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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, 2000
                                       OR
            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

      For the transition period from ________________ to ________________.
                            Commission File #0-12874
                             COMMERCE BANCORP, INC.
             (Exact name of registrant as specified in its charter)

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

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

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

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

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

     Securities registered pursuant to Section 12(g) of the Act: None
                          ----------------------------
     Indicate by check mark  whether the  registrant ( 1 ) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____.
     Indicate by check mark if disclosure of' delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10- K.                                             [ X ]
     The aggregate  market value of voting stock held by  non-affiliates  of the
Registrant is $1,749,057,600.(1)
                          ----------------------------
                      APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the last practicable date.
 Common Stock $1.5625 Par Value                          31,960,287
 ------------------------------           --------------------------------------
      Title of Class                      No. of Shares Outstanding as of 3/2/01

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

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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...........................................................87
Item 2.    Properties.........................................................88
Item 3.    Legal Proceedings .................................................94
Item 4.    Submission of Matters to a Vote of Security Holders
           (This item is omitted since no matters were
           submitted for security holder vote during
           the fourth quarter of 2000.)
                                     Part II
Item 5.    Market for the Registrant's Common Stock and
            Related Stockholders Matters .....................................55
Item 6.    Selected Financial Data ...........................................43
Item 7.    Management's Discussion and Analysis of Financial
            Condition and Results of Operations ..............................44
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk ........53
Item 8.    Financial Statements and Supplementary Financial Data .............57
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 ...84
           (a) (3) - Exhibits:

                  3.1      Restated Certificate of Incorporation of the Company,
                           as amended. (I)

                  3.2      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)

                  10.7     Lease between the Company and Astoria Associates,
                           relating to the Company's and Commerce NJ's
                           headquarters facilities. (B)


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                  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   The Company's 1997 Employee Stock Option Plan. (L)

                  *10.16   A copy of employment contracts with Dennis M.
                           DiFlorio and Robert D. Falese dated January 1, 1998.
                           (N)

                  10.17    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)

                  10.18    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)

                  10.19    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)

                  10.20    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)

                  10.21    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)

                  10.22    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. (P)

                  *10.23   The Company's 1998 Stock Option Plan for Non-Employee
                           Directors. (O)

                  10.24    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. (P)

                  10.25    Ground lease, dated November 30, 1998, between
                           Commerce Shore and Brick/Burnt Tavern Equities,
                           L.L.C., relating to Commerce Shore's branch office in
                           Brick, New Jersey. (Q)

                  10.26    Ground lease, dated November 30, 1998, between
                           Commerce Shore and Aberdeen Equities, L.L.C.,
                           relating to Commerce Shore's branch office in
                           Aberdeen, New Jersey. (Q)

                  10.27    Ground lease, dated November 30, 1998, between
                           Commerce NJ and Hamilton/Wash Properties, L.L.C.,
                           relating to Commerce NJ's branch office in Hamilton
                           Township, New Jersey. (Q)

                  10.28    Ground lease, dated April 2, 1999, between Commerce
                           PA and Abington Equities, L.L.C., relating to
                           Commerce PA's branch office in Abington Township,
                           Pennsylvania. (Q)

                  10.29    Ground lease, dated October, 1999, between Commerce
                           PA and Bensalem Equities, L.L.C., relating to
                           Commerce PA's branch office in Bensalem,
                           Pennsylvania.

                  10.30    Ground lease, dated June 9, 2000, between Commerce NJ
                           and Galloway Equities, L.L.C., relating to Commerce
                           NJ's branch office in Galloway, New Jersey.

                  11.1     Computation of Net Income Per Share................71

                  13.1     The Registrant's Annual Report to Shareholders for
                           its fiscal year ended December 31, 2000.

                  21.1     Subsidiaries of the Company (incorporated by
                           reference from PART I, Item 1. "BUSINESS" of this
                           Report on Form 10-K.)..............................87

                  23.1     Consent of Ernst & Young LLP.
                --------------

               (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).



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               (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 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.

               (P)  Incorporated by reference from the Company's Annual Report
                    on Form 10-K for the fiscal year ended December 31, 1998.

               (Q)  Incorporated by reference from the Company's Annual Report
                    on Form 10-K for the year ended December 31, 1999.

                *   Management contract or compensation plan or arrangement.

      (b) There were no reports on Form 8-K filed in the fourth quarter of 2000.
      (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........................................................95



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                                     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").  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.  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.
("Commerce Central"). In 1998, the Company received regulatory approvals to open
Commerce  Bank/Delaware,  N.A. ("Commerce Delaware").  Commerce Delaware's first
branch opened in New Castle County, Delaware, on December 18, 1999.

     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  National  Insurance").  Commerce  National  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  National
Insurance. In January 1997, Colkate, Inc., t/a The Morrissey Agency, Mt. Laurel,
New Jersey,  was merged with and into Commerce National  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  National  Insurance.  In August 1998,
J.A. Montgomery, Inc., Wilmington, DE, an insurance brokerage agency, was merged
with and into Commerce National Insurance. In November, 1999, Mullaney Insurance
Associates,  Oakhurst,  NJ, an insurance  brokerage agency,  was merged with and
into Commerce National Insurance.  In January, 2000, Traber and Vreeland,  Inc.,

                                                                              87
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Randolph,  NJ and in October 2000,  Guarantee  Service Agency,  Inc. t/a Maywood
Agency,  Maywood,  NJ, insurance brokerage  agencies,  were merged with and into
Commerce National Insurance.

     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 bank securities dealer division
of Commerce NJ, to form Commerce Capital Markets,  Inc.  ("CCMI") a wholly-owned
subsidiary of the Company.

     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  Central,
Commerce Delaware,  Commerce Capital Trust I, Commerce National  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 (856) 751-9000.

     The total number of full-time  equivalent  persons  employed by the Company
was 4,230 as of December 31, 2000.  The Company  believes that its  relationship
with its employees is good.

Commerce NJ

     Commerce NJ provides  retail and  commercial  banking  services  through 53
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, 2000,  Commerce NJ had total assets of $4.560  billion,
total  deposits  of $3.582  billion,  and total  stockholders'  equity of $283.7
million.

  Service Area
     Commerce NJ's primary service area includes Burlington, Camden, Gloucester,
Mercer, 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 buildings.  Where the needs of
a  customer  exceed  Commerce  NJ's  legal  lending  limit for any one  customer
(approximately  $47.6  million  as  of  December  31,  2000),  Commerce  NJ  may
participate with other banks,  including  Commerce PA, Commerce Shore,  Commerce
North, Commerce Central, and Commerce Delaware 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, 2000, Commerce PA had
total  assets of $1.505  billion,  total  deposits  of $1.411  billion and total
stockholders' equity of $82.8 million.
     Commerce PA provides  retail and  commercial  banking  services  through 36
retail branch offices in Philadelphia,  Bucks,


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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,  Commerce North,  Commerce
Central,  and Commerce  Delaware.  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, 2000, Commerce Shore had total assets
of $1.175  billion,  total  deposits of $1.099  billion and total  stockholders'
equity of $73.7 million.

     Commerce Shore provides retail and commercial  banking  services through 25
retail  branch  offices in Ocean and  Monmouth  Counties,  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,  Commerce  North,  Commerce
Central, and Commerce Delaware. 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, 2000, Commerce North had total
assets  of  $1.064  billion,   total  deposits  of  $850.0  million,  and  total
stockholders' equity of $60.0 million.

     Commerce North provides retail and commercial  banking  services through 16
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,  Commerce  Shore,  Commerce
Central, and Commerce Delaware. Commerce North does not offer trust services.

Commerce Central
     Effective January 15, 1999, the Company acquired Prestige  Financial Corp.,
and PFC's wholly-owned state-chartered bank subsidiary, Prestige State Bank, was
subsequently re-chartered as a national bank and renamed Commerce Central.

     Commerce  Central was  organized as a  state-chartered  bank and  commenced
operations in 1990. As of December 31, 2000,  Commerce  Central had total assets
of $433.5  million,  total deposits of $394.0 million,  and total  stockholders'
equity of $31.2 million.

     Commerce Central provides retail and commercial banking services through 15
retail  branch  offices in Hunterdon,  Middlesex,  Morris,  Somerset,  and Union
Counties, New Jersey. Commerce Central's deposits are insured by the FDIC.

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

Commerce Delaware

     In  1998,  the  Company  received  regulatory  approvals  to open  Commerce
Delaware.  Commerce  Delaware  began  operations on December 18, 1999,  with the
opening of its first branch office.

     As of  December  31,  2000,  Commerce  Delaware  had total  assets of $72.1
million, total deposits of $67.0 million, and total stockholders' equity of $6.0
million.

     Commerce Delaware generally provides the same retail and commercial banking
services and products as Commerce NJ,  Commerce  PA,  Commerce  Shore,  Commerce
North, and Commerce Central.  Commerce Delaware offers trust services similar to
those offered by Commerce NJ and Commerce PA.

     Commerce Delaware  provides retail and commercial  banking services through
five retail branch offices in New Castle County,  Delaware.  Commerce Delaware's
deposits are insured by the FDIC.

Commerce National Insurance
     Commerce National Insurance operates as a regional insurance brokerage firm
concentrating  on commercial  property,  casualty and surety as well as personal
lines.  In  addition,  Commerce  National  Insurance  offers a line of  employee
benefit  programs


                                                                              89
<PAGE>

including both group as well as individual medical, life,  disability,  pension,
and risk management services. Commerce National Insurance currently operates out
of 16 locations in New Jersey and three locations in Delaware. Commerce National
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  subsidiary of the Company
engaging in certain securities activities,  including trading, underwriting, and
advisory   services.   CCMI's  principal  place  of  business  is  Philadelphia,
Pennsylvania,  with branch  locations in Cherry Hill and South  Plainfield,  New
Jersey, Burlingame, California, and Fort Lauderdale, Florida.

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.
Commerce  Mortgage  Acceptance  Corp., a Delaware  Corporation is a wholly-owned
subsidiary of Commerce NJ utilized in the securitization of certain  residential
mortgage loans. 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. Central Asset Management, a Delaware corporation,
is a wholly-owned  subsidiary of Commerce  Central which  purchases,  holds, and
sells investments of Commerce Central.  Delaware Asset Management,  a New Jersey
corporation, is a wholly-owned subsidiary of Commerce Delaware, which purchases,
holds, and sells investments of Commerce Delaware.

     As part of the Commerce  Network,  the Company has an equity  investment in
Commerce Bank/Harrisburg, Camp Hill, Pennsylvania (15.08% 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,
Commerce  North's,  Commerce  Central's,  and Commerce  Delaware's legal lending
limit to a single borrower  (approximately $47.6 million,  $13.6 million,  $12.0
million,  $9.6 million,  $5.2 million,  and $1.0  million,  respectively,  as of
December  31,  2000)  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,  Commerce  Shore's,  Commerce
North's,  Commerce Central's, and Commerce Delaware'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.


90
<PAGE>



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 Department 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."

     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
55 of the  Company's  Annual  Report to  Shareholders  for the fiscal year ended
December 31, 2000, which page of the Annual Report appears elsewhere herein.

Commerce NJ, Commerce PA, Commerce Shore, Commerce North, Commerce Central,
and Commerce Delaware
     Commerce NJ, Commerce PA, Commerce Shore,  Commerce  Central,  and Commerce
Delaware,  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, and 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,  Commerce North,
and Commerce  Central  would be permitted to operate  offices at any location in
New Jersey,  subject to prior regulatory  approval.  Under present  Pennsylvania
law,
                                                                              91
<PAGE>

Commerce  PA  would be  permitted  to  operate  offices  within  any  county  in
Pennsylvania,  subject to prior regulatory approval. Under present Delaware law,
Commerce  Delaware  would be  permitted  to operate  offices at any  location in
Delaware at which  deposits  are  received,  checks are paid,  or money is lent,
subject to prior regulatory approval.

     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.  For their  most  recent  examinations,  Commerce  NJ,  Commerce  PA,
Commerce  Shore,   Commerce  North,   and  Commerce   Central  each  received  a
"satisfactory" rating.

     Commerce NJ, Commerce PA, Commerce Shore, Commerce North, Commerce Central,
and  Commerce  Delaware  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,  Commerce North, Commerce Central, and
Commerce  Delaware  which  are  regulated  by these  agencies  include  personal
lending,  mortgage lending and reserve  requirements.  The operation of Commerce
NJ, Commerce PA, Commerce Shore,  Commerce North, Commerce Central, and Commerce
Delaware  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, Commerce North, Commerce Central,
and Commerce  Delaware 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.

     All  of  the  deposits  of  the  banking  subsidiaries  are  insured  up to
applicable limits by the FDIC and are subject to deposit insurance  assessments.
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 to the  statutory
minimum of $2,000 annually for "well capitalized" banks.

  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  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. Delaware has enacted a law opting in to interstate branching by
merger only.

     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.  Delaware law does not permit interstate
branching  either through the original  establishment of a branch in Delaware by
an  out-of-state  bank or  through  acquisition  of a branch in  Delaware  by an
out-of-state bank.


92
<PAGE>

Commerce National Insurance/ Commerce Capital Markets
     Commerce  National  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 Commerce NJ, engages in certain  permitted  securities  activities
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  National  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.

Recent Legislation
     On November  12, 1999 the  Gramm-Leach-Bliley  Act (the "Act")  became law,
repealing  the  1933  Glass-Steagall  Act's  separation  of the  commercial  and
investment  banking  industries.   The  Act  expands  the  range  of  nonbanking
activities  a bank  holding  company may engage in,  while  preserving  existing
authority for bank holding  companies to engage in  activities  that are closely
related  to  banking.  The new  legislation  creates a new  category  of holding
company called a "Financial Holding Company," a subset of bank holding companies
that  satisfy the  following  criteria:  (1) all of the  depository  institution
subsidiaries  must be well  capitalized  and well  managed;  and (2) the holding
company must have made an effective election with the Federal Reserve Board that
it elects to be a financial  holding  company to engage in activities that would
not have  been  permissible  before  the Act.  In order for the  election  to be
effective, all of the depository institution subsidiaries must have a CRA rating
of "satisfactory" or better as of its most recent  examination.  The Company has
not elected to be a financial  holding company.  Financial holding companies may
engage in any activity  that (i) is financial  in nature or  incidental  to such
financial activity or (ii) is complementary to a financial activity and does not
pose a substantial  risk to the safety and soundness of depository  institutions
or the financial system generally. The Act specifies certain activities that are
financial in nature.  These activities  include - acting as principal,  agent or
broker  for  insurance;  -  underwriting,  dealing  in or  making  a  market  in
securities; and - providing financial and investment advice. The Federal Reserve
Board and the Secretary of the Treasury have  authority to decide  whether other
activities  are also  financial in nature or incidental  to financial  activity,
taking into account changes in technology,  changes in the banking  marketplace,
competition for banking services and so on.

     These new financial activities authorized by the Act may also be engaged in
by a "financial subsidiary" of a national or state bank, except for insurance or
annuity  underwriting,  insurance  company  portfolio  investments,  real estate
investment and development,  and merchant banking,  which must be conducted in a
financial  holding  company.  In order for the new  financial  activities  to be
engaged in by a  financial  subsidiary  of a  national  or state  bank,  the Act
requires  each of the parent bank (and its  sister-bank  affiliates)  to be well
capitalized and well managed;  the aggregate  consolidated assets of all of that
bank's  financial  subsidiaries  may  not  exceed  the  lesser  of  45%  of  its
consolidated  total  assets  or $50  billion;  the  bank  must  have at  least a
satisfactory  CRA rating;  and, if that bank is one of the 100 largest  national
banks, it must meet certain financial rating or other comparable requirements.

     The Act  establishes  a system of  functional  regulation,  under which the
federal  banking  agencies  will  regulate the banking  activities  of financial
holding  companies and banks' financial  subsidiaries,  the U.S.  Securities and
Exchange  Commission  will  regulate  their  securities   activities  and  state
insurance  regulators  will regulate their  insurance  activities.  The Act also
provides new protections against the transfer and use by financial  institutions
of consumers' nonpublic, personal information.

     Except for the  increase  in  competitive  pressures  faced by all  banking
organizations that is a likely consequence of the Act, the Company believes that
the legislation and implementing regulations are likely to have a more immediate
impact on large  regional  and  national  institutions  than on  community-based
institutions engaged principally in traditional banking activities.  Because the
legislation  permits bank holding  companies to engage in activities  previously
prohibited  altogether or severely restricted because of the risks they posed to
the  banking  system,   implementing  regulations  impose  strict  and  detailed
prudential  safeguards on affiliations among banking and nonbanking companies in
a holding company organization.

     The  foregoing  discussion is qualified in its entirety by reference to the
statutory  provisions  of the Act and the  implementing  regulations  which  are
adopted by various government  agencies pursuant to the Act. The exact impact of
the Act on the Company and its subsidiaries, if any, cannot be predicted at this
time.

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,  Commerce
North,  Commerce Central,  and Commerce Delaware 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.


                                                                              93
<PAGE>

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 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, Commerce
Shore,  Commerce  North,  Commerce  Central,  and  Commerce  Delaware  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
Central,  Commerce  Delaware,   Commerce  Capital  Trust  1,  Commerce  National
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.

     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. 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.

     As of December 31, 2000,  all of the  approximately  890,000  shares of the
Company's common stock held by the ESOP were allocated to participant accounts.

















94
<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 27, 2001                    Chairman of the Board and President

                                   By /s/ DOUGLAS J. PAULS
                                      ---------------------------------------
                                                Douglas J. Pauls
                                      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.
<TABLE>
<CAPTION>
          Signature                            Title                              Date
<S>                               <C>                                           <C>
 /s/   VERNON W. HILL, II         Chairman of the Board and President             March 27, 2001
-----------------------------     (Principal Executive Officer)
       Vernon W. Hill, II

 /s/  C. EDWARD JORDAN JR.        Executive Vice President and Director           March 27, 2001
-----------------------------
      C. Edward Jordan Jr.

 /s/  ROBERT C. BECK              Secretary and Director                          March 27, 2001
-----------------------------
      Robert C. Beck

 /s/  DAVID BAIRD, IV             Director                                        March 27, 2001
-----------------------------
      David Baird, IV

 /s/  JACK R BERSHAD              Director                                        March 27, 2001
-----------------------------
      Jack R Bershad

 /s/  JOSEPH BUCKELEW             Director                                        March 27, 2001
-----------------------------
      Joseph Buckelew

 /s/  MORTON N. KERR              Director                                        March 27, 2001
-----------------------------
      Morton N. Kerr

 /s/  STEVEN M. LEWIS             Director                                        March 27, 2001
-----------------------------
      Steven M. Lewis

 /s/  DANIEL J. RAGONE            Director                                        March 27, 2001
-----------------------------
      Daniel J. Ragone

 /s/ WILLIAM A. SCHWARTZ JR.      Director                                        March 27, 2001
-----------------------------
     William A. Schwartz Jr.

 /s/ JOSEPH T. TARQUINI JR.       Director                                        March 27, 2001
-----------------------------
     Joseph T. Tarquini Jr.

 /s/ FRANK C. VIDEON SR.          Director                                        March 27, 2001
-----------------------------
     Frank C. Videon Sr.
</TABLE>

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