================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K/A-2

[ X ]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
                   For the fiscal year ended December 31, 2000
                                       OR
            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

      For the transition period from ________________ to ________________.
                            Commission File #1-12069
                             COMMERCE BANCORP, INC.
             (Exact name of registrant as specified in its charter)

         New Jersey                                    22-2433468
(State of other jurisdiction of          (I.R.S. Employee Identification Number)
 incorporation or organization)

             Commerce Atrium
           1701 Route 70 East                          08034-5400
       Cherry Hill, New Jersey                         (Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: 856-751-9000

     Securities registered pursuant to Section 12(b) of the Act:

   Common Stock                                 New York Stock Exchange
  --------------                       -----------------------------------------
  Title of Class                       Name of Each Exchange on Which Registered

     Securities registered pursuant to Section 12(g) of the Act: None
                          ----------------------------
     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 ____.
     Indicate by check mark if disclosure of' delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10- K.                                             [ X ]
     The aggregate  market value of voting stock held by  non-affiliates  of the
Registrant is $1,749,057,600.(1)
                          ----------------------------
                      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 practicable date.
 Common Stock $1.5625 Par Value                          31,960,287
 ------------------------------           --------------------------------------
      Title of Class                      No. of Shares Outstanding as of 3/2/01

                          ----------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE
     Parts II and IV  incorporate  certain  information  by  reference  from the
Registrant's  Annual Report to  Shareholders  for the fiscal year ended December
31, 2000 (the "Annual  Report").  Part III incorporates  certain  information by
reference from the  Registrant's  Proxy Statement for the 2001 Annual Meeting of
Shareholders.
_______________
(1) The aggregate  dollar amount of the voting stock set forth equals the number
of shares of the Registrant's  Common Stock outstanding reduced by the amount of
Common Stock held by officers,  directors,  and shareholders owning in excess of
10% of the  Registrant's  Common Stock multiplied by the last sale price for the
Registrant's Common Stock on March 2, 2001. The information provided shall in no
way be construed as an admission that the officer,  director, or 10% shareholder
in the Registrant may be deemed an affiliate of the Registrant or that he is the
beneficial  owner of' the shares  reported  as being  held by him,  and any such
inference is hereby  disclaimed.  The  information  provided  herein is included
solely for the recordkeeping purpose of the Securities and Exchange Commission.

================================================================================
<PAGE>
                                EXPLANATORY NOTE

     This Amendment No. 2 to the Registrant's Annual Report on Form 10-K for the
year  ended  December  31,  2000,  as filed  with the  Securities  and  Exchange
Commission  on March  28,  2001,  is  being  filed  to  provide  the name of the
independent auditor who opined on the Registrant's Financial Statements.


Item 8. Financial Statements and Supplementary Financial Data

Commerce Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets

<TABLE>
<CAPTION>
================================================================================================================================
                                                                                                        December 31,
--------------------------------------------------------------------------------------------------------------------------------
                     (dollars in thousands)                                                        2000               1999
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>               <C>
Assets               Cash and due from banks                                                   $  443,918        $  317,624
                     Federal funds sold                                                            52,000             5,300
                     -----------------------------------------------------------------------------------------------------------
                        Cash and cash equivalents                                                 495,918           322,924
                     Loans held for sale                                                           41,791             5,704
                     Trading securities                                                           109,306           117,837
                     Securities available for sale                                              2,021,326         1,664,257
                     Securities held to maturity                                                1,513,456         1,201,892
                        (market value 2000-$1,503,202; 1999-$1,155,447)
                     Loans                                                                      3,687,260         2,961,088
                        Less allowance for loan losses                                             48,680            38,382
                     -----------------------------------------------------------------------------------------------------------
                                                                                                3,638,580         2,922,706
                     Bank premises and equipment, net                                             276,097           198,515
                     Other assets                                                                 200,042           201,958
                     -----------------------------------------------------------------------------------------------------------
                                                                                               $8,296,516        $6,635,793
--------------------------------------------------------------------------------------------------------------------------------
Liabilities          Deposits:
                        Demand:
                           Interest-bearing                                                    $2,628,358        $2,063,899
                           Noninterest-bearing                                                  1,789,371         1,420,865
                        Savings                                                                 1,436,800         1,054,791
                        Time                                                                    1,533,065         1,069,365
                     -----------------------------------------------------------------------------------------------------------
                               Total deposits                                                   7,387,594         5,608,920

                     Other borrowed money                                                         283,714           558,092
                     Other liabilities                                                             52,484            31,525
                     Trust Capital Securities - Commerce Capital Trust I                           57,500            57,500
                     Long-term debt                                                                23,000            23,000
                     -----------------------------------------------------------------------------------------------------------
                                                                                                7,804,292         6,279,037
--------------------------------------------------------------------------------------------------------------------------------
Stockholders'        Common stock, 31,761,453 shares issued                                        49,627            44,418
Equity                  (29,844,314 shares in 1999)
                     Capital in excess of par or stated value                                     422,375           321,443
                     Retained earnings                                                             27,083            32,263
                     Accumulated other comprehensive income                                        (5,239)          (39,744)
                     -----------------------------------------------------------------------------------------------------------
                                                                                                  493,846           358,380
                     Less treasury stock, at cost                                                   1,622             1,624
                     -----------------------------------------------------------------------------------------------------------
                               Total stockholders' equity                                         492,224           356,756
                     -----------------------------------------------------------------------------------------------------------
                                                                                               $8,296,516        $6,635,793
                     -----------------------------------------------------------------------------------------------------------
                     See accompanying notes.

                                                                                                                               57
</TABLE>
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income

<TABLE>
<CAPTION>
================================================================================================================================
                                                                                            Year Ended December 31,
--------------------------------------------------------------------------------------------------------------------------------
                   (dollars in thousands, except per share amounts)                    2000            1999            1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>             <C>             <C>
Interest           Interest and fees on loans                                        $292,066        $215,170        $167,914
Income             Interest on investment securities                                  208,769         170,300         154,164
                   Other interest                                                       4,465             978           2,565
                   -------------------------------------------------------------------------------------------------------------
                                Total interest income                                 505,300         386,448         324,643
                   -------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Interest           Interest on deposits:
Expense                 Demand                                                         72,975          45,274          35,477
                        Savings                                                        36,935          20,835          20,672
                        Time                                                           75,046          59,021          62,692
                   -------------------------------------------------------------------------------------------------------------
                                Total interest on deposits                            184,956         125,130         118,841
                   Interest on other borrowed money                                    16,943           9,880           4,014
                   Interest on long-term debt                                           6,471           7,071           7,127
                   -------------------------------------------------------------------------------------------------------------
                                Total interest expense                                208,370         142,081         129,982
                   -------------------------------------------------------------------------------------------------------------

                   Net interest income                                                296,930         244,367         194,661
                   Provision for loan losses                                           13,931           9,175           8,762
                   -------------------------------------------------------------------------------------------------------------
                   Net interest income after provision for loan losses                282,999         235,192         185,899
--------------------------------------------------------------------------------------------------------------------------------
Noninterest        Deposit charges and service fees                                    56,306          44,196          35,343
Income             Other operating income                                              91,241          67,818          58,042
                   Net investment securities gains                                      3,213           2,582           2,892
                   -------------------------------------------------------------------------------------------------------------
                                Total noninterest income                              150,760         114,596          96,277
                   -------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
Noninterest        Salaries                                                           123,476         101,650          87,078
Expense            Benefits                                                            25,323          20,232          18,475
                   Occupancy                                                           31,419          22,407          18,565
                   Furniture and equipment                                             40,436          31,659          24,995
                   Office                                                              23,548          21,356          16,974
                   Audit and regulatory fees and assessments                            3,256           2,623           2,246
                   Marketing                                                           11,706          10,155           8,451
                   Other real estate (net)                                              1,042           1,786           1,348
                   Other                                                               55,151          40,655          35,818
                   -------------------------------------------------------------------------------------------------------------
                                Total noninterest expenses                            315,357         252,523         213,950
                   -------------------------------------------------------------------------------------------------------------
                   Income before income taxes                                         118,402          97,265          68,226
                   Provision for federal and state income taxes                        38,355          31,305          26,071
                   -------------------------------------------------------------------------------------------------------------
                   Net income                                                        $ 80,047        $ 65,960        $ 42,155
                   -------------------------------------------------------------------------------------------------------------

                   Net income per common and common equivalent share:
                            Basic                                                    $   2.59        $   2.26        $   1.49
                   -------------------------------------------------------------------------------------------------------------
                            Diluted                                                  $   2.49        $   2.17        $   1.42
                   -------------------------------------------------------------------------------------------------------------
                   Average common and common equivalent shares outstanding:
                            Basic                                                      30,878          29,155          28,254
                   -------------------------------------------------------------------------------------------------------------
                            Diluted                                                    32,111          30,465          29,662
                   -------------------------------------------------------------------------------------------------------------
                   Cash dividends declared, common stock                             $   0.97        $   0.83        $   0.87
                   -------------------------------------------------------------------------------------------------------------
                   See accompanying notes.

</TABLE>


58


<PAGE>


Commerce Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
==============================================================================================================================
                                                                                             Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------
                   (dollars in thousands)                                               2000           1999           1998
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>        <C>             <C>
Operating          Net income                                                         $80,047    $    65,960     $  42,155
Activities         Adjustments to reconcile net income to net cash
                     (used) provided by operating activities:
                        Provision for loan losses                                      13,931          9,175         8,762
                        Provision for depreciation, amortization
                          and accretion                                                32,596         28,186        26,640
                        Gains on sales of securities available for sale                (3,213)        (2,582)       (2,892)
                        Proceeds from sales of mortgages held for sale                 56,101        111,055        67,125
                        Originations of mortgages held for sale                       (92,188)       (94,341)      (61,629)
                        Net loan (chargeoffs)                                          (3,633)        (2,058)       (1,647)
                        Net decrease (increase) in trading securities                   8,531        (32,478)      (77,448)
                        Increase in other assets                                      (17,494)       (60,142)      (44,022)
                        Increase (decrease) in other liabilities                       26,271        (23,064)       48,226
                        Deferred income tax benefit                                    (2,812)        (3,468)       (3,115)
                   -----------------------------------------------------------------------------------------------------------
                                Net cash provided (used) by operating                  98,137         (3,757)        2,155
                                activities

Investing          Proceeds from the sales of securities available for sale           410,541        398,274       435,488
Activities         Proceeds from the maturity of securities available for sale        345,160        313,373       404,927
                   Proceeds from the maturity of securities held to maturity          174,124        241,690       374,540
                   Purchase of securities available for sale                       (1,055,694)    (1,002,738)     (807,276)
                   Purchase of securities held to maturity                           (127,194)      (236,623)     (616,780)
                   Net increase in loans                                           (1,085,090)      (810,530)     (617,341)
                   Purchases of premises and equipment                               (109,701)       (73,303)      (48,320)
                   -----------------------------------------------------------------------------------------------------------
                                Net cash used by investing activities              (1,447,854)    (1,169,857)     (874,762)

Financing          Net increase in demand and savings deposits                      1,314,974        721,147       976,959
Activities         Net increase (decrease) in time deposits                           463,700        (41,035)      167,272
                   Net (decrease) increase in other borrowed money                   (274,378)       530,247      (195,455)
                   Issuance of common stock                                                                          1,795
                   Dividends paid                                                     (29,761)       (23,476)      (23,062)
                   Proceeds from issuance of common stock under
                     dividend reinvestment and other stock plans                       53,670         31,428         9,428
                   Other                                                               (5,494)           612         8,509
                   -----------------------------------------------------------------------------------------------------------
                                Net cash provided by financing activities           1,522,711      1,218,923        945,446

                   Increase in cash and cash equivalents                              172,994         45,309        72,839
                   Cash and cash equivalents at beginning of year                     322,924        277,615       204,776
                   -----------------------------------------------------------------------------------------------------------
                   Cash and cash equivalents at end of year                          $495,918    $   322,924     $ 277,615
                   -----------------------------------------------------------------------------------------------------------

                   Supplemental disclosures of cash flow information:  Cash paid
                     during the year for:
                        Interest                                                     $206,144    $   141,810     $ 124,535
                        Income taxes                                                   36,373         26,753        29,755
                   Other noncash activities:
                     Transfer of securities to securities available for sale                          91,010
                     Securitization of loans                                          358,918        129,768
                   -----------------------------------------------------------------------------------------------------------
                   See accompanying notes.



                                                                                                                            59
</TABLE>

<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
<TABLE>
<CAPTION>

====================================================================================================================================
Years ended December 31, 2000, 1999 and 1998
                                                                   Capital in                                   Accumulated
                                                                   Excess of                                      Other
                                                                    Par or                                       Compre-
(in thousands, except per share amounts)        Common  Preferred   Stated     Retained   Commitment  Treasury   hensive
                                                 Stock   Stock      Value      Earnings   to ESOP      Stock      Income     Total
------------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>      <C>       <C>          <C>       <C>         <C>      <C>         <C>
Balances at December 31, 1997                   $29,652  $7,506    $190,166     $52,755   $(2,308)    $(1,624) $  3,753    $279,900
Acquisition of investment firm/insurance
brokerage agency (735 shares)                       794                (552)      7,997                                       8,239
------------------------------------------------------------------------------------------------------------------------------------
As adjusted balance at January 1, 1998           30,446   7,506     189,614      60,752    (2,308)     (1,624)    3,753     288,139
Net income                                                                       42,155                                      42,155
 Other comprehensive income, net of tax
  Unrealized gain on securities (pre-tax $5,005)                                                                  3,157       3,157
  Reclassification adjustment (pre-tax $147)                                                                         96          96
                                                                                                                          ----------
 Other comprehensive income                                                                                                   3,253
                                                                                                                          ----------
       Total comprehensive income                                                                                            45,408
Common stock dividends and cash paid in lieu of
   fractional shares (5,671 shares)               8,860              29,449     (38,395)                                        (86)
Cash dividends paid                                                             (22,976)                                    (22,976)
Shares issued under dividend reinvestment and
   compensation and benefit plans (429 shares)      671              10,629                                                  11,300
Convert preferred C stock to common stock
(647 shares)                                      1,011  (7,506)      6,495                                                       0
Other                                                                   741                 1,026                             1,767
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1998                   $40,988  $    0    $236,928     $41,536   $(1,282)    $(1,624) $  7,006    $323,552
Acquisition of insurance brokerage agencies
(74 shares)                                         110                 212                                                     322
------------------------------------------------------------------------------------------------------------------------------------
As adjusted balance at January 1, 1999           41,098       0     237,140      41,536    (1,282)     (1,624)    7,006     323,874
Net income                                                                       65,960                                      65,960
 Other comprehensive income, net of tax
  Unrealized loss on securities (pre-tax ($71,923))                                                              (45,431)   (45,431)
  Reclassification adjustment (pre-tax ($1,919))                                                                  (1,319)    (1,319)
                                                                                                                          ----------
 Other comprehensive income                                                                                                 (46,750)
                                                                                                                          ----------
       Total comprehensive income                                                                                            19,210
Common stock dividend and cash paid in lieu of
   fractional shares (1,145 shares)               1,790              49,968     (51,890)                                       (132)
Cash dividends paid                                                             (23,343)                                    (23,343)
Shares issued under dividend reinvestment and
   compensation and benefit plans (980 shares)    1,530              29,897                                                  31,427
Other                                                                 4,438                 1,282                             5,720
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1999                   $44,418  $    0    $321,443     $32,263   $     0     $(1,624) $(39,744)   $356,756
Acquisition of insurance brokerage agencies
(301 shares)                                        470                (450)     (5,519)                                     (5,499)
------------------------------------------------------------------------------------------------------------------------------------
As adjusted balance at January 1, 2000           44,888       0     320,993      26,744         0      (1,624)  (39,744)    351,257
Net income                                                                       80,047                                      80,047
 Other comprehensive income, net of tax
  Unrealized gain on securities (pre-tax
    $52,382)                                                                                                     33,837      33,837
  Reclassification adjustment (pre-tax $1,027)                                                                      668         668
                                                                                                                          ----------
 Other comprehensive income                                                                                                  34,505
                                                                                                                          ----------
       Total comprehensive income                                                                                           114,552
Common stock dividend and cash paid in lieu of
   fractional shares (1,417 shares)               2,214              47,734     (50,031)                                        (83)
Cash dividends paid                                                             (29,678)                                    (29,678)
Shares issued under dividend reinvestment and
   compensation and benefit plans (1,615
   shares)                                        2,523              51,147                                                  53,670
Other                                                 2               2,501           1                     2                 2,506
------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2000                   $49,627  $    0    $422,375     $27,083    $    0     $(1,622) $ (5,239)   $492,224
------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes.
</TABLE>

60
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


1. Significant Accounting Policies

Basis of Presentation
The consolidated  financial statements include the accounts of Commerce Bancorp,
Inc.  (the  Company) and its  wholly-owned  subsidiaries,  Commerce  Bank,  N.A.
(Commerce  NJ),  Commerce   Bank/Pennsylvania,   N.A.  (Commerce  PA),  Commerce
Bank/Shore,   N.A.  (Commerce  Shore),  Commerce  Bank/North  (Commerce  North),
Commerce Bank/Central,  N.A. (Commerce Central),  Commerce  Bank/Delaware,  N.A.
(Commerce  Delaware),  Commerce  National  Insurance  Services,  Inc.  (Commerce
National  Insurance),  Commerce  Capital Trust I, and Commerce  Capital Markets,
Inc.  (CCMI).  All  material  intercompany  transactions  have been  eliminated.
Certain  amounts  from prior years have been  reclassified  to conform with 2000
presentation.

The Company is a multi-bank  holding company  headquartered  in Cherry Hill, New
Jersey,  operating primarily in the metropolitan  Philadelphia,  New Jersey, and
Delaware  markets.  Through its  subsidiaries,  the Company  provides retail and
commercial   banking   services,   corporate  trust  services,   municipal  bond
underwriting services, and insurance brokerage services.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Investment Securities
Trading account securities are carried at market value.  Gains and losses,  both
realized and unrealized,  are included in other operating income.  Trading gains
were $8.4  million,  $7.8  million,  and $5.6  million  in 2000,  1999 and 1998,
respectively.

Investment  securities  are  classified as held to maturity when the Company has
the intent and ability to hold those securities to maturity.  Securities held to
maturity  are  stated  at cost and  adjusted  for  accretion  of  discounts  and
amortization of premiums.

Those  securities  that might be sold in response to changes in market  interest
rates,  prepayment risk, the Company's income tax position, the need to increase
regulatory  capital,  or similar other  factors are  classified as available for
sale.  Available for sale securities are carried at fair value,  with unrealized
gains and losses,  net of tax, reported as a component of stockholders'  equity.
The amortized cost of debt securities in this category is adjusted for accretion
of  discounts  and  amortization  of  premiums.  Realized  gains and  losses are
determined on the specific  certificate  method and are included in  noninterest
income.

Loans
Loans  are  stated  at  principal  amounts  outstanding,  net of  deferred  loan
origination fees and costs.  Interest income on loans is accrued and credited to
interest  income  monthly  as  earned.   Loan  origination  fees  are  generally
considered  as  adjustments  of  interest  rate  yields and are  amortized  into
interest income on loans over the terms of the related loans.

Loans are placed on a non-accrual  status and cease accruing  interest when loan
payment  performance is deemed  unsatisfactory.  However,  all loans past due 90
days are placed on non-accrual status,  unless the loan is both well secured and
in the process of collection.

Allowance for Loan Losses
The allowance for loan losses is increased by provisions  charged to expense and
reduced  by  loan  charge-offs  net  of  recoveries.   Based  upon  management's
evaluation of the loan portfolio, the allowance is maintained at


                                                                              61
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


a level  considered  adequate to absorb  estimated  inherent  losses in the loan
portfolio.  The level of the  allowance  is based on an  evaluation  of the risk
characteristics  included in the loan  portfolio,  including such factors as the
volume  and  composition  of the  portfolio,  historical  loan loss  experience,
present and prospective  financial condition of borrowers,  general national and
local economic conditions, and other relevant factors.

Bank Premises and Equipment
Bank premises and equipment are carried at cost less  accumulated  depreciation.
Depreciation  and amortization  are determined on the  straight-line  method for
financial reporting purposes, and accelerated methods for income tax purposes.

Other Real Estate (ORE)
Real estate  acquired in  satisfaction  of a loan is reported in other assets at
the lower of cost or fair value less disposition costs.  Properties  acquired by
foreclosure or deed in lieu of'  foreclosure are transferred to ORE and recorded
at the  lower  of cost or fair  value  less  disposition  costs  based  on their
appraised value at the date actually or constructively received.  Losses arising
from the acquisition of such property are charged against the allowance for loan
losses.  Subsequent  adjustments  to the carrying  values of ORE  properties are
charged to operating expense.

Intangible Assets
The excess of cost over fair value of net assets acquired (goodwill) is included
in other assets and is being amortized on a straight-line  basis over the period
of expected  benefit,  which  approximates 15 years.  Goodwill  amounted to $2.2
million and $2.5  million at December  31,  2000 and 1999,  respectively.  Other
intangible  assets are  amortized  on a  straight-line  basis over 10 to 15 year
lives.  Other intangibles  amounted to $1.6 million and $1.8 million at December
31, 2000 and 1999, respectively.

Income Taxes
The provision for income taxes is based on current taxable  income.  When income
and expenses are  recognized in different  periods for book  purposes,  deferred
taxes are provided.

Restriction on Cash and Due From Banks
The Banks are required to maintain  reserve  balances  with the Federal  Reserve
Bank. The weighted average amount of the reserve balances for 2000 and 1999 were
approximately $7.1 million and $13.6 million, respectively.

Derivative Financial Instruments
The  Company  utilizes  an  interest  rate  swap to  manage  interest  rate risk
associated with its Commerce  Capital Trust  Securities.  Net amounts payable or
receivable from this contract are accrued as an adjustment to interest  expense.
Unrealized  gains or losses on this  contract are not  recognized on the balance
sheet.

As part of CCMI's  broker-dealer  activities,  the  Company  maintains a trading
securities  portfolio  for  distribution  to  customers  in order to meet  those
customers' needs.  Derivative  instruments,  primarily interest rate futures and
options, are used in order to reduce the exposure to interest rate risk relating
to the trading portfolio. These contracts are carried at fair value with changes
in fair value included in other operating income.

Recent Accounting Statements
SFAS No. 133 "Accounting for Derivative  Instruments and Hedging Activities," as
amended  (FAS 133),  requires the Company to recognize  all  derivatives  on the
balance sheet at fair value. FAS 133 allows for hedge



62
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

accounting  treatment and sets forth  specific  criteria to be used to determine
when hedge  accounting is appropriate.  Hedge  accounting  allows for changes in
fair value of both the  derivative  and hedged item to be recognized in earnings
in the same  period.  Changes in fair value of  derivatives  not  considered  an
effective  hedge are recognized in earnings  immediately.  Derivatives for which
hedge  accounting  does not apply must also be  adjusted  to fair value  through
income.  The Company  adopted FAS 133 on January 1, 2001.  Due to the  Company's
minimal use of  derivatives,  adoption did not have a significant  effect on the
results of operations or the financial position of the Company. Future impact of
FAS 133 will depend on the nature and purpose of the  derivative  instruments in
use by the Company at that time.

In September  2000, the FASB issued  Statement No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" (FAS 140).
FAS 140 revises the standards for existing  accounting for  securitizations  and
will  require  the  Company  to  disclose  additional   information  related  to
securitizations.   Certain   provisions   of  FAS  140,   including   disclosure
requirements,  became effective on December 15, 2000. Other provisions  relating
to the  transfer  and  servicing  of  financial  assets and  extinguishments  of
liabilities  become  effective after March 31, 2001.  Management does not expect
the adoption of FAS 140 to have a significant effect on results of operations or
the financial position of the Company.

The  Company  securitized  $358.9  million  and $129.8  million  of  residential
mortgage loans during 2000 and 1999, respectively,  and included the securitized
assets in its held to  maturity  investment  portfolio.  No gains or losses were
recognized on these transactions.

2. Mergers and Acquisitions

In August 1998, J.A. Montgomery,  Inc.,  Wilmington,  DE, an insurance brokerage
agency, was merged with and into Commerce National Insurance. The Company issued
approximately  211,000  shares  of  common  stock  in  exchange  for  all of the
outstanding  shares  of this  agency.  In  November,  1999,  Mullaney  Insurance
Associates, Oakhurst, NJ, an insurance brokerage agency was merged with and into
Commerce National Insurance.  The Company issued  approximately 67,000 shares of
common stock in exchange for all of the  outstanding  shares of this agency.  In
January 2000,  Traber and  Vreeland,  Inc.,  Randolph,  NJ, and in October 2000,
Guarantee  Service  Agency,  Inc. t/a Maywood  Agency,  Maywood,  NJ,  insurance
brokerage agencies,  were merged with and into Commerce National Insurance.  The
Company issued approximately  301,000 shares of common stock in exchange for all
the  outstanding  shares  of  these  agencies.  All of these  transactions  were
accounted for as poolings of  interests.  However,  financial  statements of the
periods prior to the acquisitions have not been restated, as the changes, in the
aggregate, would be immaterial.

In the first quarter of 1998,  the Company  completed the  acquisition  of A. H.
Williams & Co., Inc., (Williams)  Philadelphia,  PA, a public finance investment
firm, and combined  Williams with Commerce  Capital,  the bank securities dealer
division of Commerce NJ, to form Commerce Capital Markets,  Inc., a wholly-owned
nonbank subsidiary of the Company. The acquisition was completed by the issuance
of common  stock of the  Company  totaling  approximately  436,000  shares.  The
transaction  was  accounted for as a pooling of  interests,  however,  financial
statements of the periods prior to the  acquisition  have not been restated,  as
the changes, in the aggregate, would be immaterial.

Effective January 15, 1999, the Company acquired Community First Banking Company
(CFBC),  and CFBC's  wholly-owned bank subsidiary,  Tinton Falls State Bank, was
merged with and into Commerce Shore. The Company issued approximately  1,428,000
shares of common stock to effect the merger.  Also  effective  January 15, 1999,
the Company acquired Prestige Financial Corp. (PFC), and PFC's wholly-owned bank
subsidiary, Prestige State Bank, was re-chartered as a national bank and renamed
Commerce Bank/Central, N.A. The Company issued approximately 1,950,000 shares of
common  stock to effect the  merger.  The  transactions  were  accounted  for as
poolings of interests.  The Company's originally reported financial position and
results of  operations  have been  restated  herein to include  CFBC's and PFC's
results of operations for all periods presented.

                                                                              63
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


3. Investment Securities

A summary of the  amortized  cost and market value of  securities  available for
sale and  securities  held to maturity (in  thousands)  at December 31, 2000 and
1999 follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                       December 31,
---------------------------------------------------------------------------------------------------------------------------------
                                                2000                                                1999
---------------------------------------------------------------------------------------------------------------------------------
                                          Gross         Gross                                 Gross        Gross
                            Amortized   Unrealized   Unrealized     Market      Amortized   Unrealized   Unrealized    Market
                              Cost        Gains        Losses       Value         Cost        Gains        Losses       Value
---------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>           <C>         <C>          <C>          <C>            <C>         <C>         <C>
U.S. Government agency
   and mortgage-backed
   obligations             $1,912,261    $ 6,562     $(17,911)    $1,900,912   $1,644,698     $    7      $(61,772)   $1,582,933
Obligations of state and
   political subdivisions      46,528        436         (420)        46,544       43,379         87        (1,284)       42,182
Equity securities              13,823      3,170         (168)        16,825        7,655      2,206          (754)        9,107
Other                          56,989      1,083       (1,027)        57,045       30,209         71          (245)       30,035
---------------------------------------------------------------------------------------------------------------------------------
Securities available
   for sale                $2,029,601    $11,251     $(19,526)    $2,021,326   $1,725,941     $2,371      $(64,055)   $1,664,257
---------------------------------------------------------------------------------------------------------------------------------
U.S. Government agency
   and mortgage-backed
   obligations             $1,437,993    $ 5,111     $(15,365)    $1,427,739   $1,134,115     $   87      $(46,527)   $1,087,675
Obligations of state and
   political subdivisions      42,938                                 42,938       35,667                                 35,667
Other                          32,525                                 32,525       32,110                       (5)       32,105
---------------------------------------------------------------------------------------------------------------------------------
Securities held to
   maturity                $1,513,456    $ 5,111     $(15,365)    $1,503,202   $1,201,892     $   87      $(46,532)   $1,155,447
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The amortized  cost and  estimated  market value of  investment  securities  (in
thousands)  at December  31,  2000,  by  contractual  maturity  are shown below.
Expected  maturities will differ from  contractual  maturities  because obligors
have the right to repay obligations without prepayment penalties.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                    Available for Sale             Held to Maturity
----------------------------------------------------------------------------------------------------------
                                                  Amortized        Market         Amortized      Market
                                                    Cost           Value             Cost         Value
----------------------------------------------------------------------------------------------------------
<S>                                               <C>            <C>            <C>            <C>
Due in one year or less                           $   37,716     $   37,361     $  162,819     $  162,677
Due after one year through five years                 44,687         44,406            650            650
Due after five years through ten years                53,168         54,373            835            835
Due after ten years                                   18,962         18,660            159            159
Mortgage backed securities                         1,861,245      1,849,701      1,348,993      1,338,881
Equity securities                                     13,823         16,825
----------------------------------------------------------------------------------------------------------
                                                  $2,029,601     $2,021,326     $1,513,456     $1,503,202
----------------------------------------------------------------------------------------------------------
</TABLE>


64
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


Proceeds from sales of securities  available for sale during 2000, 1999 and 1998
were $410.5  million,  $398.3 million and $435.5  million,  respectively.  Gross
gains of $3.2 million,  $2.6 million and $3.3 million were realized on the sales
in 2000,  1999 and 1998,  respectively,  and gross  losses  of $0,  $27,000  and
$376,000 were realized in 2000, 1999 and 1998, respectively.

At December 31, 2000 and 1999,  investment  securities  with a carrying value of
$998.9 million and $564.8 million, respectively, were pledged to secure deposits
of public funds.

In connection  with the  acquisition  of CFBC and PFC,  management  reclassified
$91.0  million of investment  securities  from held to maturity to available for
sale in the  first  quarter  of 1999.  Unrealized  losses  on  those  securities
transferred were approximately $330,000.

4.  Loans

The following is a summary of loans  outstanding  (in thousands) at December 31,
2000 and 1999:

-------------------------------------------------------------------------------
                                                           December 31,
-------------------------------------------------------------------------------
                                                      2000            1999
-------------------------------------------------------------------------------
Commercial real estate:
     Owner-occupied                              $  685,916       $  512,087
     Investor/developer                             471,604          395,086
     Construction                                   380,804          185,712
-------------------------------------------------------------------------------
                                                  1,538,324        1,092,885
Commercial loans:
     Term                                           469,564          393,953
     Line of credit                                 430,811          277,917
     Demand                                           1,400            1,328
-------------------------------------------------------------------------------
                                                    901,775          673,198
Consumer:
     Mortgages (1-4 family residential)             351,644          428,453
     Installment                                    154,415          125,856
     Home equity                                    710,848          621,597
     Credit lines                                    30,254           19,099
-------------------------------------------------------------------------------
                                                  1,247,161        1,195,005
-------------------------------------------------------------------------------
                                                 $3,687,260       $2,961,088
-------------------------------------------------------------------------------

At December 31, 2000 and 1999,  loans of  approximately  $14.4 million and $11.3
million,  respectively,  were  outstanding  to certain of the  Company's and its
subsidiaries'  directors and officers, and approximately $44.0 million and $21.2
million,  respectively,  of loans were  outstanding  from  companies  with which
certain of the  Company's  and its  subsidiaries'  directors  and  officers  are
associated, exclusive of loans to any such person and associated companies which
in aggregate did not exceed $60,000.  The terms of these loans are substantially
the same as those prevailing at the time for comparable unrelated  transactions.
A summary (in thousands) of the related party loans  outstanding at December 31,
2000 is as follows:

----------------------------------------------------------
                                               2000
----------------------------------------------------------
Balance, January 1                           $32,503
New loans                                     39,041
Loan payments                                 13,138
----------------------------------------------------------
Balance, December 31                         $58,406
----------------------------------------------------------



                                                                              65
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


The  Company  engaged  in  certain  activities  with  entities  affiliated  with
directors of the Company.  The Company received real estate  appraisal  services
from a company  owned by a director of the Company.  Such real estate  appraisal
services  amounted to $202,000 in 2000,  $334,000 in 1999 and  $304,000 in 1998.
The Company received legal services from two law firms of which two directors of
the Company are partners. Such aggregate legal services amounted to $1.7 million
in 2000 and $1.6 million in 1999 and 1998.


5. Allowance for Loan Losses

The  following  is an analysis of changes in the  allowance  for loan losses (in
thousands) for 2000, 1999 and 1998:

-------------------------------------------------------------------------------
                                              2000          1999       1998
-------------------------------------------------------------------------------

Balance, January 1                           $38,382      $31,265     $24,150
Provision charged to operating expense        13,931        9,175       8,762
Recoveries of loans previously charged off       576          969       1,487
Loan charge-offs                              (4,209)      (3,027)     (3,134)
-------------------------------------------------------------------------------
Balance, December 31                         $48,680      $38,382     $31,265
-------------------------------------------------------------------------------

6. Non-accrual and Restructured Loans and Other Real Estate

The total of non-performing loans (non-accrual and restructured loans) was $13.6
million  and  $8.7  million  at  December  31,  2000  and  1999,   respectively.
Non-performing  loans of $1.3  million,  $1.6  million  and $3.4  million net of
charge offs of $26,000,  $39,000  and $0 were  transferred  to other real estate
during 2000,  1999 and 1998,  respectively.  Other real estate ($3.0 million and
$3.5 million at December 31, 2000 and 1999,  respectively)  is included in other
assets.

At December 31, 2000 and 1999, the recorded investment in loans considered to be
impaired under FASB Statement No. 114 "Accounting by Creditors for Impairment of
a Loan"  totaled $9.1 million and $5.5 million,  respectively,  all of which are
included in non-performing  loans. As permitted,  all homogenous smaller balance
consumer and residential  mortgage loans are excluded from individual review for
impairment.  The majority of impaired  loans were measured using the fair market
value of  collateral.  No portion of the  allowance  for loan losses for 2000 or
1999 was allocated to these loans. During 2000 and 1999, impaired loans averaged
approximately  $7.3 million and $4.6 million,  respectively.  Interest income of
approximately  $1.7  million  and $1.0  million  would  have  been  recorded  on
non-performing  loans  (including  impaired  loans)  in  accordance  with  their
original terms in 2000 and 1999,  respectively.  Actual interest income recorded
on these  loans  amounted  to  $525,000  and  $255,000  during  2000  and  1999,
respectively.




66
<PAGE>


7. Bank Premises, Equipment, and Leases

A summary of bank premises and equipment (in thousands) is as follows:

--------------------------------------------------------------------------
                                                    December 31,
                                         ---------------------------------
                                              2000                1999
--------------------------------------------------------------------------
Land                                        $  54,066           $ 40,952
Buildings                                     121,908             88,427
Leasehold improvements                         20,979              9,657
Furniture, fixtures and equipment             177,708            128,642
Leased property under capital leases              124                124
--------------------------------------------------------------------------
                                              374,785            267,802

Less accumulated depreciation
  and amortization                             98,688             69,287
--------------------------------------------------------------------------
                                             $276,097           $198,515
--------------------------------------------------------------------------


At December  31, 2000,  Commerce NJ leased one of its  branches  under a capital
lease with an unrelated  party.  All other branch  leases are  accounted  for as
operating  leases with the related rental  payments being expensed  ratably over
the life of the lease.

The Company leases its operations  facilities  from two limited  partnerships in
which the Company is a limited  partner at  December  31,  2000.  The leases are
accounted for as operating leases with an aggregate annual rent of $1.5 million,
which  escalates to $1.8  million in 2011.  One lease  expires in 2014,  and the
other expires in 2014 and is renewable for five  additional  terms of five years
each.

At December 31, 2000,  the Company  leased from related  parties under  separate
operating  lease  agreements  the  land on which it has  constructed  20  branch
offices.  The aggregate  annual rental under these related party leases for 2000
was approximately $1.1 million,  and was approximately  $723,000 and $440,000 in
1999 and 1998,  respectively.  These leases expire periodically through 2020 but
are renewable through 2040. Aggregate annual rentals escalate to $1.2 million in
2006. The Company leases land to a limited  partnership  partially  comprised of
the  directors  of Commerce  PA and  Commerce  NJ. The initial  lease term is 25
years, with two successive  10-year options.  As of December 31, 2000, the total
future  minimum  lease  payments  to  be  received  by  the  Company  amount  to
approximately  $315,000  for  the  remainder  of  the  initial  lease  term.  In
accordance  with  the  provision  of the land  lease,  the  limited  partnership
constructed and owns the office building located on the land. Commerce PA leases
the building as a branch facility through 2010. Commerce North leases one of its
branches from a director and its  headquarters  facility  from a partnership  in
which a director has a substantial  interest.  The aggregate annual rental under
these related party leases was approximately  $486,000 for 2000 and $432,000 for
1999 and 1998. The leases expire in 2007 and 2017.  Commerce  Central leases one
of its branches and its  headquarters  facility from  partnerships  in which two
directors have  substantial  interests.  The aggregate annual rental under these
related party leases was  approximately  $550,000 in 2000,  $484,000 in 1999 and
$474,000 in 1998. The leases expire in 2004 and 2015.

Total  rent  expense   charged  to  operations   under   operating   leases  was
approximately  $10.4  million in 2000,  $7.8 million in 1999 and $6.3 million in
1998.


                                                                              67
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


The future minimum rental commitments,  by year, under the non-cancelable leases
are as follows (in thousands) at December 31, 2000:

--------------------------------------------------------------------------------
                                                 Capital          Operating
--------------------------------------------------------------------------------
2001                                                $12             $9,596
2002                                                 12              8,922
2003                                                 12              8,744
2004                                                 12              8,289
2005                                                 12              8,050
Later years                                         111             74,998
--------------------------------------------------------------------------------
Net minimum lease payment                          $171           $118,599
--------------------------------------------------------------------------------
Less amount representing interest                    75
--------------------------------------------------------------------------------
Present value of net minimum
     lease payments                                 $96
--------------------------------------------------------------------------------

The Company obtained  interior design and general  contractor  services for $2.0
million,  $2.5  million and $1.3 million in 2000,  1999 and 1998,  respectively,
from a business owned by the spouse of the Chairman of the Board of the Company.
Additionally,  the business received  commissions of approximately $1.6 million,
$1.4 million and $814,000 in 2000, 1999 and 1998, respectively, on furniture and
facility purchases made directly by the Company.

8.  Deposits

The  aggregate  amount of time  certificates  of  deposits in  denominations  of
$100,000 or more was $807.0  million and $403.4 million at December 31, 2000 and
1999, respectively.

9. Other Borrowed Money

Other borrowed money consists  primarily of securities sold under  agreements to
repurchase, federal funds purchased, and lines of credit, including Federal Home
Loan  Bank  advances.  The  following  table  represents  information  for other
borrowed money:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                                       December 31,
                                  ----------------------------------------------------
                                             2000                        1999
                                  ----------------------------------------------------
                                                  Average                   Average
                                    Amount          Rate         Amount        Rate
--------------------------------------------------------------------------------------
<S>                                 <C>            <C>          <C>             <C>
Securities sold under
     agreements to repurchase       $283,714       6.70%        $292,266        5.88%

Federal funds purchased                                           20,000        4.50
Lines of credit                                                  245,826        5.67
--------------------------------------------------------------------------------------
                                    $283,714                    $558,092
--------------------------------------------------------------------------------------
Average amount outstanding          $268,304       6.31%        $183,554        5.38%
Maximum month-end balance            583,208                     558,092
--------------------------------------------------------------------------------------
</TABLE>

As of December 31, 2000, the Company had a line of credit of $414.1 million from
the Federal Home Loan Bank of New York,  all of which was  available,  a line of
credit of $100.0 million from the Federal Home Loan Bank of  Pittsburgh,  all of
which was  available,  and a line of credit of $30.0  million from another bank,
all of which  was  available.  In  addition,  CCMI had a line of credit of $10.0
million from another bank, all of which was available.


68
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


10. Long-Term Debt

On July 15, 1993, the Company issued $23.0 million of 8 3/8% subordinated  notes
due 2003.  Interest on the debt is payable  semi-annually on January 15 and July
15 of each year.  The notes may be redeemed in whole or in part at the option of
the Company  after July 15,  2000 at a price from 102% to 100% of the  principal
plus  accrued  interest,  if any, to the date fixed for  redemption,  subject to
certain conditions.  A portion of the notes qualify for total risk-based capital
for regulatory purposes, subject to certain limitations.

On June 9, 1997,  the  Company  issued  $57.5  million  of 8 3/4% Trust  Capital
Securities  through Commerce  Capital Trust 1, a newly formed Delaware  business
trust subsidiary.  The Trust Capital Securities  evidence a preferred  ownership
interest  in the  Trust,  of which  100% of the  common  equity  is owned by the
Company.  The proceeds  from the issuance of the Trust Capital  Securities  were
invested in substantially  similar Junior Subordinated Debt of the Company.  The
Trust Capital Securities are unconditionally guaranteed by the Company. Interest
on the debt is payable  quarterly in arrears on March 31, June 30, September 30,
and December 31 of each year.  The Trust  Capital  Securities  are  scheduled to
mature on June 30, 2027.  The Trust Capital  Securities may be redeemed in whole
or in part at the option of the Company on or after June 30, 2002 at 100% of the
principal  plus  accrued  interest,  if any,  to the date fixed for  redemption,
subject to certain conditions. All $57.5 million of the Trust Capital Securities
qualify as Tier I capital for regulatory capital purposes.

11. Income Taxes

The provision for income taxes consists of the following (in thousands):

---------------------------------------------------------------------
                                2000           1999           1998
---------------------------------------------------------------------
Current:
     Federal                   $40,563       $34,339        $28,012
     State                         604           434          1,174
Deferred:
     Federal                    (2,812)       (2,368)        (3,060)
     State                                    (1,100)           (55)
---------------------------------------------------------------------
                               $38,355       $31,305        $26,071
---------------------------------------------------------------------

The above provision  includes  income taxes related to securities  gains of $1.1
million, $900 thousand and $1.0 million for 2000, 1999 and 1998, respectively.

The provision for income taxes differs from the expected statutory  provision as
follows:

-----------------------------------------------------------------------------
                                               2000        1999     1998
-----------------------------------------------------------------------------
Expected provision at statutory rate:          35.0%       35.0%     35.0%
Difference resulting from:
     Tax-exempt interest on loans              (1.4)       (0.7)     (0.4)
     Tax-exempt interest on securities         (2.1)       (1.0)     (1.8)
     Purchase accounting adjustments            0.1         0.1       0.1
     Other, including acquisition costs         0.8        (1.2)      5.3
-----------------------------------------------------------------------------
                                               32.4%       32.2%     38.2%
-----------------------------------------------------------------------------

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes.


                                                                              69
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The significant  components of the Company's deferred tax liabilities and assets
as of December 31, 2000 and 1999 are as follows (in thousands):

--------------------------------------------------------------------------------
                                                              2000       1999
--------------------------------------------------------------------------------
Deferred tax assets:
     Loan loss reserves                                     $15,577    $11,797
     Fair value adjustment, available for sale securities     3,036     21,940
     Intangibles                                              2,901        336
     Other reserves                                           2,597      1,546
     Other                                                    1,738      1,026
--------------------------------------------------------------------------------
Total deferred tax assets                                    25,849     36,645
--------------------------------------------------------------------------------
Deferred tax liabilities:
     Depreciation                                             1,440        677
     Other                                                    1,326      2,053
--------------------------------------------------------------------------------
Total deferred tax liabilities                                2,766      2,730
--------------------------------------------------------------------------------
Net deferred assets                                         $23,083    $33,915
--------------------------------------------------------------------------------


12. Commitments and Letters of Credit

In the normal course of business,  there are various outstanding  commitments to
extend  credit,  such as  letters  of  credit,  which are not  reflected  in the
accompanying   financial   statements.   These  arrangements  have  credit  risk
essentially  the same as that  involved in extending  loans to customers and are
subject to the Company's normal credit policies. Collateral is obtained based on
management's credit assessment of the borrower.  At December 31, 2000, the Banks
had outstanding standby letters of credit in the amount of $169.3 million.

In addition,  the Banks are committed as of December 31, 2000 to advance  $303.7
million on construction loans, $234.2 million on home equity lines of credit and
$570.0 million on lines of credit.  All other  commitments  total  approximately
$256.3 million.  The Company anticipates no material losses as a result of these
transactions.

13. Common Stock and Preferred Stock

At December 31, 2000, the Company's common stock had a par value of $1.5625. The
Company had 50,000,000 shares authorized as of this date.

On December 19, 2000, the Board of Directors  declared a cash dividend of $0.275
for  each  share  of  common  stock  outstanding  payable  January  18,  2001 to
stockholders of record on January 4, 2001.


70
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

14. Earnings Per Share

The  calculation  of earnings per share  follows (in  thousands,  except for per
share amounts):

<TABLE>
<CAPTION>
  -----------------------------------------------------------------------------------------------
                                                                  Year Ended December 31,
                                                        -----------------------------------------
  (dollars in thousands)                                    2000          1999         1998
  -----------------------------------------------------------------------------------------------
<S>                                                       <C>            <C>          <C>
  Basic:
  Net income applicable to common stock                   $80,047        $65,960      $42,155
  -----------------------------------------------------------------------------------------------
  Average common shares outstanding                        30,878         29,155       28,254
  -----------------------------------------------------------------------------------------------
  Net income per common share                             $  2.59        $  2.26      $  1.49
  -----------------------------------------------------------------------------------------------

  Diluted:
  Net income applicable to common stock
       on a diluted basis                                 $80,047        $65,960      $42,155
  -----------------------------------------------------------------------------------------------

  Average common shares outstanding                        30,878         29,155       28,254
  Additional shares considered in diluted
       computation assuming:
         Exercise of stock options                          1,233          1,310        1,303
         Conversion of preferred stock                                                    105
  -----------------------------------------------------------------------------------------------

  Average common and common equivalent
       shares outstanding                                  32,111         30,465       29,662
  -----------------------------------------------------------------------------------------------

  Net income per common and common
       equivalent share                                   $  2.49        $  2.17      $  1.42
  -----------------------------------------------------------------------------------------------
</TABLE>

15.  Benefit Plans

Employee Stock Option Plan
The Company has the 1997 Employee  Stock Option Plan (the Plan) for the officers
and  employees  of the  Company and its  subsidiaries  as well as a plan for its
non-employee  directors.  The Plan  authorizes  the  issuance of up to 8,617,000
shares of common stock (as adjusted  for stock  dividends)  upon the exercise of
options. 3,649,000 options have been issued under the Plan. The option price for
options  issued under the Plan must be at least equal to 100% of the fair market
value of the Company's common stock as of the date the option is granted.  These
options generally become exercisable to the extent of 25% annually beginning one
year from the date of grant,  although the amount exercisable beginning one year
from the date of grant may be  greater  depending  on the  employees'  length of
service.  The options expire not later than 10 years from the date of grant.  In
addition,  there are options  outstanding  from prior stock  option plans of the
Company  which were granted under similar  terms.  No additional  options may be
issued under these plans.


                                                                              71
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Information concerning option activity for the periods indicated is as follows:

  ------------------------------------------------------------------------------
                                         Shares Under      Weighted Average
                                            Option          Exercise Price
  ------------------------------------------------------------------------------
  Balance at January 1, 1999                4,541,606            $27.67
  Options granted                           1,129,991             38.82
  Options exercised                           345,472             12.55
  Options canceled                            130,294             39.87
  Balance at December 31, 1999              5,195,831             30.79
  ------------------------------------------------------------------------------
  Balance at January 1, 2000                5,195,831            $30.79
  Options granted                              48,825             36.51
  Options exercised                           760,612             23.89
  Options canceled                            157,131             40.42
  Balance at December 31, 2000              4,326,913             31.72
  ------------------------------------------------------------------------------

Information  concerning  options  outstanding  as of  December  31,  2000  is as
follows:
<TABLE>
<CAPTION>
  --------------------------------------------------------------------------------------------------------
                                          Options Outstanding                    Options Exercisable
  --------------------------------------------------------------------------------------------------------
                                           Weighted-Average    Weighted-      Exercisable     Weighted
  Range of                       Number       Remaining         Average          as of        Average
  exercise prices             Outstanding  Contractual Life  Exercise Price   12/31/2000   Exercise Price
  --------------------------------------------------------------------------------------------------------
<S>                           <C>               <C>            <C>            <C>             <C>
  $3.00 to $32.50               1,888,375         5.4            $20.28         1,838,302       $19.98
  $32.51 and greater            2,438,538         7.9             40.58         1,895,592        40.86
  --------------------------------------------------------------------------------------------------------
</TABLE>

The  Company  has  elected  not to  adopt  the  recognition  provisions  of FASB
Statement No. 123,  "Accounting for Stock-Based  Compensation"  (FAS 123), which
requires  a fair  value  based  method  of  accounting  for all  employee  stock
compensation  plans.  The  Company  will  continue to follow APB Opinion No. 25,
"Accounting  for Stock  Issued to  Employees"  and  related  Interpretations  to
account for its stock-based compensation plans. If the Company had accounted for
stock  options  under the fair value  provisions  of FAS 123, net income and net
income  per share  would have been as follows  (in  thousands,  except per share
amounts):

--------------------------------------------------------------------------
                                       2000        1999       1998
--------------------------------------------------------------------------

Pro forma net income                 $70,706     $57,619     $36,251

Pro forma net income per share:
     Basic                           $  2.29     $  1.98     $  1.28
     Diluted                            2.22        1.91        1.23

--------------------------------------------------------------------------

The fair value of options  granted in 2000,  1999 and 1998 was  estimated at the
date of grant using a  Black-Scholes  option  pricing  model with the  following
weighted  average  assumptions:  risk-free  interest  rates of  4.54% to  6.54%,
dividend  yields of 3%,  volatility  factors of the expected market price of the
Company's  common stock of .288 to .332, and weighted  average expected lives of
the options of 4 to 4.75 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the Company's stock options have  characteristics  significantly  different from
those of traded options, and because changes in

72
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

the subjective input  assumptions can materially affect the fair value estimate,
in  management's  opinion,  the  existing  models do not  necessarily  provide a
reliable single measure of the fair value of its stock options.

Employee Stock Ownership Plan
As of December 31, 2000, the Company  maintains an Employee Stock Ownership Plan
(ESOP) for the benefit of its  officers and  employees  who meet age and service
requirements.  The ESOP holds 890,000 shares of the Company's  common stock, all
of which are  allocated to  participant  accounts.  Employer  contributions  are
determined at the discretion of the Board of Directors.  The total  contribution
expense associated with the Plan for 2000, 1999 and 1998 was $100,000,  $547,000
and $1.1 million, respectively.

Post-employment or Post-retirement Benefits
The Company offers no post-employment or post-retirement benefits.

16. Fair Value of Financial Instruments

FASB Statement No. 107, "Disclosures about Fair Value of Financial  Instruments"
(FAS  107),  requires  disclosure  of fair  value  information  about  financial
instruments,  whether or not  recognized in the balance  sheet,  for which it is
practicable to estimate that value.  In cases where quoted market prices are not
available,  fair  values are based on  estimates  using  present  value or other
valuation  techniques.  Those  techniques  are  significantly  affected  by  the
assumptions  used,  including  the  discount  rate and  estimates of future cash
flows. In that regard,  the derived fair value estimates cannot be substantiated
by comparison to independent  markets and, in many cases,  could not be realized
in immediate  settlement of the instrument.  FAS 107 excludes certain  financial
instruments and all non-financial  instruments from its disclosure requirements.
Accordingly,  the aggregate  fair value  amounts  presented do not represent the
underlying value of the Company.

The  following  table  represents  the  carrying  amounts and fair values of the
Company's financial instruments at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                           December 31,
                                     --------------------------------------------------------
                                                 2000                        1999
---------------------------------------------------------------------------------------------
                                       Carrying         Fair      Carrying         Fair
                                        Amount         Value       Amount         Value
---------------------------------------------------------------------------------------------
Financial assets:
<S>                                   <C>            <C>          <C>           <C>
     Cash and cash equivalents        $  495,918     $  495,918   $  322,924    $  322,924
     Loans held for sale                  41,791         41,791        5,704         5,704
     Trading securities                  109,306        109,306      117,837       117,837
     Investment securities             3,534,782      3,524,528    2,866,149     2,819,704
     Loans (net)                       3,638,580      3,652,000    2,922,706     2,960,855

Financial liabilities:
     Deposits                          7,387,594      7,400,507    5,608,920     5,618,204
     Other borrowed money                283,714        283,714      558,092       558,092
     Long-term debt                       80,500         81,475       80,500        76,820
---------------------------------------------------------------------------------------------
Off-balance sheet liabilities:
     Standby letters of credit                       $    1,693                 $    1,080
     Commitments to extend credit                           932                        906
</TABLE>




                                                                              73
<PAGE>


Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:

Cash and cash  equivalents,  loans  held for sale and  trading  securities:  The
carrying amounts reported approximate those assets' fair value.

Investment securities: Fair values for investment securities are based on quoted
market prices, where available. If quoted market prices are not available,  fair
values are based on quoted market prices of comparable instruments.

Loans: For variable-rate  loans that reprice  frequently and with no significant
change in credit risk, fair values are based on carrying values. The fair values
for other loans  receivable were estimated using  discounted cash flow analyses,
using  interest  rates  currently  being offered for loans with similar terms to
borrowers  of similar  credit  quality.  Loans with  significant  collectibility
concerns were fair valued on a loan-by-loan  basis  utilizing a discounted  cash
flow  method.  The carrying  amount of accrued  interest  approximates  its fair
value.

Deposit  liabilities:  The fair  values  disclosed  for demand  deposits  (e.g.,
interest-bearing and noninterest-bearing checking, passbook savings, and certain
types of money market accounts) are, by definition,  equal to the amount payable
on demand at the reporting date (i.e., their carrying amounts).  Fair values for
fixed-rate  certificates  of deposit are estimated  using a discounted cash flow
calculation  that applies interest rates currently being offered on certificates
of deposit to a schedule  of  aggregated  expected  monthly  maturities  on time
deposits.

Other borrowed money: The carrying amounts reported approximate fair value.

Long-term debt: Current quoted market prices were used to estimate fair value.

Off-balance  sheet  liabilities:  Off-balance  sheet  liabilities of the Company
consist of letters of credit,  loan  commitments  and unfunded  lines of credit.
Fair values for the Company's  off-balance  sheet  liabilities are based on fees
currently  charged to enter into  similar  agreements,  taking into  account the
remaining terms of the agreements and the counterparties' credit standing.


74
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

17. Quarterly Financial Data (unaudited)

The following  represents  summarized  unaudited quarterly financial data of the
Company which, in the opinion of management,  reflects  adjustments  (comprising
only normal recurring  accruals)  necessary for fair presentation (in thousands,
except per share amounts):

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                              Three Months Ended
-------------------------------------------------------------------------------------------------------
                                       December 31      September 30        June 30         March 31
-------------------------------------------------------------------------------------------------------
2000
<S>                                       <C>              <C>              <C>              <C>
Interest income                           $138,606         $131,185         $123,283         $112,226
Interest expense                            58,861           55,621           49,861           44,027
Net interest income                         79,745           75,564           73,422           68,199
Provision for loan losses                    3,128            3,668            3,642            3,493
Net investment securities gains              2,393                                                820
Provision for federal and state
   income taxes                              9,588           10,092            9,459            9,216
Net income                                  21,384           20,991           19,377           18,295

Net income per common share:
Basic                                     $   0.68         $   0.68         $   0.63         $   0.60
Diluted                                       0.65             0.64             0.61             0.59

1999
Interest income                           $106,629          $99,097          $93,556          $87,166
Interest expense                            40,252           36,118           33,727           31,984
Net interest income                         66,377           62,979           59,829           55,182
Provision for loan losses                    3,064            1,653            2,274            2,184
Net investment securities gains              1,047              270              400              865
Provision for federal and state
   income taxes                              8,377            7,704            7,726            7,498
Net income                                  17,623           16,840           16,016           15,481

Net income per common share:
Basic                                     $   0.59          $  0.58          $  0.55          $  0.54
Diluted                                       0.57             0.56             0.53             0.51
</TABLE>




                                                                              75
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

18. Condensed Financial Statements of the Parent Company and Other Matters

Balance Sheets

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
                                                              December 31,
---------------------------------------------------------------------------------------
(dollars in thousands)                                   2000                 1999
---------------------------------------------------------------------------------------
<S>                                                    <C>                  <C>
Assets
Cash                                                   $  1,090             $    381
Securities available for sale                            36,392               36,137
Investment in subsidiaries                              536,324              406,485
Other assets                                             16,018               11,588
---------------------------------------------------------------------------------------
                                                       $589,824             $454,591
---------------------------------------------------------------------------------------
Liabilities
Other liabilities                                      $ 17,100             $ 17,335
Trust Capital Securities                                 57,500               57,500
Long-term debt                                           23,000               23,000
---------------------------------------------------------------------------------------
                                                         97,600               97,835
---------------------------------------------------------------------------------------
Stockholders' equity
Common stock                                             49,627               44,418
Capital in excess of par or stated value                422,375              321,443
Retained earnings                                        27,083               32,263
Accumulated other comprehensive income                   (5,239)             (39,744)
---------------------------------------------------------------------------------------
                                                        493,846              358,380
Less treasury stock                                       1,622                1,624
---------------------------------------------------------------------------------------
     Total stockholders' equity                         492,224              356,756
---------------------------------------------------------------------------------------
                                                       $589,824             $454,591
---------------------------------------------------------------------------------------
</TABLE>



<TABLE>
<CAPTION>
Statements of Income
------------------------------------------------------------------------------------
                                                       Year Ended December 31,
------------------------------------------------------------------------------------
(dollars in thousands)                             2000        1999         1998
------------------------------------------------------------------------------------
<S>                                              <C>          <C>         <C>
Income:
     Dividends from subsidiaries                 $ 9,150      $15,750     $18,357
     Interest income                                 497          507         293
     Other                                         5,652        3,690       2,098
------------------------------------------------------------------------------------
                                                  15,299       19,947      20,748
------------------------------------------------------------------------------------
Expenses:
     Interest expense                              7,244        7,375       7,259
     Operating expenses                            2,352        2,508       3,053
------------------------------------------------------------------------------------
                                                   9,596        9,883      10,312
Income before income taxes and equity
     in undistributed income of subsidiaries       5,703       10,064      10,436
Income tax benefit                                (1,274)      (2,636)     (2,692)
------------------------------------------------------------------------------------
                                                   6,977       12,700      13,128
Equity in undistributed income of subsidiaries    73,070       53,260      29,027
------------------------------------------------------------------------------------
Net income                                       $80,047      $65,960     $42,155
------------------------------------------------------------------------------------
</TABLE>


76

<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>
Statements of Cash Flows
--------------------------------------------------------------------------------------------------------
                                                                      Year Ended December 31,
--------------------------------------------------------------------------------------------------------
(dollars in thousands)                                            2000          1999          1998
--------------------------------------------------------------------------------------------------------
<S>                                                               <C>           <C>           <C>
Operating activities:
   Net income                                                     $80,047       $65,960       $42,155
   Adjustments to reconcile net income to net
     cash provided by operating activities:
       Undistributed income of subsidiaries                       (73,070)      (53,260)      (29,027)
       Gains on sales of securities available for sale                             (639)
       Increase in other assets                                    (4,430)       (1,335)         (211)
       Increase in other liabilities                                1,723        13,846         2,111
--------------------------------------------------------------------------------------------------------
         Net cash provided by operating activities                  4,270        24,572        15,028
Investing activities:
   Investment in subsidiaries                                     (28,770)      (31,000)      (40,253)
   Proceeds from sale of securities available for sale              9,997         5,733
   Proceeds from the maturity of securities available for sale    117,863        26,980
   Purchase of securities available for sale                     (126,522)      (54,723)       (4,308)
   Other                                                              (38)           27            51
--------------------------------------------------------------------------------------------------------
         Net cash used by investing activities                    (27,470)      (52,983)      (44,510)
Financing activities:
   Proceeds from issuance of common stock
     under dividend reinvestment plan                              36,110        27,830         7,427
   Cash dividends                                                 (29,761)      (23,476)      (21,563)
   Proceeds from exercise of stock options                         17,560         3,598         2,001
--------------------------------------------------------------------------------------------------------
         Net cash provided (used) by financing                     23,909         7,952       (12,135)
           activities
Increase (decrease) in cash and cash equivalents                      709       (20,459)      (41,617)
Cash and cash equivalents at beginning of year                        381        20,840        62,457
--------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year                          $ 1,090       $   381       $20,840
--------------------------------------------------------------------------------------------------------
Supplemental  disclosures of cash flow information:
 Cash paid during the period for:
     Interest                                                     $ 7,089       $ 7,089       $ 7,089
     Income taxes                                                  36,135        26,056        27,626
--------------------------------------------------------------------------------------------------------
</TABLE>



                                                                              77
<PAGE>


Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

Holders of common  stock of the Company are entitled to receive  dividends  when
declared by the Board of Directors out of funds legally available. Under the New
Jersey  Business  Corporation  Act, the Company may pay dividends  only if it is
solvent and would not be rendered  insolvent by the dividend payment and only to
the extent of surplus  (the  excess of the net  assets of the  Company  over its
stated capital).

The approval of the  Comptroller of the Currency is required for a national bank
to pay  dividends if the total of all  dividends  declared in any calendar  year
exceeds net profits (as  defined) for that year  combined  with its retained net
profits for the preceding two calendar years. New Jersey state banks are subject
to similar  dividend  restrictions.  Commerce NJ,  Commerce PA,  Commerce Shore,
Commerce  North,  and  Commerce  Central can declare  dividends  in 2001 without
additional approval of approximately $74.9 million, $6.1 million, $23.7 million,
$18.9 million and $1.1 million, respectively, plus an additional amount equal to
each bank's net profit for 2001 up to the date of any such dividend declaration.

The Federal Reserve Act requires the extension of credit by any of the Company's
banking  subsidiaries to certain  affiliates,  including Commerce Bancorp,  Inc.
(parent), be secured by readily marketable securities,  that extension of credit
to any one  affiliate  be limited to 10% of the capital and capital in excess of
par or stated  value,  as  defined,  and that  extensions  of credit to all such
affiliates  be limited to 20% of capital  and capital in excess of par or stated
value.  At  December  31,  2000  and  1999,  the  Company  complies  with  these
guidelines.

The  Company and its  subsidiaries  are  subject to various  regulatory  capital
requirements  administered  by the  federal  banking  agencies.  Failure to meet
minimum  capital  requirements  can  initiate  certain  mandatory  and  possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct  material  effect on the Company's  financial  statements.  Under capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
the Company must meet specific guidelines that involve quantitative  measures of
the  Company's  assets,  liabilities,  and  certain  off-balance-sheet  items as
calculated under regulatory accounting practices.  The Company's capital amounts
and classification  are also subject to qualitative  judgments by the regulators
about components, risk weightings, and other factors.

Quantitative  measures  established  by  regulation to ensure  capital  adequacy
require the Company and its  subsidiaries to maintain minimum amounts and ratios
of total and Tier I capital (as defined in the regulations) to risk-based assets
(as defined) and of Tier I capital to average assets (as defined),  or leverage.
Management  believes,  as of  December  31,  2000,  that  the  Company  and  its
subsidiaries meet all capital adequacy requirements to which they are subject.




78
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


The following  table  presents the Company's  and Commerce NJ's  risk-based  and
leverage capital ratios at December 31, 2000 and 1999:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
                                                                        Per Regulatory Guidelines
----------------------------------------------------------------------------------------------------------
                                                 Actual                Minimum         "Well Capitalized"
----------------------------------------------------------------------------------------------------------
                                           Amount       Ratio     Amount   Ratio        Amount       Ratio
-----------------------------------------------------------------------------------------------------------
<S>                                       <C>        <C>          <C>      <C>           <C>       <C>
December 31, 2000
Company
   Risk based capital ratios:
     Tier I                              $551,167    10.79%      $204,316  4.00%        $306,474    6.00%
     Total capital                        609,047    11.92        408,633  8.00          510,791   10.00
   Leverage ratio                         551,167     6.92        318,444  4.00          398,055    5.00

Commerce NJ Risk based capital ratios:
     Tier 1                              $288,630     9.80%      $117,775  4.00%        $176,663    6.00%
     Total capital                        317,052    10.77        235,550  8.00          294,438   10.00
   Leverage ratio                         288,630     6.51        177,474  4.00          221,843    5.00

December 31, 1999
Company
   Risk based capital ratios:
     Tier I                              $449,698    11.40%      $157,847  4.00%        $236,771    6.00%
     Total capital                        501,879    12.72        315,694  8.00          394,618   10.00
   Leverage ratio                         449,698     7.02        256,362  4.00          320,453    5.00

Commerce NJ Risk based capital ratios:
     Tier 1                              $225,189    10.35%      $ 87,054  4.00%        $130,582    6.00%
     Total capital                        246,263    11.32        174,109  8.00          217,636   10.00
   Leverage ratio                         225,189     6.33        142,233  4.00          177,791    5.00
</TABLE>



                                                                              79
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements


19. Segment Reporting


The Company operates one reportable segment of business,  Community Banks, which
includes  Commerce NJ,  Commerce PA, Commerce  Shore,  Commerce North,  Commerce
Central,  and  Commerce  Delaware.  Through  its  Community  Banks,  the Company
provides a broad range of retail and commercial banking services,  and corporate
trust services.  Parent/Other  includes the holding company,  Commerce  National
Insurance  (whose revenues of $45.6 million,  $32.4 million and $25.2 million in
2000, 1999 and 1998,  respectively,  were reported in other  operating  income),
CCMI, and Commerce Capital Trust I.

Selected segment information for each of the three years ended December 31 is as
follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                      2000                                 1999                               1998
-----------------------------------------------------------------------------------------------------------------------------------
                        Community   Parent/                 Community     Parent/               Community     Parent/
                          Banks      Other        Total       Banks        Other       Total       Banks       Other          Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>         <C>         <C>          <C>          <C>         <C>         <C>         <C>          <C>
Net interest income     $298,985    $(2,055)    $296,930     $251,132     $(6,765)    $244,367    $200,998    $(6,337)     $194,661

Provision for loan
    losses                13,931                  13,931        9,175                    9,175       8,762                    8,762
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income      285,054     (2,055)     282,999      241,957      (6,765)     235,192     192,236     (6,337)      185,899
    after provision
Noninterest income        90,464     60,296      150,760       66,127      48,469      114,596      58,426     37,851        96,277
Noninterest expense      263,001     52,356      315,357      209,808      42,715      252,523     180,736     33,214       213,950
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) before
    income taxes         112,517      5,885      118,402       98,276      (1,011)      97,265      69,926     (1,700)       68,226
Income tax expense
    (benefit)             35,255      3,100       38,355       31,963        (658)      31,305      26,299       (228)       26,071
-----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)        $77,262     $2,785      $80,047      $66,313       $(353)     $65,960     $43,627    $(1,472)      $42,155
-----------------------------------------------------------------------------------------------------------------------------------
Average assets
    (in millions)     $6,626,429   $722,534   $7,348,963   $5,301,844    $602,025   $5,903,869   $4,395,127   $470,878   $4,866,005
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The  financial  information  for each  segment  is  reported  on the basis  used
internally by the Company's management to evaluate  performance.  Measurement of
the  performance  of each  segment is based on the  management  structure of the
Company and is not necessarily  comparable with financial information from other
entities.  The  information  presented  is  not  necessarily  indicative  of the
segment's  results of operations if each of the Community Banks were independent
entities.


80
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Notes to Consolidated Financial Statements

20. Derivative Financial Instruments

As part of CCMI's  broker-dealer  activities,  the  Company  maintains a trading
securities  portfolio for  distribution  to its customers in order to meet those
customers' needs. In order to reduce the exposure to market risk relating to the
inventory,  the  Company  buys  and  sells a  variety  of  derivative  financial
instruments including futures and option contracts. Market risk includes changes
in interest rates or value fluctuations in the underlying financial instruments.
The Company uses notional  (contract)  amounts to measure  derivative  activity.
Notional amounts are not included on the balance sheet, as those amounts are not
actually paid or received at settlement.  The following  table reflects the open
commitments for futures and options and the associated unrealized gains (losses)
for the year ended December 31, 2000:

  -----------------------------------------------------------------
                                           Notional     Unrealized
                                            Amount      Gain (Loss)
  -----------------------------------------------------------------
  Municipal bond futures                   $44,100         $(664)
  Treasury bond futures                      9,200          (372)
  Treasury bond put options                  2,210            (7)
  Treasury bond call options                 9,400          (250)
  Treasury bond call options                 3,100            (9)
  -----------------------------------------------------------------
  Total                                    $68,010       $(1,302)
  -----------------------------------------------------------------

The average notional amount for futures and options contracts for the year ended
December 31, 2000 was $67.5 million and $6.7 million, respectively. Realized and
unrealized  gains and losses  related to derivative  financial  instruments  are
included in other operating income in the statement of income.




                                                                              81
<PAGE>

Commerce Bancorp, Inc. and Subsidiaries Report of Independent Auditors

The Board of Directors and Stockholders
Commerce Bancorp, Inc. and Subsidiaries

We have  audited  the  accompanying  consolidated  balance  sheets  of  Commerce
Bancorp,  Inc. and Subsidiaries as of December 31, 2000 and 1999 and the related
consolidated  statements of income,  changes in stockholders'  equity,  and cash
flows for each of the three years in the period ended  December 31, 2000.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our  audits.  We did not  audit the  financial  statements  of two  wholly-owned
subsidiaries, which statements reflect net interest income constituting 12.3% of
the related  consolidated totals in 1998. Those statements were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates  to data  included  for the two  subsidiaries,  is based  solely  on the
reports of other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We  believe  that our audits  and the  reports of other  auditors
provide a reasonable basis for our opinion.

In our  opinion,  based on our audits and the  reports  of other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the consolidated  financial position of Commerce Bancorp,  Inc. and Subsidiaries
at December 31, 2000 and 1999, and the consolidated  results of their operations
and their cash flows for each of the three  years in the period  ended  December
31, 2000 in conformity  with  accounting  principles  generally  accepted in the
United States.


/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
January 30, 2001




82


<PAGE>

                                    SIGNATURE

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange of 1934, the Registrant has duly caused this Amendment No. 2 to its
Annual Report of Form 10-K for the year ended December 31, 2000 to be signed on
its behalf by the undersigned thereunto duly authorized.


                                           COMMERCE BANCORP, INC.




Date:  August 29, 2001                     By: /s/ Douglas J. Pauls
                                           -----------------------------
                                           Douglas J. Pauls
                                           Senior Vice President and
                                           Chief Accounting Officer