UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED]
                 For the fiscal year ended December 31, 1996 
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

    For the transition period from __________________ to __________________.
                            Commission File #0-12874

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

                  New Jersey                           22-2433468
(State of other jurisdiction of incorporation       (I.R.S. Employee 
               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: 609-751-9000

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

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

        Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

     The aggregate market value of voting stock held by non-affiliates of the
Registrant is $426,539,000.(1)

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the last practicable date.

Common Stock $1.5625 Par Value                          15,584,842
        Title of Class                  No. of Shares Outstanding as of 3/7/97

Series C ESOP Cumulative Convertible                     417,000
          Preferred Stock               No. of Shares Outstanding as of 3/7/97
          Title of Class

DOCUMENTS INCORPORATED BY REFERENCE

     Parts II and IV incorporate certain information by reference from the
Registrant's Annual Report to Shareholders for the fiscal year ended December
31, 1996 (the "Annual Report"). Part III incorporates certain information by
reference from the Registrant's Proxy Statement for the 1997 Annual Meeting of
Shareholders.

     (1) The aggregate dollar amount of the voting stock set forth equals the
number of shares of the Registrant's Common Stock outstanding, reduced by the
amount of Common Stock held by officers, directors, and shareholders owning in
excess of 10% of the Registrant's Common Stock multiplied by the last sale price
for the Registrant's Common Stock on March 7, 1997. The information provided
shall in no way be construed as an admission that the officer, director, or 10%
shareholder in the Registrant may be deemed an affiliate of the Registrant or
that he is the beneficial owner of the shares reported as being held by him, and
any such inference is hereby disclaimed. The information provided herein is
included solely for the recordkeeping purpose of the Securities and Exchange
Commission.
<PAGE>
                             COMMERCE BANCORP, INC.
                        FORM 10-K CROSS-REFERENCE INDEX

     The preceding Annual Report and Form 10-K incorporates into a single
document the requirements of the accounting profession and the Securities and
Exchange Commission. There has been no action by the Commission, however, to
approve or disapprove or pass upon the accuracy or adequacy of the Annual Report
and Form 10-K.
                                                                            Page

Part I
Item 1.   Business ..........................................................56
Item 2.   Properties ........................................................56
Item 3.   Legal Proceedings .................................................60
Item 4.   Submission of Matters to a Vote of Security Holders
          (This item is omitted since no matters were
          submitted for security vote during the fourth
          quarter of 1996.)

Part II
Item 5.   Market for the Registrant's Common Stock and
          Related Stockholders Matters ......................................28
Item 6.   Selected Financial Data ............................................1
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations ...............................17
Item 8.   Financial Statements and Supplementary Financial Data .............30
Item 9.   Disagreements on Accounting and Financial Disclosure
          (This item is omitted since it is not applicable)

Part III
Item 10.  Directors and Executive Officers of the Registrant
Item 11.  Management Remuneration and Transactions
Item 12.  Security Ownership of Certain Beneficial Owners and Management
Item 13.  Certain Relationships and Related Transactions
          (The information required by the items in this
          part has been omitted since it will be contained
          in the definitive proxy statement to be filed
          pursuant to Regulation 14A.)

Part IV

Item 14.  Exhibits, Financial Statement Schedules and
          Reports on Form 8-K ................................................54
          (a) (3) - Exhibits:
          2.1       Agreement and Plan of Reorganization, dated October
                    15, 1996 by and between Commerce Bancorp, Inc. and
                    Independence Bancorp, Inc. The Schedules to this
                    agreement are not filed as an exhibit hereto pursuant
                    to Regulation S-K, Item 601 (b) (2); however, the
                    Registrant will furnish a copy of these Schedules to
                    the Commision upon its request. (K)
          2.2       Agreement and Plan of Merger, dated October 15, 1996 by
                    and between Commerce Bancorp, Inc., and Independence
                    Bancorp, Inc. (K)
          3.1       Restated Certificate of Incorporation of the Company,
                    as amended. (I)
          3.2       Certificate of Amendment to the Restated Certificate
                    of Incorporation of the Company, setting forth the
                    preferences, limitations and relative rights of the
                    Company's Series C ESOP Cumulative Convertible
                    Preferred Stock. (I)
          3.3       By-laws of the Company, as amended. (L)
          4.1       Form of Trust Indenture, dated July 15, 1993, between
                    the Company and United Jersey Bank, with respect to the
                    Company's $23,000,000 8 3/8% Subordinated Notes due
                    July 15, 2003. (I)
          10.1      Ground lease, dated July 1, 1984, between Commerce NJ
                    and Group Four Equities, relating to the branch office
                    in Gloucester Township, New Jersey. (A)
          10.2      Ground lease, dated April 15, 1986, between Commerce
                    NJ and Mount Holly Equities, relating to Commerce NJ's
                    branch office in Mt. Holly, New Jersey. (C)
         *10.3      The Company's 1984 Incentive Stock Option Plan. (A)
         *10.4      The Company's Employee Stock Ownership Plan. (F)
          10.5      Lease, dated March 29, 1985, between Commerce PA and
                    Devon Properties (Ltd.), and lease dated September 4,
                    1985, between Commerce PA and Devon Properties (Ltd.),
                    relating to Commerce PA's branch office in Devon,
                    Pennsylvania. (B)
          10.6      Assignment of Lease and Assumption Agreement dated
                    November 30, 1987, between the Company and Commerce PA,
                    relating to Commerce PA's branch office in Devon,
                    Pennsylvania. (C)
54
<PAGE>
          10.7      Lease between the Company and Astoria Associates,
                    relating to the Company's and Commerce NJ's
                    headquarters facilities. (B)
          10.8      Ground lease, dated April 15, 1986, between Commerce NJ
                    and U.S. Equities, relating to one of Commerce NJ's
                    branch offices in Washington Township, New Jersey. (D)
          10.9      Ground lease, dated February 1, 1988, between Commerce
                    NJ and Diversified Properties of New Jersey, relating
                    to one of Commerce NJ's branch offices in Washington
                    Township, New Jersey. (D)
          10.10     Ground lease, dated February 15, 1988, between Commerce
                    NJ and Diversified Properties of New Jersey, relating
                    to one of Commerce NJ's branch offices in Cherry Hill,
                    New Jersey. (D)
          *10.11    The Company's 1989 Stock Option Plan for Non-Employee
                    Directors. (E)
          *10.12    A copy of employment contracts with Vernon W. Hill, II,
                    C. Edward Jordan, Jr., and Peter Musumeci, Jr., dated
                    January 2, 1992. (G)
          *10.13    A copy of the Retirement Plan for Outside Directors of
                    Commerce Bancorp, Inc. (H)
          *10.14    The Company's 1994 Employee Stock Option Plan. (J)
          10.15     Term Loan Agreement between Commerce Bancorp, Inc.
                    Employee Stock Ownership Trust and Mellon Bank, N.A.
                    dated as of November 29, 1994. (J)
          11.1      Computation of Net Income Per Share.
          13.1      The Registrant's Annual Report to Shareholders for its
                    fiscal year ended December 31, 1996.
          21.1      Subsidiaries of the Company (incorporated by reference
                    from PART I, Item 1. "BUSINESS" of this Report on Form
                    10-K.) 
          23.1      Consent of Ernst & Young LLP.
          27.1      The Registrant's Financial Data Schedule.
          ______________________
          (A)       Incorporated by reference from the Company's
                    Registration Statement on Form S-1, and Amendments Nos.
                    1 and 2 thereto (Registration No. 2-94189).
          (B)       Incorporated by reference from the Company's
                    Registration Statement on Form S-2 (Registration No
                    33-12603).
          (C)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1987.
          (D)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1988.
          (E)       Incorporated by reference from the Company's
                    Registration Statement on Form S-2, and Amendments Nos.
                    1 and 2 thereto (Registration No. 33-31042).
          (F)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1989.
          (G)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1991.
          (H)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1992.
          (I)       Incorporated by reference from the Company's
                    Registration Statement on Form S-2 and Amendments Nos.
                    1 and 2 thereto (Registration No. 33-62702).
          (J)       Incorporated by reference from the Company's Annual
                    Report on Form 10-K for the fiscal year ended December
                    31, 1994.
          (K)       Incorporated by reference from the Company's Current
                    Report on Form 8-K dated October 21, 1996 (Exhibits 3
                    and 4).
          (L)       Incorporated by reference from the Company's
                    Registration Statement on Form S-4 (Registration No.
                    333-10771).
                    * Management contract or compensation plan or arrangement.
          (b) A Current Report on Form 8-K related to the proposed
          acquisition of Independence Bancorp, Inc. was filed on October 22, 
          1996.
          (c)(d) Exhibits and Financial Statement Schedules - All other
          exhibits and schedules for which provision is made in the
          applicable accounting regulation of the Securities and Exchange
          Commission are not required under the related instruction or are
          inapplicable and, therefore, have been omitted.

Item 15.  Signatures ........................................................62

                                                                              55
<PAGE>

PART I

Item 1. Business

General

     Commerce Bancorp, Inc. (the "Company") is a New Jersey business corporation
which is registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "Holding Company Act"). The Company was incorporated on
December 9, 1982 and became an active bank holding company on June 30, 1983
through the acquisition of 100% of the outstanding shares of Commerce Bank, N.A.
("Commerce NJ"). On January 2, 1987, the Company acquired all of the outstanding
shares of Commerce Bank/Pennsylvania, N.A. ("Commerce PA"). On December 31, 1988
the Company acquired all of the outstanding shares of Citizens State Bank of New
Jersey, Forked River, which was subsequently converted to a national charter and
renamed Commerce Bank/Shore, N.A. ("Commerce Shore"). On September 30, 1993, the
Company acquired all of the outstanding shares of The Coastal Bank, Ocean City,
New Jersey, ("Coastal") which was merged into Commerce NJ.

     Effective January 21, 1997, the Company acquired Independence Bancorp,
Inc., a bank holding company headquarted in Bergen County, New Jersey.
Independence Bancorp, Inc.'s wholly-owned state-chartered bank subsidiary,
Independence Bank of New Jersey, was subsequently renamed Commerce Bank/North.
At the time of acquisition, Independence Bank of New Jersey had eight branches
in Bergen and Passaic Counties, New Jersey, and had approximately $377 million
in assets.

     On November 15, 1996, two insurance brokerage agencies, Keystone National
Companies, Inc., Cherry Hill, New Jersey, and Morales, Potter & Buckelew, Inc.,
t/a Buckelew & Associates, Toms River, New Jersey, were acquired by the Company
and thereafter merged to form Commerce National Insurance Services, Inc.
("Commerce Insurance"). Commerce Insurance is currently a wholly-owned
subsidiary of Commerce Bank/North.

     Effective December 1, 1996, a third insurance brokerage agency, Chesley &
Cline, Inc., Mt. Holly, New Jersey was merged with and into Commerce Insurance.
Effective January 1, 1997, a fourth insurance brokerage agency, Colkate, Inc.,
t/a The Morrissey Agency, Mt. Laurel, New Jersey, was merged with and into
Commerce Insurance.

     Except as otherwise indicated, all references herein to the Company include
Commerce NJ, Commerce PA, Commerce Shore, and Commerce Insurance.

     The Company's principal executive offices are located at Commerce Atrium,
1701 Route 70 East, Cherry Hill, New Jersey 08034-5400, and its telephone number
is (609) 751-9000.

     The total number of full-time equivalent persons employed by the Company
was 1,681 as of December 31, 1996. The Company believes that its relationship
with its employees is good.

Commerce NJ 

     Commerce NJ provides retail and commercial banking services through 37
retail branch offices in Camden, Burlington, Gloucester, Atlantic, and Cape May
Counties in Southern New Jersey. It currently has six offices in Cherry Hill,
three offices in Washington Township, two offices each in Marlton, Medford and
Moorestown, and one office each in Absecon, Atco, Bellmawr, Berlin, Brigantine,
Cinnaminson, Glassboro, Gloucester Township, Haddonfield, Hammonton, Marmora,
Mt. Holly, Mullica Hill, Northfield, Ocean City, Sicklerville, Somers Point,
Stratford, Voorhees, West Deptford, Williamstown, and Woodbury.

     Commerce NJ's deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC"). Commerce Capital, a division of Commerce NJ, provides
municipal bond underwriting, investment banking, and personal investment
services. Commerce NJ acquired the former Cypress Securities, Inc. in March of
1995. Vernon W. Hill, II, the Chairman, President and Chief Executive Officer of
the Company, was the principal shareholder of Cypress Securities, Inc.

     As of December 31, 1996, Commerce NJ had total assets of $2.123 billion,
total deposits of $1.910 billion and total stockholders' equity of $143.3
million.

Service Area 

     Commerce NJ's primary service area includes Burlington, Camden, Gloucester,
Atlantic and Cape May Counties, New Jersey. Commerce NJ has attempted to locate
its branches in the fastest growing communities within its service area. Retail
deposits gathered through these focused branching activities are used to support
Commerce NJ's lending throughout Southern New Jersey.

56
<PAGE>
Retail Banking Activities 

     Commerce NJ provides a broad range of retail banking services and products,
including free checking accounts (subject to minimum balances) and savings
programs, money market accounts, negotiable orders of withdrawal ("NOW")
accounts, certificates of deposit, safe deposit facilities, consumer loan
programs (including installment loans for home improvement and the purchase of
consumer goods and automobiles), home equity and Visa Gold card revolving lines
of credit, overdraft checking and automated teller facilities. Commerce NJ also
offers construction loans and permanent mortgages for houses.

Trust Activities 

     Commerce NJ offers trust services primarily focusing on corporate trust
activities, particularly as bond trustee, paying agent, and registrar for
municipal bond offerings. 

Commercial Banking Activities 

     Commerce NJ offers a broad range of commercial banking services, including
free checking accounts (subject to minimum balance), night depository
facilities, money market accounts, certificates of deposit, short-term loans for
seasonal or working capital purposes, term loans for fixed assets and expansion
purposes, revolving credit plans and other commercial loans to fit the needs of
its customers. Commerce NJ also finances the construction of business properties
and makes real estate mortgage loans on completed buildings. Where the needs of
a customer exceed Commerce NJ's legal lending limit for any one customer
(approximately $23.7 million as of December 31, 1996), Commerce NJ may
participate with other banks, including Commerce PA, Commerce Shore, and
Commerce Bank/North, in making a loan.

Commerce PA 

     In 1987, the Company acquired all of the issued and outstanding shares of
capital stock of Commerce PA. As a result of this transaction, Commerce PA
became a wholly-owned subsidiary of the Company.

     Commerce PA was organized as a national bank on December 28, 1983 and
commenced operations on June 29, 1984. As of December 31, 1996, Commerce PA had
total assets of $365.3 million, total deposits of $340.9 million and total
stockholders' equity of $21.5 million.

     Commerce PA provides retail and commercial banking services through 14
retail branch offices in Philadelphia, Chester, Delaware and Montgomery Counties
in Southeastern Pennsylvania. It currently has one office in Center City
Philadelphia, one in West Philadelphia, one in South Philadelphia, and one
office each in the Philadelphia suburbs of Chichester, Collegeville, Devon,
Haverford, Lawrence Park, Media, Newtown Square, Springfield, Trooper, Wayne and
Whitpain. Commerce PA's deposits are insured by the FDIC.

     Commerce PA generally provides the same retail and commercial banking
services and products as Commerce NJ and Commerce Shore. Commerce PA does not
offer trust services.

Commerce Shore 

     In 1988, the Company acquired all of the issued and outstanding shares of
capital stock of Commerce Shore. As a result of this transaction, Commerce Shore
became a wholly-owned subsidiary of the Company.

     Commerce Shore was organized as a state-chartered bank on December 8, 1972
and commenced operations on January 29, 1973. In 1989, Commerce Shore converted
to a national charter. As of December 31, 1996, Commerce Shore had total assets
of $389.6 million, total deposits of $331.3 million and total stockholders'
equity of $21.8 million.

     Commerce Shore provides retail and commercial banking services through
eight retail branch offices in Ocean County, New Jersey. It currently has two
offices each in Forked River and Toms River, and one office each in Barnegat,
Bayville, Long Beach Island, and Manahawkin. Commerce Shore's deposits are
insured by the FDIC.

     Commerce Shore generally provides the same retail and commercial banking
services and products as Commerce NJ and Commerce PA. Commerce Shore does not
offer trust services.
                                                                              57
<PAGE>

Commerce Insurance

     Commerce Insurance operates as a regional insurance brokerage firm
concentrating on commercial property, casualty and surety as well as personal
lines. In addition, Commerce Insurance offers a line of employee benefit
programs including both group as well as individual medical, life, disability
and pension. Commerce Insurance currently operates out of nine locations in New
Jersey. Commerce Insurance places insurance for clients in multiple states,
primarily New Jersey and Pennsylvania.

Other Activities 

     Commerce NJ Equities Corporation, a New Jersey corporation, is a
wholly-owned subsidiary of Commerce NJ which purchases, holds and sells
investments of Commerce NJ. Commerce Shore Equities Corporation, a New Jersey
corporation, is a wholly-owned subsidiary of Commerce Shore which purchases,
holds and sells investments of Commerce Shore.

     As part of the Commerce Network, the Company has an equity investment in
Commerce Bank/Harrisburg, Camp Hill, Pennsylvania (17.72% beneficial ownership).
The Commerce Network provides certain marketing support and technical support
services to its members.

Competition 

     The Company's service area is characterized by intense competition in all
aspects and areas of its business from commercial banks, savings and loan
associations, mutual savings banks and other financial institutions. Other
competitors, including credit unions, consumer finance companies, factors,
insurance companies and money market mutual funds, compete with certain lending
and deposit gathering services offered by the Company. Many competitors have
substantially greater financial resources and larger lending limits and larger
branch systems than those of the Company.

     In commercial transactions, Commerce NJ's, Commerce PA's and Commerce
Shore's legal lending limit to a single borrower (approximately $23.7 million,
$3.8 million, and $3.7 million, respectively, as of December 31, 1996) enables
them to compete effectively for the business of smaller and mid-sized
businesses. However, these legal lending limits are considerably lower than that
of various competing institutions and thus may act as a constraint on Commerce
NJ's, Commerce PA's and Commerce Shore's effectiveness in competing for
financing in excess of these limits.

     The Company believes that it is able to compete on a substantially equal
basis with larger financial institutions because it offers longer hours of
operation than those offered by most of its competitors, free checking accounts
for customers maintaining certain minimum balances and competitive interest
rates on savings and time accounts with low minimum deposit requirements.

     The Company seeks to provide personalized services through management's
knowledge and awareness of its market area, customers and borrowers. The Company
believes this knowledge and awareness provides a business advantage in serving
the retail depositors and the small and mid-sized commercial borrowers that
comprise the Company's customer base.

Supervision and Regulation 

The Company 

     The Company is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended ("Holding Company Act"), and is therefore
subject to regulation by the Board of Governors of the Federal Reserve System
("FRB").

     Under the Holding Company Act, the Company is required to secure the prior
approval of the FRB before it can merge or consolidate with any other bank
holding company or acquire all or substantially all of the assets of any bank or
acquire direct or indirect ownership or control of any voting shares of any bank
that is not already majority owned by it, if after such acquisition it would
directly or indirectly own or control more than 5% of the voting shares of such
bank. See "Recent Legislation/Interstate Banking."

58
<PAGE>

     The Company is generally prohibited under the Holding Company Act from
engaging in, or acquiring direct or indirect ownership or control or more than
5% of the voting shares of any company engaged in non-banking activities unless
the FRB, by order or regulation, has found such activities to be so closely
related to banking or managing or controlling banks as to be a proper incident
thereto. In making such a determination, the FRB considers whether the
performance of these activities by a bank holding company can reasonably be
expected to produce benefits to the public which outweigh the possible adverse
effects. The FRB has by regulation determined that certain activities are
closely related to banking within the meaning of the Holding Company Act. These
activities include, among others, operating a mortgage, finance, credit card or
factoring company; performing certain data processing operations; providing
investment and financial advice; acting as an insurance agent for certain types
of credit-related insurance; leasing property on a full-payout, non-operating
basis; and certain stock brokerage and investment advisory services.

     In addition, under the Holding Company Act, the Company is required to file
periodic reports of its operations with, and is subject to examination by, the
FRB.

     The Company is under the jurisdiction of the Securities and Exchange
Commission and various state securities commissions for matters relating to the
offering and sale of its securities and is subject to the Securities and
Exchange Commission's rules and regulations relating to periodic reporting,
reporting to shareholders, proxy solicitation and insider trading.

Commerce NJ, Commerce PA, and Commerce Shore

     Commerce NJ, Commerce PA and Commerce Shore, as national banks, are subject
to the National Bank Act. Each is also subject to the supervision of, and is
regularly examined by, the Office of the Comptroller of the Currency ("OCC") and
is required to furnish quarterly reports to the OCC. The approval of the OCC is
required for the establishment of additional branch offices by any national
bank, subject to applicable state law restrictions. Under present New Jersey
law, Commerce NJ and Commerce Shore would be permitted to operate offices at any
location in New Jersey which is approved by the OCC. Under present Pennsylvania
law, Commerce PA would be permitted to operate offices within any county in
Pennsylvania, subject to the prior approval of the OCC.

     Under the Community Reinvestment Act, as amended ("CRA"), as implemented by
OCC regulations, a bank has a continuing and affirmative obligation consistent
with its safe and sound operation to help meet the credit needs of its entire
community, including low- and moderate-income neighborhoods. CRA does not
establish specific lending requirements or programs for financial institutions
nor does it limit an institution's discretion to develop the types of products
and services that it believes are best suited to its particular community,
consistent with CRA. CRA requires the OCC to assess an institution's record of
meeting the credit needs of its community and to take such record into account
in its evaluation of certain applications by such institution. The CRA requires
public disclosure of an institution's CRA rating and requires that the OCC
provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system. An institution's CRA rating is considered
in determining whether to grant charters, branches and other deposit facilities,
relocations, mergers, consolidations and acquisitions. Performance less than
satisfactory may be the basis for denying an application. In addition, under
applicable regulations a bank having a less than satisfactory rating is not
entitled to participate on the bid list for FDIC offerings. In 1996, Commerce
NJ, Commerce PA and Commerce Shore each received a "satisfactory" rating.

     Commerce NJ, Commerce PA and Commerce Shore are members of the FDIC and
members of the FRB and, therefore, are subject to additional regulation by these
agencies. Some of the aspects of the lending and deposit business of Commerce
NJ, Commerce PA and Commerce Shore which are regulated by these agencies include
personal lending, mortgage lending and reserve requirements. The operation of
Commerce NJ, Commerce PA and Commerce Shore are also subject to numerous
federal, state and local laws and regulations which set forth specific
restrictions and procedural requirements with respect to interest rates on
loans, the extension of credit, credit practices, the disclosure of credit terms
and discrimination in credit transactions.

     Commerce NJ, Commerce PA and Commerce Shore are subject to certain
limitations on the amount of cash dividends that they can pay. See Note 18 of
the Company's Notes to Consolidated Financial Statements which appears elsewhere
herein.

                                                                              59

<PAGE>

Recent Legislation/Interstate Banking

On September 29, 1994, the President signed into law the "Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994" (the "Interstate Act"). Among
other things, the Interstate Act permits bank holding companies to acquire banks
in any state one year after enactment. Beginning June 1, 1997, a bank may merge
with a bank in another state so long as both states have not opted out of
interstate branching between the date of enactment of the Interstate Act and May
31,1997. States may enact laws opting out of interstate branching before June 1,
1997, subject to certain conditions. States may also enact laws permitting
interstate merger transactions before June 1, 1997 and host states may impose
conditions on a branch resulting from an interstate merger transaction that
occurs before June 1, 1997, if the conditions do not discriminate against
out-of-state banks, are not preempted by Federal law and do not apply or require
performance after May 31, 1997. New Jersey and Pennsylvania have enacted laws
opting in immediately to interstate merger and interstate branching
transactions. Interstate acquisitions and mergers would both be subject, in
general, to certain concentration limits and state entry rules relating to the
age of the bank.

     Under the Interstate Act, the Federal Deposit Insurance Act is amended to
permit the responsible Federal regulatory agency to approve the acquisition of a
branch of an insured bank by an out-of-state bank or bank holding company
without the acquisition of the entire bank or the establishment of a "de novo"
branch only if the law of the state in which the branch is located permits
out-of-state banks to acquire a branch of a bank without acquiring the bank or
permits out-of-state banks to establish "de novo" branches. Pennsylvania
recently passed such a law. The recently passed New Jersey law does not
authorize establishment of interstate branches other than by means of acquiring
such branches from another institution.

     The foregoing necessarily is a summary and general description of certain
provisions of the Interstate Act and does not purport to be complete. Many of
the provisions will be implemented through the adoption of regulation by the
various Federal banking agencies. Moreover, many of the significant provisions
of the legislation have not yet become effective. As of the date thereof, the
Company is continuing to study the legislation and regulations relating to the
legislation but cannot yet assess its impact on the Company.

National Monetary Policy 

     In addition to being affected by general economic conditions, the earnings
and growth of the Company, Commerce NJ, Commerce PA and Commerce Shore are
affected by the policies of regulatory authorities, including the OCC, the FRB
and the FDIC. An important function of the FRB is to regulate the money supply
and credit conditions. Among the instruments used to implement these objectives
are open market operations in U.S. Government securities, setting the discount
rate, and changes in reserve requirements against bank deposits. These
instruments are used in varying combinations to influence overall growth and
distribution of credit, bank loans, investments and deposits, and their use may
also affect interest rates charged on loans or paid on deposits.

     The monetary policies and regulations of the FRB have had a significant
effect on the operating results of commercial banks in the past and are expected
to continue to do so in the future. The effects of such policies upon the future
business, earnings and growth of the Company, Commerce NJ, Commerce PA and
Commerce Shore cannot be predicted.

Legal Proceedings 

     Other than routine litigation incidental to its business, none of the
Company, Commerce NJ, Commerce PA, Commerce Shore or any of their properties is
subject to any material legal proceedings, nor are any such proceedings known to
be contemplated.

Employee Stock Ownership Plan 

     Effective January 1, 1989, the Company's Board of Directors approved the
restatement of the Company's Stock Bonus Plan to an Employee Stock Ownership
Plan ("ESOP"). The ESOP is intended to be a qualified retirement plan
established and maintained in accordance with the Employee Retirement Income
Security Act of 1974 for the benefit of the Company's and its bank subsidiaries'
eligible employees. The ESOP is intended to invest primarily in "Qualifying
Employer Securities" (i.e., common stock or preferred stock which is convertible
into common stock). The assets of the ESOP are held in a trust fund pursuant to
a Trust Agreement. The trustees under the Trust Agreement are authorized to
invest up to 100% of the trust fund in Qualifying Employer Securities. The
trustees are also authorized to borrow money for the purpose of purchasing
Qualifying Employer Securities.

60

<PAGE>

     Generally, each participant in the ESOP is entitled to direct the trustees
with respect to the voting rights, if any, of the Qualifying Employer Securities
allocated to the participant's account. In other cases (i.e., unallocated
shares), the voting of shares held by the ESOP is determined by the trustees.
The current trustees are Vernon W. Hill, II and C. Edward Jordan, Jr., the
trustees under the Company's former Stock Bonus Plan.

     The Company is responsible for the operation and administration of the
ESOP. The Company determines investment policies under which the trustees act.
These duties are carried out by a committee appointed by the Board of Directors.
The Board of Directors has the sole responsibility to appoint and remove members
of the committee of trustees, to determine the amount of contributions to the
ESOP by the Company and its subsidiary banks, and to amend or terminate, in
whole or in part, the ESOP or the Trust Agreement.

     The Company's Board of Directors approved the creation of a new series of
cumulative convertible preferred stock known as "Series C ESOP Cumulative
Convertible Preferred Stock." On January 31, 1990, the ESOP borrowed $7.5
million from another financial institution to complete the purchase of 417,000
shares of Series C ESOP Cumulative Convertible Preferred Stock from the Company,
at $18.00 per share, with an annual dividend rate of $1.35. This loan was
guaranteed by the Company. During 1994, the loan was refinanced with another
financial institution, also with the guarantee of the Company. The balance of
the loan at December 31, 1996 was $3,333,000.

     If all of the unallocated shares of Series C ESOP Cumulative Convertible
Preferred Stock held of record by the ESOP Trust as of March 1, 1997 were
converted into the Company's common stock, the unallocated shares of common
stock the ESOP Trust would hold of record would be 1.69% of the Company's common
stock.

                                                                              61
<PAGE>


     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 report
to be signed on its behalf by the undersigned, thereunto duly authorized.

                                                Commerce Bancorp, Inc.

                                   By           /s/     Vernon W. Hill, II
                                                  Vernon W. Hill, II
                                          Chairman of the Board and President

Date: March 27,1997

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature                          Title                                         Date

<S>                               <C>                                           <C> 
/s/ Vernon W. Hill, II             Chairman of the Board and President          March 27, 1997
Vernon W. Hill, II                 (Principal Executive Officer)

/s/ C. Edward Jordan, Jr.          Executive Vice President and Director        March 27, 1997
C. Edward Jordan, Jr.              (Principal Financial and Accounting
                                   Officer)

/s/ Robert C. Beck                 Secretary and Director                       March 27, 1997
Robert C. Beck

/s/ David Baird, IV                Director                                     March 27, 1997
David Baird, IV

/s/ Jack R Bershad                 Director                                     March 27, 1997
Jack R Bershad

/s/ Morton N. Kerr                 Director                                     March 27, 1997
Morton N. Kerr

/s/ Steven M. Lewis                Director                                     March 27, 1997
Steven M. Lewis

/s/ Daniel J. Ragone               Director                                     March 27, 1997
Daniel J. Ragone

/s/ Joseph T. Tarquini, Jr.        Director                                     March 27, 1997
Joseph T. Tarquini, Jr.

/s/ Joseph Buckelew                Director                                     March 27, 1997
Joseph Buckelew
</TABLE>