity  analysis prepared as of June 30, 1995, it is
           projected  that net interest  income would be reduced by  approximately
           1.6% over the next two years as a result of a 200 basis point  increase
           in general market  interest rates  occurring  proportionately  over the
           next twelve months.
  
                    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.  In  order  to  reduce  the
           potential  impact  from a dramatic  increase  in  interest  rates,  the
           Company  entered into  interest-rate  cap  agreements  during the first
           quarter of 1995.  The strike price of the  agreements  exceeds  current
           market interest rates. The agreements are for a notional amount of $200
           million for a period of two years.
  
                    Liquidity  involves  the  Company's  ability to raise funds to
           support asset growth or decrease assets to meet deposit withdrawals and
           other  borrowing  needs,  to  maintain  reserve   requirements  and  to
           otherwise  operate  the  Company on an  ongoing  basis.  The  Company's
           liquidity  needs  are met by  growth  in core  deposits,  its  cash and
           federal funds sold position,  cash flow from its amortizing  investment
           and loan portfolios, as well as the use of short-term borrowings.
  
           Short-Term Borrowings
  
                    Short-term   borrowings   consist  of  securities  sold  under
           agreement to repurchase.  These  borrowings  were used as an additional
           source of funding for the investment  portfolio and to fund loan growth
           during 1994.  At December 31, 1994,  short-term  borrowings  aggregated
           $312.9  million and had an average rate of 5.94%.  During the first six
           months of 1995,  the  Company  significantly  reduced  its  outstanding
           short-term  borrowings,  primarily through increased deposits.  At June
           30, 1995,  short-term  borrowings  aggregated  $34.1 million and had an
           average rate of 5.65%.
  
           Interest Earning Assets
  
                    For the six month period ended June 30, 1995, interest earning
           assets  increased  $68.6 million from $2.07  billion to $2.15  billion.
           This increase was primarily in the loan portfolio which increased $48.6
           million.
  
           Loans
  
                    During the first six  months of 1995,  loans  increased  $48.6
           million from $802.0 million to $850.6 million.  At June 30, 1995, loans
           represented 39% of total deposits and 36% of total assets.
  
                                        -11-
  The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                  During the first six months of 1995, total securities  decreased
           $21.6  million  from  $1.26  billion to $1.24  billion,  as a result of
           payments  on  the  existing  portfolio.   For  the  six  month  period,
           securities  available for sale  decreased from $118.9 million to $116.5
           million,  and securities held to maturity  decreased from $1.15 billion
           to $1.11 billion.  Trading  securities  increased to $13.8 million as a
           result of the  establishment  of Commerce  Capital,  a bank  securities
           dealer department of Commerce NJ. At June 30, 1995, the average life of
           the investment portfolio is approximately 7.7 years.
  
                    Short-term  investments  (Federal funds sold)  increased $40.7
           million from $9.8  million to $50.5  million.  At June 30, 1995,  total
           securities  and  Federal  funds  sold  aggregated   $1.29  billion  and
           represented 55% of total assets.
  
           Net Income
  
                    Net income for the second quarter of 1995 was $5.8 million, an
           increase of $527 thousand over the $5.3 million recorded for the second
           quarter of 1994.  Net income for the first six months of 1995 was $11.1
           million,  an increase of $1.2 million over the $9.9 million recorded in
           the first six months of 1994.  These increases were due to increases in
           net  interest  income,  as well as  reduced  loan loss  provisions  and
           increases  in  noninterest   income  which  offset  increased  overhead
           expenses. On a per share basis, fully-diluted net income for the second
           quarter  of 1995 and for the six months of 1995 were $.50 and $1.00 per
           common  share  compared  to $.54 and  $1.02  per  common  share for the
           respective 1994 periods. Net income per share for the second quarter of
           1995 and for the first six months of 1995 were impacted by the issuance
           of 1,725,000 shares of common stock via an underwritten public offering
           in the first quarter of 1995.
  
                  Return on average  assets  (ROA) and  return on  average  equity
           (ROE)  for  the  second   quarter  of  1995  were  0.99%  and   16.05%,
           respectively,  compared to 0.94% and 20.36%, respectively, for the same
           1994  period.  ROA and ROE for the first six  months of 1995 were 0.95%
           and 16.30%, respectively, compared to 0.90% and 19.40% a year ago.
  
           Net Interest Income
  
                    Net  interest  income  totaled  $23.7  million  for the second
           quarter of 1995,  an increase of $1.1 million or 5%, from $22.6 million
           in the second  quarter of 1994.  Net interest  income for the first six
           months of 1995 totaled  $46.5  million,  up $3.2 million or 7% from the
           first six months of 1994. The  improvement  in net interest  income for
           both  reporting  periods was due  primarily to volume  increases in the
           loan portfolio.
  
           Noninterest Income
  
                  Noninterest  income in 1995  increased  $592  thousand  and $956
           thousand for the three and six months ended June 30, respectively, over
           the  comparable  1994 periods.  These  increases  were due primarily to
           increased deposit charges and service fees.
  
                                        -12-
  Noninterest Expense
  
                   For the second  quarter of 1995,  noninterest  expense  totaled
           $18.9  million,  an increase of $1.4  million,  or 8.4%,  over the same
           period in 1994.  Contributing  to this increase was new branch activity
           over the past  twelve  months.  As a result  of the  addition  of these
           offices, staff, facilities, and related expenses rose accordingly.
  
                    Salaries  increased  $823  thousand due  primarily to the 5.1%
           increase in the number of full time  equivalent  (FTE)  employees  from
           1,118 at June  30,1994 to 1,175 at June  30,1995.  The  increase in the
           number of FTE employees  results  primarily  from the branch  expansion
           activities   which  have  occurred  during  the  past  year.   Benefits
           associated with these increased salaries rose $186 thousand.  Furniture
           and equipment and office  expenses  increased by $350 thousand and $245
           thousand,  respectively,  due to  additional  branch  offices  and  the
           ongoing  refurbishment  of  existing  facilities.   Increased  expenses
           included depreciation,  software,  postage and stationery and supplies.
           Occupancy expenses decreased by $27 thousand, as a result of the second
           quarter  of 1994  being  impacted  by the  costs  associated  with  the
           termination of a maintenance contract.
  
                   Audit  and  regulatory  fees  and  assessments   increased  $68
           thousand over the second quarter of 1994 due to increased  deposits and
           associated   Federal  deposit  insurance  premiums  on  such  deposits.
           Marketing  expense  decreased by $38  thousand  due to a refocusing  of
           advertising  programs.  Other real  estate  expenses  decreased  by $62
           thousand as compared to the second  quarter of 1994.  This  decrease is
           consistent with the decrease in the other real estate portfolio.  Other
           noninterest  expenses  for the  second  quarter of 1995  decreased  $86
           thousand from 1994.  The decrease  resulted  primarily  from  decreased
           printing expenses and lower provisions for non-credit-related losses.
  
                   For the first six months of 1995,  noninterest  expense totaled
           $37.3 million, an increase of $3.2 million, or 9.4%, over the first six
           months of 1994.  Contributing  to this increase was new branch activity
           as noted above.
  
                   Salaries and benefits increased $1.7 million and $445 thousand,
           respectively,  due  to the  increase  in the  number  of FTE  employees
           resulting  primarily  from  branch  expansion  activities.   Occupancy,
           furniture  and  equipment,   and  office  expenses  increased  by  $132
           thousand,  $699  thousand,  and  $470  thousand,  respectively,  due to
           expenses  associated  with the increased  number of branch  facilities.
           Increased  expenses  included  building  rent  and real  estate  taxes,
           depreciation, software, telecommunications, postage, and stationary and
           supplies.
  
                    Audit and regulatory  fees and  assessments  increased by $134
           thousand  over the first six months of 1994 due to  increased  deposits
           and associated  Federal  deposit  insurance  premiums on such deposits.
           Marketing  expense  increased by $80  thousand,  due to a refocusing of
           advertising  programs.   Other  real  estate  expenses  decreased  $164
           thousand as compared  to the first six months of 1994,  reflecting  the
           decrease in the other real estate portfolio. Other noninterest expenses
           for the first six months of 1995 decreased $281 thousand from 1994. The
           decrease resulted  primarily from decreased printing expenses and lower
           provisions for non-credit-related losses.
  
                   One  key  measure  used  to  monitor  progress  in  controlling
           overhead  expenses  is the ratio of  noninterest  expenses  to  average
           assets.  For the first six  months of 1995,  this ratio  equaled  3.21%
           versus 3.09% for the comparable 1994 period.  The operating  efficiency
           ratio (noninterest expenses,  less other real estate expenses,  divided
           by net interest income plus noninterest income excluding  non-recurring
           gains)  was  64.35%  for the first six  months of 1995 as  compared  to
           62.98% for the same 1994 period.
  
                                        -13-
  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,  1995 were $18.8  million,  or .79% of
           total  assets  compared  to $22.3  million  or .97% of total  assets at
           December  31, 1994 and $25.7  million or 1.12% of total  assets at June
           30, 1994.
  
                    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, 1995 were $10.2  million or 1.20% of total loans
           compared to $11.8  million or 1.47% of total loans at December 31, 1994
           and $9.7 million or 1.31% of total loans at June 30, 1994.  At June 30,
           1995,  loans  past  due 90 days or more  and  still  accruing  interest
           amounted to $86 thousand compared to $211 thousand at December 31, 1994
           and $154  thousand at June 30, 1994.  Additional  loans  considered  as
           potential   problem  loans  by  the  Company's   internal  loan  review
           department ($7.8 million at June 30, 1995, $7.0 million at December 31,
           1994 and $6.7 million at June 30, 1994) have been  evaluated as to risk
           exposure in determining the adequacy of the allowance for loan losses.
  
                    Other real estate  (ORE) at June 30, 1995 totaled $8.6 million
           compared  to $10.5  million at December  31, 1994 and $16.0  million at
           June 30, 1994.  These properties have been written down to the lower of
           cost or fair value less disposition costs.
  
                    On pages 15 and 16 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, 1995, December 31, 1994, and June 30, 1994.
  
                                        -14-
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1995 and the preceding four quarters:  (dollar  amounts in
  thousands)
  June 30,     March 31,     Dec. 31,      Sept. 30,     June 30,
                                                 1995         1995          1994          1994          1994
  Non-accrual loans:
    Commercial                                 $   897       $ 1,379       $ 1,624       $ 1,810       $ 2,369
    Consumer                                     1,063         1,025         1,427         1,629         1,603
    Real Estate:
      Construction                                 911           955           955           922           956
      Mortgage                                   7,003         7,201         7,240         5,908         4,477
                                               -------       -------       -------       -------       -------
        Total non-accrual loans                  9,874        10,560        11,246        10,269         9,405
                                               -------       -------       -------       -------       -------
  
  Restructured loans
    Commercial                                     140           142           143           157           160
    Consumer                                        70            29            29
    Real Estate:
      Construction
      Mortgage                                      85           302           404           280           132
                                               -------       -------       -------       -------       -------
        Total restructured loans                   295           473           576           437           292
                                               -------       -------       -------       -------       -------
  
    Total non-performing loans                  10,169        11,033        11,822        10,706         9,697
                                               -------       -------       -------       -------       -------
  
  Other real estate                              8,591         9,880        10,517        13,170        15,953
                                               -------       -------       -------       -------       -------
  
  Total non-performing assets                   18,760        20,913        22,339        23,876        25,650
                                               -------       -------       -------       -------       -------
  
  Loans past due 90 days or more
    and still accruing                              86            92           211           199           154
                                               -------       -------       -------       -------       -------
  
  Total non-performing assets and
    loans past due 90 days or more             $18,846       $21,005       $22,550       $24,075       $25,804
                                               =======       =======       =======       =======       =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                         1.20%         1.35%         1.47%         1.40%         1.31%
  
  Total non-performing assets as a
    percentage of total period-end assets         0.79%         0.92%         0.97%         1.06%         1.12%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets         0.80%         0.92%         0.98%         1.07%         1.13%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                          129%          117%          102%          106%          113%
  
  Allowance for loan losses as a percentage
    of total period-end loans                     1.54%         1.57%         1.50%         1.48%         1.48%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                       12%           13%           18%           20%           22%
  -15-
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and othe related data: (dollar amounts in thousands)
  Year
                                                                       Six Months Ended            Ended
                                                                  06/30/95        06/30/94        12/31/94
  Balance at beginning of period                     $12,036         $10,023         $10,023
                 Provisions charged to operating expenses             1,245           2,110           4,210
                                                                    -------         -------         -------
                                                                     13,281          12,133          14,233
                 Recoveries on loans charged-off:
                   Commercial                                            71              33             100
                   Consumer                                             112              68             123
                   Real estate                                          266               0              22
                                                                    -------         -------         -------
                 Total recoveries                                       449             101             245
  
                 Loans charged-off:
                   Commercial                                          (366)           (792)         (1,519)
                   Consumer                                            (207)           (268)           (530)
                   Real estate                                          (73)           (168)           (393)
                                                                    -------         -------         -------
                 Total charged-off                                     (646)         (1,228)         (2,442)
                                                                    -------         -------         -------
                 Net charge-offs                                       (197)         (1,127)         (2,197)
                                                                    -------         -------         -------
  
                 Balance at end of period                           $13,084         $11,006         $12,036
                                                                    =======         =======         =======
  
                 Net charge-offs as a percentage of
                 average loans outstanding                             0.05%           0.31%           0.29%
  -16-
  PART II. OTHER INFORMATION
  
  Item 4.           Submission of Matters to a Vote of  Securities Holders
  
                          The Annual Meeting of the Registrant's  Shareholders was
                    held on June 20, 1995. The only item of business acted upon at
                    the Annual  Meeting was the election of nine directors for one
                    year  terms.  The number of votes  cast for and  against as to
                    each nominee for director was as follows:
  
                    Name of  
                    Nominee                       For        Against
  
                    Vernon W. Hill, II         9,010,656      73,411
                    C. Edward Jordan, Jr.      9,076,561      67,506
                    David Baird, IV            9,076,808      67,259
                    Robert C. Beck             8,975,982     168,085
                    Jack R Bershad             8,973,687     170,380
                    Morton N. Kerr             9,075,323      68,744
                    Steven M. Lewis            9,076,222      67,845
                    Daniel J. Ragone           9.068,794      75,273
                    Joseph T. Tarquini, Jr.    9,075,228      68,839
  
                                        -17-
  Item 6.           Exhibits and Reports on Form 8-K
  
                    (a)      Exhibit 11 - Computation of Net Income Per Share
  
                             No reports  on Form 8-K were filed  during the second
                    quarter ended June 30, 1995.
  
                                        -18-
  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 14, 1995
    (Date)                                        C. EDWARD JORDAN, JR.
                                                 EXECUTIVE VICE PRESIDENT
                                               (PRINCIPAL FINANCIAL OFFICER)
  
                                        -19-