content: SECURITIES AND EXCHANGE COMMISSION
  
                               WASHINGTON, D.C. 20549
  
                                      Form 10-Q
  
  
       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                         For the quarter ended June 30, 1996
  
                                         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                                        11,417,950
        (Title of Class)                               (No. of Shares Outstanding
                                                            as of 08/09/96)
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                                   417,000
       (Title of Class)                              (No. of Shares Outstanding
                                                           as of 08/09/96)
  
                                         1
  <PAGE>
  
  
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
  
                                        INDEX
  
                                                                           Page
  
  
  PART I. FINANCIAL INFORMATION
  
  Item 1. Financial Statements
  
          Consolidated Balance Sheets (unaudited)
             June 30, 1996 and December 31, 1995
  
          Consolidated  Statements  of Income  (unaudited)
             Three months ended June 30,  1996 and
             June 30, 1995 and six months ended June 30, 1996
             and June 30, 1995
  
          Consolidated Statements of Cash Flows  (unaudited)
             Six months ended June 30, 1996 and
             June 30, 1995
  
          Notes to Consolidated Financial Statements (unaudited)
  
  Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operation
  
  PART II. OTHER INFORMATION
  
  Item 4.  Submission of Matters to a Vote of Securities Holders
  
  Item 6.  Exhibits and Reports on Form 8-K
  
  
                                         2
  <PAGE>
  
                       Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                                                    June 30,     December 31,
  (dollars in thousands)                                                              1996          1995
  <S>                                                                             <C>            <C>       
  Assets
  Cash and due from banks                                                         $  143,810     $  147,465
  Federal funds sold                                                                       0         29,550
                                                                                  ----------     ----------
            Cash and cash equivalents                                                143,810        177,015
  Mortgages held for sale                                                              3,504          5,442
  Trading securities                                                                  11,606          8,843
  Securities available for sale                                                      653,871        520,314
  Securities held to maturity:
            U.S. Government agency mortgage-backed obligations                       614,844        653,412
            Obligations of state and political subdivisions                           12,549         12,289
            Other securities                                                          17,148         17,001
                                                                                  ----------     ----------
            Total securities held to maturity
            (market value 1996-$613,298; 1995-$671,539)                              644,541        682,702
  
  Loans                                                                            1,031,501        907,515
            Less allowance for loan losses                                            13,674         13,320
                                                                                  ----------     ----------
                                                                                   1,017,827        894,195
  Bank premises and equipment, net                                                    80,827         74,289
  Other assets                                                                        52,386         53,094
                                                                                  ----------     ----------
                                                                                  $2,608,372     $2,415,894
                                                                                  ==========     ==========
  
  Liabilities
  Deposits:
            Demand:
              Interest-bearing                                                    $  697,000     $  657,568
              Noninterest-bearing                                                    477,512        439,609
            Savings                                                                  516,408        485,522
            Time                                                                     662,508        642,399
                                                                                  ----------     ----------
              Total deposits                                                       2,353,428      2,225,098
  
  Other borrowed money                                                                61,800
  Other liabilities                                                                    3,622          1,417
  Obligation to Employee Stock Ownership Plan (ESOP)                                   3,846          4,359
  Long-term debt                                                                      23,000         23,000
                                                                                  ----------     ----------
                                                                                   2,445,696      2,253,874
  
  Stockholders' Equity
  Common stock, 11,466,903 shares issued (11,337,719 shares in 1995)                  17,916         16,880
  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                                           125,311        112,894
  Retained earnings                                                                   17,413         30,723
                                                                                  ----------     ----------
                                                                                     168,146        168,003
  Less commitment to ESOP                                                              3,846          4,359
  Less treasury stock, at cost, 100,159 common shares
            in 1996 (100,159 in 1995)                                                  1,624          1,624
                                                                                  ----------     ----------
            Total stockholders' equity                                               162,676        162,020
                                                                                  ----------     ----------
                                                                                  $2,608,372     $2,415,894
                                                                                  ==========     ==========
  </TABLE>
  
                                         3
  <PAGE>
  
                       Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  
  <TABLE>
  <CAPTION>
                                                                Three Months Ended       Six Months Ended
                                                                     June 30,                June 30,
  (dollars in thousands, except per share amounts)               1996       1995         1996         1995
  <S>                                                          <C>         <C>         <C>         <C>    
  Interest income
  Interest and fees on loans                                   $22,298     $19,670     $43,483     $38,349
  Interest on investments                                       20,769      20,783      40,203      41,865
       Other interest                                              344       1,141       1,595       1,797
                                                               -------     -------     -------     -------
         Total interest income                                  43,411      41,594      85,281      82,011
                                                               -------     -------     -------     -------
  
  Interest expense
  Interest on deposits:
       Demand                                                    4,377       3,878       8,399       7,286
       Savings                                                   2,837       2,795       5,519       5,481
       Time                                                      8,556       8,627      18,072      15,537
                                                               -------     -------     -------     -------
         Total interest on deposits                             15,770      15,300      31,990      28,304
       Interest on other borrowed money                            612       2,132         643       6,159
       Interest on long-term debt                                  506         506       1,012       1,012
                                                               -------     -------     -------     -------
         Total interest expense                                 16,888      17,938      33,645      35,475
                                                               -------     -------     -------     -------
       Net interest income                                      26,523      23,656      51,636      46,536
       Provision for loan losses                                   674         388       1,348       1,245
                                                               -------     -------     -------     -------
       Net interest income after provision for loan losses      25,849      23,268      50,288      45,291
  
  Noninterest income
  Deposit charges and service fees                               4,963       3,778       9,676       7,462
  Other operating income                                         1,708       1,019       2,933       1,928
  Net investment securities gains                                    0          18         517          18
                                                               -------     -------     -------     -------
       Total noninterest income                                  6,671       4,815      13,126       9,408
                                                               -------     -------     -------     -------
  
  Noninterest expense
  Salaries                                                       7,791       6,347      14,990      12,599
  Benefits                                                       1,824       1,789       3,733       3,648
  Occupancy                                                      2,562       1,997       5,179       3,937
  Furniture and equipment                                        3,112       2,409       5,941       4,555
  Office                                                         2,355       1,710       4,486       3,343
  Audit and regulatory fees and assessments                        428       1,240         810       2,481
  Marketing                                                      1,062         669       2,018       1,326
  Other real estate (net)                                          450         593         900       1,291
  Other                                                          2,670       2,157       5,322       4,110
                                                               -------     -------     -------     -------
       Total noninterest expenses                               22,254      18,911      43,379      37,290
                                                               -------     -------     -------     -------
  Income before income taxes                                    10,266       9,172      20,035      17,409
  Provision for federal and state income taxes                   3,670       3,356       7,178       6,350
                                                               -------     -------     -------     -------
  Net income                                                     6,596       5,816      12,857      11,059
  
  Dividends on preferred stocks                                    140         140         281         281
                                                               -------     -------     -------     -------
  Net income applicable to common stock                        $ 6,456     $ 5,676     $12,576     $10,778
                                                               =======     =======     =======     =======
  
  Net income per common and common equivalent share:
       Primary                                                 $  0.55     $  0.50     $  1.07     $  0.99
                                                               -------     -------     -------     -------
       Fully diluted                                           $  0.53     $  0.48     $  1.04     $  0.95
                                                               -------     -------     -------     -------
  Average common and common equivalent shares outstanding:
       Primary                                                  11,767      11,392      11,722      10,940
                                                               -------     -------     -------     -------
       Fully diluted                                            12,387      12,036      12,364      11,593
                                                               -------     -------     -------     -------
  Cash dividends declared, common stock                        $  0.18     $  0.15     $  0.34     $  0.30
                                                               =======     =======     =======     =======
  </TABLE>
  
                                         4
  <PAGE>
                       Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  <TABLE>
  <CAPTION>
                                                                   Six Months Ended June 30,
  (dollars in thousands)                                              1996          1995
  <S>                                                             <C>            <C>      
  Operating activities
  Net income                                                      $  12,857      $  11,059
  Adjustments to reconcile net income to net cash
    provided by operating activities:
       Provision for loan losses                                      1,348          1,245
       Provision for depreciation, amortization and accretion         7,820          6,333
       Gains on sales of securities available for sale                 (517)
       Proceeds from sales of mortgages held for sale                13,442          7,291
       Originations of mortgages held for sale                      (11,504)        (8,140)
       Net loan (chargeoffs)                                           (994)          (197)
       Net increase in trading securities                            (2,763)       (13,813)
       Decrease (increase) in other assets                            6,428           (816)
       Increase (decrease) in other liabilities                       2,205         (3,111)
                                                                  ---------      ---------
            Net cash provided (used) by operating activities         28,322           (149)
  
  Investing activities
  Proceeds from the sales of securities available for sale           40,052
  Proceeds from the maturity of securities available for sale        21,562          8,056
  Proceeds from the maturity of securities held to maturity          42,729         35,028
  Purchase of securities available for sale                        (212,679)          (312)
  Purchase of securities held to maturity                            (5,983)        (3,741)
  Net increase in loans                                            (127,407)       (51,029)
  Proceeds from sales of loans                                        3,421          2,384
  Purchases of premises and equipment                               (11,425)       (10,294)
                                                                  ---------      ---------
            Net cash (used) by investing activities                (249,730)       (19,908)
  
  Financing activities
  Net increase in demand and savings deposits                       108,221        101,866
  Net increase in time deposits                                      20,109        220,868
  Net increase (decrease) in other borrowed money                    61,800       (278,789)
  Issuance of common stock                                                          25,774
  Dividends paid                                                     (4,159)        (3,376)
  Proceeds from issuance of common stock under
    dividend reinvestment and other stock plans                       2,134          1,190
  Purchase of treasury stock                                                          (352)
  Other                                                                  98             98
                                                                  ---------      ---------
            Net cash provided by financing activities               188,203         67,279
  
  (Decrease) increase in cash and cash equivalents                  (33,205)        47,222
  Cash and cash equivalents at beginning of year                    177,015        129,447
                                                                  ---------      ---------
  Cash and cash equivalents at end of period                      $ 143,810      $ 176,669
                                                                  ---------      ---------
  
  Supplemental disclosures of cash flow information:
    Cash paid during the period for:
       Interest                                                   $  32,927      $  35,475
       Income taxes                                                   7,466          7,088
                                                                  ---------      ---------
  </TABLE>
  
                                         5
  <PAGE>
  
                       COMMERCE BANCORP, INC. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
  A.   Consolidated Financial Statements
  
            The  consolidated  financial  statements  included  herein  have  been
       prepared  without  audit  pursuant  to the  rules  and  regulations  of the
       Securities  and  Exchange  Commission.  Certain  information  and  footnote
       disclosures   normally  included  in  financial   statements   prepared  in
       accordance  with  generally  accepted   accounting   principles  have  been
       condensed  or  omitted  pursuant  to  such  rules  and   regulations.   The
       accompanying   condensed  consolidated  financial  statements  reflect  all
       adjustments  which are, in the opinion of  management,  necessary to a fair
       statement  of  the  results  for  the  interim  periods   presented.   Such
       adjustments are of a normal recurring nature. These condensed  consolidated
       financial  statements  should  be  read in  conjunction  with  the  audited
       financial  statements  and the notes thereto  included in the  registrant's
       Annual Report for the period ended  December 31, 1995.  The results for the
       three months ended June 30, 1996 and for the six months ended June 30, 1996
       are not necessarily  indicative of the results that may be expected for the
       year ended December 31, 1996.
  
            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.
  
  B.   Commitments
  
            In the  normal  course  of  business,  there are  various  outstanding
       commitments to extend credit, such as letters of credit and unadvanced loan
       commitments,  which  are not  reflected  in the  accompanying  consolidated
       financial statements. Management does not anticipate any material losses as
       a result of these transactions.
  
  C.   Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
            The Company has  guaranteed a debt  obligation  of its Employee  Stock
       Ownership Plan ("ESOP") which originated at $7,500,000 and has been reduced
       to $3,846,000 through principal reductions. Accordingly, the loan amount is
       reflected in the Company's consolidated balance sheet as a liability and an
       equal amount, representing deferred employee benefits, has been recorded as
       a deduction from  stockholders'  equity. The ESOP obtained the loan in 1990
       to acquire a new class of Company  Cumulative  Convertible  Preferred Stock
       (Series C) at a price of $18.00 per share. The loan was refinanced in 1994,
       and is payable in quarterly installments with the final payment due January
       28, 2000. The loan bears interest at a variable rate, although the rate can
       be fixed at future  repricing  dates in accordance with the loan agreement.
       As the Company makes annual contributions to the ESOP, these contributions,
       plus  dividends  from the  Company's  Series C Preferred  Stock held by the
       ESOP, will be used to repay the loan.
  
                                         6
  <PAGE>
  
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
          of Operation
  
       Capital Resources
  
            At June 30, 1996, stockholders' equity totaled $162.7 million or 6.24%
       of total  assets,  compared to $162.0  million or 6.71% of total  assets at
       December 31, 1995.
  
            The table below presents a comparison of the Company's and each of its
       three bank  subsidiaries  risk-based  capital ratios and leverage ratios to
       the minimum regulatory requirements for the periods indicated.
  <TABLE>
  <CAPTION>
  
                                                                           Capital
                                                                           Excess
                                                             Minimum        as of
                                      June  30,   June 30,  Regulatory    June 30,
                                        1996        1995   Requirements     1996
                                                                        (in thousands)
  <S>                                    <C>        <C>    <C>            <C>      
   Company
      Risk based capital ratios:
        Tier 1                          12.57%     12.62%     4.00%        $113,590
        Total capital                   15.34      15.77      8.00           97,240
      Leverage ratio                     6.55       6.17      3.00-5.00      90,260(1)
  
  Commerce NJ
      Risk based capital ratios:
        Tier 1                          13.78%     14.45%     4.00%        $100,990
        Total capital                   14.87      15.59      8.00           70,900
      Leverage ratio                     7.21       6.99      3.00-5.00      83,050(1)
  
  Commerce PA
      Risk based capital ratios:
        Tier 1                          13.14%     12.24%     4.00%         $13,560
        Total capital                   13.95      13.34      8.00            8,820
      Leverage ratio                     6.49       6.35      3.00-5.00      10,480(1)
  
  Commerce Shore
      Risk based capital ratios:
        Tier 1                          13.93%     12.39%     4.00%         $14,730
        Total capital                   14.80      13.49      8.00           10,090
      Leverage ratio                     6.73       6.08      3.00-5.00      11,450(1)
  
  <FN>
  (1) Based on a minimum regulatory requirement of 3.00%
  </FN>
  </TABLE>
  
            At June 30, 1996, 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
  
                                         7
  <PAGE>
  
       leverage  capital  ratio  exceeding  5%, a Tier 1 risk-based  capital ratio
       exceeding 6%, and a total risk-based capital ratio exceeding 10%.
  
       Deposits
  
            Total deposits at June 30, 1996 were $2.35 billion, up $196.1 million,
       or 9% over total  deposits  of $2.16  billion at June 30,  1995,  and up by
       $128.3 million,  or 6% from year-end 1995.  Deposit growth during the first
       six months of 1996 was largely  from core  deposits,  primarily  demand and
       savings accounts.  In addition,  the Company  experienced  "same-store core
       deposit  growth" of 10.5% at June 30,  1996 as  compared to deposits a year
       ago for those branches open for more than one year.
  
       Interest Rate Sensitivity and Liquidity
  
            An interest rate  sensitive  asset or liability is one that,  within a
       defined time period,  either matures or experiences an interest rate change
       in line with general market interest rates.  The objective of interest rate
       risk  management is to monitor and manage the  sensitivity  of net interest
       income to changing  interest  rates and other  factors in order to meet the
       Company's overall financial goals.
  
            Management   considers  the  simulation  of  net  interest  income  in
       different  interest  rate  environments  to be the  best  indicator  of the
       Company's interest rate risk. Income simulation  analysis captures not only
       the potential of all assets and liabilities to mature or reprice,  but also
       the probability that they will do so. Income simulation also attends to the
       relative  interest rate  sensitivities  of these items,  and projects their
       behavior  over an  extended  period  of time.  Finally,  income  simulation
       permits  management to assess the probable effects on the balance sheet not
       only of changes in  interest  rates,  but also of proposed  strategies  for
       responding to them.
  
            The  Company's  income   simulation   model  analyzes   interest  rate
       sensitivity by projecting net income over the next 24 months in a flat rate
       scenario  versus  net  income  in  alternative   interest  rate  scenarios.
       Management   continually   reviews  and  refines  its  interest  rate  risk
       management process in response to the changing economic climate. Currently,
       the Company's model projects a proportionate  200 basis point change during
       the next year,  with rates  remaining  constant  in the  second  year.  The
       Company's  Asset/Liability  Committee  (ALCO) policy has  established  that
       interest income sensitivity will be considered  acceptable if net income in
       the above  interest  rate  scenario is within 15% of net income in the flat
       rate  scenario  in the  first  year and  within  30% over the two year time
       frame. At June 30, 1996, the Company's income simulation model indicates an
       acceptable level of interest rate risk.
  
            In the event the  Company's  interest  rate risk  models  indicate  an
       unacceptable level of risk, the Company could undertake a number of actions
       that  would  reduce  this  risk,  including  the sale of a  portion  of its
       available for sale portfolio, or the use of risk management strategies such
       as interest rate swaps and caps.  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.
  
            Management  also  monitors  interest  rate risk by  utilizing a market
       value of  equity  model.  The  model  assesses  the  impact  of a change in
       interest rates on the market value of all the
  
                                         8
  <PAGE>
  
       Company's assets and  liabilities,  as well as any off balance sheet items.
       The  model  calculates  the  market  value  of  the  Company's  assets  and
       liabilities in excess of book value in the current rate scenario,  and then
       compares the excess of market value over book value given an immediate  200
       basis point increase in rates. The Company's ALCO policy indicates that the
       level of interest  rate risk is  unacceptable  if the  immediate  200 basis
       point  increase  would  result in the loss of 70% or more of the  excess of
       market  value over book value in the  current  rate  scenario.  At June 30,
       1996,  the market value of equity model  indicates an  acceptable  level of
       interest rate risk.
  
            Liquidity  involves  the  Company's  ability to raise funds to support
       asset  growth or  decrease  assets to meet  deposit  withdrawals  and other
       borrowing needs, to maintain reserve  requirements and to otherwise operate
       the Company on an ongoing basis.  The Company's  liquidity needs are met by
       growth in core  deposits,  its cash and federal funds sold  position,  cash
       flow from its amortizing investment and loan portfolios, as well as the use
       of short-term borrowings, as required.
  
       Short-Term Borrowings
  
            Short-term borrowings,  or other borrowed money, consist of securities
       sold under  agreement to  repurchase.  During the first six months of 1996,
       these  borrowings  were used as an  additional  source of  funding  for the
       investment portfolio and to fund loan growth. At June 30, 1996,  short-term
       borrowings aggregated $61.8 million and had an average rate of 5.55%.
  
       Interest Earning Assets
  
            For the six month period ended June 30, 1996,  interest earning assets
       increased $190.7 million from $2.15 billion to $2.35 billion. This increase
       was primarily in investment  securities and the loan portfolio as described
       below.
  
       Loans
  
            During the first six months of 1996,  loans  increased  $124.0 million
       from $907.5 million to $1.03 billion.  At June 30, 1996, loans  represented
       44% of total deposits and 40% 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 six months of 1996, securities increased $98.2
       million  from $1.21  billion  to $1.31  billion.  Deposit  growth and other
       funding  sources were used to increase  the  Company's  available  for sale
       portfolio,  which rose $133.6 million to $653.9 million from $520.3 million
       at year-end 1995. Securities held to maturity decreased from $682.7 million
       to $644.5 million reflecting  payments on the existing  portfolio.  At June
       30, 1996,  the average life of the investment  portfolio was  approximately
       6.1 years, and the duration was approximately 4.4 years.
  
                                         9
  <PAGE>
  
            Short-term investments (Federal funds sold) decreased $29.6 million to
       zero. At June 30, 1996,  total securities and Federal funds sold aggregated
       $1.31 billion and represented 50% of total assets.
  
       Net Income
  
            Net  income  for the  second  quarter  of 1996  was $6.6  million,  an
       increase of $780  thousand  over the $5.8  million  recorded for the second
       quarter  of 1995.  Net  income  for the first six  months of 1996 was $12.9
       million, an increase of $1.8 million over the $11.1 million recorded in the
       first six months of 1995.  These  increases  were due to  increases  in net
       interest income and noninterest  income,  which offset slightly higher loan
       loss  provisions  and increased  overhead  expenses.  On a per share basis,
       fully-diluted  net income for the second  quarter of 1996 and for the first
       six months of 1996 were $.53 and $1.04 per common  share  compared  to $.48
       and $.95 per common share for the respective 1995 periods.
  
            Return on average  assets (ROA) and return on average equity (ROE) for
       the second quarter of 1996 were 1.04% and 16.63%, respectively, compared to
       .99% and 16.05%,  respectively,  for the same 1995 period.  ROA and ROE for
       the first six months of 1996 were 1.03% and 15.98%, respectively,  compared
       to .95% and 16.30% a year ago.
  
       Net Interest Income
  
            Net interest  income  totaled $26.5 million for the second  quarter of
       1996,  an increase of $2.9 million or 12% from $23.7  million in the second
       quarter  of 1995.  Net  interest  income  for the first six  months of 1996
       totaled $51.6 million,  up $5.1 million or 11% from the first six months of
       1995. The improvement in net interest income for both reporting periods was
       due primarily to volume increases in the loan portfolio.
  
       Noninterest Income
  
            Noninterest  income  totaled  $6.7  million for the second  quarter of
       1996,  an increase of $1.9  million or 39% from $4.8  million in the second
       quarter of 1995.  The  increase  was due  primarily  to  increased  deposit
       charges and service fees,  which rose $1.2 million over the prior year. For
       the first six months of 1996,  noninterest income totaled $13.1 million, an
       increase of $3.7  million or 40% from $9.4  million in the first six months
       of 1995.  The increase was due primarily to increased  deposit  charges and
       service  fees,  which  rose  $2.2  million  over the  prior  year,  and net
       investment securities gains of $517 thousand.
  
       Noninterest Expense
  
            For the second  quarter of 1996,  noninterest  expense  totaled  $22.3
       million,  an increase of $3.3  million or 18% over the same period in 1995.
       Contributing  to this rise was the increase in the number of branches  from
       46 at June 30, 1995 to 55 at June 30, 1996.  As a result of the addition of
       these offices,  staff,  facilities,  marketing,  and related  expenses rose
       accordingly.  Audit and regulatory fees and  assessments  decreased by $812
       thousand due to reductions in Federal deposit insurance rates enacted as of
       June 1, 1995 and  January 1, 1996.  Other  noninterest  expenses  rose $513
       thousand over the
  
                                         10
  <PAGE>
  
       second quarter of 1995, due primarily to higher banking service charges and
       increased provisions for non-credit-related losses.
  
            For the first six months of 1996,  noninterest  expense  totaled $43.4
       million,  an increase of $6.1  million,  or 16%,  over $37.3 million in the
       first six  months of 1995.  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 six months of 1996,  this ratio  equaled  3.48%  versus 3.21% for the
       comparable  1995  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 66.12% for the
       first six months of 1996 as compared to 64.37% for the same 1995 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 June 30,  1996 were $16.3  million,  or .63% of total  assets
       compared to $19.1  million or .79% of total assets at December 31, 1995 and
       $18.8 million or .79% of total assets at June 30, 1995.
  
            Total  non-performing loans (non-accrual loans and restructured loans,
       excluding  loans past due 90 days or more and still  accruing  interest) at
       June 30,  1996 were $8.6  million or .83% of total  loans  compared to $8.5
       million or .94% of total  loans at December  31, 1995 and $10.2  million or
       1.20% of total loans at June 30, 1995. At June 30, 1996,  loans past due 90
       days or more and still accruing interest amounted to $427 thousand compared
       to $126  thousand at December  31, 1995 and $86  thousand at June 30, 1995.
       Additional  loans  considered  as potential  problem loans by the Company's
       internal  loan  review  department  ($9.1  million at June 30,  1996,  $7.2
       million at December  31, 1995 and $7.8  million at June 30, 1995) have been
       evaluated as to risk exposure in determining  the adequacy of the allowance
       for loan losses.
  
            Other real estate (ORE) at June 30, 1996 totaled $7.7 million compared
       to $10.6  million at December  31, 1995 and $8.6  million at June 30, 1995.
       These  properties have been written down to the lower of cost or fair value
       less disposition costs.
  
            On  pages  13  and  14  are  tabular   presentation  showing  detailed
       information  about the  Company's  non-performing  loans and  assets and an
       analysis of the Company's  allowance for loan losses and other related data
       for June 30, 1996, December 31, 1995, and June 30, 1995.
  
       Pending Acquisitions
  
            On July 31,  1996,  the Company  reached  agreements  in  principle to
       acquire two insurance brokerage firms:  Keystone National Companies,  Inc.,
       Cherry Hill, NJ and Buckelew & Associates, Toms River, NJ. The acquisitions
       will be completed  by the issuance of common stock of the Company  totaling
       approximately  550,000 shares. The acquisitions are intended to be tax-free
       reorganizations under appropriate  provisions of the United States Internal
       Revenue  Code  and  will  be  accounted   for  by  the  Company  under  the
       pooling-of-interests   method.  Subject  to  the  execution  of  definitive
       agreements  and  required  governmental  approvals,  the  acquisitions  are
       expected to close on or about September 30, 1996.
  
                                         11
  <PAGE>
  
            The effect of these  acquisitions on the Company's total  consolidated
       assets,  stockholders'  equity,  and  net  income  is  not  expected  to be
       material.
  
       Listing Application
  
            The Company has been  cleared to file a listing  application  with the
       New York Stock Exchange  ("NYSE") to list the Company's common stock. It is
       anticipated that trading on the NYSE will commence on or about September 9,
       1996 under the symbol "CBH."
  
                                         12
  <PAGE>
  
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1996 and the preceding four quarters:  (dollar  amounts in
  thousands)
  <TABLE>
  <CAPTION>
                                                June 30,     March 31,    Dec. 31,     Sept. 30,     June 30,
                                                  1996         1996         1995         1995          1995
  <S>                                           <C>          <C>          <C>          <C>          <C>    
  Non-accrual loans:
     Commercial                                 $ 1,000      $   701      $   629      $   658      $   897
     Consumer                                       827          794          853        1,186        1,063
     Real Estate:
       Construction                               1,687        1,787        1,787          911          911
       Mortgage                                   5,015        5,054        4,708        4,441        7,003
                                                -------      -------      -------      -------      -------
            Total non-accrual loans               8,529        8,336        7,977        7,196        9,874
                                                -------      -------      -------      -------      -------
  
  Restructured loans
     Commercial                                      22          144          161          173          140
     Consumer                                        59           60           60           69           70
     Real Estate:
       Construction
       Mortgage                                                   84          301          301           85
                                                -------      -------      -------      -------      -------
            Total restructured loans                 81          288          522          543          295
                                                -------      -------      -------      -------      -------
  
  Total non-performing loans                      8,610        8,624        8,499        7,739       10,169
                                                -------      -------      -------      -------      -------
  
  Other real estate                               7,721        8,241       10,561       10,120        8,591
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                   $16,331      $16,865      $19,060      $17,859      $18,760
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              427          163          126           77           86
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $16,758      $17,028      $19,186      $17,936      $18,846
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.83%        0.92%        0.94%        0.89%        1.20%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.63%        0.68%        0.79%        0.74%        0.79%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.64%        0.69%        0.79%        0.75%        0.80%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           159%         156%         157%         168%         129%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.33%        1.43%        1.47%        1.50%        1.54%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                        10%          10%          11%          11%          12%
  </TABLE>
  
                                         13
  <PAGE>
  
  The following  table  presents,  for the periods  indicated,  an analysis of the
  allowance for loan losses and other related data: (dollar amounts in thousands)
  
  <TABLE>
  <CAPTION>
                                                                                          Year
                                                                  Six Months Ended        Ended
                                                                06/30/96    06/30/95    12/31/95
  <S>                                                            <C>         <C>         <C>    
  Balance at beginning of period                                 $13,320     $12,036     $12,036
  Provisions charged to operating expenses                         1,348       1,245       2,215
                                                                 -------     -------     -------
                                                                  14,668      13,281      14,251
  Recoveries on loans charged-off:
    Commercial                                                        65          71         154
    Consumer                                                          51         112         144
    Real estate                                                       72         266         292
                                                                 -------     -------     -------
  Total recoveries                                                   188         449         590
  
  Loans charged-off:
    Commercial                                                      (161)       (366)       (595)
    Consumer                                                        (317)       (207)       (580)
    Real estate                                                     (704)        (73)       (346)
                                                                 -------     -------     -------
  Total charged-off                                               (1,182)       (646)     (1,521)
                                                                 -------     -------     -------
  Net charge-offs                                                   (994)       (197)       (931)
                                                                 -------     -------     -------
  
  Balance at end of period                                       $13,674     $13,084     $13,320
                                                                 =======     =======     =======
  
  
  
  Net charge-offs as a percentage of
  average loans outstanding                                         0.21%       0.05%       0.11%
  </TABLE>
  
                                         14
  <PAGE>
  
                             PART II. OTHER INFORMATION
  
  
  Item 4. Submission of Matters to a Vote of Securities Holders
  
            The Annual Meeting of the  Registrant's  Shareholders was held on June
       18, 1996.  The only item of business  acted upon at the Annual  Meeting was
       the election of nine directors for one year terms. The number of votes cast
       for and against as to each nominee for director was as follows:
  
      Name of
      Nominee                                    For                     Against
  
      Vernon W. Hill, II                      10,118,905                  92,033
      C. Edward Jordan, Jr.                   10,120,279                  90,689
      David Baird, IV                         10,128,224                  82,714
      Robert C. Beck                          10,014,851                 196,087
      Jack R Bershad                          10,007,443                 203,495
      Morton N. Kerr                          10,112,780                  98,158
      Steven M. Lewis                         10,129,155                  81,783
      Daniel J. Ragone                        10,121,224                  89,714
      Joseph T. Tarquini, Jr.                 10,129,410                  81,528
  
  Item 6. Exhibits and Reports on Form 8-K
  
       (a)  Exhibit 11 - Computation of Net Income Per Share
  
            No reports on Form 8-K were filed during the second quarter ended June
            30, 1996.
  
                                         15
  <PAGE>
  
  
                                     SIGNATURES
  
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
                                          COMMERCE BANCORP, INC.
                                                (Registrant)
  
  
  August 14, 1996                         By: /s/ C. EDWARD JORDAN, JR.
    (Date)                                    -----------------------------------
                                              C. EDWARD JORDAN, JR.
                                            EXECUTIVE VICE PRESIDENT
                                            (PRINCIPAL FINANCIAL OFFICER)
  
  
                                         16
metadata_documents: [{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 50135}]
metadata_filer: {"company-data": {"conformed-name": "COMMERCE BANCORP INC /NJ/", "cik": "0000715096", "assigned-sic": "6021", "irs-number": "222433468", "state-of-incorporation": "NJ", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-12874", "film-number": "96613200"}, "business-address": {"street1": "COMMERCE ATRIUM", "street2": "1701 RTE 70 E", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400", "phone": "6097519000"}, "mail-address": {"street1": "1701 ROUTE 70 EAST", "city": "CHERRY HILL", "state": "NJ", "zip": "08034-5400"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                               WASHINGTON, D.C. 20549
  
                                      Form 10-Q
  
       (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934
  
                         For the quarter ended June 30, 1996
  
                                         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                                        11,417,950
        (Title of Class)                               (No. of Shares Outstanding
                                                            as of 08/09/96)
  
  Series C ESOP Cumulative Con-
     vertible Preferred Stock                                   417,000
       (Title of Class)                              (No. of Shares Outstanding
                                                           as of 08/09/96)
  
                                         1
  COMMERCE BANCORP, INC. AND SUBSIDIARIES
  
                                        INDEX
  
                                                                           Page
  
  PART I. FINANCIAL INFORMATION
  
  Item 1. Financial Statements
  
          Consolidated Balance Sheets (unaudited)
             June 30, 1996 and December 31, 1995
  
          Consolidated  Statements  of Income  (unaudited)
             Three months ended June 30,  1996 and
             June 30, 1995 and six months ended June 30, 1996
             and June 30, 1995
  
          Consolidated Statements of Cash Flows  (unaudited)
             Six months ended June 30, 1996 and
             June 30, 1995
  
          Notes to Consolidated Financial Statements (unaudited)
  
  Item 2. Management's Discussion and Analysis of Financial
            Condition and Results of Operation
  
  PART II. OTHER INFORMATION
  
  Item 4.  Submission of Matters to a Vote of Securities Holders
  
  Item 6.  Exhibits and Reports on Form 8-K
  
                                         2
  Commerce Bancorp, Inc. and Subsidiaries
                             Consolidated Balance Sheets
                                     (unaudited)
  June 30,     December 31,
  (dollars in thousands)                                                              1996          1995
  Assets
  Cash and due from banks                                                         $  143,810     $  147,465
  Federal funds sold                                                                       0         29,550
                                                                                  ----------     ----------
            Cash and cash equivalents                                                143,810        177,015
  Mortgages held for sale                                                              3,504          5,442
  Trading securities                                                                  11,606          8,843
  Securities available for sale                                                      653,871        520,314
  Securities held to maturity:
            U.S. Government agency mortgage-backed obligations                       614,844        653,412
            Obligations of state and political subdivisions                           12,549         12,289
            Other securities                                                          17,148         17,001
                                                                                  ----------     ----------
            Total securities held to maturity
            (market value 1996-$613,298; 1995-$671,539)                              644,541        682,702
  
  Loans                                                                            1,031,501        907,515
            Less allowance for loan losses                                            13,674         13,320
                                                                                  ----------     ----------
                                                                                   1,017,827        894,195
  Bank premises and equipment, net                                                    80,827         74,289
  Other assets                                                                        52,386         53,094
                                                                                  ----------     ----------
                                                                                  $2,608,372     $2,415,894
                                                                                  ==========     ==========
  
  Liabilities
  Deposits:
            Demand:
              Interest-bearing                                                    $  697,000     $  657,568
              Noninterest-bearing                                                    477,512        439,609
            Savings                                                                  516,408        485,522
            Time                                                                     662,508        642,399
                                                                                  ----------     ----------
              Total deposits                                                       2,353,428      2,225,098
  
  Other borrowed money                                                                61,800
  Other liabilities                                                                    3,622          1,417
  Obligation to Employee Stock Ownership Plan (ESOP)                                   3,846          4,359
  Long-term debt                                                                      23,000         23,000
                                                                                  ----------     ----------
                                                                                   2,445,696      2,253,874
  
  Stockholders' Equity
  Common stock, 11,466,903 shares issued (11,337,719 shares in 1995)                  17,916         16,880
  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                                           125,311        112,894
  Retained earnings                                                                   17,413         30,723
                                                                                  ----------     ----------
                                                                                     168,146        168,003
  Less commitment to ESOP                                                              3,846          4,359
  Less treasury stock, at cost, 100,159 common shares
            in 1996 (100,159 in 1995)                                                  1,624          1,624
                                                                                  ----------     ----------
            Total stockholders' equity                                               162,676        162,020
                                                                                  ----------     ----------
                                                                                  $2,608,372     $2,415,894
                                                                                  ==========     ==========
  3
  Commerce Bancorp, Inc. and Subsidiaries
                          Consolidated Statements of Income
                                     (unaudited)
  Three Months Ended       Six Months Ended
                                                                     June 30,                June 30,
  (dollars in thousands, except per share amounts)               1996       1995         1996         1995
  Interest income
  Interest and fees on loans                                   $22,298     $19,670     $43,483     $38,349
  Interest on investments                                       20,769      20,783      40,203      41,865
       Other interest                                              344       1,141       1,595       1,797
                                                               -------     -------     -------     -------
         Total interest income                                  43,411      41,594      85,281      82,011
                                                               -------     -------     -------     -------
  
  Interest expense
  Interest on deposits:
       Demand                                                    4,377       3,878       8,399       7,286
       Savings                                                   2,837       2,795       5,519       5,481
       Time                                                      8,556       8,627      18,072      15,537
                                                               -------     -------     -------     -------
         Total interest on deposits                             15,770      15,300      31,990      28,304
       Interest on other borrowed money                            612       2,132         643       6,159
       Interest on long-term debt                                  506         506       1,012       1,012
                                                               -------     -------     -------     -------
         Total interest expense                                 16,888      17,938      33,645      35,475
                                                               -------     -------     -------     -------
       Net interest income                                      26,523      23,656      51,636      46,536
       Provision for loan losses                                   674         388       1,348       1,245
                                                               -------     -------     -------     -------
       Net interest income after provision for loan losses      25,849      23,268      50,288      45,291
  
  Noninterest income
  Deposit charges and service fees                               4,963       3,778       9,676       7,462
  Other operating income                                         1,708       1,019       2,933       1,928
  Net investment securities gains                                    0          18         517          18
                                                               -------     -------     -------     -------
       Total noninterest income                                  6,671       4,815      13,126       9,408
                                                               -------     -------     -------     -------
  
  Noninterest expense
  Salaries                                                       7,791       6,347      14,990      12,599
  Benefits                                                       1,824       1,789       3,733       3,648
  Occupancy                                                      2,562       1,997       5,179       3,937
  Furniture and equipment                                        3,112       2,409       5,941       4,555
  Office                                                         2,355       1,710       4,486       3,343
  Audit and regulatory fees and assessments                        428       1,240         810       2,481
  Marketing                                                      1,062         669       2,018       1,326
  Other real estate (net)                                          450         593         900       1,291
  Other                                                          2,670       2,157       5,322       4,110
                                                               -------     -------     -------     -------
       Total noninterest expenses                               22,254      18,911      43,379      37,290
                                                               -------     -------     -------     -------
  Income before income taxes                                    10,266       9,172      20,035      17,409
  Provision for federal and state income taxes                   3,670       3,356       7,178       6,350
                                                               -------     -------     -------     -------
  Net income                                                     6,596       5,816      12,857      11,059
  
  Dividends on preferred stocks                                    140         140         281         281
                                                               -------     -------     -------     -------
  Net income applicable to common stock                        $ 6,456     $ 5,676     $12,576     $10,778
                                                               =======     =======     =======     =======
  
  Net income per common and common equivalent share:
       Primary                                                 $  0.55     $  0.50     $  1.07     $  0.99
                                                               -------     -------     -------     -------
       Fully diluted                                           $  0.53     $  0.48     $  1.04     $  0.95
                                                               -------     -------     -------     -------
  Average common and common equivalent shares outstanding:
       Primary                                                  11,767      11,392      11,722      10,940
                                                               -------     -------     -------     -------
       Fully diluted                                            12,387      12,036      12,364      11,593
                                                               -------     -------     -------     -------
  Cash dividends declared, common stock                        $  0.18     $  0.15     $  0.34     $  0.30
                                                               =======     =======     =======     =======
  4
  Commerce Bancorp, Inc. And Subsidiaries
                        Consolidated Statements of Cash Flows
                                     (unaudited)
  Six Months Ended June 30,
  (dollars in thousands)                                              1996          1995
  Operating activities
  Net income                                                      $  12,857      $  11,059
  Adjustments to reconcile net income to net cash
    provided by operating activities:
       Provision for loan losses                                      1,348          1,245
       Provision for depreciation, amortization and accretion         7,820          6,333
       Gains on sales of securities available for sale                 (517)
       Proceeds from sales of mortgages held for sale                13,442          7,291
       Originations of mortgages held for sale                      (11,504)        (8,140)
       Net loan (chargeoffs)                                           (994)          (197)
       Net increase in trading securities                            (2,763)       (13,813)
       Decrease (increase) in other assets                            6,428           (816)
       Increase (decrease) in other liabilities                       2,205         (3,111)
                                                                  ---------      ---------
            Net cash provided (used) by operating activities         28,322           (149)
  
  Investing activities
  Proceeds from the sales of securities available for sale           40,052
  Proceeds from the maturity of securities available for sale        21,562          8,056
  Proceeds from the maturity of securities held to maturity          42,729         35,028
  Purchase of securities available for sale                        (212,679)          (312)
  Purchase of securities held to maturity                            (5,983)        (3,741)
  Net increase in loans                                            (127,407)       (51,029)
  Proceeds from sales of loans                                        3,421          2,384
  Purchases of premises and equipment                               (11,425)       (10,294)
                                                                  ---------      ---------
            Net cash (used) by investing activities                (249,730)       (19,908)
  
  Financing activities
  Net increase in demand and savings deposits                       108,221        101,866
  Net increase in time deposits                                      20,109        220,868
  Net increase (decrease) in other borrowed money                    61,800       (278,789)
  Issuance of common stock                                                          25,774
  Dividends paid                                                     (4,159)        (3,376)
  Proceeds from issuance of common stock under
    dividend reinvestment and other stock plans                       2,134          1,190
  Purchase of treasury stock                                                          (352)
  Other                                                                  98             98
                                                                  ---------      ---------
            Net cash provided by financing activities               188,203         67,279
  
  (Decrease) increase in cash and cash equivalents                  (33,205)        47,222
  Cash and cash equivalents at beginning of year                    177,015        129,447
                                                                  ---------      ---------
  Cash and cash equivalents at end of period                      $ 143,810      $ 176,669
                                                                  ---------      ---------
  
  Supplemental disclosures of cash flow information:
    Cash paid during the period for:
       Interest                                                   $  32,927      $  35,475
       Income taxes                                                   7,466          7,088
                                                                  ---------      ---------
  5
  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, 1995.  The results for the
       three months ended June 30, 1996 and for the six months ended June 30, 1996
       are not necessarily  indicative of the results that may be expected for the
       year ended December 31, 1996.
  
            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.
  
  B.   Commitments
  
            In the  normal  course  of  business,  there are  various  outstanding
       commitments to extend credit, such as letters of credit and unadvanced loan
       commitments,  which  are not  reflected  in the  accompanying  consolidated
       financial statements. Management does not anticipate any material losses as
       a result of these transactions.
  
  C.   Employee Stock Ownership Plan (ESOP) Debt Guarantee
  
            The Company has  guaranteed a debt  obligation  of its Employee  Stock
       Ownership Plan ("ESOP") which originated at $7,500,000 and has been reduced
       to $3,846,000 through principal reductions. Accordingly, the loan amount is
       reflected in the Company's consolidated balance sheet as a liability and an
       equal amount, representing deferred employee benefits, has been recorded as
       a deduction from  stockholders'  equity. The ESOP obtained the loan in 1990
       to acquire a new class of Company  Cumulative  Convertible  Preferred Stock
       (Series C) at a price of $18.00 per share. The loan was refinanced in 1994,
       and is payable in quarterly installments with the final payment due January
       28, 2000. The loan bears interest at a variable rate, although the rate can
       be fixed at future  repricing  dates in accordance with the loan agreement.
       As the Company makes annual contributions to the ESOP, these contributions,
       plus  dividends  from the  Company's  Series C Preferred  Stock held by the
       ESOP, will be used to repay the loan.
  
                                         6
  Item 2. Management's  Discussion and Analysis of Financial Condition and Results
          of Operation
  
       Capital Resources
  
            At June 30, 1996, stockholders' equity totaled $162.7 million or 6.24%
       of total  assets,  compared to $162.0  million or 6.71% of total  assets at
       December 31, 1995.
  
            The table below presents a comparison of the Company's and each of its
       three bank  subsidiaries  risk-based  capital ratios and leverage ratios to
       the minimum regulatory requirements for the periods indicated.
  Capital
                                                                           Excess
                                                             Minimum        as of
                                      June  30,   June 30,  Regulatory    June 30,
                                        1996        1995   Requirements     1996
                                                                        (in thousands)
  Company
      Risk based capital ratios:
        Tier 1                          12.57%     12.62%     4.00%        $113,590
        Total capital                   15.34      15.77      8.00           97,240
      Leverage ratio                     6.55       6.17      3.00-5.00      90,260(1)
  
  Commerce NJ
      Risk based capital ratios:
        Tier 1                          13.78%     14.45%     4.00%        $100,990
        Total capital                   14.87      15.59      8.00           70,900
      Leverage ratio                     7.21       6.99      3.00-5.00      83,050(1)
  
  Commerce PA
      Risk based capital ratios:
        Tier 1                          13.14%     12.24%     4.00%         $13,560
        Total capital                   13.95      13.34      8.00            8,820
      Leverage ratio                     6.49       6.35      3.00-5.00      10,480(1)
  
  Commerce Shore
      Risk based capital ratios:
        Tier 1                          13.93%     12.39%     4.00%         $14,730
        Total capital                   14.80      13.49      8.00           10,090
      Leverage ratio                     6.73       6.08      3.00-5.00      11,450(1)
  (1) Based on a minimum regulatory requirement of 3.00%
  At June 30, 1996, 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
  
                                         7
  leverage  capital  ratio  exceeding  5%, a Tier 1 risk-based  capital ratio
       exceeding 6%, and a total risk-based capital ratio exceeding 10%.
  
       Deposits
  
            Total deposits at June 30, 1996 were $2.35 billion, up $196.1 million,
       or 9% over total  deposits  of $2.16  billion at June 30,  1995,  and up by
       $128.3 million,  or 6% from year-end 1995.  Deposit growth during the first
       six months of 1996 was largely  from core  deposits,  primarily  demand and
       savings accounts.  In addition,  the Company  experienced  "same-store core
       deposit  growth" of 10.5% at June 30,  1996 as  compared to deposits a year
       ago for those branches open for more than one year.
  
       Interest Rate Sensitivity and Liquidity
  
            An interest rate  sensitive  asset or liability is one that,  within a
       defined time period,  either matures or experiences an interest rate change
       in line with general market interest rates.  The objective of interest rate
       risk  management is to monitor and manage the  sensitivity  of net interest
       income to changing  interest  rates and other  factors in order to meet the
       Company's overall financial goals.
  
            Management   considers  the  simulation  of  net  interest  income  in
       different  interest  rate  environments  to be the  best  indicator  of the
       Company's interest rate risk. Income simulation  analysis captures not only
       the potential of all assets and liabilities to mature or reprice,  but also
       the probability that they will do so. Income simulation also attends to the
       relative  interest rate  sensitivities  of these items,  and projects their
       behavior  over an  extended  period  of time.  Finally,  income  simulation
       permits  management to assess the probable effects on the balance sheet not
       only of changes in  interest  rates,  but also of proposed  strategies  for
       responding to them.
  
            The  Company's  income   simulation   model  analyzes   interest  rate
       sensitivity by projecting net income over the next 24 months in a flat rate
       scenario  versus  net  income  in  alternative   interest  rate  scenarios.
       Management   continually   reviews  and  refines  its  interest  rate  risk
       management process in response to the changing economic climate. Currently,
       the Company's model projects a proportionate  200 basis point change during
       the next year,  with rates  remaining  constant  in the  second  year.  The
       Company's  Asset/Liability  Committee  (ALCO) policy has  established  that
       interest income sensitivity will be considered  acceptable if net income in
       the above  interest  rate  scenario is within 15% of net income in the flat
       rate  scenario  in the  first  year and  within  30% over the two year time
       frame. At June 30, 1996, the Company's income simulation model indicates an
       acceptable level of interest rate risk.
  
            In the event the  Company's  interest  rate risk  models  indicate  an
       unacceptable level of risk, the Company could undertake a number of actions
       that  would  reduce  this  risk,  including  the sale of a  portion  of its
       available for sale portfolio, or the use of risk management strategies such
       as interest rate swaps and caps.  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.
  
            Management  also  monitors  interest  rate risk by  utilizing a market
       value of  equity  model.  The  model  assesses  the  impact  of a change in
       interest rates on the market value of all the
  
                                         8
  Company's assets and  liabilities,  as well as any off balance sheet items.
       The  model  calculates  the  market  value  of  the  Company's  assets  and
       liabilities in excess of book value in the current rate scenario,  and then
       compares the excess of market value over book value given an immediate  200
       basis point increase in rates. The Company's ALCO policy indicates that the
       level of interest  rate risk is  unacceptable  if the  immediate  200 basis
       point  increase  would  result in the loss of 70% or more of the  excess of
       market  value over book value in the  current  rate  scenario.  At June 30,
       1996,  the market value of equity model  indicates an  acceptable  level of
       interest rate risk.
  
            Liquidity  involves  the  Company's  ability to raise funds to support
       asset  growth or  decrease  assets to meet  deposit  withdrawals  and other
       borrowing needs, to maintain reserve  requirements and to otherwise operate
       the Company on an ongoing basis.  The Company's  liquidity needs are met by
       growth in core  deposits,  its cash and federal funds sold  position,  cash
       flow from its amortizing investment and loan portfolios, as well as the use
       of short-term borrowings, as required.
  
       Short-Term Borrowings
  
            Short-term borrowings,  or other borrowed money, consist of securities
       sold under  agreement to  repurchase.  During the first six months of 1996,
       these  borrowings  were used as an  additional  source of  funding  for the
       investment portfolio and to fund loan growth. At June 30, 1996,  short-term
       borrowings aggregated $61.8 million and had an average rate of 5.55%.
  
       Interest Earning Assets
  
            For the six month period ended June 30, 1996,  interest earning assets
       increased $190.7 million from $2.15 billion to $2.35 billion. This increase
       was primarily in investment  securities and the loan portfolio as described
       below.
  
       Loans
  
            During the first six months of 1996,  loans  increased  $124.0 million
       from $907.5 million to $1.03 billion.  At June 30, 1996, loans  represented
       44% of total deposits and 40% 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 six months of 1996, securities increased $98.2
       million  from $1.21  billion  to $1.31  billion.  Deposit  growth and other
       funding  sources were used to increase  the  Company's  available  for sale
       portfolio,  which rose $133.6 million to $653.9 million from $520.3 million
       at year-end 1995. Securities held to maturity decreased from $682.7 million
       to $644.5 million reflecting  payments on the existing  portfolio.  At June
       30, 1996,  the average life of the investment  portfolio was  approximately
       6.1 years, and the duration was approximately 4.4 years.
  
                                         9
  Short-term investments (Federal funds sold) decreased $29.6 million to
       zero. At June 30, 1996,  total securities and Federal funds sold aggregated
       $1.31 billion and represented 50% of total assets.
  
       Net Income
  
            Net  income  for the  second  quarter  of 1996  was $6.6  million,  an
       increase of $780  thousand  over the $5.8  million  recorded for the second
       quarter  of 1995.  Net  income  for the first six  months of 1996 was $12.9
       million, an increase of $1.8 million over the $11.1 million recorded in the
       first six months of 1995.  These  increases  were due to  increases  in net
       interest income and noninterest  income,  which offset slightly higher loan
       loss  provisions  and increased  overhead  expenses.  On a per share basis,
       fully-diluted  net income for the second  quarter of 1996 and for the first
       six months of 1996 were $.53 and $1.04 per common  share  compared  to $.48
       and $.95 per common share for the respective 1995 periods.
  
            Return on average  assets (ROA) and return on average equity (ROE) for
       the second quarter of 1996 were 1.04% and 16.63%, respectively, compared to
       .99% and 16.05%,  respectively,  for the same 1995 period.  ROA and ROE for
       the first six months of 1996 were 1.03% and 15.98%, respectively,  compared
       to .95% and 16.30% a year ago.
  
       Net Interest Income
  
            Net interest  income  totaled $26.5 million for the second  quarter of
       1996,  an increase of $2.9 million or 12% from $23.7  million in the second
       quarter  of 1995.  Net  interest  income  for the first six  months of 1996
       totaled $51.6 million,  up $5.1 million or 11% from the first six months of
       1995. The improvement in net interest income for both reporting periods was
       due primarily to volume increases in the loan portfolio.
  
       Noninterest Income
  
            Noninterest  income  totaled  $6.7  million for the second  quarter of
       1996,  an increase of $1.9  million or 39% from $4.8  million in the second
       quarter of 1995.  The  increase  was due  primarily  to  increased  deposit
       charges and service fees,  which rose $1.2 million over the prior year. For
       the first six months of 1996,  noninterest income totaled $13.1 million, an
       increase of $3.7  million or 40% from $9.4  million in the first six months
       of 1995.  The increase was due primarily to increased  deposit  charges and
       service  fees,  which  rose  $2.2  million  over the  prior  year,  and net
       investment securities gains of $517 thousand.
  
       Noninterest Expense
  
            For the second  quarter of 1996,  noninterest  expense  totaled  $22.3
       million,  an increase of $3.3  million or 18% over the same period in 1995.
       Contributing  to this rise was the increase in the number of branches  from
       46 at June 30, 1995 to 55 at June 30, 1996.  As a result of the addition of
       these offices,  staff,  facilities,  marketing,  and related  expenses rose
       accordingly.  Audit and regulatory fees and  assessments  decreased by $812
       thousand due to reductions in Federal deposit insurance rates enacted as of
       June 1, 1995 and  January 1, 1996.  Other  noninterest  expenses  rose $513
       thousand over the
  
                                         10
  second quarter of 1995, due primarily to higher banking service charges and
       increased provisions for non-credit-related losses.
  
            For the first six months of 1996,  noninterest  expense  totaled $43.4
       million,  an increase of $6.1  million,  or 16%,  over $37.3 million in the
       first six  months of 1995.  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 six months of 1996,  this ratio  equaled  3.48%  versus 3.21% for the
       comparable  1995  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 66.12% for the
       first six months of 1996 as compared to 64.37% for the same 1995 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 June 30,  1996 were $16.3  million,  or .63% of total  assets
       compared to $19.1  million or .79% of total assets at December 31, 1995 and
       $18.8 million or .79% of total assets at June 30, 1995.
  
            Total  non-performing loans (non-accrual loans and restructured loans,
       excluding  loans past due 90 days or more and still  accruing  interest) at
       June 30,  1996 were $8.6  million or .83% of total  loans  compared to $8.5
       million or .94% of total  loans at December  31, 1995 and $10.2  million or
       1.20% of total loans at June 30, 1995. At June 30, 1996,  loans past due 90
       days or more and still accruing interest amounted to $427 thousand compared
       to $126  thousand at December  31, 1995 and $86  thousand at June 30, 1995.
       Additional  loans  considered  as potential  problem loans by the Company's
       internal  loan  review  department  ($9.1  million at June 30,  1996,  $7.2
       million at December  31, 1995 and $7.8  million at June 30, 1995) have been
       evaluated as to risk exposure in determining  the adequacy of the allowance
       for loan losses.
  
            Other real estate (ORE) at June 30, 1996 totaled $7.7 million compared
       to $10.6  million at December  31, 1995 and $8.6  million at June 30, 1995.
       These  properties have been written down to the lower of cost or fair value
       less disposition costs.
  
            On  pages  13  and  14  are  tabular   presentation  showing  detailed
       information  about the  Company's  non-performing  loans and  assets and an
       analysis of the Company's  allowance for loan losses and other related data
       for June 30, 1996, December 31, 1995, and June 30, 1995.
  
       Pending Acquisitions
  
            On July 31,  1996,  the Company  reached  agreements  in  principle to
       acquire two insurance brokerage firms:  Keystone National Companies,  Inc.,
       Cherry Hill, NJ and Buckelew & Associates, Toms River, NJ. The acquisitions
       will be completed  by the issuance of common stock of the Company  totaling
       approximately  550,000 shares. The acquisitions are intended to be tax-free
       reorganizations under appropriate  provisions of the United States Internal
       Revenue  Code  and  will  be  accounted   for  by  the  Company  under  the
       pooling-of-interests   method.  Subject  to  the  execution  of  definitive
       agreements  and  required  governmental  approvals,  the  acquisitions  are
       expected to close on or about September 30, 1996.
  
                                         11
  The effect of these  acquisitions on the Company's total  consolidated
       assets,  stockholders'  equity,  and  net  income  is  not  expected  to be
       material.
  
       Listing Application
  
            The Company has been  cleared to file a listing  application  with the
       New York Stock Exchange  ("NYSE") to list the Company's common stock. It is
       anticipated that trading on the NYSE will commence on or about September 9,
       1996 under the symbol "CBH."
  
                                         12
  The following summary presents  information  regarding  non-performing loans and
  assets as of June 30, 1996 and the preceding four quarters:  (dollar  amounts in
  thousands)
  June 30,     March 31,    Dec. 31,     Sept. 30,     June 30,
                                                  1996         1996         1995         1995          1995
  Non-accrual loans:
     Commercial                                 $ 1,000      $   701      $   629      $   658      $   897
     Consumer                                       827          794          853        1,186        1,063
     Real Estate:
       Construction                               1,687        1,787        1,787          911          911
       Mortgage                                   5,015        5,054        4,708        4,441        7,003
                                                -------      -------      -------      -------      -------
            Total non-accrual loans               8,529        8,336        7,977        7,196        9,874
                                                -------      -------      -------      -------      -------
  
  Restructured loans
     Commercial                                      22          144          161          173          140
     Consumer                                        59           60           60           69           70
     Real Estate:
       Construction
       Mortgage                                                   84          301          301           85
                                                -------      -------      -------      -------      -------
            Total restructured loans                 81          288          522          543          295
                                                -------      -------      -------      -------      -------
  
  Total non-performing loans                      8,610        8,624        8,499        7,739       10,169
                                                -------      -------      -------      -------      -------
  
  Other real estate                               7,721        8,241       10,561       10,120        8,591
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets                   $16,331      $16,865      $19,060      $17,859      $18,760
                                                -------      -------      -------      -------      -------
  
  Loans past due 90 days or more
    and still accruing                              427          163          126           77           86
                                                -------      -------      -------      -------      -------
  
  Total non-performing assets and
    loans past due 90 days or more              $16,758      $17,028      $19,186      $17,936      $18,846
                                                =======      =======      =======      =======      =======
  
  Total non-performing loans as a
    percentage of total period-end
    loans                                          0.83%        0.92%        0.94%        0.89%        1.20%
  
  Total non-performing assets as a
    percentage of total period-end assets          0.63%        0.68%        0.79%        0.74%        0.79%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of total period-end assets          0.64%        0.69%        0.79%        0.75%        0.80%
  
  Allowance for loan losses as a
    percentage of total non-performing
    loans                                           159%         156%         157%         168%         129%
  
  Allowance for loan losses as a percentage
    of total period-end loans                      1.33%        1.43%        1.47%        1.50%        1.54%
  
  Total non-performing assets and loans
    past due 90 days or more as a
    percentage of stockholders' equity and
    allowance for loan losses                        10%          10%          11%          11%          12%
  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
                                                                  Six Months Ended        Ended
                                                                06/30/96    06/30/95    12/31/95
  Balance at beginning of period                                 $13,320     $12,036     $12,036
  Provisions charged to operating expenses                         1,348       1,245       2,215
                                                                 -------     -------     -------
                                                                  14,668      13,281      14,251
  Recoveries on loans charged-off:
    Commercial                                                        65          71         154
    Consumer                                                          51         112         144
    Real estate                                                       72         266         292
                                                                 -------     -------     -------
  Total recoveries                                                   188         449         590
  
  Loans charged-off:
    Commercial                                                      (161)       (366)       (595)
    Consumer                                                        (317)       (207)       (580)
    Real estate                                                     (704)        (73)       (346)
                                                                 -------     -------     -------
  Total charged-off                                               (1,182)       (646)     (1,521)
                                                                 -------     -------     -------
  Net charge-offs                                                   (994)       (197)       (931)
                                                                 -------     -------     -------
  
  Balance at end of period                                       $13,674     $13,084     $13,320
                                                                 =======     =======     =======
  
  Net charge-offs as a percentage of
  average loans outstanding                                         0.21%       0.05%       0.11%
  14
  PART II. OTHER INFORMATION
  
  Item 4. Submission of Matters to a Vote of Securities Holders
  
            The Annual Meeting of the  Registrant's  Shareholders was held on June
       18, 1996.  The only item of business  acted upon at the Annual  Meeting was
       the election of nine directors for one year terms. The number of votes cast
       for and against as to each nominee for director was as follows:
  
      Name of
      Nominee                                    For                     Against
  
      Vernon W. Hill, II                      10,118,905                  92,033
      C. Edward Jordan, Jr.                   10,120,279                  90,689
      David Baird, IV                         10,128,224                  82,714
      Robert C. Beck                          10,014,851                 196,087
      Jack R Bershad                          10,007,443                 203,495
      Morton N. Kerr                          10,112,780                  98,158
      Steven M. Lewis                         10,129,155                  81,783
      Daniel J. Ragone                        10,121,224                  89,714
      Joseph T. Tarquini, Jr.                 10,129,410                  81,528
  
  Item 6. Exhibits and Reports on Form 8-K
  
       (a)  Exhibit 11 - Computation of Net Income Per Share
  
            No reports on Form 8-K were filed during the second quarter ended June
            30, 1996.
  
                                         15
  SIGNATURES
  
  Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
                                          COMMERCE BANCORP, INC.
                                                (Registrant)
  
  August 14, 1996                         By: /s/ C. EDWARD JORDAN, JR.
    (Date)                                    -----------------------------------
                                              C. EDWARD JORDAN, JR.
                                            EXECUTIVE VICE PRESIDENT
                                            (PRINCIPAL FINANCIAL OFFICER)
  
                                         16