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

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

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

                                   FORM 10-K/A
                                (Amendment No. 1)

  [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2003
                                       OR
  [ ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
      For the transition period from ________________ to ________________.
                            Commission File #1-12609

                             COMMERCE BANCORP, INC.
                                 [LOGO OMITTED]
             (Exact name of registrant as specified in its charter)

                 New Jersey                                   22-2433468
    (State of other jurisdiction of                       (I.R.S. Employee
     incorporation or organization)                      Identification Number)
               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 (ss. 229.405 of this chapter) 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.

     Indicate by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Act).Yes _X_ No __.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant was approximately $2,497,629,542.(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 $1.00 Par Value                            77,394,220
-------------------------------           --------------------------------------
       Title of Class                     No. of Shares Outstanding as of 3/1/04

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

                       DOCUMENTS INCORPORATED BY REFERENCE
     Part  III   incorporates   certain   information   by  reference  from  the
Registrant's Proxy Statement for the 2004 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 number of
shares of Common Stock held by officers,  directors, and shareholders owning 10%
or more of the Registrant's  Common Stock,  multiplied by $37.10 , the last sale
price for the  Registrant's  Common Stock on June 30, 2003 the last business day
of  the  Registrant's  most  recently  completed  second  fiscal  quarter.   The
information  provided  shall in no way be  construed  as an  admission  that any
person  whose  holdings  are  excluded  from this figure is an  affiliate of the
Registrant or that such person 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  purposes  of the
Securities and Exchange Commission.

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

<PAGE>



EXPLANATORY NOTE
(Amounts in thousands)

We are filing  this  Amendment  No. 1 to our Annual  Report on Form 10-K for the
year  ended  December  31,  2003 as  filed  with  the  Securities  and  Exchange
Commission  on March 11, 2004.  This  Amendment  corrects  typographical  errors
contained in the third chart on page 23 in Item 7,  Management's  Discussion and
Analysis.

<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  of  the  Company  analyzes  the  major  elements  of  the  Company's
consolidated  balance  sheets and  statements of income.  This section should be
read in conjunction  with the Company's  consolidated  financial  statements and
accompanying notes.

Executive Summary

The  Commerce  model is built on the  gathering  and  retention of low cost core
deposits as being  essential to  shareholder  value.  Management  believes  core
deposit  growth  has been and will  continue  to be the  primary  driver  of the
Company's success,  and that service and a great retail  experience,  not rates,
drives  deposit  growth.  The  consistent  inflow of low cost,  long  lived core
deposits allows the Company to avoid taking  excessive risks in growing its loan
and investment  portfolios.  In addition,  the Company's  significant  cash flow
provides ongoing reinvestment opportunities as interest rates change.

During 2003, the company's total assets grew 38%. The interest rate  environment
during the year was  difficult for the Company's  growth model,  with  long-term
interest  rates  reaching   historically   low  levels.   The  rate  environment
contributed to the  compression  of the Company's net interest  margin to 4.36%,
the lowest level in over 10 years.  Despite  this,  the Company was able to grow
revenue  31%,  net income  34%,  and  diluted  net income per share by 28%.  The
Company  also  demonstrated  its  ability  to  access  the  capital  markets  by
successfully  completing a $209 million common stock offering in September 2003.
The Company's financial  performance for 2003 and projected performance for 2004
are further discussed below.

The 2003 financial  highlights are summarized  below.

o    Net income increased 34% and earnings per share increased 28%.

o    Total deposits grew 42% and total loans grew 28%.

o    Total revenues (net interest income plus noninterest income) increased 31%.

o    Successful  completion of common stock  offering that produced net proceeds
     of approximately $209 million, which will support future growth.

                                  2003        2002      Increase
  (amounts in billions)
  Total Assets              $     22.7      $  16.4         38%
  Total Loans (net)                7.3          5.7         28%
  Total Investments               13.3          8.9         49%
  Total Deposits                  20.7         14.5         42%

  (amounts in millions)
  Total Revenues            $  1,088.3      $ 830.2         31%
  Net Income                     194.3        144.8         34%
  Net Income per Share            2.61         2.04         28%


The Company remains a deposit-driven financial institution with emphasis on core
deposit   accumulation   and   retention   as  a  basis  for  sound  growth  and
profitability.  The Company's  unique business model continues to produce strong
top-line revenue growth that is driven by strong deposit growth.

The continued ability to grow deposits has resulted in significant earning asset
growth.  This growth  resulted in $771.5 million of net interest income on a tax
equivalent  basis in 2003,  an increase of $185.6  million or 32% over 2002.  As
more fully depicted in the chart below,  the increase in net interest  income in
both 2003 and 2002 was almost entirely due to volume  increases in the Company's
earning assets.

------------------------------------------------------------
                            Net Interest Income
                           (dollars in millions)
------------------------------------------------------------
                   Volume      Rate
                  Increase    Change      Total Increase
------------------------------------------------------------
2003               $227.1    ($41.5)    $185.6      32%
------------------------------------------------------------
2002               $174.0     ($0.8)    $173.2      42%
------------------------------------------------------------

The Company  continues to reiterate its future growth targets,  which management
expects to meet or exceed.


                               Growth      Actual
                               Target    2003 Growth

       Total Deposits              25%         42%
       Comp Store Deposits         18%         27%
       Total Revenue               25%         31%

       Net Income                  25%         34%
       Earnings Per Share          20%         28%

The  Company  completed  it plan to open 46  stores in 2003 and plans to open 50
more during 2004. The Company plans to open  approximately  40 stores in 2004 in
the metro New York market.  This market has seen the highest  deposit growth per
branch and  management  expects  these  stores to  continue  to lead the deposit
growth of the  Company.  The  remaining  10  stores  will be opened in the metro
Philadelphia  market.  The Company has  previously  announced that it expects to
enter the Washington D.C./Northern Virginia market in 2005.


12
<PAGE>

Application of Critical Accounting Policies

The Company's  consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States and follow general
practices  within the  industries  in which it  operates.  Application  of these
principles  requires  management to make estimates,  assumptions,  and judgments
that affect the amounts  reported in the financial  statements and  accompanying
notes.  These  estimates,  assumptions,  and judgments are based on  information
available  as of the  date of the  financial  statements;  accordingly,  as this
information changes, the financial statements could reflect different estimates,
assumptions,  and judgments. Certain policies inherently have a greater reliance
on the use of estimates,  assumptions,  and judgments and as such have a greater
possibility  of  producing  results  that  could be  materially  different  than
originally reported.

The Company's accounting policies are fundamental to understanding  Management's
Discussion and Analysis of Financial  Condition and Results of  Operations.  The
Company has identified two policies as being critical:  the policies  related to
the allowance for loan losses and  capitalization  of branch costs. The Company,
in  consultation  with the Audit  Committee,  has reviewed  and  approved  these
critical accounting policies (further described in Note 1 Significant Accounting
Policies to the Consolidated Financial Statements.)

Allowance for loan losses. The allowance for loan losses represents management's
estimate  of  probable  credit  losses  inherent  in the loan  portfolio  of the
Company. Determining the amount of the allowance for loan losses is considered a
critical  accounting estimate because it requires  significant  judgment and the
use of estimates  related to the amount and timing of expected future cash flows
on  impaired  loans,  estimated  losses on pools of  homogeneous  loans based on
historical loss  experience,  and  consideration  of current economic trends and
conditions, all of which may be susceptible to significant change. Note 1 to the
Consolidated  Financial  Statements  describes the methodology used to determine
the allowance for loan losses,  and a discussion of the factors  driving changes
in the amount of the  allowance for loan losses is included in the Allowance for
Loan Losses  discussion  within this  Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations.

Branch  Premises  and  Equipment.   In  accordance  with  accounting  principles
generally  accepted in the United  States,  when  capitalizing  costs for branch
construction,  the Company includes the costs of purchasing the land, developing
the site,  constructing the building (or leasehold  improvements if the property
is leased), and furniture, fixtures and equipment necessary to equip the branch.
All other pre-opening and post-opening costs related to branches are expensed as
incurred.

Segment Reporting

The Company  operates one reportable  segment of business,  Community  Banks, as
more fully described in Note 19 to the Consolidated  Financial  Statements.  The
following  table  summarizes  net income by  segment  for each of the last three
years:

 -----------------------------------------------------------
                                    Net Income
 -----------------------------------------------------------
                           2003        2002        2001
 -----------------------------------------------------------
 Community Banks          $183,068    $139,560    $ 95,574
 Parent/Other               11,219       5,255       7,448
 -----------------------------------------------------------
 Consolidated total       $194,287    $144,815    $103,022
 -----------------------------------------------------------

Average Balances and Net Interest Income

The table on page 15 sets forth balance sheet items on a daily average basis for
the years ended December 31, 2003,  2002 and 2001 and presents the daily average
interest  rates earned on assets and the daily  average  interest  rates paid on
liabilities  for such periods.  During 2003,  average  interest  earning  assets
totaled  $17.7  billion,  an increase of $5.2  billion,  or 42% over 2002.  This
increase  resulted  primarily  from  the  increase  in the  average  balance  of
investments,  which rose $4.0 billion,  and the average balance of loans,  which
rose $1.2  billion  during 2003.  The growth in the average  balance of interest
earning  assets was funded  primarily  by an increase in the average  balance of
deposits (including noninterest-bearing demand deposits) of $5.2 billion.

Net Interest Margin and Net Interest Income

Net interest margin on a tax equivalent  basis was 4.36% for 2003, a decrease of
33  basis  points  from  2002.  The  decrease  is due to the low  interest  rate
environment throughout 2003. During the fourth quarter of 2003, the net interest
margin  increased  by 6 basis  points  and  management  expects  it to  continue
increasing in the first quarter of 2004.  The net interest  margin is calculated
by dividing net interest income by average earning assets.

Net interest  income is the  difference  between the  interest  income on loans,
investments and other interest-earning  assets and the interest paid on deposits
and other  interest-bearing  liabilities.  Net  interest  income is the  primary
source of earnings  for the Company.  There are several  factors that affect net
interest income, including:

o    the   volume,   pricing,   mix  and   maturity   of   earning   assets  and
     interest-bearing liabilities;

o    market interest rate fluctuations; and

o    asset quality.


13

<PAGE>


Net interest income on a tax-equivalent  basis (which adjusts for the tax-exempt
status of income earned on certain loans and  investments to express such income
as if it were  taxable)  for 2003 was  $771.5  million,  an  increase  of $185.6
million, or 32%, over 2002. Interest income on a tax-equivalent  basis increased
to $931.3  million from $768.5  million,  or 21%.  This  increase was  primarily
related to volume  increases  in the loan and  investment  portfolios.  Interest
expense for 2003 fell $22.8  million to $159.8  million  from $182.6  million in
2002. This decrease was primarily  related to decreases in the rates paid on the
Company's deposits and debt instruments.

The  tax-equivalent  yield on interest  earning  assets during 2003 was 5.26%, a
decrease  of 89 basis  points from 6.15% in 2002.  The cost of  interest-bearing
liabilities decreased 70 basis points in 2003 to 1.11% from 1.81% in 2002. These
decreases resulted primarily from decreased general market interest rates during
2003 as compared to 2002. The cost of total funding  sources  decreased 56 basis
points in 2003 to 0.90% from 1.46%.

The following  table presents the major factors that  contributed to the changes
in net  interest  income  for the  years  ended  December  31,  2003 and 2002 as
compared to the respective previous periods.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                      2003 vs. 2002                                  2002 vs. 2001
                                   Increase (Decrease)                            Increase (Decrease)
                                  Due to Changes in (1)                          Due to Changes in (1)
------------------------------------------------------------------------------------------------------------------------
                           Volume        Rate           Total             Volume             Rate           Total
------------------------------------------------------------------------------------------------------------------------
                                                             (dollars in thousands)
<S>                      <C>            <C>            <C>              <C>                <C>            <C>
Interest on
  Investments:
   Taxable               $186,070       ($65,123)      $120,947         $156,146           ($29,870)      $126,276
   Tax-exempt               6,277            706          6,983            1,968               (214)         1,754
   Trading                 (1,029)        (1,527)        (2,556)           1,558                253          1,811
Federal
    Funds sold               (356)          (254)          (610)          (1,802)            (3,270)        (5,072)
Interest on loans:
   Commercial
     mortgages             24,352        (10,574)        13,778           31,083            (17,291)        13,792
   Commercial              21,154         (6,710)        14,444           16,240            (17,045)          (805)
   Consumer                24,965        (17,970)         6,995           27,817            (13,936)        13,881
   Tax-exempt               4,515         (1,701)         2,814            1,612               (499)         1,113
------------------------------------------------------------------------------------------------------------------------
Total interest
  Income                  265,948       (103,153)       162,795          234,622            (81,872)       152,750
------------------------------------------------------------------------------------------------------------------------
Interest expense:
  Savings                   9,453        (12,089)        (2,636)           9,678            (12,093)        (2,415)
  N.O.W.
   Accounts                   884         (1,682)          (798)           1,128             (2,606)        (1,478)
  Money
   Market plus             16,781        (20,685)        (3,904)          17,669            (24,332)        (6,663)
  Time
   Deposits                10,405        (18,077)        (7,672)          20,708            (20,730)           (22)
  Public funds             (1,069)        (6,711)        (7,780)           2,960            (19,455)       (16,495)
  Other
   Borrowed
   Money                    2,349           (924)         1,425              379             (2,048)        (1,669)
  Long-term
   Debt                        32         (1,517)        (1,485)           8,090                227          8,317
------------------------------------------------------------------------------------------------------------------------
Total interest
  Expense                  38,835        (61,685)       (22,850)          60,612            (81,037)       (20,425)
------------------------------------------------------------------------------------------------------------------------
Net increase             $227,113       ($41,468)      $185,645         $174,010              ($835)      $173,175
------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Changes  due to both volume and rate have been  allocated  to volume or rate
    changes in proportion to the absolute dollar amounts of the change in each.
</FN>
</TABLE>




14

<PAGE>

<TABLE>
<CAPTION>
                            Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income

------------------------------------------------------------------------------------------------------------------------------------
                                                                    Year Ended December 31,
------------------------------------------------------------------------------------------------------------------------------------
                                              2003                            2002                            2001
------------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)            Average             Average     Average             Average     Average               Average
Earning Assets                    Balance    Interest  Rate       Balance    Interest   Rate      Balance    Interest    Rate
------------------------------------------------------------------------------------------------------------------------------------
<S>                             <C>          <C>       <C>      <C>          <C>        <C>      <C>          <C>          <C>
Investment securities
     Taxable                    $ 10,777,538 $508,758  4.72%    $ 6,835,820  $387,811   5.67%    $4,083,493   $261,535     6.40%
     Tax-exempt                      201,775   13,835  6.86         110,235     6,852   6.22         78,572      5,098     6.49
     Trading                         193,376    9,637  4.98         214,016    12,193   5.70        186,678     10,382     5.56
------------------------------------------------------------------------------------------------------------------------------------
Total investment securities       11,172,689  532,230  4.76       7,160,071   406,856   5.68      4,348,743    277,015     6.37
Federal funds sold                    22,530      255  1.13          54,043       865   1.60        166,619      5,937     3.56
Loans
     Commercial mortgages          2,419,855  152,642  6.31       2,037,091   138,864   6.82      1,581,118    125,072     7.91
     Commercial                    1,605,845   87,782  5.47       1,219,182    73,338   6.02        949,205     74,143     7.81
     Consumer                      2,224,197  137,138  6.17       1,815,679   130,143   7.17      1,427,586    116,262     8.14
     Tax-exempt                      269,592   21,230  7.87         212,261    18,416   8.68        193,678     17,303     8.93
------------------------------------------------------------------------------------------------------------------------------------
Total loans                        6,519,489  398,792  6.12       5,284,213   360,761   6.83      4,151,587    332,780     8.02
------------------------------------------------------------------------------------------------------------------------------------
Total earning assets             $17,714,708 $931,277  5.26%    $12,498,327  $768,482   6.15%    $8,666,949   $615,732     7.10%
------------------------------------------------------------------------------------------------------------------------------------
Sources of Funds
------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities
     Savings                      $3,676,147  $27,596  0.75%    $ 2,416,884  $ 30,232   1.25%    $1,643,145   $ 32,647     1.99%
     N.O.W. accounts                 468,311    3,358  0.72         344,951     4,156   1.20        251,352      5,634     2.24
     Money market plus             6,495,847   47,353  0.73       4,193,963    51,257   1.22      2,748,236     57,920     2.11
     Time deposits                 2,335,124   53,721  2.30       1,882,823    61,393   3.26      1,247,741     61,415     4.92
     Public funds                    852,319   12,394  1.45         925,827    20,174   2.18        790,001     36,669     4.64
------------------------------------------------------------------------------------------------------------------------------------
Total deposits                    13,827,748  144,422  1.04       9,764,448   167,212   1.71      6,680,475    194,285     2.91

Other borrowed money                 423,538    3,263  0.77         118,734     1,839   1.55         94,257      3,508     3.72
Long-term debt                       200,000   12,080  6.04         199,464    13,565   6.80         80,500      5,248     6.52
------------------------------------------------------------------------------------------------------------------------------------
Total deposits and interest-
     bearing liabilities          14,451,286  159,765  1.11      10,082,646   182,616   1.81      6,855,232    203,041     2.96
Noninterest-bearing funds
     (net)                         3,263,422                      2,415,681                       1,811,717
------------------------------------------------------------------------------------------------------------------------------------
Total sources to fund
     earning assets              $17,714,708 $159,765  0.90     $12,498,327  $182,616   1.46     $8,666,949   $203,041     2.34
------------------------------------------------------------------------------------------------------------------------------------
Net interest income and
     margin tax-equivalent
     basis                                   $771,512  4.36                  $585,866   4.69                  $412,691     4.76
Tax-exempt adjustment                          15,646                          13,111                           11,365
                                             --------                        --------                       -----------
Net interest income and margin               $755,866  4.27%                 $572,755   4.58%                 $401,326     4.63%
Other Balances
------------------------------------------------------------------------------------------------------------------------------------
Cash and due from banks            $ 922,188                       $630,134                      $  417,110
Other assets                       1,053,283                        702,898                         519,799
Total assets                      19,590,319                     13,752,237                       9,546,794
Demand deposits
     (noninterest-bearing)         3,826,885                      2,674,233                       1,962,354
Other  liabilities                   279,203                        212,775                         145,084
Stockholders' equity               1,032,945                        782,583                         584,124

<FN>
Notes --Weighted average yields on tax-exempt obligatiohave been computed on a tax-equivalent basis assuming a federal
        tax rate of 35%.

      --Non-accrual loans have been included in the average loan balance.

      --Investment securities include investments available for sale.

      --Consumer loans include loans held for sale.
</FN>
</TABLE>

15

<PAGE>

Noninterest Income

For 2003,  noninterest  income  totaled  $332.5  million,  an  increase of $75.0
million or 29% from 2002.  Deposit  charges  and  service  fees had the  largest
increase of $29.6 million,  or 23%. Other  operating  income  increased by $23.5
million,  or 66%,  which  includes the Company's  insurance and capital  markets
divisions.  Commerce Insurance,  the Company's  insurance brokerage  subsidiary,
recorded  increased  revenues of $10.6 million,  or 19%, while Commerce  Capital
Markets generated  increased  revenues of $7.4 million,  or 21%. The increase in
other operating income is more fully depicted in the following chart.

                                   2003          2002
                               -------------  ------------
Deposit Charges & Service Fees     $160,678       $131,033
Other Operating Income:
   Insurance                         66,482         55,875
   Capital Markets                   42,518         35,082
   Loan Brokerage Fees               27,169         18,655
   Other                             31,780         16,821
                               -------------  ------------
     Total other                    167,949        126,433
                               -------------  ------------
Net Investment Securities
  Gains                               3,851
                               -------------  ------------
Total Noninterest Income           $332,478       $257,466
                               -------------  ------------

The  increase  in loan  brokerage  fees  resulted  from the  volume of  mortgage
refinancing  activity in 2003 related to  historically  low  long-term  interest
rates. Management does not anticipate the same level of refinancing activity and
fees in 2004. Other included gains on sale of loans,  primarily SBA loans, which
increased $10.4 million over 2002.  Management  intends to continue  selling the
majority of SBA loans originated in 2004.

Noninterest Expenses

Noninterest  expenses  totaled  $763.4  million for 2003,  an increase of $184.2
million, or 32% over 2002.  Contributing to this increase was the addition of 46
new  branches.  With the  addition  of these  new  offices,  staff,  facilities,
marketing,  and related expenses rose accordingly.  Occupancy costs increased by
70%  during  2003.  This  increase  is due to the  growth  in the metro New York
market, where occupancy costs are higher especially in New York City.

Other  noninterest  expenses rose $26.0  million,  or 21%, to $150.1  million in
2003.  The  primary  increases  in other  noninterest  expenses  were  increased
business  development  expenses  of $3.3  million  to $24.9  million,  increased
bank-card  related service  charges of $3.5 million to $25.4 million,  increased
professional  services/insurance  expenses of $5.5 million to $24.6  million and
increased  provisions  for  non-credit-related  losses of $2.4  million to $15.5
million.


A key industry  productivity  measure is the operating  efficiency  ratio.  This
ratio expresses the relationship of noninterest  expenses  (excluding other real
estate  expenses)  to net interest  income plus  noninterest  income  (excluding
non-recurring  gains).  This ratio equaled 70.38%,  69.73%, and 70.06%, in 2003,
2002,  and 2001,  respectively.  Management  believes the  Company's  aggressive
growth activities will keep its efficiency ratio above its peer group.

Income Taxes

The  provision  for federal and state  income  taxes for 2003 was $98.8  million
compared to $73.1 million in 2002 and $48.7  million in 2001.  The effective tax
rate was  33.7%,  33.5% and 32.1% in 2003,  2002,  and 2001,  respectively.  The
increase in the  effective  income tax rate for 2002 was primarily due to higher
state income taxes under newly enacted tax laws in New Jersey.

Net Income

Net income for 2003 was $194.3  million,  an increase of $49.5  million,  or 34%
over the $144.8 million recorded for 2002.

Historically,  the  Company's  rate of revenue  growth has  exceeded the rate of
growth in noninterest expenses,  despite the Company's significant investment in
infrastructure  and people to support its ongoing  branch  expansion  plans.  In
2003,  total  revenues  increased  $258.1  million,  or 31%,  while  noninterest
expenses increased $184.2 million or 32%. As previously discussed,  the interest
rate  environment in 2003 negatively  impacted the Company's net interest margin
and revenue growth.  Management projects that deposit growth and an improved net
interest margin will positively impact revenues in 2004, and that revenue growth
will exceed the growth in noninterest expenses.

Diluted  net income  per share of common  stock for 2003 was $2.61  compared  to
$2.04 per common share for 2002.  Diluted net income per share for 2003 reflects
the issuance of 5,000,000 shares of common stock in September 2003.

Return on Average Equity and Average Assets

Two industry measures of the performance by a banking institution are its return
on average assets and return on average equity. Return on average assets ("ROA")
measures  net  income in  relation  to total  average  assets  and  indicates  a
company's  ability to employ its  resources  profitably.  The  Company's ROA was
0.99%,  1.05%,  and 1.08%  for 2003,  2002,  and 2001,  respectively.  Return on
average  equity  ("ROE") is determined by dividing  annual net income by average
stockholders'  equity and indicates  how  effectively a company can generate net
income on the  capital  invested  by its  stockholders.  The  Company's  ROE was
18.81%, 18.50%, and 17.64% for 2003, 2002, and 2001, respectively.

16

<PAGE>


The Company's ROE excluding the accumulated other comprehensive income component
of  stockholders  equity  (the  unrealized   appreciation/depreciation   of  its
available for sale securities) was 19.33%, 20.28%, and 18.33% for 2003, 2002 and
2001 respectively.

Loan Portfolio

The following table summarizes the loan portfolio of the Company by type of loan
as of December 31, for each of the years 1999 through 2003.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                   December 31,
---------------------------------------------------------------------------------------------------------------
                                   2003              2002              2001            2000              1999
---------------------------------------------------------------------------------------------------------------
                                                                (dollars in thousands)
<S>                             <C>                  <C>              <C>            <C>                <C>
Commercial:
  Term                          $1,027,526           842,869          600,374        469,564            393,953
  Line of credit                   959,158           683,640          556,977        430,811            277,917
  Demand                             1,077               317              440          1,400              1,328
 ---------------------------------------------------------------------------------------------------------------
                                 1,987,761         1,526,826        1,157,791        901,775            673,198

Owner-occupied                   1,619,079         1,345,306        1,028,408        945,599            634,726

Consumer:
  Mortgages
  (1-4 family
  residential)                     918,686           626,652          471,680        351,644            428,453
  Installment                      138,437           140,493          161,647        154,415            125,856
  Home equity                    1,405,795         1,139,589          872,974        710,848            621,597
  Credit lines                      60,579            56,367           43,196         30,254             19,099
 ---------------------------------------------------------------------------------------------------------------
                                 2,523,497         1,963,101        1,549,497      1,247,161          1,195,005

Commercial real estate:
  Investor developer             1,167,672           885,276          799,799        578,982            452,579
  Construction                     142,567           102,080           47,917         13,743              5,580
 ---------------------------------------------------------------------------------------------------------------
                                 1,310,239           987,356          847,716        592,725            458,159
 ---------------------------------------------------------------------------------------------------------------
 Total loans                    $7,440,576        $5,822,589       $4,583,412     $3,687,260         $2,961,088
 ---------------------------------------------------------------------------------------------------------------
</TABLE>

The  Company   manages  risk   associated   with  its  loan  portfolio   through
diversification,   underwriting  policies  and  procedures,   and  ongoing  loan
monitoring  efforts.  The commercial real estate  portfolio  includes  investor/
developer  permanent and construction loans and residential  construction loans.
Owner-occupied  and  investor/  developer  loans  generally  have five year call
provisions  and  bear  the  personal  guarantees  of  the  principals  involved.
Financing for  investor/developer  construction  is generally for  pre-leased or
pre-sold  property,  while  residential  construction  is provided  against firm
agreements  of sale  with  speculative  construction  generally  limited  to two
samples per  project.  The  commercial  loan  portfolio is comprised of loans to
businesses in the Philadelphia and New York City metropolitan areas. These loans
are generally secured by business assets,  personal guarantees,  and/or personal
assets of the borrower.  The consumer loan  portfolio is comprised  primarily of
loans secured by first and second mortgage liens on residential real estate.

The  contractual  maturity  ranges of the loan portfolio and the amount of loans
with predetermined  interest rates and floating rates in each maturity range, as
of December 31, 2003, are summarized in the following table.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                           December 31, 2003
-------------------------------------------------------------------------------------
                         Due in One    Due in One to   Due in Over
                        Year or Less     Five Years     Five Years          Total
-------------------------------------------------------------------------------------
(dollars in thousands)
<S>                       <C>             <C>            <C>             <C>
Commercial:
  Term                    $  336,652      $ 580,584      $ 110,290       $ 1,027,526
  Line of credit             920,292         38,866                          959,158
  Demand                       1,077                                           1,077
-------------------------------------------------------------------------------------
                           1,258,021        619,450        110,290         1,987,761

Owner-occupied               318,028        969,582        331,469         1,619,079

Consumer:
  Mortgages
   (1-4 family
   residential)               29,471        113,037        776,178           918,686
  Installment                 47,934         58,183         32,320           138,437
  Home equity                113,913        422,044        869,838         1,405,795
  Credit lines                21,809         38,770                           60,579
-------------------------------------------------------------------------------------
                             213,127        632,034      1,678,336         2,523,497
Commercial real estate:
  Investor developer         309,761        737,201        120,710         1,167,672
  Construction                71,968         70,599                          142,567
-------------------------------------------------------------------------------------
                             381,729        807,800        120,710         1,310,239
-------------------------------------------------------------------------------------
Total loans               $2,170,905     $3,028,866     $2,240,805        $7,440,576
-------------------------------------------------------------------------------------
Interest rates:
   Predetermined           $ 575,602     $2,070,183     $1,407,087        $4,052,872
   Floating                1,595,303        958,683        833,718         3,387,704
-------------------------------------------------------------------------------------
Total loans               $2,170,905     $3,028,866     $2,240,805        $7,440,576
-------------------------------------------------------------------------------------
</TABLE>


During 2003,  loans  increased  $1.6  billion,  or 28% from $5.8 billion to $7.4
billion.  At December 31, 2003, loans  represented 36% of total deposits and 33%
of total assets. All segments of the loan portfolio  experienced growth in 2003.
During the first three quarters of 2003,  increased loan prepayment activity put
pressure on overall loan  growth.  The  prepayment  activity  slowed  during the
fourth  quarter and helped  result in  increased  loan growth  relative to prior
quarters.  Management  expects  loan  growth  during  2004 to meet or exceed the
growth in 2003, with commercial loan growth in the metro New York market helping
to drive the growth.

The Company has  traditionally  been an active  provider of real estate loans to
creditworthy  local borrowers,  with such loans secured by properties within the
Company's  primary trade area. Loans to finance  owner-occupied  properties grew
$273.8 million or 20% during 2003.  Commercial  loan growth of $460.9 million or
30% was led by activity in the middle market and healthcare  sectors.  Growth in
consumer  loans of $560.4  million,  or 29%, was  primarily in mortgage and home
equity lending.

17

<PAGE>


Non-Performing Loans and Assets

Non-performing  assets  (non-performing  loans and other real estate,  excluding
loans past due 90 days or more and still accruing interest) at December 31, 2003
were $23.6 million or .10% of total assets, as compared to $17.8 million or .11%
of total assets at December 31, 2002.

Total non-performing loans (non-accrual loans, and restructured loans, excluding
loans past due 90 days or more and still accruing interest) at December 31, 2003
were  $21.7  million  as  compared  to $14.2  million a year ago.  During  2003,
consumer  non-performing  loans increased by approximately $3.5 million of loans
that  were  part of  attempts  to  defraud  the  Company  and a number  of other
financial  institutions and mortgage  companies.  The Company generally places a
loan on  non-accrual  status  and ceases  accruing  interest  when loan  payment
performance  is  deemed  unsatisfactory.  Generally  loans  past due 90 days are
placed on  non-accrual  status,  unless the loan is both well secured and in the
process of collection.  At December 31, 2003, loans past due 90 days or more and
still accruing interest amounted to $538 thousand,  compared to $620 thousand at
December 31, 2002.  Additional loans  considered by the Company's  internal loan
review  department  as potential  problem loans of $47.7 million at December 31,
2003 have been evaluated as to risk exposure in determining  the adequacy of the
allowance for loan losses.

Other real estate (ORE) totaled $1.8 million at December 31, 2003 as compared to
$3.6 million at December 31, 2002.  These  properties  have been written down to
the lower of cost or fair value less disposition costs.

The Company has, on an ongoing basis, updated appraisals on non-performing loans
secured by real estate.  In those  instances  where updated  appraisals  reflect
reduced  collateral  values,  an evaluation of the borrowers'  overall financial
condition is made to determine  the need,  if any,  for possible  writedowns  or
appropriate additions to the allowance for loan losses.

The following summary presents  information  regarding  non-performing loans and
assets as of December 31, 1999 through 2003.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
                                                  Year Ended December 31,
-----------------------------------------------------------------------------------------------
                          2003          2002            2001          2000           1999
-----------------------------------------------------------------------------------------------
(dollars in thousands)
<S>                     <C>            <C>             <C>          <C>            <C>
Non-accrual loans (1):
  Commercial            $ 6,867        $ 5,412         $ 6,835      $ 4,955        $ 2,254
  Consumer                9,242          2,734           1,484        1,295            674
  Real estate
   Construction             138            131           1,590        1,459             55
   Mortgage               5,494          5,891           6,924        5,840          5,230
-----------------------------------------------------------------------------------------------
  Total non-accrual
   loans                 21,741         14,168          16,833       13,549          8,213
-----------------------------------------------------------------------------------------------
Restructured loans (1):
  Commercial                  1              5               8           11            277
  Real estate mortgage                                                   82            192
-----------------------------------------------------------------------------------------------
  Total restructured
   loans                      1              5               8           93            469
-----------------------------------------------------------------------------------------------
Total non-performing
  loans                  21,742         14,173          16,841       13,642          8,682
-----------------------------------------------------------------------------------------------
Other real estate         1,831          3,589           1,549        2,959          3,523
-----------------------------------------------------------------------------------------------
Total non-performing
  assets(1):            $23,573        $17,762         $18,390      $16,601        $12,205
-----------------------------------------------------------------------------------------------
Non-performing
  assets as a percent
  of total assets          0.10%          0.11%           0.16%        0.20%          0.18%
-----------------------------------------------------------------------------------------------
Loans past due 90
  days or more and
  still accruing
  interest                 $538           $620            $519      $   489        $   499

-----------------------------------------------------------------------------------------------
<FN>
(1)  Interest  income  of  approximately  $1,908,000,   $1,352,000,  $1,092,000,
     $1,731,000,  and $986,000  would have been  recorded in 2003,  2002,  2001,
     2000, and 1999  respectively,  on  non-performing  loans in accordance with
     their original terms.  Actual interest  recorded on these loans amounted to
     $418,000 in 2003, $275,000 in 2002, $237,000 in 2001, $525,000 in 2000, and
     $255,000 in 1999.
</FN>
</TABLE>

Allowance for Loan Losses
The  allowance for loan losses is  maintained  at a level  believed  adequate by
management to absorb losses inherent in the loan portfolio.  In conjunction with
an internal  loan review  function that  operates  independently  of the lending
function,  management  monitors the loan portfolio to identify risks on a timely
basis so that an appropriate allowance can be maintained. Based on an evaluation
of the loan portfolio,  management  presents a quarterly review of the loan loss
reserve to the Board of Directors,  indicating  any changes in the reserve since
the last review and any  recommendations  as to adjustments  in the reserve.  In
making its evaluation,  in addition to the factors  discussed below,  management
considers  the results of regulatory  examinations,  which  typically  include a
review of the allowance  for loan losses as an integral part of the  examination
process.

In establishing the allowance,  management evaluates individual large classified
loans and nonaccrual  loans, and determines an aggregate reserve for those loans
based on that review.  An allowance for the  remainder of the loan  portfolio is
also determined based on historical loss experience within the components of the
portfolio. These allocations may be modified if current conditions indicate that
loan losses may differ from historical experience, based on economic factors and
changes in portfolio mix and volume.

In addition,  a portion of the allowance is established  for losses  inherent in
the loan  portfolio  which  have not been  identified  by the more  quantitative
processes  described  above.  This  determination  inherently  involves a higher
degree  of  subjectivity,  and  considers  risk  factors  that  may not have yet
manifested themselves in the Company's historical loss experience. Those factors
include  changes  in  levels  and  trends  of  charge-offs,  delinquencies,  and
nonaccrual loans,  trends in volume and terms of loans,  changes in underwriting
standards and practices,  portfolio mix, tenure of loan officers

18

<PAGE>

and  management,  entrance  into  new  geographic  markets,  changes  in  credit
concentrations, and national and local economic trends and conditions. While the
allowance for loan losses is  maintained  at a level  believed to be adequate by
management  for estimated  losses in the loan  portfolio,  determination  of the
allowance is inherently subjective,  as it requires estimates,  all of which may
be susceptible to significant change.  Changes in these estimates may impact the
provisions charged to expense in future periods.

The allowance for loan losses is increased by provisions  charged to expense and
reduced by loan charge-offs net of recoveries.  Charge-offs occur when loans are
deemed to be  uncollectible.  During  2003,  net  charge-offs  amounted to $10.5
million,  or .16% of average loans  outstanding  for the year,  compared to $9.4
million, or .18% of average loans outstanding for 2002. During 2003, the Company
recorded  provisions of $31.9 million to the allowance for loan losses  compared
to $33.2  million for 2002.  The Company  continued  to  proactively  manage its
exposure  to credit  risk in 2003.  Based  upon  consistent  application  of the
Company's  reserve  methodology,  allowance levels increased by $21.3 million to
$122.1  million or 1.51% of total loans at December 31, 2003, but decreased as a
percentage of the total loans due to growth in the portfolio.

The following  table  presents,  for the periods  indicated,  an analysis of the
allowance for loan losses and other related data.

<TABLE>
<CAPTION>
 ---------------------------------------------------------------------------------------------
                                                Year Ended December 31,
 ---------------------------------------------------------------------------------------------
                              2003         2002          2001         2000          1999
 ---------------------------------------------------------------------------------------------
 (dollars in thousands)
<S>                          <C>          <C>          <C>           <C>          <C>
 Balance at beginning
    of period                $90,733      $66,981      $48,680       $38,382      $31,265
 Provisions charged to
    operating expenses        31,850       33,150       26,384        13,931        9,175
 ---------------------------------------------------------------------------------------------
                             122,583      100,131       75,064        52,313       40,440
 ---------------------------------------------------------------------------------------------
 Recoveries of loans
    previously charged-off:
      Commercial                 669          815          552           313          551
      Consumer                   584          339          288           249          286
      Commercial real
       estate                     11          176          134            14          132
 ---------------------------------------------------------------------------------------------
 Total recoveries              1,264        1,330          974           576          969
 ---------------------------------------------------------------------------------------------
 Loans charged-off:
      Commercial              (5,601)      (7,181)      (5,862)       (2,936)      (1,599)
      Consumer                (5,950)      (3,514)      (2,784)       (1,220)      (1,078)
      Commercial real
       estate                   (239)         (33)        (411)          (53)        (350)
 ---------------------------------------------------------------------------------------------
 Total charged-off           (11,790)     (10,728)      (9,057)       (4,209)      (3,027)
 ---------------------------------------------------------------------------------------------
 Net charge-offs             (10,526)      (9,398)      (8,083)       (3,633)      (2,058)
 ---------------------------------------------------------------------------------------------
 Balance at end of period   $112,057      $90,733      $66,981       $48,680      $38,382
 ---------------------------------------------------------------------------------------------
 Net charge-offs as a
    percentage of average
    loans outstanding           0.16%       0.18%        0.19%         0.11%        0.08%
 ---------------------------------------------------------------------------------------------
 Allowance for loan losses
    as a percentage of
    year-end loans              1.51%       1.56%        1.46%         1.32%        1.30%
 ---------------------------------------------------------------------------------------------
</TABLE>


Allocation of the Allowance for Loan Losses
The following  table details the  allocation of the allowance for loan losses to
the various  categories,  owner-occupied  is included in commercial real estate.
The  allocation  is  made  for  analytical  purposes  and it is not  necessarily
indicative of the  categories  in which future loan losses may occur.  The total
allowance is available to absorb losses from any segment of loans.

<TABLE>
<CAPTION>
 -------------------------------------------------------------------------------------------------------------------------
                                                   Allowance for Loan Losses at December 31,
 -------------------------------------------------------------------------------------------------------------------------
                            2003                2002                2001                2000               1999
 -------------------------------------------------------------------------------------------------------------------------
                               % Gross             % Gross             % Gross             % Gross            % Gross
                       Amount   Loans      Amount   Loans     Amount    Loans     Amount    Loans     Amount   Loans
 -------------------------------------------------------------------------------------------------------------------------
 (dollars in thousands)
<S>                     <C>        <C>     <C>         <C>     <C>        <C>      <C>          <C>    <C>        <C>
  Commercial            $50,400    27%     $33,708     26%     $24,110    25%      $20,396      24%    $14,268    23%
  Consumer               13,082    34       14,497     34        9,915    34         4,632      34       4,120    40
  Commercial real
  estate                 48,575    39       42,528     40       32,956    41        23,652      42      19,994    37
 -------------------------------------------------------------------------------------------------------------------------
                       $112,057   100%     $90,733    100%     $66,981   100%      $48,680     100%    $38,382   100%
 -------------------------------------------------------------------------------------------------------------------------
</TABLE>


19
<PAGE>


Investment Securities

The following table  summarizes the book value of securities  available for sale
and securities held to maturity by the Company as of the dates shown.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
                                                            December 31,
--------------------------------------------------------------------------------------------
                                           2003                2002                2001
--------------------------------------------------------------------------------------------
(dollars in thousands)
<S>                                    <C>                 <C>                   <C>
U.S. Government agency
   and mortgage-backed
   obligations                         $10,511,545         $7,659,737            $3,994,523
Obligations of state and
   political subdivisions                   30,927             23,185                82,922
Equity securities                           16,588             24,054                16,325
Other                                       91,595             99,803                58,934
--------------------------------------------------------------------------------------------
Securities available
   for sale                            $10,650,655         $7,806,779            $4,152,704
--------------------------------------------------------------------------------------------
U.S. Government agency
   and mortgage-backed
   obligations                         $ 2,193,577         $  624,688            $1,044,266
Obligations of state and
   political subdivisions                  227,199             91,204                50,602
Other                                       69,708             47,134                37,304
--------------------------------------------------------------------------------------------
Securities held to
   maturity                            $ 2,490,484         $  763,026            $1,132,172
--------------------------------------------------------------------------------------------
</TABLE>


The Company has segregated a portion of its  investment  portfolio as securities
available for sale. The balance of the investment  portfolio  (excluding trading
securities) is categorized as securities held to maturity. Investment securities
are  classified  as  available  for sale if they  might be sold in  response  to
changes in interest rates,  prepayment  risk, the Company's income tax position,
the need to  increase  regulatory  capital,  liquidity  needs  or other  similar
factors. These securities are carried at fair market value with unrealized gains
and losses,  net of income tax  effects,  recognized  in  Stockholders'  Equity.
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  carried at cost and  adjusted  for  accretion  of  discounts  and
amortization of premiums.  Trading securities,  primarily municipal  securities,
are  carried  at  market  value,  with  gains  and  losses,  both  realized  and
unrealized, included in other operating income.

In total,  investment  securities  increased  $4.4  billion from $8.9 billion to
$13.3 billion at December 31, 2003.  Deposit  growth and other  funding  sources
were used to increase the Company's investment portfolio. The available for sale
portfolio  increased $2.8 billion to $10.7 billion,  and the securities  held to
maturity portfolio  increased $1.7 billion to $2.5 billion at year-end 2003. The
portfolio of trading  securities  decreased $156.0 million from year-end 2002 to
$170.5  million at year-end  2003.  During 2003,  management  determined  it was
appropriate to classify a greater portion of its securities purchases as held to
maturity.  By the end of 2004, up to a third of the investment  portfolio may be
in held to maturity securities.

At December 31, 2003, the average life and duration of the investment  portfolio
were  approximately  4.9 years and 3.9 years,  respectively,  as compared to 3.0
years and 2.5 years,  respectively,  at December 31, 2002.  At December 31, 2003
the yield on the portfolio was 4.84%,  down from 5.30% at December 31, 2002. The
decrease  in yield was due to lower  reinvestment  rates,  which  reflect  lower
general market interest rates in 2003 as compared to 2002.

The Company's  significant  cash flow  provides  reinvestment  opportunities  as
interest  rates  change.  In  addition,   management   continually  reviews  and
repositions  the  investment  portfolio  to adjust for current  and  anticipated
interest  rate and yield curve  levels.  This  repositioning  involved  sales of
approximately  $4.8  billion  during  2003.  Management  expects to continue the
repositioning  of the investment  portfolio in 2004 as warranted by the changing
interest rate environment.

The Company's  investment portfolio consists primarily of U.S. Government agency
and  mortgage-backed  obligations.  These securities have little, if any, credit
risk  since  they are  either  backed by the full  faith and  credit of the U.S.
Government,  or are guaranteed by an agency of the U.S.  Government,  or are AAA
rated.  These  investment  securities  carry fixed  coupons  whose rate does not
change over the life of the  securities.  Certain  securities  are  purchased at
premiums or  discounts.  Their yield will change  depending on any change in the
estimated  rate of  prepayments.  The Company  amortizes  premiums  and accretes
discounts  over the  estimated  average life of the  securities.  Changes in the
estimated average life of the investment  portfolio will lengthen or shorten the
period in which the premium or discount  must be  amortized  or  accreted,  thus
affecting the Company's investment yields. For the year ended December 31, 2003,
the yield on the  investment  portfolio was 4.76%, a decrease of 92 basis points
from 5.68% in fiscal 2002.  The decrease in yield is a reflection of the general
decline in market interest rates in 2003.

At December 31, 2003, the net unrealized  depreciation  in securities  available
for sale included in  stockholders'  equity  totaled $3.7  million,  net of tax,
compared  to net  unrealized  appreciation  of $113.6  million,  net of tax,  at
December 31, 2002.


20
<PAGE>


The  contractual  maturity  distribution  and  weighted  average  yield  of  the
Company's  investment  portfolio  (excluding  equity and trading  securities) at
December 31, 2003, are summarized in the following table. Weighted average yield
is calculated by dividing  income within each maturity range by the  outstanding
amortized  cost  amount of the  related  investment  and has been tax  effected,
assuming a federal tax rate of 35%, on tax-exempt obligations.


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
                                                                    December 31, 2003
---------------------------------------------------------------------------------------------------------------------------
                                 Due Under 1 Year   Due 1-5 Years    Due 5-10 Years  Due Over 10 Years       Total
---------------------------------------------------------------------------------------------------------------------------
                                  Amount   Yield    Amount    Yield   Amount  Yield    Amount   Yield    Amount    Yield
---------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S>                              <C>        <C>       <C>      <C>   <C>       <C>    <C>         <C>   <C>          <C>
Securities available for sale:
U.S. Government agency and
   mortgage-backed obligations   $137,589   1.00%   $     1    8.50%  $346,674   4.50% $10,027,281  4.95% $10,511,545  4.89%
Obligations of state and
   political subdivisions           3,660   7.08     12,739    6.86      7,574   5.83        6,954  6.27       30,927  6.50
Other securities                   12,681   5.18        175    3.75     53,121   3.38       25,618  8.60       91,595  5.09
----------------------------------------------------------------------------------------------------------------------------
                                 $153,930   1.49%   $12,915    6.82%  $407,369   4.38% $10,059,853  4.96% $10,634,067  4.89%
----------------------------------------------------------------------------------------------------------------------------
Securities held to maturity:
U.S. Government agency and
   mortgage-backed obligations     $  415   7.22%   $ 5,005    6.52%  $488,141   4.21% $ 1,700,016  4.92% $ 2,193,577  4.77%

Obligations of state and
   political subdivisions          99,837   1.18        112    2.17     14,661   7.65      112,589  6.49      227,199  4.11
Other securities                   69,708   1.79                                                               69,708  1.79
----------------------------------------------------------------------------------------------------------------------------
                                 $169,960   1.45%   $ 5,117    6.43%  $502,802   4.31% $ 1,812,605  5.01% $ 2,490,484  4.63%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>


Deposits

Total  deposits at December  31,  2003 were $20.7  billion,  an increase of $6.2
billion or 42% above total  deposits of $14.5 billion at December 31, 2002.  The
Company remains a  deposit-driven  financial  institution  with emphasis on core
deposit   accumulation   and   retention   as  a  basis  for  sound  growth  and
profitability.  The Company  regards core  deposits as all  deposits  other than
public  certificates  of  deposit.  Deposits  in  the  various  core  categories
increased $5.9 billion from year-end 2002 to year-end 2003.

Total  deposits  averaged $17.7 billion for 2003, an increase of $5.2 billion or
42% above the 2002 average.  The average balance of  noninterest-bearing  demand
deposits  in 2003 was $3.8  billion,  a $1.2  billion or 43%  increase  over the
average  balance for 2002.  The average  total balance of passbook and statement
savings accounts increased $1.3 billion,  or 52% compared to the prior year. The
average  balance of  interest-bearing  demand  accounts (money market and N.O.W.
accounts)  for 2003 was $7.0  billion,  a $2.4 billion or 53% increase  over the
average  balance for the prior year.  The average  balance of time  deposits for
2003 was $3.2 billion, a $378.8 million or 13% increase over the average balance
for 2002. For 2003, the cost of total deposits was 0.82% as compared to 1.34% in
2002.

The  Company  believes  that its record of  sustaining  core  deposit  growth is
reflective  of the  Company's  retail  approach to banking  which  emphasizes  a
combination of superior customer service, convenient branch locations,  extended
hours of operation,  free checking  accounts (subject to a small minimum balance
requirement) and active marketing.  This approach is especially reflected in the
Company's  comparable  store  deposit  growth.  The Company's  comparable  store
deposit  growth is  measured as the year over year  percentage  increase in core
deposits  for  branches  open two years or more at the balance  sheet  date.  At
December 31, 2003, the comparable  store deposit growth was 27% and included 184
branches.  Management  expects strong comparable store deposit growth in 2004 as
additional metro New York stores continue to be added to the calculation.

The average  balances  and  weighted  average  rates of deposits for each of the
years 2003, 2002, and 2001 are presented below.


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                      2003                      2002                      2001
-------------------------------------------------------------------------------------------------------------------------
                                              Average      Average      Average      Average      Average     Average
                                              Balance        Rate       Balance        Rate       Balance       Rate
-------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S>                                         <C>           <C>         <C>           <C>         <C>          <C>
Demand deposits:
  Noninterest-bearing                       $  3,826,885               $ 2,674,233                $1,962,354
  Interest-bearing (money market and
   N.O.W. accounts)                            6,964,158     0.73%       4,538,914     1.22%       2,999,588    2.12%
Savings deposits                               3,676,147     0.75        2,416,884     1.25        1,643,145    1.99
Time deposits/public funds                     3,187,443     2.07        2,808,650     2.90        2,037,742    4.81
-------------------------------------------------------------------------------------------------------------------------
Total deposits                              $ 17,654,633               $12,438,681                $8,642,829
-------------------------------------------------------------------------------------------------------------------------
</TABLE>


21

<PAGE>

The  remaining  maturity of  certificates  of deposit for $100,000 or more as of
December 31, 2003, 2002 and 2001 is presented below:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Maturity                                2003                     2002                     2001
---------------------------------------------------------------------------------------------------------
(dollars in thousands)
<S>                                   <C>                      <C>                      <C>
3 months or less                      $1,017,986               $  950,299               $  897,304
3 to 6 months                            222,740                  116,721                  137,388
6 to 12 months                           112,800                  103,449                   70,630
Over 12 months                            23,272                   10,646                    6,820
---------------------------------------------------------------------------------------------------------
Total                                 $1,376,798               $1,181,115               $1,112,142
---------------------------------------------------------------------------------------------------------
</TABLE>


Interest Rate Sensitivity and Liquidity

The  Company's  risk of loss arising  from adverse  changes in the fair value of
financial  instruments,  or market risk, is composed  primarily of interest rate
risk.  The  primary  objective  of  the  Company's  asset/liability   management
activities  is to maximize net  interest  income  while  maintaining  acceptable
levels of interest rate risk. The Company's  Asset/Liability Committee (ALCO) is
responsible for  establishing  policies to limit exposure to interest rate risk,
and to ensure  procedures  are  established  to  monitor  compliance  with those
policies.  The  guidelines  established by ALCO are reviewed and approved by the
Company's Board of Directors.

An interest rate sensitive asset or liability is one that, within a defined time
period,  either  matures or  experiences  an  interest  rate change in line with
general  market  interest  rates.  Historically,   the  most  common  method  of
estimating  interest  rate  risk  was to  measure  the  maturity  and  repricing
relationships between  interest-earning assets and interest-bearing  liabilities
at specific  points in time ("GAP"),  typically one year.  Under this method,  a
company   is   considered   liability   sensitive   when  the   amount   of  its
interest-bearing  liabilities exceeds the amount of its interest-earning  assets
within the one year  horizon.  However,  assets  and  liabilities  with  similar
repricing  characteristics  may not  reprice  at the  same  time or to the  same
degree. As a result,  the Company's GAP does not necessarily  predict the impact
of changes in general levels of interest rates on net interest income.

The following  table  illustrates the GAP position of the Company as of December
31, 2003.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                    Interest Rate Sensitivity Gaps
                                                          December 31, 2003
-------------------------------------------------------------------------------------------------------

                           1-90         91-180     181-365        1-5        Beyond
                           Days          Days         Days       Years       5 Years        Total
-------------------------------------------------------------------------------------------------------
(dollars in millions)
<S>                      <C>             <C>          <C>       <C>           <C>          <C>
Rate sensitive:
  Interest-earning
   assets
   Loans                 $3,832.1        $108.3       $180.3    $1,926.9      $1,414.1     $7,461.7
   Investment
    securities              765.7         726.8      1,338.4     6,622.3       3,858.4     13,311.6
-------------------------------------------------------------------------------------------------------
Total interest-
  earning assets          4,597.8         835.1      1,518.7     8,549.2       5,272.5     20,773.3
-------------------------------------------------------------------------------------------------------
Interest-bearing
  liabilities
  Transaction
   accounts               4,053.5                                              8,743.1     12,796.6
  Time deposits           1,346.8         717.9        736.7       528.6                    3,330.0
  Other borrowed
   money                    311.5                                                             311.5
  Long-term debt                                                                 200.0        200.0
-------------------------------------------------------------------------------------------------------
Total interest-
  bearing
  liabilities             5,711.8         717.9        736.7       528.6       8,943.1     16,638.1
-------------------------------------------------------------------------------------------------------
Period gap               (1,114.0)        117.2        782.0     8,020.6      (3,670.6)    $4,135.2
-------------------------------------------------------------------------------------------------------
Cumulative gap          $(1,114.0)      $(996.8)     $(214.8)   $7,805.8      $4,135.2
-------------------------------------------------------------------------------------------
Cumulative gap as a
  percentage of total
  interest-earning
  assets                     (5.4) %       (4.8)%       (1.0)%      37.6%         19.9%
-------------------------------------------------------------------------------------------
</TABLE>


Management  believes  that the  simulation  of net interest  income in different
interest rate environments  provides a more meaningful  measure of interest rate
risk. Income  simulation  analysis captures not only the potential of all assets
and liabilities to mature or reprice, but also the probability that they will do
so. Income simulation also attends to the relative  interest rate  sensitivities
of these items,  and projects  their  behavior over an extended  period of time.
Finally,  income simulation permits management to assess the probable effects on
the balance  sheet not only of changes in interest  rates,  but also of proposed
strategies for responding to them.

The Company's  income  simulation  model analyzes  interest rate  sensitivity by
projecting net income over the next 24 months in a flat rate scenario versus net
income in alternative  interest rate scenarios.  Management  continually reviews
and  refines  its  interest  rate risk  management  process in  response  to the
changing   economic   climate.   Currently,   the  Company's  model  projects  a
proportionate  plus 200 and minus 100 basis point  change  during the next year,
with rates remaining constant in the second year.

The  Company's  Asset/Liability  Committee  (ALCO) policy has  established  that
interest income  sensitivity will be

22

<PAGE>

considered  acceptable  if net income in the above  interest  rate  scenario  is
within 10% of net income in the flat rate  scenario in the first year and within
15% over the two year  time  frame.  Net  income in the flat  rate  scenario  is
projected  to  increase  by  approximately  25% per year.  The  following  table
illustrates  the impact on projected net income at December 31, 2003 and 2002 of
a plus 200 and minus 100 basis point change in interest rates.

------------------------------------------------------------
                                  Basis Point Change:
------------------------------------------------------------
                                Plus 200       Minus 100
------------------------------------------------------------
December 31, 2003:
   Twelve Months                   1.6%           (2.3)%
   Twenty Four Months              6.8%           (2.3)%

December 31, 2002:
   Twelve Months                   8.8%           (5.4)%
   Twenty Four Months             13.5%           (7.3)%

All of these forecasts are within an acceptable  level of interest rate risk per
the policies established by ALCO.

In the event the model  indicates  an  unacceptable  level of risk,  the Company
could  undertake a number of actions that would reduce this risk,  including the
sale of a portion of its available  for sale  investment  portfolio,  the use of
risk  management  strategies  such as  interest  rate  swaps  and  caps,  or the
extension of the maturities of its short-term borrowings.

Management  also  monitors  interest  rate risk by  utilizing a market  value of
equity model. The model assesses the impact of a change in interest rates on the
market value of all the  Company's  assets and  liabilities,  as well as any off
balance  sheet items.  The model  calculates  the market value of the  Company's
assets and liabilities in excess of book value in the current rate scenario, and
then compares the excess of market value over book value given an immediate plus
200 and minus 100  basis  point  change in  rates.  The  Company's  ALCO  policy
indicates that the level of interest rate risk is  unacceptable if the immediate
plus 200 or minus 100 basis point change would result in the loss of 45% or more
of the excess of market value over book value in the current rate  scenario.  At
December 31, 2003, the market value of equity  indicates an acceptable  level of
interest rate risk.

The market value of equity model  reflects  certain  estimates  and  assumptions
regarding the impact on the market value of the Company's assets and liabilities
given an immediate  plus 200 or minus 100 basis point change in interest  rates.
One of the key  assumptions  is the market value  assigned to the Company's core
deposits, or the core deposit premium.  Utilizing an independent consultant, the
Company has completed and updated comprehensive core deposit studies in order to
assign its own core deposit  premiums as permitted by the  Company's  regulatory
authorities. The studies have consistently confirmed management's assertion that
the Company's core deposits have stable  balances over long periods of time, are
generally insensitive to changes in interest rates and have significantly longer
average lives and durations than the Company's loans and investment  securities.
Thus,  these core  deposit  balances  provide an internal  hedge to market value
fluctuations  in the Company's fixed rate assets.  Management  believes the core
deposit  premiums  produced by its core deposit study and utilized in its market
value of equity model at December 31, 2003 provide an accurate assessment of the
Company's  interest rate risk. The following  table depicts the average lives of
the Company's loans, investments and deposits at December 31, 2003:

        --------------------------------------------
                                      Average Life
                                       (in years)
        --------------------------------------------

           Loans                           3.5

           Investments                     4.9

           Deposits                       13.6


The MVE  analyzes  both sides of the  balance  sheet and,  as  indicated  below,
demonstrates  the inherent value of the Company's core deposits in a rising rate
environment.  As rates rise, the value of the Company's core deposits  increases
which helps offset the decrease in value of the Company's fixed rate assets. The
following  table  summarizes the market value of equity at December 31, 2003 (in
millions, except for per share amounts):

------------------------------------------------------------
                            Market Value of
                                 Equity        Per Share
------------------------------------------------------------

   Plus 200 basis point          $4,531           $58.95

   Current Rate                  $4,656           $60.57

   Minus 100 basis point         $3,924           $51.05


Although the use of  derivatives  in 2003 was  minimal,  the Company may utilize
interest rate derivatives to manage interest rate risk,  including interest rate
swaps,   interest   rate  caps  and  floors,   interest   rate   forwards,   and
exchange-traded  futures  and  options  contracts.  Further  discussion  of  the
accounting for derivative  instruments is included in Note 1 to the consolidated
financial statements.

Liquidity  involves the Company's ability to raise funds to support asset growth
or reduce  assets to meet deposit  withdrawals  and other  borrowing  needs,  to
maintain reserve requirements and to otherwise operate the Company on an ongoing
basis.  The  Company's  liquidity  needs  are  primarily  met by  growth in core
deposits,  its cash and  federal  funds  sold  position,  and cash flow from its
amortizing  investment and loan  portfolios.  If necessary,  the Company has the
ability to raise liquidity through collateralized borrowings,  FHLB advances, or
the sale of its available for sale investment portfolio. As of December 31, 2003
the Company had in excess of $9.0  billion in  immediately  available  liquidity
which  includes  securities  that  could  be  sold or  used  for  collateralized
borrowings,  cash on hand,  and borrowing  capacities  under  existing  lines of
credit.  During 2003, deposit growth and short-term borrowings were used to fund
growth in the loan portfolio and purchase additional investment securities.

23

<PAGE>

Other Borrowed Money

Other  borrowed  money,  or short-term  borrowings,  which consist  primarily of
securities  sold under  agreement to repurchase,  federal funds  purchased,  and
lines of credit, were used in 2003 to meet short-term liquidity needs. For 2003,
short-term  borrowings  averaged $423.5 million as compared to $118.7 million in
2002.  The average rate on the  Company's  short-term  borrowings  was 0.77% and
1.55% during 2003 and 2002,  respectively.  As of December 31, 2003,  short-term
borrowings  included  $200.0  million of  securities  sold under  agreements  to
repurchase at an average rate of 1.27%, compared to $391.6 million at an average
rate of 1.48% as of December 31, 2002.

Long-Term Debt

On March 11, 2002 the Company  issued $200  million of 5.95%  Convertible  Trust
Capital Securities through Commerce Capital Trust II, a Delaware business trust.
The  Convertible  Trust Capital  Securities  mature in 2032. The net proceeds of
this offering were used for general corporate purposes, including the redemption
of the Company's $57.5 million of 8.75% Trust Capital Securities on July 1, 2002
and the repayment of the Company's $23.0 million of 8 3/8% subordinated notes on
May 20, 2002.

Holders of the  Convertible  Trust Capital  Securities may convert each security
into 0.9478 shares of Company common stock,  subject to  adjustment,  if (1) the
closing  sale price of Company  common  stock for at least 20 trading  days in a
period of 30  consecutive  trading  days  ending on the last  trading day of any
calendar  quarter  beginning  with the quarter ending June 30, 2003 is more than
110% of the Convertible  Trust Capital  Securities  conversion  price ($52.75 at
December 31, 2003) then in effect on the last day of such calendar quarter,  (2)
the  assigned  credit  rating  by  Moody's  of  the  Convertible  Trust  Capital
Securities is at or below Bal, (3) the Convertible Trust Capital  Securities are
called for redemption, or (4) specified corporate transactions have occurred. As
of  December  31,  2003,  the  Convertible  Trust  Capital  Securities  were not
convertible.

The Company may force conversion of the Convertible Trust Capital Securities if,
at any time on or after March 11, 2005, the closing sale price of Company common
stock for at least 20 trading  days in a period of 30  consecutive  trading days
exceeds  120% of the  Convertible  Trust  Capital  Securities  conversion  price
($52.75 at December 31, 2003).

Once  any of the  above  conditions  are  met,  the  Convertible  Trust  Capital
Securities  will be  convertible  into  approximately  3.8 million shares of the
Company's  common stock.  The effect of these securities on diluted earnings per
share is  calculated  using the  if-converted  method.  Under  the  if-converted
method,   the  related  interest  charges  on  the  Convertible   Trust  Capital
Securities,  adjusted for income  taxes,  is added back to the numerator and the
common shares to be issued upon conversion are added to the denominator.  If any
of the above conditions are met in 2004, the impact of the  if-converted  method
on diluted earnings per share will not be material.

Stockholders' Equity and Dividends

At December 31, 2003,  stockholders'  equity totaled $1,277.3 million, up $359.3
million or 39% over stockholders' equity of $918.0 million at December 31, 2002.
This increase was due to the  Company's  increase in net income for the year and
shares  issued under the  Company's  common  stock  offering in  September,  the
dividend   reinvestment  plan  and  employee  compensation  and  benefit  plans.
Stockholders'  equity as a percent of total assets was 5.6% at December 31, 2003
and 2002, respectively.

Capital Resources

In August 2003, the Company filed a Form S-3 shelf  registration  statement with
the Securities and Exchange Commission (SEC). This shelf registration  statement
allows  the  Company  to  periodically  offer and sell,  individually  or in any
combination,  common stock,  preferred stock,  debt securities,  trust preferred
securities,  warrants to purchase  other  securities  and units (which include a
combination  of any of the preceding  securities) up to a total of $500 million,
subject to market conditions and the Company's  capital needs.  During September
2003, the Company  completed an offering of 5,000,000 shares of common stock for
aggregate  proceeds  of  approximately  $209  million  under this Form S-3 shelf
registration.  The  proceeds  from this  offering  are being used to support the
Company's future growth.

Risk-based capital standards issued by bank regulatory authorities in the United
States attempt to relate a banking  company's capital to the risk profile of its
assets  and  provide  the basis for which all  banking  companies  and banks are
evaluated in terms of capital adequacy. The risk-based capital standards require
all  banks to have Tier 1 capital  of at least 4% and total  capital,  including
Tier 1 capital, of at least 8% of risk-adjusted  assets. Tier 1 capital includes
stockholders'  equity  (adjusted  for  goodwill,  other  intangibles,   and  the
unrealized  appreciation/depreciation in securities available for sale) plus the
Convertible  Trust Capital  Securities.  The Federal Reserve Board is evaluating
the qualification of the Convertible Trust Capital Securities as Tier 1 capital.
Total  capital is  comprised  of all of the  components  of Tier 1 capital  plus
qualifying  subordinated  debt  instruments  and the reserve for  possible  loan
losses.

24

<PAGE>


Banking  regulators have also issued leverage ratio  requirements.  The leverage
ratio requirement is measured as the ratio of Tier 1 capital to adjusted average
assets.  The following  table provides a comparison of the Company's  risk-based
capital ratios and leverage ratio to the minimum regulatory requirements for the
periods indicated.

--------------------------------------------------------------------------
                                                              Minimum
                                                            Regulatory
                                   December 31,            Requirements
--------------------------------------------------------------------------
                                2003          2002       2003       2002
--------------------------------------------------------------------------
Risk based capital ratios:
   Tier 1                       12.66%       11.47%      4.00%      4.00%
   Total capital                13.62        12.51       8.00       8.00
Leverage ratio                   6.61         6.37       4.00       4.00
--------------------------------------------------------------------------

The Federal Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA"),
which  became law in December of 1991,  required  each  federal  banking  agency
including  the Board of Governors of the FRB, to revise its  risk-based  capital
standards to ensure that those standards take adequate  account of interest rate
risk, concentration of credit risk and the risks of non-traditional  activities,
as  well  as  reflect  the  actual  performance  and  expected  risk  of loss on
multi-family  mortgages.  This law also  requires each federal  banking  agency,
including  the FRB, to specify,  by  regulation,  the levels at which an insured
institution would be considered "well  capitalized,"  "adequately  capitalized,"
"undercapitalized,"    "significantly    undercapitalized,"    or    "critically
undercapitalized."

At December 31, 2003 the Company's  consolidated  capital levels and each of the
Company's  banking  subsidiaries  met  the  regulatory  definition  of  a  "well
capitalized" financial institution, i.e., a leverage capital ratio exceeding 5%,
a Tier 1 risk-based  capital ratio exceeding 6%, and a total risk-based  capital
ratio  exceeding  10%. If it is determined  that the  Convertible  Trust Capital
Securities  no longer  qualify as Tier 1 capital,  the Company will remain "well
capitalized".

The Company's  common stock is listed for trading on the New York Stock Exchange
under the symbol CBH. The quarterly  market price ranges and dividends  paid per
common share for each of the last two years are shown in the table below.  As of
February  5, 2004,  there  were  approximately  49,000  holders of record of the
Company's common stock.

------------------------------------------------------------
                     Common Share Data
------------------------------------------------------------
                           Market Prices
                         -----------------  Cash Dividends
                           High      Low       Per Share
------------------------------------------------------------
2003 Quarter Ended
 December 31                $53.30   $47.33     $0.16000
 September 30                47.91    37.30      0.17000
 June 30                     40.67    36.37      0.16000
 March 31                    45.60    37.74      0.17000

2002 Quarter Ended
 December 31                $47.23   $36.42     $0.15000
 September 30                47.85    38.88      0.15000
 June 30                     50.24    43.70      0.15000
 March 31                    45.05    38.20      0.15000
------------------------------------------------------------


The Company  offers a Dividend  Reinvestment  and Stock  Purchase  Plan by which
dividends on the Company's  common stock and optional  monthly cash payments may
be invested in the Company's  common Stock at a 3% discount  (subject to change)
to the market price and without payment of brokerage commissions.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company enters into commitments to extend credit, such as letters of credit,
which are not reflected in the consolidated financial statements. See note 12 to
the Company's consolidated financial statements included elsewhere herein.

The Company has various  contractual  obligations  that may require  future cash
payments.  The following  table presents,  as of December 31, 2003,  significant
fixed and determinable  contractual obligations to third parties by payment date
excluding interest.

<TABLE>
<CAPTION>
   Contractual Obligations                           Payments Due By Period
----------------------------------------------------------------------------------------------
                                             One to   Three to      Beyond
                              One Year       Three      Five         Five
                              or Less        Years      Years        Years         Total
----------------------------------------------------------------------------------------------
(dollars in millions)
<S>                          <C>            <C>                     <C>          <C>
Deposits without a stated
  maturity                   $ 5,425.9                              $11,945.5    $17,371.4
Certificates of deposits       2,801.4        404.1      124.5                     3,330.0
Other borrowed money             311.5                                               311.5
Long-term debt                                                         200.0         200.0
Operating leases                  29.0         58.2       57.0         299.0         443.2
</TABLE>



Related Parties

The Company engaged in certain activities with entities that would be considered
related parties.  Management believes disbursements made to related parties were
substantially  equivalent  to those that  would  have been paid to  unaffiliated
companies  for similar  goods and  services.  See notes 4 and 7 to the Company's
consolidated financial statements included elsewhere herein.

Recent Accounting Statements

See note 1 to the Company's consolidated financial statements included elsewhere
herein.

25
<PAGE>


Results of Operations - 2002 versus 2001

Net income  for 2002 was  $144.8  million  compared  to $103.0  million in 2001.
Diluted net income per common share was $2.04 compared to $1.51 per common share
for the prior year.

Net  interest  income  on a  tax-equivalent  basis for 2002  amounted  to $585.9
million, an increase of $173.2 million, or 42% over 2001.

Interest income on a  tax-equivalent  basis  increased  $152.8 million or 25% to
$768.5 million in 2002. This increase was primarily  related to volume increases
in the loan and investment portfolios. Interest expense for 2002 decreased $20.4
million to $182.6  million  from  $203.0  million  in 2001.  This  decrease  was
primarily  related to decreases in the rates paid on the Company's  deposits and
other borrowed money.

The  provision  for loan  losses  was $33.2  million in 2002  compared  to $26.4
million in the prior year.

For 2002,  noninterest  income  totaled  $257.5  million,  an  increase of $60.7
million  or 31% from  2002.  The  growth in  noninterest  income  was  primarily
reflected in  increased  deposit and service  fees and other  operating  income,
including the Company's insurance and capital markets divisions. Deposit charges
and service fees  increased  $30.1  million,  or 30%, over 2001 due primarily to
higher  transaction  volumes.  Commerce  Insurance  recorded an increase of $6.1
million  in  revenues  to $55.9  million  from $49.8  million in 2001.  Commerce
Capital  Markets  generated  noninterest  revenues of $35.1  million in 2002, an
increase of $13.1 million from revenues of $22.0 million in 2001. Loan brokerage
fees increased by $7.7 million in 2002.

Noninterest  expenses  totaled  $579.2  million for 2002,  an increase of $159.2
million, or 38% over 2001.  Contributing to this increase was the addition of 40
new  branches.  With the  addition  of these  new  offices,  staff,  facilities,
marketing, and related expenses rose accordingly.  Salaries and benefits had the
largest increase of $78.9 million during 2002. Other  noninterest  expenses rose
$37.2  million  to $124.1  million in 2002.  This  increase  included  increased
bank-card   related  service  charges  of  $8.3  million,   increased   business
development    expenses   of   $6.6   million   and    increased    professional
services/insurance expenses of $5.4 million.

Mergers and Acquisitions

During 2003,  the Company  purchased  The Porch Agency,  an insurance  brokerage
agency.  The  Company  issued  approximately  44,000  shares of common  stock in
connection with this immaterial acquisition.

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


<PAGE>


Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(3)  Exhibits

              Exhibit
               Number                   Description of Exhibit
               ------                   ----------------------

                31.1      Certification of the Company's Chief Executive
                          Officer pursuant to 18 U.S.C. Section 1350, as adopted
                          pursuant to Section 302 of the  Sarbanes-Oxley  Act of
                          2002.

                31.2      Certification of the Company's Chief Financial Officer
                          pursuant  to  18  U.S.C.   Section  1350,  as  adopted
                          pursuant to Section 302 of the  Sarbanes-Oxley  Act of
                          2002.

                 32       Certification of the Company's Chief Executive
                          Officer and Chief Financial Officer pursuant to 18
                          U.S.C. Section 1350, as adopted pursuant to
                          Section 906 of the Sarbanes-Oxley Act of 2002.



                                   SIGNATURES

     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to its
Annual Report on Form 10-K for the year ended  December 31, 2003 to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                           Commerce Bancorp, Inc.


                                           By       /s/ Douglas J. Pauls
Date: March 19, 2004                       --------------------------------
                                                      Douglas J. Pauls
                                                Senior Vice President and
                                                 Chief Financial Officer
                                                (Principal Financial and
                                                    Accounting Officer)