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 September 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                                10,679,526
         (Title of Class)                      (No. of Shares Outstanding
                                                     as of 11/03/95)
  
  
  
   Series C ESOP Cumulative Con-
     vertible Preferred Stock                             417,000
           (Title of Class)                      (No. of Shares Outstanding
                                                      as of 11/03/95)
  
  
  <PAGE>
  
  
                      COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  
  
  
                                       INDEX
  
  
  
                                                                              Page
  
  
  PART I.  FINANCIAL INFORMATION
  
  Item 1.  Financial Statements
  
           Consolidated Balance Sheets (Unaudited)
               September 30, 1995 and December 31, 1994 .......................1
  
           Consolidated  Statements  of Income  (Unaudited)  
               Three months ended  September  30, 1995 and 
               September 30, 1994 and nine months ended  
               September  30, 1995 and  September 30, 1994 ....................2
  
           Consolidated Statements of Cash Flows (Unaudited)
               Nine months ended September 30, 1995 and
               September 30, 1994 .............................................3
  
           Notes to Consolidated Financial Statements ( Unaudited) ............4
  
  Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operation .............................6
  
  PART II. OTHER INFORMATION
  
  Item 6.  Exhibits and Reports on Form 8-K ..................................14
  
  
  
  <PAGE>1
  
  
                      Commerce Bancorp, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                                    (unaudited)
  <TABLE>
  <CAPTION>
                                                                            September 30,  December 31,
                       (dollars in thousands)                                    1995          1994
  <S>                                                                       <C>           <C>
  Assets               Cash and due from banks                                $  140,740   $  119,697
                       Federal funds sold                                         32,200        9,750
                                                                              ----------   ----------
                            Cash and cash equivalents                            172,940      129,447
                       Mortgages held for sale                                     7,633        2,263
                       Securities available for sale                             159,570      118,855
                       Securities held to maturity:
                            U.S. Government agency mortgage-backed
                              obligations                                      1,038,869    1,113,359
                            Collateralized mortgage obligations                    1,678        2,390
                            Obligations of state and political subdivisions       10,060          565
                            Other securities                                      39,415       28,819
                                                                              ----------   ----------
                              Total securities held to maturity
                              (market value 1995-$1,059,366;
                               1994-$1,039,311)                                1,090,022    1,145,133
                       Trading securities                                          1,735
  
                       Loans                                                     869,883      801,952
                            Less allowance for loan losses                        13,005       12,036
                                                                              ----------   ----------
                                                                                 856,878      789,916
                       Bank premises and equipment, net                           67,539       57,997
                       Other assets                                               46,540       47,679
                                                                              ----------   ----------
                                                                              $2,402,857   $2,291,290
                                                                              ==========   ==========
  
  Liabilities          Deposits:
                            Demand:
                              Interest-bearing                                $  634,625   $  510,345
                              Noninterest-bearing                                395,824      367,421
                            Savings                                              473,041      488,282
                            Time                                                 712,739      468,524
                                                                              ----------   ----------
                              Total deposits                                   2,216,229    1,834,572
                       Other borrowed money                                                   312,895
                       Other liabilities                                           2,604        3,565
                       Obligation to Employee Stock Ownership Plan (ESOP)          4,615        5,385
                       Long-term debt                                             23,000       23,000
                                                                              ----------   ----------
                                                                               2,246,448    2,179,417
  
  Stockholders'        Common stock, 10,777,252 shares issued
  Equity                   (8,889,506 shares in 1994)                             16,839       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                  112,318       80,033
                       Retained earnings                                          25,985       17,757
                                                                              ----------   ----------
                                                                                 162,648      118,530
                       Less commitment to ESOP                                     4,615        5,385
                       Less treasury stock, at cost, 100,159 common shares
                            in 1995 (79,520 in 1994)                               1,624        1,272
                                                                              ----------   ----------
                              Total stockholders' equity                         156,409      111,873
                                                                              ----------   ----------
  
                                                                              $2,402,857   $2,291,290
                                                                              ==========   ==========
  </TABLE>
  
  
  
  
  
  <PAGE>2
  
  
                      Commerce Bancorp, Inc. and Subsidiaries
                         Consolidated Statements of Income
                                    (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                         Three Months Ended            Nine Months Ended
                                                                            September 30,                 September 30,
                         (dollars in thousands, except per 
                          share amounts)                                  1995         1994            1995          1994
  <S>                                                                  <C>           <C>             <C>           <C>
  Interest               Interest and fees on loans                      $20,552      $16,781         $58,901       $47,784
  income                 Interest on investments                          19,986       21,447          61,851        60,095
                         Other interest                                    1,036          276           2,833           687
                                                                         -------      -------         -------       -------
                              Total interest income                       41,574       38,504         123,585       108,566
                                                                         -------      -------         -------       -------
  
  Interest               Interest on deposits:
  expense                   Demand                                         4,438        2,468          11,724         6,963
                            Savings                                        2,874        3,004           8,355         8,883
                            Time                                           9,564        4,870          25,101        14,454
                                                                         -------      -------         -------       -------
                              Total interest on deposits                  16,876       10,342          45,180        30,300
                         Interest on other borrowed money                    220        4,007           6,379         9,744
                         Interest on long-term debt                          507          507           1,519         1,519
                                                                         -------      -------         -------       -------
                              Total interest expense                      17,603       14,856          53,078        41,563
                                                                         -------      -------         -------       -------
  
                         Net interest income                              23,971       23,648          70,507        67,003
                         Provision for loan losses                           388        1,050           1,633         3,160
                                                                         -------      -------         -------       -------
                         Net interest income after provision for loan
                           losses                                         23,583       22,598          68,874        63,843
  
  Noninterest            Deposit charges and service fees                  4,249        3,387          11,711        10,282
  income                 Other operating income                            1,126          794           3,054         2,351
                         Net investment securities gains                      88          641             106           641
                                                                         -------      -------         -------       -------
                              Total noninterest income                     5,463        4,822          14,871        13,274
                                                                         -------      -------         -------       -------
  
  Noninterest            Salaries                                          6,870        5,924          19,469        16,833
  expense                Benefits                                          1,517        1,733           5,165         4,936
                         Occupancy                                         2,285        2,030           6,222         5,835
                         Furniture and equipment                           2,441        2,302           6,996         6,158
                         Office                                            1,916        1,770           5,259         4,643
                         Audit and regulatory fees and assessments           275        1,315           2,756         3,662
                         Marketing                                           715          555           2,041         1,801
                         Other real estate (net)                             516          800           1,807         2,255
                         Other                                             2,657        2,347           6,767         6,738
                                                                         -------      -------         -------       -------
                              Total noninterest expenses                  19,192       18,776          56,482        52,861
                                                                         -------      -------         -------       -------
  
                         Income before income taxes                        9,854        8,644          27,263        24,256
                         Provision for federal and state income taxes      3,577        3,128           9,927         8,814
                                                                         -------      -------         -------       -------
                         Net income                                        6,277        5,516          17,336        15,442
  
                         Dividends on preferred stocks                       141          141             422           927
                                                                         -------      -------         -------       -------
                         Net income applicable to common stock            $6,136       $5,375         $16,914       $14,515
                                                                         =======      =======         =======       =======
  
                         Net income per common and common equivalent 
                           share:
                            Primary                                        $0.56        $0.62           $1.59         $1.76
                                                                         -------      -------         -------       -------
                            Fully diluted                                  $0.53        $0.57           $1.53         $1.59
                                                                         -------      -------         -------       -------
                         Average common and common equivalent shares 
                           outstanding:
                            Primary                                       11,013        8,712          10,601         8,264
                                                                         -------      -------         -------       -------
                            Fully diluted                                 11,616        9,682          11,303         9,656
                                                                         -------      -------         -------       -------
                         Cash dividends declared, common stock             $0.16        $0.15           $0.47         $0.43
                                                                         =======      =======         =======       =======
  </TABLE>
  
  
  <PAGE>3
  
  
                      Commerce Bancorp, Inc. And Subsidiaries
                       Consolidated Statements of Cash Flows
                                    (unaudited)
  
  <TABLE>
  <CAPTION>
  
                                                                                    Nine Months Ended September 30,
                          (dollars in thousands)                                          1995         1994
  <S>                                                                                  <C>          <C>
  Operating activities    Net income                                                    $  17,336    $  15,442
                          Adjustments to reconcile net income to net cash
                             provided by operating activities:
                                Provision for loan losses                                   1,633        3,160
                                Provision for depreciation, amortization accretion          9,779       13,200
                                Gains on sales of securities available for sale               (88)        (641)
                                Proceeds from sales of mortgages held for sale              9,887       73,420
                                Originations of mortgages held for sale                   (15,257)     (31,422)
                                Net loan (chargeoffs)                                        (664)      (1,855)
                                Net increase in trading securities                         (1,735)
                                (Increase) decrease in other assets                        (1,708)       8,750
                                Decrease in other liabilities                                (961)     (19,209)
                                                                                        ---------    ---------
                                     Net cash provided by operating activities             18,222       60,845
  
  Investing activities    Proceeds from the sales of securities available for sale            128          961
                          Proceeds from the maturity of securities available for sale      12,943       32,619
                          Proceeds from the maturity of securities held to maturity        63,624      108,291
                          Purchase of securities available for sale                       (48,126)      (1,074)
                          Purchase of securities held to maturity                         (11,452)    (346,002)
                          Net increase in loans                                           (73,257)     (68,771)
                          Proceeds from sales of loans                                      5,326        4,839
                          Purchases of premises and equipment                             (15,119)     (16,482)
                                                                                        ---------    ---------
                                      Net cash (used) by investing activities             (65,933)    (285,619)
  
  Financing activities    Net increase in demand and savings deposits                     137,442       58,159
                          Net increase (decrease)  in time deposits                       244,215      (30,853)
                          Net (decrease) increase in other borrowed money                (312,895)     189,417
                          Issuance of common stock                                         25,774
                          Dividends paid                                                   (5,240)      (4,288)
                          Proceeds from issuance of common stock under
                               dividend reinvestment and other stock plans                  2,112        1,610
                          Purchase of treasury stock                                         (352)        (205)
                          Other                                                               147           44
                                                                                        ---------    ---------
                                      Net cash provided by financing activities            91,203      213,884
  
                          Increase (decrease)  in cash and cash equivalent                 43,493      (10,890)
                          Cash and cash equivalents at beginning of year                  129,447      105,725
                                                                                        ---------    ---------
                          Cash and cash equivalents at end of period                    $ 172,940    $  94,835
                                                                                        ---------    ---------
  
                          Supplemental disclosures of cash flow information:
                            Cash paid during the period for:
                              Interest                                                  $  53,398    $  40,216
                              Income taxes                                                  9,608        9,164
                                                                                        ---------    ---------
  </TABLE>
  
  
  <PAGE>4
  
                      COMMERCE BANCORP, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (Unaudited)
  
  A.       Consolidated Financial Statements
  
                    The  consolidated  financial  statements  included herein have
           been prepared  without audit  pursuant to the rules and  regulations of
           the  Securities  and  Exchange  Commission.   Certain  information  and
           footnote disclosures normally included in financial statements prepared
           in accordance with generally accepted  accounting  principles have been
           condensed  or  omitted  pursuant  to such  rules and  regulations.  The
           accompanying  condensed  consolidated  financial statements reflect all
           adjustments  which are, in the opinion of  management,  necessary  to a
           fair statement of the results for the interim periods  presented.  Such
           adjustments  are  of  a  normal  recurring   nature.   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 September 30, 1995, and for the nine
           months ended September 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 the 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 $4,615,000 through principal  reductions.  Accordingly,
           the loan amount is  reflected  in the  Company's  consolidated  balance
           sheet  as a  liability  and  an  equal  amount,  representing  deferred
           employee benefits,  has been recorded as a deduction from stockholders'
           equity.  The ESOP  obtained  the loan in 1990 to acquire a new class of
           Company Cumulative Convertible Preferred Stock (Series C) at a price of
           $18.00 per share.  The loan was  refinanced in 1994,  and is payable in
           quarterly installments with the final payment due January 28, 2000. The
           loan bears interest at a variable rate,  although the rate can be fixed
           at future repricing dates in accordance with the loan agreement. As the
           Company makes annual
  
  <PAGE>5
  
           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.
  
  
  
  <PAGE>6
  
  
  Item 2.  Management's Discussion and Analysis of Financial Condition and 
           Results of Operation Capital Resources
  
                    At September 30, 1995,  stockholders'  equity  totaled  $156.4
           million or 6.51% 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
                                                September 30,       September 30,     Regulatory       September 30,
                                                    1995                1994         Requirements          1995
                                                    ----                ----         ------------          ----
                                                                                                      (in thousands)
  <S>                                            <C>                <C>              <C>             <C>
           Company
                  Risk based capital ratios:
                    Tier 1                          12.84%              9.94%          4.00%            $103,420
                    Total capital                   15.92              13.17           8.00               92,630
                  Leverage ratio                     6.37               4.67           3.00-5.00          79,300 (1)
  
           Commerce NJ
                  Risk based capital ratios:
                    Tier 1                          14.78%             11.41%          4.00%             $99,030
                    Total capital                   15.92              12.44           8.00               72,770
                  Leverage ratio                     7.21               5.31           3.00-5.00          79,330 (1)
  
           Commerce PA
                  Risk based capital ratios:
                    Tier 1                          11.77%             12.33%          4.00%            $  9,340
                    Total capital                   12.69              13.39           8.00                5,640
                  Leverage ratio                     6.10               6.30           3.00-5.00           7,200 (1)
  
           Commerce Shore Risk based capital ratios:
                    Tier 1                          13.56%             13.17%          4.00%             $12,760
                    Total capital                   14.60              14.42           8.00                8,810
                  Leverage ratio                     6.18               5.97           3.00-5.00           9,320 (1)
  <FN>
           (1) Based on a minimum regulatory requirement of 3.00%
  </FN>
  </TABLE>
  
                  At September 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%.
  
  
  <PAGE>7
  
  
           Deposits
  
                    Total  deposits at September 30, 1995 were $2.22  billion,  up
           $444.0  million,  or 25%  over  total  deposits  of  $1.77  billion  at
           September  30, 1994,  and up by $381.7  million,  or 21% from  year-end
           1994.  Deposit  growth during the first nine months of 1995 was largely
           from  the  public  sector,   supported  by  growth  in  core  deposits,
           particularly 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 September 30, 1995 (dollar amounts in millions):
  
  <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                                           $ 444         $14        $29      $240       $143    $   870
             Investment securities                              61          37         80       426        647      1,251
             Federal funds sold                                 32                                                     32
                                                           -------     -------    -------   -------    -------    -------
           Total interest-earning assets                       537          51        109       666        790      2,153
                                                           -------     -------    -------   -------    -------    ------- 
           Interest-bearing liabilities
             Deposits
                Transaction accounts                           355                                         752      1,107
                Time                                           304         102        163       125         19        713
             Other borrowed money
             Long-term debt                                                                                 23         23
                                                           -------     -------    -------   -------    -------    ------- 
           Total interest-bearing liabilities                  659         102        163       125        794      1,843
                                                           -------     -------    -------   -------    -------    ------- 
  
           Period GAP                                         (122)        (51)       (54)      541          4     $  310
                                                           -------     -------    -------   -------    -------    ------- 
           Cumulative GAP                                   $ (122)      $(173)     $(227)    $ 314       $310
                                                            =======    ========   ========  =======    =======
  </TABLE>
  
  
           The  Company's  negative one year GAP  position has been  significantly
           reduced  during the first nine  months of 1995,  primarily  through the
           elimination of short-term borrowings at September 30, 1995.
  
                    Management   utilizes   additional  tools,   including  income
           simulation  analysis,  which it  believes  provides  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.
  
  
  <PAGE>8
  
  
                    The Company's  income  simulation  model  indicates that a 100
           basis point increase or decrease in general market  interest rates over
           the next 12 months would have little  effect on projected  net interest
           income.  Management  continues to review and refine its  interest  rate
           risk management process in response to the changing economic climate.
  
                    In the event the Company's  interest rate risk models indicate
           an unacceptable  level of risk, the Company could undertake a number of
           actions that would reduce this risk, including the sale of a portion of
           its  available  for  sale  portfolio,  or the  use of  risk  management
           strategies such as interest rate swaps and caps.  
  
                    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,  as
           required.
  
           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 nine
           months of 1995,  the  Company  eliminated  its  outstanding  short-term
           borrowings, primarily through increased deposits.
  
           Interest Earning Assets
  
                  For the nine month period  ended  September  30, 1995,  interest
           earning  assets  increased  $83.1  million from $2.07  billion to $2.16
           billion.  This  increase  was  primarily  in the loan  portfolio  which
           increased $67.9 million.
  
  
  <PAGE>9
  
  
           Loans
  
                    During the first nine months of 1995,  loans  increased  $67.9
           million from $802.0 million to $869.9  million.  At September 30, 1995,
           loans represented 39% of total deposits and 36% of total assets.
  
                    The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                    In  total,  for the  first  nine  months  of 1995,  securities
           decreased  $12.7 million from $1.26 billion to $1.25  billion.  For the
           nine month period ended  September 30, 1995,  securities  available for
           sale increased from $118.9  million to $159.6  million,  as a result of
           securities purchases in the third quarter.  Securities held to maturity
           decreased  from $1.15 billion to $1.09 billion, reflecting  payments on
           the existing portfolio. Trading securities increased to $1.7 million as
           a result of the  establishment of Commerce  Capital,  a bank securities
           dealer  department of Commerce NJ. At September  30, 1995,  the average
           life of the investment portfolio is approximately 6.8 years.
  
                  Short-term  investments  (Federal  funds sold)  increased  $22.5
           million from $9.8  million to $32.2  million.  At  September  30, 1995,
           total  securities and Federal funds sold  aggregated  $1.28 billion and
           represented 53% of total assets.
  
           Net Income
  
                  Net income for the third  quarter of 1995 was $6.3  million,  an
           increase of $761 thousand over the $5.5 million  recorded for the third
           quarter of 1994. Net income for the first nine months of 1995 was $17.3
           million, an increase of $1.9 million over the $15.4 million recorded in
           the first nine 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 third
           quarter of 1995 and for the nine months of 1995 were $.53 and $1.53 per
           common  share  compared  to $.57 and  $1.59  per  common  share for the
           respective 1994 periods.  Net income per share for the third quarter of
           1995  and for the  first  nine  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  third   quarter  of  1995  were   1.06%  and   16.60%,
           respectively,  compared to 0.97% and 20.56%, respectively, for the same
           1994  period.  ROA and ROE for the first nine months of 1995 were 0.99%
           and 16.40%, respectively, compared to 0.93% and 19.80% a year ago.
  
           Net Interest Income
  
                    Net  interest  income  totaled  $24.0  million  for the  third
           quarter of 1995, an increase of $323 thousand or 1%, from $23.6 million
           in the third  quarter of 1994.  Net interest  income for the first nine
           months of 1995 totaled  $70.5  million,  up $3.5 million or 5% from the
           first nine months of
  
  <PAGE>10
  
  
           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  $641  thousand  and $1.6
           million for the three and nine months ended September 30, respectively,
           over the comparable 1994 periods. These increases were due primarily to
           increased deposit charges and service fees, which offset a reduction in
           gains from the sale of investment securities.
  
           Noninterest Expense
  
                    For the third  quarter of 1995,  noninterest  expense  totaled
           $19.2  million,  an increase of $416 thousand,  or 2.2%,  over the same
           period in 1994.  Contributing  to this increase was new branch activity
           over the past twelve  months,  with the number of  branches  increasing
           from 42 at September  30, 1994 to 47 at September 30, 1995. As a result
           of the  addition  of these  offices,  staff,  facilities,  and  related
           expenses rose accordingly.  Benefits  decreased $216 thousand primarily
           as a result of favorable  claims  experience  in the  employee  medical
           plan.  Audit and  regulatory  fees and  assessments  decreased  by $1.0
           million due to the reduction in Federal deposit insurance rates enacted
           retroactive to June 1, 1995.
  
                    For the first nine months of 1995, noninterest expense totaled
           $56.5  million,  an increase of $3.6 million,  or 6.9%,  over the first
           nine  months of 1994.  Contributing  to this  increase  was new  branch
           activity as noted above.
  
                    One  key  measure  used to  monitor  progress  in  controlling
           overhead  expenses  is the ratio of  noninterest  expenses  to  average
           assets.  For the first nine months of 1995,  this ratio  equaled  3.22%
           versus 3.17% 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 64.04% for the first  nine  months of 1995 as  compared  to
           63.04% for the same 1994 period.
  
           Loan and Asset Quality
  
                    Total non-performing  assets  (non-performing  loans and other
           real  estate,  excluding  loans  past  due 90 days or  more  and  still
           accruing interest) at September 30, 1995 were $17.9 million, or .74% of
           total  assets  compared  to $22.3  million  or .97% of total  assets at
           December  31,  1994 and  $23.9  million  or 1.06%  of total  assets  at
           September 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  September  30,  1995 were $7.7  million or .89% of total
           loans compared to $11.8 million or 1.47% of total loans at December 31,
           1994 and $10.7  million or 1.40% of total loans at September  30, 1994.
           At  September  30,  1995,  loans  past  due 90 days or more  and  still
           accruing interest amounted to $77 thousand compared to $211 thousand at
           December 31, 1994 and $199 thousand at September  30, 1994.  Additional
           loans considered as potential  problem loans by the Company's  internal
           loan review  department  ($7.6  million at  September  30,  1995,  $7.0
           million at December 31, 1994 and $6.6  million at  September  30, 1994)
           have been evaluated as to risk exposure in determining  the adequacy of
           the allowance for loan losses.
  
  <PAGE>11
  
                    Other real estate  (ORE) at September  30, 1995 totaled  $10.1
           million  compared  to $10.5  million  at  December  31,  1994 and $13.2
           million at September 30, 1994.  These properties have been written down
           to the lower of cost or fair value less disposition costs.
  
                    On pages 12 and 13 are tabular  presentation  showing detailed
           information about the Company's  non-performing loans and assets and an
           analysis of the  Company's  allowance for loan losses and other related
           data for September 30, 1995, December 31, 1994, and September 30, 1994.
  
  
  <PAGE>12
  
  
           The following  summary presents  information  regarding  non-performing
           loans and  assets  as of  September  30,  1995 and the  preceding  four
           quarters: (dollar amounts in thousands)
  
  <TABLE>
  <CAPTION>
  
                                       Sept. 30,     June 30,    March 31,    Dec. 31,    Sept. 30,
                                          1995         1995         1995        1994        1994
  <S>                                 <C>            <C>          <C>         <C>        <C>
  
  Non-accrual loans:
    Commercial                               $658         $897       $1,379      $1,624      $1,810
    Consumer                                1,186        1,063        1,025       1,427       1,629
    Real Estate:
      Construction                            911          911          955         955         922
      Mortgage                              4,441        7,003        7,201       7,240       5,908
                                          -------      -------      -------     -------     -------
        Total non-accrual loans             7,196        9,874       10,560      11,246      10,269
                                          -------      -------      -------     -------     -------
  
  Restructured loans
    Commercial                                173          140          142         143         157
    Consumer                                   69           70           29          29
    Real Estate:
      Construction
      Mortgage                                301           85          302         404         280
                                          -------      -------      -------     -------     -------
        Total restructured loans              543          295          473         576         437
                                          -------      -------      -------     -------     -------
  
    Total non-performing loans              7,739       10,169       11,033      11,822      10,706
                                          -------      -------      -------     -------     -------
  
  Other real estate                        10,120        8,591        9,880      10,517      13,170
                                          -------      -------      -------     -------     -------
  
  Total non-performing assets              17,859       18,760       20,913      22,339      23,876
                                          -------      -------      -------     -------     -------
  
  Loans past due 90 days or more
    and still accruing                         77           86           92         211         199
                                          -------      -------      -------     -------     -------
  
  Total non-performing assets and
    loans past due 90 days or more        $17,936      $18,846      $21,005     $22,550     $24,075
                                          =======      =======      =======     =======     =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                    0.89%        1.20%        1.35%       1.47%       1.40%
  
  Total non-performing assets as a
    percentage of total period-end 
    assets                                   0.74%        0.79%        0.92%       0.97%       1.06%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end
    assets                                   0.75%        0.80%        0.92%       0.98%       1.07%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                     168%         129%         117%        102%        106%
  
  Allowance for loan losses as a 
    percentage of total period-end loans     1.50%        1.54%        1.57%       1.50%       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              11%          12%          13%         18%         20%
  </TABLE>
  
  <PAGE>13
  
  
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and other related data: (dollar amounts in thousands)
  
  <TABLE>
  <CAPTION>
                                                                  Year
                                       Nine Months Ended         Ended
                                     09/30/95     09/30/94      12/31/94
  <S>                                <C>         <C>          <C>
  Balance at beginning of period      $12,036      $10,023       $10,023
  Provisions charged to operating 
    expenses                            1,633        3,160         4,210
                                      -------      -------       -------
                                       13,669       13,183        14,233
  Recoveries on loans charged-off:
    Commercial                             94           71           100
    Consumer                              120           93           123
    Real estate                           288            1            22
                                      -------      -------       -------
  Total recoveries                        502          165           245
  
  Loans charged-off:
    Commercial                           (526)      (1,285)       (1,519)
    Consumer                             (326)        (383)         (530)
    Real estate                          (314)        (352)         (393)
                                      -------      -------       -------
  Total charged-off                    (1,166)      (2,020)       (2,442)
                                      -------      -------       -------
  Net charge-offs                        (664)      (1,855)       (2,197)
                                      -------      -------       -------
  
  Balance at end of period            $13,005      $11,328       $12,036
                                      =======      =======       =======
  
  
  
  Net charge-offs as a percentage of
  average loans outstanding              0.11%        0.33%         0.29%
  </TABLE>
  
  
  <PAGE>14
  
  
  
                             PART II. OTHER INFORMATION
  
  
  
  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 third
                             quarter ended September 30, 1995.
  
  
  
  
  <PAGE>15
  
  
                                     SIGNATURES
  
  
  
  
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
  
                                                COMMERCE BANCORP, INC.
                                                     (Registrant)
  
  
  
  
  
  
  
  
  
  
  November 14, 1995                          /s/ C. EDWARD JORDAN, JR.
  - -----------------                          --------------------------
    (Date)                                      C. EDWARD JORDAN, JR.
                                              EXECUTIVE VICE PRESIDENT
                                            (PRINCIPAL FINANCIAL OFFICER)
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 52914}]
metadata_filer: {"company-data": {"conformed-name": "COMMERCE BANCORP INC /NJ/", "cik": "0000715096", "assigned-sic": "6022", "irs-number": "222433468", "state-of-incorporation": "NJ", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-12874", "film-number": "95592217"}, "business-address": {"street1": "COMMERCE ATRIUM", "street2": "1701 RTE 70 E", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400", "phone": "6097519000"}, "mail-address": {"street1": "1701 ROUTE 70 EAST", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                               WASHINGTON, D.C. 20549
  
                                     Form 10-Q
  
       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                      For the quarter ended September 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                                10,679,526
         (Title of Class)                      (No. of Shares Outstanding
                                                     as of 11/03/95)
  
   Series C ESOP Cumulative Con-
     vertible Preferred Stock                             417,000
           (Title of Class)                      (No. of Shares Outstanding
                                                      as of 11/03/95)
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                       INDEX
  
                                                                              Page
  
  PART I.  FINANCIAL INFORMATION
  
  Item 1.  Financial Statements
  
           Consolidated Balance Sheets (Unaudited)
               September 30, 1995 and December 31, 1994 .......................1
  
           Consolidated  Statements  of Income  (Unaudited)  
               Three months ended  September  30, 1995 and 
               September 30, 1994 and nine months ended  
               September  30, 1995 and  September 30, 1994 ....................2
  
           Consolidated Statements of Cash Flows (Unaudited)
               Nine months ended September 30, 1995 and
               September 30, 1994 .............................................3
  
           Notes to Consolidated Financial Statements ( Unaudited) ............4
  
  Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operation .............................6
  
  PART II. OTHER INFORMATION
  
  Item 6.  Exhibits and Reports on Form 8-K ..................................14
  1
  
                      Commerce Bancorp, Inc. and Subsidiaries
                            Consolidated Balance Sheets
                                    (unaudited)
  September 30,  December 31,
                       (dollars in thousands)                                    1995          1994
  Assets               Cash and due from banks                                $  140,740   $  119,697
                       Federal funds sold                                         32,200        9,750
                                                                              ----------   ----------
                            Cash and cash equivalents                            172,940      129,447
                       Mortgages held for sale                                     7,633        2,263
                       Securities available for sale                             159,570      118,855
                       Securities held to maturity:
                            U.S. Government agency mortgage-backed
                              obligations                                      1,038,869    1,113,359
                            Collateralized mortgage obligations                    1,678        2,390
                            Obligations of state and political subdivisions       10,060          565
                            Other securities                                      39,415       28,819
                                                                              ----------   ----------
                              Total securities held to maturity
                              (market value 1995-$1,059,366;
                               1994-$1,039,311)                                1,090,022    1,145,133
                       Trading securities                                          1,735
  
                       Loans                                                     869,883      801,952
                            Less allowance for loan losses                        13,005       12,036
                                                                              ----------   ----------
                                                                                 856,878      789,916
                       Bank premises and equipment, net                           67,539       57,997
                       Other assets                                               46,540       47,679
                                                                              ----------   ----------
                                                                              $2,402,857   $2,291,290
                                                                              ==========   ==========
  
  Liabilities          Deposits:
                            Demand:
                              Interest-bearing                                $  634,625   $  510,345
                              Noninterest-bearing                                395,824      367,421
                            Savings                                              473,041      488,282
                            Time                                                 712,739      468,524
                                                                              ----------   ----------
                              Total deposits                                   2,216,229    1,834,572
                       Other borrowed money                                                   312,895
                       Other liabilities                                           2,604        3,565
                       Obligation to Employee Stock Ownership Plan (ESOP)          4,615        5,385
                       Long-term debt                                             23,000       23,000
                                                                              ----------   ----------
                                                                               2,246,448    2,179,417
  
  Stockholders'        Common stock, 10,777,252 shares issued
  Equity                   (8,889,506 shares in 1994)                             16,839       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                  112,318       80,033
                       Retained earnings                                          25,985       17,757
                                                                              ----------   ----------
                                                                                 162,648      118,530
                       Less commitment to ESOP                                     4,615        5,385
                       Less treasury stock, at cost, 100,159 common shares
                            in 1995 (79,520 in 1994)                               1,624        1,272
                                                                              ----------   ----------
                              Total stockholders' equity                         156,409      111,873
                                                                              ----------   ----------
  
                                                                              $2,402,857   $2,291,290
                                                                              ==========   ==========
  2
  
                      Commerce Bancorp, Inc. and Subsidiaries
                         Consolidated Statements of Income
                                    (unaudited)
  Three Months Ended            Nine Months Ended
                                                                            September 30,                 September 30,
                         (dollars in thousands, except per 
                          share amounts)                                  1995         1994            1995          1994
  Interest               Interest and fees on loans                      $20,552      $16,781         $58,901       $47,784
  income                 Interest on investments                          19,986       21,447          61,851        60,095
                         Other interest                                    1,036          276           2,833           687
                                                                         -------      -------         -------       -------
                              Total interest income                       41,574       38,504         123,585       108,566
                                                                         -------      -------         -------       -------
  
  Interest               Interest on deposits:
  expense                   Demand                                         4,438        2,468          11,724         6,963
                            Savings                                        2,874        3,004           8,355         8,883
                            Time                                           9,564        4,870          25,101        14,454
                                                                         -------      -------         -------       -------
                              Total interest on deposits                  16,876       10,342          45,180        30,300
                         Interest on other borrowed money                    220        4,007           6,379         9,744
                         Interest on long-term debt                          507          507           1,519         1,519
                                                                         -------      -------         -------       -------
                              Total interest expense                      17,603       14,856          53,078        41,563
                                                                         -------      -------         -------       -------
  
                         Net interest income                              23,971       23,648          70,507        67,003
                         Provision for loan losses                           388        1,050           1,633         3,160
                                                                         -------      -------         -------       -------
                         Net interest income after provision for loan
                           losses                                         23,583       22,598          68,874        63,843
  
  Noninterest            Deposit charges and service fees                  4,249        3,387          11,711        10,282
  income                 Other operating income                            1,126          794           3,054         2,351
                         Net investment securities gains                      88          641             106           641
                                                                         -------      -------         -------       -------
                              Total noninterest income                     5,463        4,822          14,871        13,274
                                                                         -------      -------         -------       -------
  
  Noninterest            Salaries                                          6,870        5,924          19,469        16,833
  expense                Benefits                                          1,517        1,733           5,165         4,936
                         Occupancy                                         2,285        2,030           6,222         5,835
                         Furniture and equipment                           2,441        2,302           6,996         6,158
                         Office                                            1,916        1,770           5,259         4,643
                         Audit and regulatory fees and assessments           275        1,315           2,756         3,662
                         Marketing                                           715          555           2,041         1,801
                         Other real estate (net)                             516          800           1,807         2,255
                         Other                                             2,657        2,347           6,767         6,738
                                                                         -------      -------         -------       -------
                              Total noninterest expenses                  19,192       18,776          56,482        52,861
                                                                         -------      -------         -------       -------
  
                         Income before income taxes                        9,854        8,644          27,263        24,256
                         Provision for federal and state income taxes      3,577        3,128           9,927         8,814
                                                                         -------      -------         -------       -------
                         Net income                                        6,277        5,516          17,336        15,442
  
                         Dividends on preferred stocks                       141          141             422           927
                                                                         -------      -------         -------       -------
                         Net income applicable to common stock            $6,136       $5,375         $16,914       $14,515
                                                                         =======      =======         =======       =======
  
                         Net income per common and common equivalent 
                           share:
                            Primary                                        $0.56        $0.62           $1.59         $1.76
                                                                         -------      -------         -------       -------
                            Fully diluted                                  $0.53        $0.57           $1.53         $1.59
                                                                         -------      -------         -------       -------
                         Average common and common equivalent shares 
                           outstanding:
                            Primary                                       11,013        8,712          10,601         8,264
                                                                         -------      -------         -------       -------
                            Fully diluted                                 11,616        9,682          11,303         9,656
                                                                         -------      -------         -------       -------
                         Cash dividends declared, common stock             $0.16        $0.15           $0.47         $0.43
                                                                         =======      =======         =======       =======
  3
  
                      Commerce Bancorp, Inc. And Subsidiaries
                       Consolidated Statements of Cash Flows
                                    (unaudited)
  Nine Months Ended September 30,
                          (dollars in thousands)                                          1995         1994
  Operating activities    Net income                                                    $  17,336    $  15,442
                          Adjustments to reconcile net income to net cash
                             provided by operating activities:
                                Provision for loan losses                                   1,633        3,160
                                Provision for depreciation, amortization accretion          9,779       13,200
                                Gains on sales of securities available for sale               (88)        (641)
                                Proceeds from sales of mortgages held for sale              9,887       73,420
                                Originations of mortgages held for sale                   (15,257)     (31,422)
                                Net loan (chargeoffs)                                        (664)      (1,855)
                                Net increase in trading securities                         (1,735)
                                (Increase) decrease in other assets                        (1,708)       8,750
                                Decrease in other liabilities                                (961)     (19,209)
                                                                                        ---------    ---------
                                     Net cash provided by operating activities             18,222       60,845
  
  Investing activities    Proceeds from the sales of securities available for sale            128          961
                          Proceeds from the maturity of securities available for sale      12,943       32,619
                          Proceeds from the maturity of securities held to maturity        63,624      108,291
                          Purchase of securities available for sale                       (48,126)      (1,074)
                          Purchase of securities held to maturity                         (11,452)    (346,002)
                          Net increase in loans                                           (73,257)     (68,771)
                          Proceeds from sales of loans                                      5,326        4,839
                          Purchases of premises and equipment                             (15,119)     (16,482)
                                                                                        ---------    ---------
                                      Net cash (used) by investing activities             (65,933)    (285,619)
  
  Financing activities    Net increase in demand and savings deposits                     137,442       58,159
                          Net increase (decrease)  in time deposits                       244,215      (30,853)
                          Net (decrease) increase in other borrowed money                (312,895)     189,417
                          Issuance of common stock                                         25,774
                          Dividends paid                                                   (5,240)      (4,288)
                          Proceeds from issuance of common stock under
                               dividend reinvestment and other stock plans                  2,112        1,610
                          Purchase of treasury stock                                         (352)        (205)
                          Other                                                               147           44
                                                                                        ---------    ---------
                                      Net cash provided by financing activities            91,203      213,884
  
                          Increase (decrease)  in cash and cash equivalent                 43,493      (10,890)
                          Cash and cash equivalents at beginning of year                  129,447      105,725
                                                                                        ---------    ---------
                          Cash and cash equivalents at end of period                    $ 172,940    $  94,835
                                                                                        ---------    ---------
  
                          Supplemental disclosures of cash flow information:
                            Cash paid during the period for:
                              Interest                                                  $  53,398    $  40,216
                              Income taxes                                                  9,608        9,164
                                                                                        ---------    ---------
  4
  
                      COMMERCE BANCORP, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    (Unaudited)
  
  A.       Consolidated Financial Statements
  
                    The  consolidated  financial  statements  included herein have
           been prepared  without audit  pursuant to the rules and  regulations of
           the  Securities  and  Exchange  Commission.   Certain  information  and
           footnote disclosures normally included in financial statements prepared
           in accordance with generally accepted  accounting  principles have been
           condensed  or  omitted  pursuant  to such  rules and  regulations.  The
           accompanying  condensed  consolidated  financial statements reflect all
           adjustments  which are, in the opinion of  management,  necessary  to a
           fair statement of the results for the interim periods  presented.  Such
           adjustments  are  of  a  normal  recurring   nature.   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 September 30, 1995, and for the nine
           months ended September 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 the 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 $4,615,000 through principal  reductions.  Accordingly,
           the loan amount is  reflected  in the  Company's  consolidated  balance
           sheet  as a  liability  and  an  equal  amount,  representing  deferred
           employee benefits,  has been recorded as a deduction from stockholders'
           equity.  The ESOP  obtained  the loan in 1990 to acquire a new class of
           Company Cumulative Convertible Preferred Stock (Series C) at a price of
           $18.00 per share.  The loan was  refinanced in 1994,  and is payable in
           quarterly installments with the final payment due January 28, 2000. The
           loan bears interest at a variable rate,  although the rate can be fixed
           at future repricing dates in accordance with the loan agreement. As the
           Company makes annual
  5
  
           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.
  6
  
  Item 2.  Management's Discussion and Analysis of Financial Condition and 
           Results of Operation Capital Resources
  
                    At September 30, 1995,  stockholders'  equity  totaled  $156.4
           million or 6.51% 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
                                                September 30,       September 30,     Regulatory       September 30,
                                                    1995                1994         Requirements          1995
                                                    ----                ----         ------------          ----
                                                                                                      (in thousands)
  Company
                  Risk based capital ratios:
                    Tier 1                          12.84%              9.94%          4.00%            $103,420
                    Total capital                   15.92              13.17           8.00               92,630
                  Leverage ratio                     6.37               4.67           3.00-5.00          79,300 (1)
  
           Commerce NJ
                  Risk based capital ratios:
                    Tier 1                          14.78%             11.41%          4.00%             $99,030
                    Total capital                   15.92              12.44           8.00               72,770
                  Leverage ratio                     7.21               5.31           3.00-5.00          79,330 (1)
  
           Commerce PA
                  Risk based capital ratios:
                    Tier 1                          11.77%             12.33%          4.00%            $  9,340
                    Total capital                   12.69              13.39           8.00                5,640
                  Leverage ratio                     6.10               6.30           3.00-5.00           7,200 (1)
  
           Commerce Shore Risk based capital ratios:
                    Tier 1                          13.56%             13.17%          4.00%             $12,760
                    Total capital                   14.60              14.42           8.00                8,810
                  Leverage ratio                     6.18               5.97           3.00-5.00           9,320 (1)
  (1) Based on a minimum regulatory requirement of 3.00%
  At September 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%.
  7
  
           Deposits
  
                    Total  deposits at September 30, 1995 were $2.22  billion,  up
           $444.0  million,  or 25%  over  total  deposits  of  $1.77  billion  at
           September  30, 1994,  and up by $381.7  million,  or 21% from  year-end
           1994.  Deposit  growth during the first nine months of 1995 was largely
           from  the  public  sector,   supported  by  growth  in  core  deposits,
           particularly 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 September 30, 1995 (dollar amounts in millions):
  1-90      91-180      181-365     1-5     Beyond
                                                             Days       Days        Days      Years    5 Years    Total
  Rate Sensitive:
           Interest-earning assets
             Loans                                           $ 444         $14        $29      $240       $143    $   870
             Investment securities                              61          37         80       426        647      1,251
             Federal funds sold                                 32                                                     32
                                                           -------     -------    -------   -------    -------    -------
           Total interest-earning assets                       537          51        109       666        790      2,153
                                                           -------     -------    -------   -------    -------    ------- 
           Interest-bearing liabilities
             Deposits
                Transaction accounts                           355                                         752      1,107
                Time                                           304         102        163       125         19        713
             Other borrowed money
             Long-term debt                                                                                 23         23
                                                           -------     -------    -------   -------    -------    ------- 
           Total interest-bearing liabilities                  659         102        163       125        794      1,843
                                                           -------     -------    -------   -------    -------    ------- 
  
           Period GAP                                         (122)        (51)       (54)      541          4     $  310
                                                           -------     -------    -------   -------    -------    ------- 
           Cumulative GAP                                   $ (122)      $(173)     $(227)    $ 314       $310
                                                            =======    ========   ========  =======    =======
  The  Company's  negative one year GAP  position has been  significantly
           reduced  during the first nine  months of 1995,  primarily  through the
           elimination of short-term borrowings at September 30, 1995.
  
                    Management   utilizes   additional  tools,   including  income
           simulation  analysis,  which it  believes  provides  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.
  8
  
                    The Company's  income  simulation  model  indicates that a 100
           basis point increase or decrease in general market  interest rates over
           the next 12 months would have little  effect on projected  net interest
           income.  Management  continues to review and refine its  interest  rate
           risk management process in response to the changing economic climate.
  
                    In the event the Company's  interest rate risk models indicate
           an unacceptable  level of risk, the Company could undertake a number of
           actions that would reduce this risk, including the sale of a portion of
           its  available  for  sale  portfolio,  or the  use of  risk  management
           strategies such as interest rate swaps and caps.  
  
                    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,  as
           required.
  
           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 nine
           months of 1995,  the  Company  eliminated  its  outstanding  short-term
           borrowings, primarily through increased deposits.
  
           Interest Earning Assets
  
                  For the nine month period  ended  September  30, 1995,  interest
           earning  assets  increased  $83.1  million from $2.07  billion to $2.16
           billion.  This  increase  was  primarily  in the loan  portfolio  which
           increased $67.9 million.
  9
  
           Loans
  
                    During the first nine months of 1995,  loans  increased  $67.9
           million from $802.0 million to $869.9  million.  At September 30, 1995,
           loans represented 39% of total deposits and 36% of total assets.
  
                    The increase in the loan  portfolio was due primarily to loans
           secured by 1-4 family  residential  properties  (including  home equity
           loans) and loans secured by commercial real estate properties.
  
           Investments
  
                    In  total,  for the  first  nine  months  of 1995,  securities
           decreased  $12.7 million from $1.26 billion to $1.25  billion.  For the
           nine month period ended  September 30, 1995,  securities  available for
           sale increased from $118.9  million to $159.6  million,  as a result of
           securities purchases in the third quarter.  Securities held to maturity
           decreased  from $1.15 billion to $1.09 billion, reflecting  payments on
           the existing portfolio. Trading securities increased to $1.7 million as
           a result of the  establishment of Commerce  Capital,  a bank securities
           dealer  department of Commerce NJ. At September  30, 1995,  the average
           life of the investment portfolio is approximately 6.8 years.
  
                  Short-term  investments  (Federal  funds sold)  increased  $22.5
           million from $9.8  million to $32.2  million.  At  September  30, 1995,
           total  securities and Federal funds sold  aggregated  $1.28 billion and
           represented 53% of total assets.
  
           Net Income
  
                  Net income for the third  quarter of 1995 was $6.3  million,  an
           increase of $761 thousand over the $5.5 million  recorded for the third
           quarter of 1994. Net income for the first nine months of 1995 was $17.3
           million, an increase of $1.9 million over the $15.4 million recorded in
           the first nine 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 third
           quarter of 1995 and for the nine months of 1995 were $.53 and $1.53 per
           common  share  compared  to $.57 and  $1.59  per  common  share for the
           respective 1994 periods.  Net income per share for the third quarter of
           1995  and for the  first  nine  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  third   quarter  of  1995  were   1.06%  and   16.60%,
           respectively,  compared to 0.97% and 20.56%, respectively, for the same
           1994  period.  ROA and ROE for the first nine months of 1995 were 0.99%
           and 16.40%, respectively, compared to 0.93% and 19.80% a year ago.
  
           Net Interest Income
  
                    Net  interest  income  totaled  $24.0  million  for the  third
           quarter of 1995, an increase of $323 thousand or 1%, from $23.6 million
           in the third  quarter of 1994.  Net interest  income for the first nine
           months of 1995 totaled  $70.5  million,  up $3.5 million or 5% from the
           first nine months of
  10
  
           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  $641  thousand  and $1.6
           million for the three and nine months ended September 30, respectively,
           over the comparable 1994 periods. These increases were due primarily to
           increased deposit charges and service fees, which offset a reduction in
           gains from the sale of investment securities.
  
           Noninterest Expense
  
                    For the third  quarter of 1995,  noninterest  expense  totaled
           $19.2  million,  an increase of $416 thousand,  or 2.2%,  over the same
           period in 1994.  Contributing  to this increase was new branch activity
           over the past twelve  months,  with the number of  branches  increasing
           from 42 at September  30, 1994 to 47 at September 30, 1995. As a result
           of the  addition  of these  offices,  staff,  facilities,  and  related
           expenses rose accordingly.  Benefits  decreased $216 thousand primarily
           as a result of favorable  claims  experience  in the  employee  medical
           plan.  Audit and  regulatory  fees and  assessments  decreased  by $1.0
           million due to the reduction in Federal deposit insurance rates enacted
           retroactive to June 1, 1995.
  
                    For the first nine months of 1995, noninterest expense totaled
           $56.5  million,  an increase of $3.6 million,  or 6.9%,  over the first
           nine  months of 1994.  Contributing  to this  increase  was new  branch
           activity as noted above.
  
                    One  key  measure  used to  monitor  progress  in  controlling
           overhead  expenses  is the ratio of  noninterest  expenses  to  average
           assets.  For the first nine months of 1995,  this ratio  equaled  3.22%
           versus 3.17% 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 64.04% for the first  nine  months of 1995 as  compared  to
           63.04% for the same 1994 period.
  
           Loan and Asset Quality
  
                    Total non-performing  assets  (non-performing  loans and other
           real  estate,  excluding  loans  past  due 90 days or  more  and  still
           accruing interest) at September 30, 1995 were $17.9 million, or .74% of
           total  assets  compared  to $22.3  million  or .97% of total  assets at
           December  31,  1994 and  $23.9  million  or 1.06%  of total  assets  at
           September 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  September  30,  1995 were $7.7  million or .89% of total
           loans compared to $11.8 million or 1.47% of total loans at December 31,
           1994 and $10.7  million or 1.40% of total loans at September  30, 1994.
           At  September  30,  1995,  loans  past  due 90 days or more  and  still
           accruing interest amounted to $77 thousand compared to $211 thousand at
           December 31, 1994 and $199 thousand at September  30, 1994.  Additional
           loans considered as potential  problem loans by the Company's  internal
           loan review  department  ($7.6  million at  September  30,  1995,  $7.0
           million at December 31, 1994 and $6.6  million at  September  30, 1994)
           have been evaluated as to risk exposure in determining  the adequacy of
           the allowance for loan losses.
  11
  
                    Other real estate  (ORE) at September  30, 1995 totaled  $10.1
           million  compared  to $10.5  million  at  December  31,  1994 and $13.2
           million at September 30, 1994.  These properties have been written down
           to the lower of cost or fair value less disposition costs.
  
                    On pages 12 and 13 are tabular  presentation  showing detailed
           information about the Company's  non-performing loans and assets and an
           analysis of the  Company's  allowance for loan losses and other related
           data for September 30, 1995, December 31, 1994, and September 30, 1994.
  12
  
           The following  summary presents  information  regarding  non-performing
           loans and  assets  as of  September  30,  1995 and the  preceding  four
           quarters: (dollar amounts in thousands)
  Sept. 30,     June 30,    March 31,    Dec. 31,    Sept. 30,
                                          1995         1995         1995        1994        1994
  Non-accrual loans:
    Commercial                               $658         $897       $1,379      $1,624      $1,810
    Consumer                                1,186        1,063        1,025       1,427       1,629
    Real Estate:
      Construction                            911          911          955         955         922
      Mortgage                              4,441        7,003        7,201       7,240       5,908
                                          -------      -------      -------     -------     -------
        Total non-accrual loans             7,196        9,874       10,560      11,246      10,269
                                          -------      -------      -------     -------     -------
  
  Restructured loans
    Commercial                                173          140          142         143         157
    Consumer                                   69           70           29          29
    Real Estate:
      Construction
      Mortgage                                301           85          302         404         280
                                          -------      -------      -------     -------     -------
        Total restructured loans              543          295          473         576         437
                                          -------      -------      -------     -------     -------
  
    Total non-performing loans              7,739       10,169       11,033      11,822      10,706
                                          -------      -------      -------     -------     -------
  
  Other real estate                        10,120        8,591        9,880      10,517      13,170
                                          -------      -------      -------     -------     -------
  
  Total non-performing assets              17,859       18,760       20,913      22,339      23,876
                                          -------      -------      -------     -------     -------
  
  Loans past due 90 days or more
    and still accruing                         77           86           92         211         199
                                          -------      -------      -------     -------     -------
  
  Total non-performing assets and
    loans past due 90 days or more        $17,936      $18,846      $21,005     $22,550     $24,075
                                          =======      =======      =======     =======     =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                    0.89%        1.20%        1.35%       1.47%       1.40%
  
  Total non-performing assets as a
    percentage of total period-end 
    assets                                   0.74%        0.79%        0.92%       0.97%       1.06%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end
    assets                                   0.75%        0.80%        0.92%       0.98%       1.07%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                     168%         129%         117%        102%        106%
  
  Allowance for loan losses as a 
    percentage of total period-end loans     1.50%        1.54%        1.57%       1.50%       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              11%          12%          13%         18%         20%
  13
  
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and other related data: (dollar amounts in thousands)
  Year
                                       Nine Months Ended         Ended
                                     09/30/95     09/30/94      12/31/94
  Balance at beginning of period      $12,036      $10,023       $10,023
  Provisions charged to operating 
    expenses                            1,633        3,160         4,210
                                      -------      -------       -------
                                       13,669       13,183        14,233
  Recoveries on loans charged-off:
    Commercial                             94           71           100
    Consumer                              120           93           123
    Real estate                           288            1            22
                                      -------      -------       -------
  Total recoveries                        502          165           245
  
  Loans charged-off:
    Commercial                           (526)      (1,285)       (1,519)
    Consumer                             (326)        (383)         (530)
    Real estate                          (314)        (352)         (393)
                                      -------      -------       -------
  Total charged-off                    (1,166)      (2,020)       (2,442)
                                      -------      -------       -------
  Net charge-offs                        (664)      (1,855)       (2,197)
                                      -------      -------       -------
  
  Balance at end of period            $13,005      $11,328       $12,036
                                      =======      =======       =======
  
  Net charge-offs as a percentage of
  average loans outstanding              0.11%        0.33%         0.29%
  14
  
                             PART II. OTHER INFORMATION
  
  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 third
                             quarter ended September 30, 1995.
  15
  
                                     SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                                COMMERCE BANCORP, INC.
                                                     (Registrant)
  
  November 14, 1995                          /s/ C. EDWARD JORDAN, JR.
  - -----------------                          --------------------------
    (Date)                                      C. EDWARD JORDAN, JR.
                                              EXECUTIVE VICE PRESIDENT
                                            (PRINCIPAL FINANCIAL OFFICER)