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                                  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, 1998
                                       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             (I.R.S. Employee Identification Number)
     of incorporation 
     or organization)

      Commerce Atrium
     1701 Route 70 East                                 08034-5400
  Cherry Hill, New Jersey                               (Zip Code)
(Address of principal executive offices)
        Registrant's telephone number, including area code: 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 $1,109,133,000.(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                         27,438,170
  ------------------------------------             --------------------------
            Title of Class                         No. of Shares Outstanding 
                                                         as of 3/5/99

                       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, 1998 (the "Annual  Report").  Part III incorporates  certain  information by
reference from the  Registrant's  Proxy Statement for the 1999 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 5, 1999. 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.

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                             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............................................................47
Item 2.   Properties..........................................................48
Item 3.   Legal Proceedings ..................................................53
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 1998.)
                                    Part II
Item 5.   Market for the Registrant's Common Stock and Related 
          Stockholders Matters ...............................................15
Item 6.   Selected Financial Data .............................................1
Item 7.   Management's Discussion and Analysis of Financial Condition and 
          Results of Operations ...............................................2
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk . .......12
Item 8.   Financial Statements and Supplementary Financial Data ..............17
Item 9.   Changes in and Disagreements with Accountants 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.  Executive Compensation
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 ....44

          (a)  (3) - Exhibits:
               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. (K)
               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)
               4.2   Form of Indenture  between the Company and Wilmington Trust
                     Company, as Debenture Trustee. (M)
               4.3   Certificate of Trust of Commerce Capital Trust I. (M)
               4.4   Form of  Amended  and  Restated  Declaration  of  Trust  of
                     Commerce Capital Trust I. (M)
               4.5   Form of Capital  Security  Certificate for Commerce Capital
                     Trust I (included in Exhibit 4.4). (M)
               4.6   Form of Guarantee Agreement. (M)
               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)
44
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               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)
              *10.16 The Company's 1997 Employee Stock Option Plan. (L)
              *10.17 A copy of employment  contracts with Dennis M. DiFlorio and
                     Robert D. Falese dated January 1, 1998. (N)
               10.18 Ground lease,  dated June 1, 1994,  between Commerce NJ and
                     Absecon  Associates,  L.L.C.,  relating  to  Commerce  NJ's
                     branch office in Absecon, New Jersey. (N)
               10.19 Ground lease,  dated September 11, 1995,  between  Commerce
                     Shore and Whiting  Equities,  L.L.C.,  relating to Commerce
                     Shore's branch office in Manchester  Township,  New Jersey.
                     (N)
               10.20 Ground lease,  dated November 1, 1995,  between Commerce NJ
                     and Evesboro Associates,  L.L.C., relating to Commerce NJ's
                     branch office in Evesham Township, New Jersey. (N)
               10.21 Ground lease,  dated October 1, 1996,  between  Commerce NJ
                     and Triad  Equities,  L.L.C.,  relating  to one of Commerce
                     NJ's branch offices in Gloucester Township, New Jersey. (N)
               10.22 Ground lease,  dated October 11, 1996,  between Commerce PA
                     and Plymouth  Equities,  L.L.C.,  relating to Commerce PA's
                     branch office in Plymouth Township, PA. (N)
               10.23 Ground lease,  dated January 16, 1998,  between Commerce NJ
                     and Ewing  Equities,  L.L.C.,  relating  to  Commerce  NJ's
                     branch in Ewing, New Jersey.
               10.24 The  Company's  1998  Stock  Option  Plan for  Non-Employee
                     Directors  (O) 10.25  Ground  lease,  dated July 31,  1998,
                     between Commerce NJ and English Creek  Properties,  L.L.C.,
                     relating  to Commerce  NJ's branch in Egg Harbor  Township,
                     New Jersey.
               11.1  Computation of Net Income Per Share .....................32
               13.1  The  Registrant's  Annual  Report to  Shareholders  for its
                     fiscal year ended December 31,1998.
               21.1  Subsidiaries of the Company (incorporated by reference from
                     PART I, Item 1. "BUSINESS" of this Report on Form 10-K.).47
               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. I 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).
                                                                              45
<PAGE>

               (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  Registration
                     Statement on Form S-4 (Registration No. 333-10771).
               (L)   Incorporated  by reference  from the  Company's  Definitive
                     Proxy   Statement   for  its   1997   Annual   Meeting   of
                     Shareholders, Exhibit A thereto.
               (M)   Incorporated  by reference from the Company's  Registration
                     Statement on Form S-3 (Registration No. 333-28311).
               (N)   Incorporated by reference from the Company's  Annual Report
                     on Form 10-K for the fiscal year ended December 31, 1997.
               (O)   Incorporated  by reference  from the  Company's  Definitive
                     Proxy   Statement   for  its   1998   Annual   Meeting   of
                     Shareholders,  Exhibit A thereto. * Management  contract or
                     compensation plan or arrangement.

          (b) There were no  reports on Form 8-K filed in the fourth  quarter of
          1998.
          (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..........................................................55

46
<PAGE>
                                     PART I
Item 1. Business

Forward-Looking Statements

     Commerce  Bancorp,  Inc. (the "Company") may from time to time make written
or oral  "forward-looking  statements",  including  statements  contained in the
Company's  filings with the Securities and Exchange  Commission  (including this
Annual Report and Form 10-K and the exhibits hereto and thereto), in its reports
to stockholders and in other  communications  by the Company,  which are made in
good  faith by the  Company  pursuant  to the "safe  harbor"  provisions  of the
Private Securities Litigation Reform Act of 1995.

     These  forward-looking  statements  include  statements with respect to the
Company's  beliefs,  plans,  objectives,  goals,  expectations,   anticipations,
estimates  and   intentions,   that  are  subject  to   significant   risks  and
uncertainties  and are subject to change based on various factors (some of which
are beyond the Company's control). The words "may", "could", "should",  "would",
believe",  "anticipate",  "estimate",  "expect",  "intend",  "plan" and  similar
expressions are intended to identify forward-looking  statements.  The following
factors, among others, could cause the Company's financial performance to differ
materially from that expressed in such forward-looking  statements: the strength
of the United States economy in general and the strength of the local  economies
in which the Company conducts operations; the effects of, and changes in, trade,
monetary and fiscal policies,  including  interest rate policies of the Board of
Governors of the Federal Reserve System (the "FRB"); inflation;  interest rates,
market and monetary  fluctuations;  the timely  development of  competitive  new
products and  services by the Company and the  acceptance  of such  products and
services by customers;  the willingness of customers to substitute  competitors'
products and services  for the  Company's  products and services and vice versa;
the impact of changes in financial  services'  laws and  regulations  (including
laws  concerning  taxes,  banking,  securities  and  insurance);   technological
changes; future acquisitions;  the expense savings and revenue enhancements from
acquisitions  being less than  expected;  the growth  and  profitability  of the
Company's  noninterest  or fee income  being less than  expected;  unanticipated
regulatory  or judicial  proceedings;  changes in consumer  spending  and saving
habits;  and the success of the Company at  managing  the risks  involved in the
foregoing.

     The Company  cautions that the foregoing  list of important  factors is not
exclusive.  The  Company  does  not  undertake  to  update  any  forward-looking
statement,  whether written or oral, that may be made from time to time by or on
behalf of the Company.

General

     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
headquartered  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 ("Commerce North").

     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 North.  In December 1996,  Chesley & Cline,  Inc.,  Mount
Holly, New Jersey, was merged with and into Commerce Insurance. In January 1997,
Colkate, Inc., t/a The Morrissey Agency, Mt. Laurel, New Jersey, was merged with
and  into  Commerce  Insurance.   In  December  1997,  Joseph  J.  Reinhart  and
Associates, Inc., Cherry Hill, NJ, a risk/loss management and loss investigation
consulting firm, and Associated Insurance Management Inc.,  Haddonfield,  NJ, an
employee  and  executive  benefit  consulting  firm,  were  merged with and into
Commerce Insurance.  In August 1998, J.A. Montgomery,  Inc., Wilmington,  DE, an
insurance brokerage agency, was merged with and into Commerce Insurance.

     On March 27, 1998, the Company  completed the acquisition of A. H. Williams
& Co., Inc.,  ("Williams")  Philadelphia,  PA, a public finance investment firm,
and combined Williams with Commerce Capital, the 

                                                                              47
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bank  securities  dealer  division  of  Commerce  NJ, to form  Commerce  Capital
Markets, Inc. ("CCMI") a wholly-owned nonbank subsidiary of the Company engaging
in  certain   securities   activities   permitted   under   Section  20  of  the
Glass-Steagall Act.

     Effective  January 15, 1999, the Company  acquired  Community First Banking
Company ("CFBC"), a one-bank holding company  headquartered in Tinton Falls, New
Jersey. CFBC's wholly-owned bank subsidiary, Tinton Falls State Bank, was merged
with and into Commerce  Shore.  At the time of  acquisition,  Tinton Falls State
Bank had six branch offices in Monmouth County,  New Jersey,  and  approximately
$201 million in assets.

     Also effective  January 15, 1999, the Company acquired  Prestige  Financial
Corp.  ("PFC"),  a one-bank  holding company  headquartered  in Flemington,  New
Jersey. PFC's wholly-owned state-chartered bank subsidiary, Prestige State Bank,
was   subsequently   re-chartered  as  a  national  bank  and  renamed  Commerce
Bank/Central,  N.A. At the time of  acquisition,  Prestige  State Bank had seven
branches in Hunterdon and Somerset  Counties,  New Jersey, and had approximately
$328 million in assets.

     In  1998,  the  Company  received  regulatory  approvals  to open  Commerce
Bank/Delaware,  N.A. It is currently anticipated that the first office will open
in the second quarter of 1999.

     On June 9, 1997,  the Company  issued  $57,500,000  of 8 3/4% Trust Capital
Securities  through Commerce  Capital Trust 1, a newly formed Delaware  business
trust subsidiary of the Company.

     Except as otherwise indicated, all references herein to the Company include
Commerce NJ, Commerce PA, Commerce Shore, Commerce North, Commerce Capital Trust
I, Commerce Insurance, and CCMI.

     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 2,777 as of December 31, 1998.  The Company  believes that its  relationship
with its employees is good.

Commerce NJ

     Commerce NJ provides  retail and  commercial  banking  services  through 43
retail branch offices in Camden, Burlington,  Gloucester,  Mercer, Atlantic, and
Cape May  Counties in New  Jersey.  Commerce  NJ' s deposits  are insured by the
Federal Deposit Insurance Corporation ("FDIC").

     As of December  31, 1998,  Commerce NJ had total assets of $3.026  billion,
total  deposits  of $2.708  billion,  and total  stockholders'  equity of $194.4
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.

   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 

48
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buildings.  Where the needs of a customer  exceed  Commerce  NJ's legal  lending
limit for any one  customer  (approximately  $31.2  million as of  December  31,
1998),  Commerce NJ may  participate  with other banks,  including  Commerce PA,
Commerce Shore, and Commerce 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, 1998, Commerce PA had
total  assets of $806.9  million,  total  deposits  of $746.4  million and total
stockholders' equity of $54.9 million.

     Commerce PA provides  retail and  commercial  banking  services  through 18
retail branch offices in Philadelphia, Chester, Delaware and Montgomery Counties
in Southeastern Pennsylvania. 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,  Commerce  Shore,  and  Commerce  North.
Commerce PA offers trust services similar to those offered by Commerce NJ.

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, 1998, Commerce Shore had total assets
of $512.1  million,  total  deposits of $473.8  million and total  stockholders'
equity of $33.4 million.

     Commerce Shore provides retail and commercial  banking  services through 13
retail branch offices in Ocean County, New Jersey. 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, Commerce PA, and Commerce North.  Commerce
Shore does not offer trust services.

Commerce North

        In 1997, the Company acquired  Independence Bancorp, Inc. As a result of
this transaction,  Independence Bancorp Inc.'s wholly-owned state-chartered bank
subsidiary, Independence Bank of New Jersey, became a wholly-owned subsidiary of
the Company, and was subsequently renamed Commerce North.

     Commerce  North  was  organized  as a  state-chartered  bank  in  1974  and
commenced  operations in 1975. As of December 31, 1998, Commerce North had total
assets  of  $600.3  million,   total  deposits  of  $535.6  million,  and  total
stockholders' equity of $38.7 million.

     Commerce North provides retail and commercial  banking  services through 10
retail  branch  offices in Bergen and Passaic  Counties,  New  Jersey.  Commerce
North's deposits are insured by the FDIC.

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

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 six locations in New
Jersey and three locations in Delaware.  Commerce Insurance places insurance for
clients in multiple states, primarily New Jersey, Pennsylvania, and Delaware.

Commerce Capital Markets, Inc.

     Commerce Capital Markets,  Inc. is a wholly-owned nonbank subsidiary of the
Company engaging in certain securities  activities permitted under Section 20 of
the Glass-Steagall Act, including trading,  underwriting, and advisory services.
CCMI's  principal place of business is Philadelphia,  Pennsylvania,  with 

                                                                              49
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branch locations in Pittsburgh,  Pennsylvania,  Cherry Hill, New Jersey, Boston,
Massachusetts, and Burlingame, California.

Other Activities

     NA Asset Management,  a Delaware corporation,  is a wholly-owned subsidiary
of Commerce NJ which  purchases,  holds and sells  investments  of Commerce  NJ.
Shore Asset Management  Corporation,  a Delaware corporation,  is a wholly-owned
subsidiary of Commerce  Shore which  purchases,  holds and sells  investments of
Commerce  Shore.  North  Asset  Management,   a  Delaware   corporation,   is  a
wholly-owned  subsidiary of Commerce  North which  purchases,  holds,  and sells
investments of Commerce North.

     As part of the Commerce  Network,  the Company has an equity  investment in
Commerce Bank/Harrisburg, Camp Hill, Pennsylvania (15.35% 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, Commerce Shore's,
and Commerce  North's legal lending  limit to a single  borrower  (approximately
$31.2 million, $8.6 million, $5.3 million, and $6.2 million, respectively, as of
December  31,  1998)  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 FOLLOWING DISCUSSION SETS FORTH CERTAIN OF THE MATERIAL ELEMENTS OF THE
REGULATORY FRAMEWORK APPLICABLE TO BANK HOLDING COMPANIES AND THEIR SUBSIDIARIES
AND  PROVIDES  CERTAIN  SPECIFIC   INFORMATION  RELEVANT  TO  THE  COMPANY.  THE
REGULATORY  FRAMEWORK IS INTENDED  PRIMARILY FOR THE  PROTECTION OF  DEPOSITORS,
OTHER  CUSTOMERS  AND  THE  FEDERAL  DEPOSIT  INSURANCE  FUNDS  AND  NOT FOR THE
PROTECTION OF SECURITY  HOLDERS.  TO THE EXTENT THAT THE  FOLLOWING  INFORMATION
DESCRIBES STATUTORY AND REGULATORY  PROVISIONS,  IT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PARTICULAR STATUTORY AND REGULATORY PROVISIONS.  A CHANGE IN
APPLICABLE STATUTES, REGULATIONS OR REGULATORY POLICY MAY HAVE A MATERIAL EFFECT
ON THE BUSINESS OF THE COMPANY.

   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 supervision  and regulation by the FRB. The Company is also regulated
by the New Jersey and Pennsylvania Departments of Banking.

     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 "Interstate Banking."

50
<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 nonbanking  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.

     Satisfactory  financial  condition,  particularly  with  regard to  capital
adequacy,  and  satisfactory  Community  Reinvestment  Act ratings are generally
prerequisites to obtaining federal regulatory approval to make acquisitions. All
of the Company's  subsidiary banks are currently rated  "satisfactory" under the
Community Reinvestment Act.

     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 ("SEC") and various state securities commissions for matters relating
to the offering and sale of its securities and is subject to the SEC's rules and
regulations  relating to periodic  reporting,  reporting to shareholders,  proxy
solicitation and insider trading.

     There are various legal restrictions on the extent to which the Company and
its nonbank  subsidiaries can borrow or otherwise obtain credit from its banking
subsidiaries. In general, these restrictions require that any such extensions of
credit must be secured by  designated  amounts of specified  collateral  and are
limited,  as to any one of the  Company  or such  nonbank  subsidiaries,  to ten
percent of the lending bank's  capital stock and surplus,  and as to the Company
and all such  nonbank  subsidiaries  in the  aggregate,  to 20  percent  of such
lending bank's capital stock and surplus.  Further,  a bank holding  company and
its subsidiaries are prohibited from engaging in certain tie-in  arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services.

     The Financial Institutions Reform,  Recovery and Enforcement Act ("FIRREA")
contains  a  "cross-guarantee"  provision  that  could  result  in  any  insured
depository  institution  owned by the Company being assessed for losses incurred
by the FDIC in connection  with  assistance  provided to, or the failure of, any
other depository  institution owned by the Company.  Also, under FRB policy, the
Company is  expected  to act as a source of  financial  strength  to each of its
banking  subsidiaries  and to  commit  resources  to  support  each such bank in
circumstances  where such bank might not be in a  financial  position to support
itself.

     A discussion of capital  guidelines  and capital is included in the section
entitled  "Stockholders'  Equity and Dividends"  contained  within  Management's
Discussion and Analysis of Financial Condition and Results of Operations on page
14 of the  Company's  Annual  Report to  Shareholders  for the fiscal year ended
December 31, 1998, which page of the Annual Report appears elsewhere herein.

   Commerce NJ, Commerce PA, Commerce Shore and Commerce North

     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.

     Commerce North, as a New Jersey state-chartered bank, is subject to the New
Jersey  Banking Act.  Commerce North is also subject to the  supervision  of, is
regularly  examined  by, the New Jersey  Department  of  Banking  and  Insurance
("Department")  and the FDIC,  and is required to furnish  quarterly  reports to
each  agency.  The  Approval of the  Department  and FDIC is  necessary  for the
establishment of any additional branch offices by any New Jersey state-chartered
bank, subject to applicable state law restrictions.

     Under  present New Jersey law,  Commerce  NJ,  Commerce  Shore and Commerce
North  would be  permitted  to operate  offices at any  location  in New Jersey,
subject to prior regulatory  approval.  Under present Pennsylvania law, Commerce
PA would be  permitted  to operate  offices  within any county in  Pennsylvania,
subject to prior regulatory approval.

                                                                              51
<PAGE>

     Under the  Community  Reinvestment  Act, as amended  ("CRA"),  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 that the applicable regulatory agency 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
applicable  regulatory  agency 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 1998,  Commerce NJ,  Commerce PA, Commerce
Shore and Commerce North each received a "satisfactory" rating.

     Commerce  NJ,  Commerce  PA,  Commerce  Shore and  Commerce  North are also
members of the FDIC and,  except  for  Commerce  North,  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,
Commerce Shore and Commerce North which are regulated by these agencies  include
personal lending,  mortgage lending and reserve  requirements.  The operation of
Commerce NJ,  Commerce PA, Commerce Shore and Commerce North 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, Commerce Shore and Commerce North 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.

     The OCC has authority under the Financial  Institutions  Supervisory Act to
prohibit  national  banks from  engaging  in any  activity  which,  in the OCC's
opinion,   constitutes  an  unsafe  or  unsound  practice  in  conducting  their
businesses.  The Federal Reserve Board has similar authority with respect to the
Company and the Company's non-bank subsidiaries.  The FDIC has similar authority
with respect to Commerce North.

     Substantially  all of the deposits of the banking  subsidiaries are insured
up to applicable  limits by the Bank  Insurance Fund ("BIF") of the FDIC and are
subject to deposit  insurance  assessments  to maintain the BIF.  The  insurance
assessments  are based upon a matrix  that takes into  account a bank's  capital
level and supervisory  rating.  Effective  January 1, 1996, the FDIC reduced the
insurance  premiums  it  charged  on  bank  deposits  insured  by the BIF to the
statutory minimum of $2,000 annually for "well capitalized"  banks. On September
30,  1996,  the Deposit  Insurance  Funds Act of 1996  ("DIFA")  was enacted and
signed into law. DIFA reduced the amount of FDIC insurance  premiums for savings
association  deposits acquired by banks to the same levels assessed for deposits
insured by BIF.  DIFA  further  provides  for  assessments  to be imposed on all
insured depository  institutions with respect to deposits to pay for the cost of
Financing  Corporation  bonds;  however,  banks are assessed for this purpose at
only one-fifth the rate of the assessment on savings associations until December
31, 1999. As a result of these  changes,  the deposit  insurance  assessment for
banks and for  thrifts  has been  nearly  equalized  and will be  identical  for
comparably  rated  institutions  after January 1, 2000, at which time banks will
share equally in the FICO assessment and the BIF and SAIF funds will be merged.

   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 after September 29, 1995.  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  

52
<PAGE>

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 and New
Jersey  have  each  passed  such a law.  However,  the New  Jersey  law does not
authorize  establishment of interstate branches other than by means of acquiring
such branches from another institution.

   Commerce Insurance/ Commerce Capital Markets

     Commerce  Insurance,  a nonbank  subsidiary of Commerce North, is currently
subject to supervision,  regulation and examination by the New Jersey Department
of Banking and Insurance.  Commerce Capital Markets, a nonbank subsidiary of the
Company,  engages in certain  securities  activities  permitted  to bank holding
company subsidiaries under Section 20 of the Glass-Steagall Act and is regulated
by the SEC.  Commerce  Capital  Markets is also subject to rules and regulations
promulgated  by the  National  Association  of  Securities  Dealers,  Inc.,  the
Securities  Investors  Protection   Corporation  and  various  state  securities
commissions  and  with  respect  to  public  finance  activities  the  Municipal
Securities Rulemaking Board.

     Both Commerce  Insurance and Commerce  Capital  Markets are also subject to
various  state laws and  regulations  in which they do business.  These laws and
regulations  are  primarily  intended  to benefit  clients and  generally  grant
supervisory agencies broad administrative  powers,  including the power to limit
or restrict the carrying on of business for failure to comply with such laws and
regulations.  In such event, the possible sanctions which may be imposed include
the suspension of individual employees,  limitations on engaging in business for
specific periods, censures and fines.

National Monetary Policy

     In addition to being affected by general economic conditions,  the earnings
and growth of the  Company,  Commerce  NJ,  Commerce  PA,  Commerce  Shore,  and
Commerce North 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 bad 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, Commerce
Shore, and Commerce North cannot be predicted.

Legal Proceedings

     Other than  routine  litigation  incidental  to its  business,  none of the
Company,  Commerce NJ,  Commerce PA, Commerce  Shore,  Commerce North,  Commerce
Capital Trust 1,  Commerce  Insurance,  or CCMI,  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.

                                                                              53
<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, 1998 was  $2,308,000.  Effective  March 1, 1998,  the
Trustees of the ESOP  exercised  their  right to convert  all 417,000  shares of
Series C ESOP  Cumulative  Convertible  Preferred  Stock  held by the ESOP  into
849,062 shares of the Company's common stock.

     The unallocated shares of common stock the ESOP Trust held of record as of'
March 5, 1999 were less than 1% of the Company's outstanding common stock.

54
<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
Date: March 26, 1999                         Chairman of the Board and President

                                         By        /s/ THOMAS J. SUKAY
                                             -----------------------------------
                                                     Thomas J. Sukay
                                                 Principal Financial and
                                                    Accounting Officer

     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.

Signature Title Date

/s/ VERNON W. HILL, II             Chairman of the Board          March 26, 1999
-------------------------------    and President
    Vernon W. Hill, II             (Principal Executive Officer) 

/s/ C. EDWARD JORDAN JR.           Executive Vice President       March 26, 1999
-------------------------------    and Director
    C. Edward Jordan Jr.           

/s/   ROBERT C. BECK               Secretary and Director         March 26, 1999
-------------------------------
      Robert C. Beck

/s/   DAVID BAIRD, IV              Director                       March 26, 1999
-------------------------------
     David Baird, IV

/s/   JACK R BERSHAD               Director                       March 26, 1999
-------------------------------
     Jack R Bershad

/s/   MORTON N. KERR               Director                       March 26, 1999
-------------------------------
      Morton N. Kerr

/s/   STEVEN M. LEWIS              Director                       March 26, 1999
-------------------------------
      Steven M. Lewis

/s/   DANIEL J. RAGONE             Director                       March 26, 1999
-------------------------------
      Daniel J. Ragone

/s/ WILLIAM A. SCHWARTZ JR.        Director                       March 26, 1999
-------------------------------
  William A. Schwartz Jr.

/s/  JOSEPH T. TARQUINI JR.        Director                       March 26, 1999
-------------------------------
     Joseph T. Tarquini Jr.

/s/   JOSEPH BUCKELEW              Director                       March 26, 1999
-------------------------------
      Joseph Buckelew

/s/  FRANK C. VIDEON SR.           Director                       March 26, 1999
-------------------------------
     Frank C. Videon Sr.

                                                                              55