----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

----

**FORM      10-K**

| [X]                                                                           | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
|-------------------------------------------------------------------------------|-------------------------------------------------------------------------|
| **SECURITIES                EXCHANGE ACT OF 1934**                            |
| **For                the fiscal year ended December 31,                2005** |

**OR**

| [                  ]                                                                         | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE** |
|--------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------|
| **SECURITIES                EXCHANGE ACT OF 1934**                                                     |
| **For                the transition period from ________________ to                ________________.** |

| New                Jersey                                        | 22-2433468                                                 |
|------------------------------------------------------------------|------------------------------------------------------------|
| **(State                of other jurisdiction of incorporation** | **(I.R.S.                Employee Identification Number)** |
| **or                organization)**                         |                                                       |
| Commerce                Atrium                                   |                                                       |
| 1701                Route 70 East                                | 08034-5400                                                 |
| Cherry                Hill, New Jersey                           | **(Zip                Code)**                              |
| **(Address                of principal executive offices)**      |                                                       |

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

----

----

**APPLICABLE      ONLY TO CORPORATE ISSUERS:**

| Common                Stock $1.00 Par Value |   | 181,809,928                                                              |
|---------------------------------------------|--------|--------------------------------------------------------------------------|
| **Title                of Class**           |   | **No.                of Shares Outstanding as of                3/6/06** |

**DOCUMENTS      INCORPORATED BY REFERENCE**

----

**COMMERCE      BANCORP, INC.**

**FORM      10-K CROSS-REFERENCE INDEX**

|                                      |                                                                                                                                       | **Page** |
|-------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|----------|
| **Part                I**                 |
| Item                1.                    | Business                                                                                                                                   | 3        |
| Item                1A.                   | Risk                Factors                                                                                                                | 8        |
| Item                1B.                   | Unresolved                Staff Comments                                                                                                   | none     |
| Item                2.                    | Properties                                                                                                                                 | 9        |
| Item                3.                    | Legal                Proceedings                                                                                                           | 9        |
| Item                4.                    | Submission                of Matters to a Vote of Security Holders                                                                         | none     |
|                                      |                                                                                                                                       |     |
|                                      |                                                                                                                                       |     |
| **Part                II**                |
| Item                5.                    | Market                for Registrant's Common Equity, Related Stockholder Matters and Issuer                Purchases of Equity Securities | 10       |
| Item                6.                    | Selected                Financial Data                                                                                                     | 10       |
| Item                7.                    | Management's                Discussion and Analysis of Financial Condition and Results of Operations                                       | 12       |
| Item                7A.                   | Quantitative                and Qualitative Disclosures About Market Risk                                                                  | 26       |
| Item                8.                    | Financial                Statements and Supplementary Data                                                                                 | 30       |
| Item                9.                    | Changes                in and Disagreements with Accountants on Accounting and Financial                Disclosure                         | none     |
| Item                9A.                   | Controls                and Procedures                                                                                                     | 52       |
| Item                9B.                   | Other                Information                                                                                                           | 52       |
|                                      |                                                                                                                                       |     |
|                                      |                                                                                                                                       |     |
| **Part                III**               |
| Item                10.                   | Directors                and Executive Officers of the Registrant                                                                          | 52       |
| Item                11.                   | Executive                Compensation                                                                                                      | 52       |
| Item                12.                   | Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters               | 53       |
| Item                13.                   | Certain                Relationships and Related Transactions                                                                              | 53       |
| Item                14.                   | Principal                Accounting Fees and Services                                                                                      | 53       |
|                                      |                                                                                                                                       |     |
|                                      |                                                                                                                                       |     |
| **Part                IV**                |
| Item                15.                   | Exhibits                and Financial Statement Schedules                                                                                  | 53       |
|                                      |                                                                                                                                       |     |
| Signatures                                | 57                                                                                                                                         |
| Section                302 Certifications | 58                                                                                                                                         |
| Section                906 Certification  | 60                                                                                                                                         |

----

**PART      I**

**Item      1. Business**

**Forward-Looking      Statements**

**General**

**Stock      Split**

----

**Acquisitions**

**Dividends**

**The      Banks**

*Service      Areas*

*Retail      Banking Services and Products*

*Trust      Services*

*Commercial      Banking Services and Products*

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**Commerce      Insurance**

**Commerce      Capital Markets**

**Other      Activities**

**Competition**

**Supervision      and Regulation **

----

*The      Company*

*Commerce      N.A. and Commerce North*

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*Commerce      Insurance/Commerce Capital Markets*

*Gramm-Leach-Bliley      Act*

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**National      Monetary Policy**

**Employees**

**Available      Information**

**Item      1A. Risk Factors**

----

*The      Company plans to continue its rapid growth and there are risks associated with      such growth.*

*If      the Company does not adjust to changes in the financial services industry,      its      financial performance may suffer.*

*Changes      in interest rates could reduce the Company’s income and cash      flows.*

*The      Company operates in a highly regulated environment and may be adversely affected      by changes in laws and regulations.*

**Item      2. Properties**

**Item      3. Legal Proceedings **

----

**Part      II**

**Item      5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities**

**Dividend      Policy**

**Item      6. Selected Financial Data**

----

|                                                                       |   |                                       |
|----------------------------------------------------------------------------|--------|--------------------------------------------|
|                                                                       |   | **Year                Ended December 31,** |
| *(dollars                in thousands, except per share data)*             |   | **2005**                                   |   |   | 2004 |   |   | 2003 |   |   | 2002 |   |   | 2001 |   |
| **Income                Statement Data:**                                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Net interest income                            | **$**  | **1,153,582**                              |   | **$** | 1,017,785 |   | **$** | 755,866 |   | $ | 572,755 |   | $ | 401,326 |   |
|                   Provision for credit losses                    |   | **19,150**                                 |   |   | 39,238 |   |   | 31,850 |   |   | 33,150 |   |   | 26,384 |   |
|                   Noninterest income                             |   | **442,794**                                |   |   | 375,071 |   |   | 332,478 |   |   | 257,466 |   |   | 196,805 |   |
|                   Noninterest expense                            |   | **1,146,380**                              |   |   | 938,778 |   |   | 763,392 |   |   | 579,168 |   |   | 420,036 |   |
|                   Income before income taxes                     |   | **430,846**                                |   |   | 414,840 |   |   | 293,102 |   |   | 217,903 |   |   | 151,711 |   |
|                   Net income                                     |   | **282,939**                                |   |   | 273,418 |   |   | 194,287 |   |   | 144,815 |   |   | 103,022 |   |
| **Balance                Sheet Data:**                                     |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Total assets                                   | **$**  | **38,466,037**                             |   | **$** | 30,501,645 |   | **$** | 22,712,180 |   | $ | 16,403,981 |   | $ | 11,363,703 |   |
|                   Loans (net)                                    |   | **12,524,988**                             |   |   | 9,318,991 |   |   | 7,328,519 |   |   | 5,731,856 |   |   | 4,516,431 |   |
|                   Securities available for sale                  |   | **9,518,821**                              |   |   | 8,044,150 |   |   | 10,650,655 |   |   | 7,806,779 |   |   | 4,152,704 |   |
|                   Securities held to maturity                    |   | **13,005,364**                             |   |   | 10,463,658 |   |   | 2,490,484 |   |   | 763,026 |   |   | 1,132,172 |   |
|                   Trading securities                             |   | **143,016**                                |   |   | 169,103 |   |   | 170,458 |   |   | 326,479 |   |   | 282,811 |   |
|                   Deposits                                       |   | **34,726,713**                             |   |   | 27,658,885 |   |   | 20,701,400 |   |   | 14,548,841 |   |   | 10,185,594 |   |
|                   Long-term debt                                 |   |                                       |   |   | 200,000 |   |   | 200,000 |   |   | 200,000 |   |   | 80,500 |   |
|                   Stockholders' equity                           |   | **2,309,173**                              |   |   | 1,665,705 |   |   | 1,277,288 |   |   | 918,010 |   |   | 636,570 |   |
| **Per                Share Data:**                                         |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Net income-basic                               | **$**  | **1.70**                                   |   | **$** | 1.74 |   | **$** | 1.36 |   | $ | 1.08 |   | $ | 0.80 |   |
|                   Net income-diluted                             |   | **1.61**                                   |   |   | 1.63 |   |   | 1.29 |   |   | 1.01 |   |   | 0.76 |   |
|                   Dividends declared                             |   | **0.45**                                   |   |   | 0.40 |   |   | 0.34 |   |   | 0.31 |   |   | 0.28 |   |
|                   Book value                                     |   | **12.92**                                  |   |   | 10.42 |   |   | 8.35 |   |   | 6.77 |   |   | 4.85 |   |
|                   Average shares outstanding:                    |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Basic                                                    |   | **165,974**                                |   |   | 156,625 |   |   | 142,169 |   |   | 133,590 |   |   | 129,331 |   |
|                   Diluted                                        |   | **179,135**                                |   |   | 172,603 |   |   | 156,507 |   |   | 149,389 |   |   | 136,204 |   |
| **Selected                Ratios:**                                        |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Performance**                                                            |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Return on average assets                       |   | **0.83**                                   | % |   | 1.03 | % |   | 0.99 | % |   | 1.05 | % |   | 1.08 | % |
|                   Return on average equity                       |   | **14.90**                                  |   |   | 18.78 |   |   | 18.81 |   |   | 18.50 |   |   | 17.64 |   |
|                   Net interest margin                            |   | **3.77**                                   |   |   | 4.28 |   |   | 4.36 |   |   | 4.69 |   |   | 4.76 |   |
| **Liquidity                and Capital**                                   |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Average loans to average deposits              |   | **35.01**                                  | % |   | 34.49 | % |   | 36.93 | % |   | 42.48 | % |   | 48.04 | % |
|                   Dividend payout-basic                          |   | **26.47**                                  |   |   | 22.99 |   |   | 25.00 |   |   | 28.70 |   |   | 35.00 |   |
|                   Stockholders' equity to total assets           |   | **6.00**                                   |   |   | 5.46 |   |   | 5.62 |   |   | 5.60 |   |   | 5.60 |   |
|                   Risk-based capital:                            |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1                                                      |   | **11.81**                                  |   |   | 12.30 |   |   | 12.66 |   |   | 11.47 |   |   | 10.81 |   |
| Total                                                                      |   | **12.58**                                  |   |   | 13.25 |   |   | 13.62 |   |   | 12.51 |   |   | 11.96 |   |
|                   Leverage ratio                                 |   | **6.04**                                   |   |   | 6.19 |   |   | 6.61 |   |   | 6.37 |   |   | 6.24 |   |
| **Asset                Quality**                                           |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                   Non-performing assets to total year-end assets |   | **0.09**                                   | % |   | 0.11 | % |   | 0.10 | % |   | 0.11 | % |   | 0.16 | % |
|                   Net charge-offs to average loans outstanding   |   | **0.15**                                   |   |   | 0.19 |   |   | 0.16 |   |   | 0.18 |   |   | 0.19 |   |
|                   Non-performing loans to total                  |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| year-end                loans                                              |   | **0.27**                                   |   |   | 0.35 |   |   | 0.29 |   |   | 0.24 |   |   | 0.37 |   |
|                   Allowance for credit losses to total           |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| end                of year loans                                           |   | **1.12**                                   |   |   | 1.43 |   |   | 1.51 |   |   | 1.56 |   |   | 1.46 |   |
|                   Allowance for credit losses to non-            |   |                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| performing                loans                                            |   | **406.85**                                 |   |   | 412.88 |   |   | 515.39 |   |   | 640.18 |   |   | 397.73 |   |

----

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

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

**Executive      Summary**

| ·   | Opened                47 new stores, including the Company’s first seven in the metropolitan                Washington, D.C. market. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Expanded                into Southeast Florida with the acquisition of Palm Beach County                Bank, a                privately held bank with seven stores in Palm Beach County,                Florida. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Redeemed                all $200 million of the Company’s Convertible Trust Preferred Securities,                leaving the Company with no long-term                debt. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Total                assets grew 26%. |
|--------------------|---------------------------------------|

| ·   | Total                deposits grew 26%, with annualized deposit growth per store of $20                million. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|
| ·  | Total                loans grew 34%, increasing the ratio of loans to deposits to                36%. |
|--------------|-------------------------------------------------------------------------------------------------------|

|                                             |   |    |        |    |   |    |   |
|---------------------------------------------|--------|--------------|-------------|--------------|--------|--------------|--------|
|                                        |   | **2005**     |        | 2004    |   | Change       |   |
| *(amounts                in billions)*      |   |         |        |         |   |         |   |
| Total                Assets                 |   | **$**        | **38.5**    |         | $      | 30.5         |   |   | 26 | % |
| Total                Loans (net)            |   |         | **12.5**    |         |   | 9.3          |   |   | 34 | % |
| Total                Investments            |   |         | **22.7**    |         |   | 18.7         |   |   | 21 | % |
| Total                Deposits               |   |         | **34.7**    |         |   | 27.7         |   |   | 26 | % |
|                                        |   |         |        |         |   |         |   |   |   |   |
| *(amounts                in millions)*      |   |         |        |         |   |         |   |   |   |   |
| Total                Revenues               |   | **$**        | **1,596.4** |         | $      | 1,392.9      |   |   | 15 | % |
| Net                Income                   |   |         | **282.9**   |         |   | 273.4        |   |   | 3 | % |
| Net                Income per Share Diluted |   |         | **1.61**    |         |   | 1.63         |   |   | (1 | )% |

|     |                                                                          |
|----------|-------------------------------------------------------------------------------|
|          |  Net                Interest Income (dollars                in millions) |
|     | Volume                Increase                                                | Rate                Change | Total                Increase |
| **2005** | **$272.5**                                                                    | **($135.4)** | **$137.1** | **13%** |
| 2004     | $285.0                                                                        | ($20.3) | $264.7 | 34% |

|                                |                                |                                     |
|-------------------------------------|-------------------------------------|------------------------------------------|
|                                     |  Growth                Targets |  Actual                2005 Results |
|  Total                Deposits |  24-26%                        |  26%                                |
| Comp                Store Deposits  | 18-20%                              | 19%                                      |
| Total                Revenue        | 23-25%                              | 15%                                      |
|                                |                                |                                     |
| Net                Income           | 23-25%                              | 3%                                       |
| Earnings                Per Share   | 18-20%                              | (1)%                                     |

----

**Critical      Accounting**
**Policy**

***Allowance      for credit losses***

**Segment      Reporting**

|                              |   | Net                Income |        |
|-----------------------------------|--------|---------------------------|-------------|
|                              |   | **2005**                  |        | 2004 |   | 2003 |   |
| Community                Banks    |   | **$**                     | **270,960** |   | $ | 267,466 |   | $ | 183,068 |   |
| Parent/Other                      |   |                      | **11,979**  |   |   | 5,952 |   |   | 11,219 |   |
| Consolidated                Total |   | **$**                     | **282,939** |   | $ | 273,418 |   | $ | 194,287 |   |

**Average      Balances and Net Interest Income**

**Net      Interest Margin and Net Interest Income**

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

| · | market                interest rate fluctuations; and |
|--------|-------------------------------------------------------|

| · | asset                quality. |
|--------|-------------------------------|

----

|                                                                                                                                                                                                                                       |   |                                  |   |                                 |     |                                 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|----------|--------------------------------------|--------|
|                                                                                                                                                                                                                                       |   |                                  |   | 2005                vs. 2004         |     | 2004                vs. 2003         |   |
|                                                                                                                                                                                                                                       |   |                                  |   | Increase                (Decrease)   |     | Increase                (Decrease)   |   |
|                                                                                                                                                                                                                                       |   |                                  |   | Due                to Changes in (1) |     | Due                to Changes in (1) |   |
|                                                                                                                                                                                                                                       |   | Volume                                |   | Rate                                 |     | Total                                |   | Volume |   | Rate |   | Total |   |
|                                                                                                                                                                                                                                       |   | (dollars                in thousands) |   |
| Interest                on Investments:                                                                                                                                                                                                    |   |                                  |   |
| Taxable                                                                                                                                                                                                                                    | $      | 214,427                               |   | $                                    | 15,041   |                                 | $      | 229,468 |   | $ | 216,828 |   | $ | 10,630 |   | $ | 227,458 |   |
| Tax-exempt                                                                                                                                                                                                                                 |   | 3,097                                 |   |                                 | (4,961   | )                                    |   | (1,864 | ) |   | 8,015 |   |   | (2,772 | ) |   | 5,243 |   |
| Trading                                                                                                                                                                                                                                    |   | (2,281                                | )      |                                 | 684      |                                 |   | (1,597 | ) |   | (1,225 | ) |   | 180 |   |   | (1,045 | ) |
| Federal                funds                sold                                                                                                                                                                                           |   | 766                                   |   |                                 | 1,603    |                                 |   | 2,369 |   |   | 633 |   |   | 15 |   |   | 648 |   |
| Interest                on loans:                                                                                                                                                                                                          |   |                                  |   |                                 |     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercialmortgages                                                                                                                                                                                                                        |   | 46,497                                |   |                                 | 10,798   |                                 |   | 57,295 |   |   | 41,216 |   |   | (4,115 | ) |   | 37,101 |   |
| Commercial                                                                                                                                                                                                                                 |   | 40,999                                |   |                                 | 24,592   |                                 |   | 65,591 |   |   | 22,840 |   |   | (206 | ) |   | 22,634 |   |
| Consumer                                                                                                                                                                                                                                   |   | 60,702                                |   |                                 | 9,156    |                                 |   | 69,858 |   |   | 39,258 |   |   | (9,545 | ) |   | 29,713 |   |
| Tax-exempt                                                                                                                                                                                                                                 |   | 7,871                                 |   |                                 | (759     | )                                    |   | 7,112 |   |   | 5,163 |   |   | (1,507 | ) |   | 3,656 |   |
| Total                interest income                                                                                                                                                                                                       |   | 372,078                               |   |                                 | 56,154   |                                 |   | 428,232 |   |   | 332,728 |   |   | (7,320 | ) |   | 325,408 |   |
| Interest                expense:                                                                                                                                                                                                           |   |                                  |   |                                 |     |                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                                                                                                                                                                                                    |   | 36,098                                |   |                                 | 40,641   |                                 |   | 76,739 |   |   | 15,174 |   |   | 3,910 |   |   | 19,084 |   |
| Interest                bearingdemand                                                                                                                                                                                                      |   | 48,777                                |   |                                 | 108,643  |                                 |   | 157,420 |   |   | 29,354 |   |   | 15,188 |   |   | 44,542 |   |
| Time                deposits                                                                                                                                                                                                               |   | 7,413                                 |   |                                      | 18,530   |                                      |        | 25,943 |  |  | 2,253 |   |   | (9,792 | ) |   | (7,539 | ) |
| Public                funds                                                                                                                                                                                                                |   | (1,590                                | )      |                                 | 14,620   |                                 |   | 13,030 |   |   | 404 |   |   | 828 |   |   | 1,232 |   |
| Other                                   borrowed     money                                                                                                                                              |   | 12,420                                |   |                                 | 9,305    |                                 |   | 21,725 |   |   | 598 |   |   | 2,824 |   |   | 3,422 |   |
| Long-term                                   debt                                                                                                                                                                            |   | (3,568                                | )      |                                 | (133     | )                                    |   | (3,701 | ) |   |   |   |   |   |   |   |   |   |
| Total                interest expense                                                                                                                                                                                                      |   | 99,550                                |   |                                 | 191,606  |                                 |   | 291,156 |   |   | 47,783 |   |   | 12,958 |   |   | 60,741 |   |
| Net                change                                                                                                                                                                                                                  | $      | 272,528                               |   |                                 | (135,452 | )                                    | $      | 137,076 |   | $ | 284,945 |   |   | ($20,278 | ) | $ | 264,667 |   |
|                                                                                                                                                                                                                                       |
| (1)                 Changes due to both volume and rate have been allocated to volume                or rate                changes in proportion to the absolute dollar                amounts of the change in                each. |

----

**Commerce      Bancorp, Inc. and Subsidiaries Average Balances and Net Interest      Income**

|                                                                                                                                                                                                                                                                                                                                                           |   |           |   |           |      | Year                Ended December 31, |   |           |   |           |       |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|--------|----------------|-----------|----------------------------------------|--------|----------------|--------|----------------|------------|
|                                                                                                                                                                                                                                                                                                                                                           |   | 2005           |   | 2004           |      | 2003                                   |   |
| (dollars                in thousands)Earning                Assets                                                                                                                                                                                                                                                                                             |   | AverageBalance |   |  Interest |      | AverageRate                            |   | AverageBalance |   |  Interest |       | AverageRate |   | AverageBalance |   |  Interest |   | AverageRate |   |
| Investment                securities                                                                                                                                                                                                                                                                                                                           |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |
| Taxable                                                                                                                                                                                                                                                                                                                                                        | $      | 19,637,178     |   | $              | 965,684   |                                   |   | 4.92           | %      | $              | 15,276,797 |   | $ | 736,216 |   |   | 4.82 | % | $ | 10,777,538 |   | $ | 508,758 |   |   | 4.72 | % |
| Tax-exempt                                                                                                                                                                                                                                                                                                                                                     |   | 424,303        |   |           | 17,214    |                                   |   | 4.06           |   |           | 347,979    |   |   | 19,078 |   |   | 5.48 |   |   | 201,775 |   |   | 13,835 |   |   | 6.86 |   |
| Trading                                                                                                                                                                                                                                                                                                                                                        |   | 127,634        |   |           | 6,995     |                                   |   | 5.48           |   |           | 169,242    |   |   | 8,592 |   |   | 5.08 |   |   | 193,376 |   |   | 9,637 |   |   | 4.98 |   |
| Total                investment securities                                                                                                                                                                                                                                                                                                                     |   | 20,189,115     |   |           | 989,893   |                                   |   | 4.90           |   |           | 15,794,018 |   |   | 763,886 |   |   | 4.84 |   |   | 11,172,689 |   |   | 532,230 |   |   | 4.76 |   |
| Federal                funds sold                                                                                                                                                                                                                                                                                                                              |   | 98,265         |   |           | 3,272     |                                   |   | 3.33           |   |           | 75,269     |   |   | 903 |   |   | 1.20 |   |   | 22,530 |   |   | 255 |   |   | 1.13 |   |
| Loans                                                                                                                                                                                                                                                                                                                                                          |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                mortgages                                                                                                                                                                                                                                                                                                                            |   | 3,808,107      |   |           | 247,038   |                                   |   | 6.49           |   |           | 3,091,350  |   |   | 189,743 |   |   | 6.14 |   |   | 2,419,855 |   |   | 152,642 |   |   | 6.31 |   |
| Commercial                                                                                                                                                                                                                                                                                                                                                     |   | 2,639,491      |   |           | 176,007   |                                   |   | 6.67           |   |           | 2,024,648  |   |   | 110,416 |   |   | 5.45 |   |   | 1,605,845 |   |   | 87,782 |   |   | 5.47 |   |
| Consumer                                                                                                                                                                                                                                                                                                                                                       |   | 3,911,672      |   |           | 236,709   |                                   |   | 6.05           |   |           | 2,908,561  |   |   | 166,851 |   |   | 5.74 |   |   | 2,224,197 |   |   | 137,138 |   |   | 6.17 |   |
| Tax-exempt                                                                                                                                                                                                                                                                                                                                                     |   | 451,151        |   |           | 31,998    |                                   |   | 7.09           |   |           | 340,172    |   |   | 24,886 |   |   | 7.32 |   |   | 269,592 |   |   | 21,230 |   |   | 7.87 |   |
| Total                loans                                                                                                                                                                                                                                                                                                                                     |   | 10,810,421     |   |           | 691,752   |                                   |   | 6.40           |   |           | 8,364,731  |   |   | 491,896 |   |   | 5.88 |   |   | 6,519,489 |   |   | 398,792 |   |   | 6.12 |   |
| Total                earning assets                                                                                                                                                                                                                                                                                                                            | $      | 31,097,801     |   | $              | 1,684,917 |                                   |   | 5.42           | %      | $              | 24,234,018 |   | $ | 1,256,685 |   |   | 5.19 | % | $ | 17,714,708 |   | $ | 931,277 |   |   | 5.26 | % |
| Sources                of Funds                                                                                                                                                                                                                                                                                                                                |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities                                                                                                                                                                                                                                                                                                                    |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                                                                                                                                                                                                                                                                                                                        | $      | 7,698,370      |   | $              | 123,419   |                                   |   | 1.60           | %      | $              | 5,446,713  |   | $ | 46,680 |   |   | 0.86 | % | $ | 3,676,147 |   | $ | 27,596 |   |   | 0.75 | % |
| Interest-bearing                demand                                                                                                                                                                                                                                                                                                                         |   | 12,474,260     |   |           | 252,673   |                                   |   | 2.03           |   |           | 10,066,187 |   |   | 95,253 |   |   | 0.95 |   |   | 6,964,158 |   |   | 50,711 |   |   | 0.73 |   |
| Time                deposits                                                                                                                                                                                                                                                                                                                                   |   | 2,736,142      |   |           | 72,125    |                                   |   | 2.64           |   |           | 2,454,910  |   |   | 46,182 |   |   | 1.88 |   |   | 2,335,124 |   |   | 53,721 |   |   | 2.30 |   |
| Public                funds                                                                                                                                                                                                                                                                                                                                    |   | 828,860        |   |           | 26,656    |                                   |   | 3.22           |   |           | 878,310    |   |   | 13,626 |   |   | 1.55 |   |   | 852,319 |   |   | 12,394 |   |   | 1.45 |   |
| Total                deposits                                                                                                                                                                                                                                                                                                                                  |   | 23,737,632     |   |           | 474,873   |                                   |   | 2.00           |   |           | 18,846,120 |   |   | 201,741 |   |   | 1.07 |   |   | 13,827,748 |   |   | 144,422 |   |   | 1.04 |   |
|                                                                                                                                                                                                                                                                                                                                                           |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                borrowed money                                                                                                                                                                                                                                                                                                                            |   | 826,400        |   |           | 28,410    |                                   |   | 3.44           |   |           | 465,137    |   |   | 6,685 |   |   | 1.44 |   |   | 423,538 |   |   | 3,263 |   |   | 0.77 |   |
| Long-term                debt                                                                                                                                                                                                                                                                                                                                  |   | 140,274        |   |           | 8,379     |                                   |   | 5.97           |   |           | 200,000    |   |   | 12,080 |   |   | 6.04 |   |   | 200,000 |   |   | 12,080 |   |   | 6.04 |   |
| Total                deposits and interest-bearing                liabilities                                                                                                                                                                                                                                                                                  |   | 24,704,306     |   |           | 511,662   |                                   |   | 2.07           |   |           | 19,511,257 |   |   | 220,506 |   |   | 1.13 |   |   | 14,451,286 |   |   | 159,765 |   |   | 1.11 |   |
| Noninterest-bearing                funds (net)                                                                                                                                                                                                                                                                                                                 |   | 6,393,495      |   |           |      |                                   |   |           |   |           | 4,722,761  |   |   |   |   |   |   |   |   | 3,263,422 |   |   |   |   |   |   |   |
| Total                sources to fund earning                assets                                                                                                                                                                                                                                                                                             | $      | 31,097,801     |   |           | 511,662   |                                   |   | 1.65           |   | $              | 24,234,018 |   |   | 220,506 |   |   | 0.91 |   | $ | 17,714,708 |   |   | 159,765 |   |   | 0.90 |   |
| Net                interest income andmargin                tax-equivalent                                                                                                                                                                                                                                                                                     |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| basis                                                                                                                                                                                                                                                                                                                                                          |   |           |   | $              | 1,173,255 |                                   |   | 3.77           |   |           |       |   | $ | 1,036,179 |   |   | 4.28 |   |   |   |   | $ | 771,512 |   |   | 4.36 |   |
| Tax-exempt                adjustment                                                                                                                                                                                                                                                                                                                           |   |           |   |           | 19,673    |                                   |   |           |   |           |       |   |   | 18,394 |   |   |   |   |   |   |   |   | 15,646 |   |   |   |   |
| Net                interest income and margin                                                                                                                                                                                                                                                                                                                  |   |           |   | $              | 1,153,582 |                                   |   | 3.71           | %      |           |       |   | $ | 1,017,785 |   |   | 4.20 | % |   |   |   | $ | 755,866 |   |   | 4.27 | % |
| Other                Balances                                                                                                                                                                                                                                                                                                                                  |   |           |   |           |      |                                   |   |           |   |           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and due from banks                                                                                                                                                                                                                                                                                                                         | $      | 1,257,799      |   |           |      |                                   |   |           |   | $              | 1,134,991  |   |   |   |   |   |   |   | $ | 922,188 |   |   |   |   |   |   |   |
| Other                assets                                                                                                                                                                                                                                                                                                                                    |   | 1,792,339      |   |           |      |                                   |   |           |   |           | 1,376,006  |   |   |   |   |   |   |   |   | 1,053,283 |   |   |   |   |   |   |   |
| Total                assets                                                                                                                                                                                                                                                                                                                                    |   | 34,005,732     |   |           |      |                                   |   |           |   |           | 26,618,555 |   |   |   |   |   |   |   |   | 19,590,319 |   |   |   |   |   |   |   |
| Demand                deposits (noninterest-bearing)                                                                                                                                                                                                                                                                                                           |   | 7,143,552      |   |           |      |                                   |   |           |   |           | 5,408,094  |   |   |   |   |   |   |   |   | 3,826,885 |   |   |   |   |   |   |   |
| Other                liabilities                                                                                                                                                                                                                                                                                                                               |   | 258,886        |   |           |      |                                   |   |           |   |           | 243,284    |   |   |   |   |   |   |   |   | 279,203 |   |   |   |   |   |   |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                                            |   | 1,898,989      |   |           |      |                                   |   |           |   |           | 1,455,920  |   |   |   |   |   |   |   |   | 1,032,945 |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                           |
| Notes    —Weighted                average yields on tax-exempt obligations have been computed on a                tax-equivalent basis assuming a federal tax rate of 35%.        —Non-accrual                  loans have been included in the average loan                  balance. |

----

**Noninterest      Income**

|                                   |   |     |        |   |   |
|----------------------------------------|--------|----------|-------------|--------|--------|
|                                   |   | **2005** |        | 2004   |   |
| Other                Operating Income: |   |     |        |   |   |
| Insurance                              |   | **$**    | **76,216**  |   | $      | 72,479 |   |
| Capital                Markets         |   |     | **25,390**  |   |   | 28,053 |   |
| Loan                Brokerage Fees     |   |     | **15,757**  |   |   | 13,189 |   |
| Other                                  |   |     | **56,769**  |   |   | 40,585 |   |
|  Total                Other       |   | **$**    | **174,132** |   | $      | 154,306 |   |

**Noninterest      Expenses**

|                                                    |   |     |        |   |   |
|---------------------------------------------------------|--------|----------|-------------|--------|--------|
|                                                    |   | **2005** |        | 2004   |   |
| Other                Noninterest Expenses:              |   |     |        |   |   |
| Business                Development Costs               |   | **$**    | **38,301**  |   | $      | 29,516 |   |
| Bank-Card                Related Service Charges        |   |     | **47,337**  |   |   | 35,728 |   |
| Professional                Services/Insurance          |   |     | **38,723**  |   |   | 40,515 |   |
| Provisions                for Non-Credit-Related Losses |   |     | **28,449**  |   |   | 22,243 |   |
| Other                                                   |   |     | **81,985**  |   |   | 66,919 |   |
| Total                Other                              |   | **$**    | **234,795** |   | $      | 194,921 |   |

**Income      Taxes**

**Net      Income**

**Return      on Average Equity and Average Assets**

----

**Loan      Portfolio**

|                                    |   |                        |       |
|-----------------------------------------|--------|-----------------------------|------------|
|                                    |   | December                31, |       |
|                                    |   | 2005                        |       | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
| (dollars                in thousands)   |   |
| Commercial:                             |   |                        |       |   |   |   |   |   |   |   |   |
| Term                                    |   | $                           | 1,781,148  |   | $ | 1,283,476 |   | $ | 1,027,526 |   | $ | 842,869 |   | $ | 600,374 |   |
| Line                of credit           |   |                        | 1,517,347  |   |   | 1,168,542 |   |   | 959,158 |   |   | 683,640 |   |   | 556,977 |   |
| Demand                                  |   |                        |       |   |   |   |   |   | 1,077 |   |   | 317 |   |   | 440 |   |
|                                    |   |                        | 3,298,495  |   |   | 2,452,018 |   |   | 1,987,761 |   |   | 1,526,826 |   |   | 1,157,791 |   |
|                                    |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Owner-occupied                          |   |                        | 2,402,300  |   |   | 1,998,203 |   |   | 1,619,079 |   |   | 1,345,306 |   |   | 1,028,408 |   |
|                                    |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Consumer:                               |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mortgages                               |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1-4                family residential) |   |                        | 2,000,309  |   |   | 1,340,009 |   |   | 918,686 |   |   | 626,652 |   |   | 471,680 |   |
| Installment                             |   |                        | 211,332    |   |   | 132,646 |   |   | 138,437 |   |   | 140,493 |   |   | 161,647 |   |
| Home                equity              |   |                        | 2,353,581  |   |   | 1,799,841 |   |   | 1,405,795 |   |   | 1,139,589 |   |   | 872,974 |   |
| Credit                lines             |   |                        | 100,431    |   |   | 69,079 |   |   | 60,579 |   |   | 56,367 |   |   | 43,196 |   |
|                                    |   |                        | 4,665,653  |   |   | 3,341,575 |   |   | 2,523,497 |   |   | 1,963,101 |   |   | 1,549,497 |   |
|                                    |   |                        |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                real estate:  |
| Investor                developer       |   |                        | 2,001,674  |   |   | 1,455,891 |   |   | 1,167,672 |   |   | 885,276 |   |   | 799,799 |   |
| Construction                            |   |                        | 290,530    |   |   | 206,924 |   |   | 142,567 |   |   | 102,080 |   |   | 47,917 |   |
|                                    |   |                        | 2,292,204  |   |   | 1,662,815 |   |   | 1,310,239 |   |   | 987,356 |   |   | 847,716 |   |
| Total                loans              |   | $                           | 12,658,652 |   | $ | 9,454,611 |   | $ | 7,440,576 |   | $ | 5,822,589 |   | $ | 4,583,412 |   |

|                                    |   |                                   |      |
|-----------------------------------------|--------|----------------------------------------|-----------|
|                                    |   | December                31, 2005       |      |
|                                         |   | Due                in One Year or Less |      | Due                in One to Five Years |   | Due                in Over Five Years |   |  Total |   |
| *(dollars                in thousands)* |   |
| Commercial:                             |   |                                   |      |   |   |   |   |   |   |
| Term                                    |   | $                                      | 608,730   |   | $ | 948,371 |   | $ | 224,047 |   | $ | 1,781,148 |   |
| Line                of credit           |   |                                   | 1,354,108 |   |   | 163,239 |   |   |   |   |   | 1,517,347 |   |
|                                    |   |                                   | 1,962,838 |   |   | 1,111,610 |   |   | 224,047 |   |   | 3,298,495 |   |
|                                    |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| Owner-occupied                          |   |                                   | 380,938   |   |   | 1,188,374 |   |   | 832,988 |   |   | 2,402,300 |   |
|                                    |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| Consumer:                               |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| Mortgages                               |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| (1-4                family residential) |   |                                   | 22,263    |   |   | 201,245 |   |   | 1,776,801 |   |   | 2,000,309 |   |
| Installment                             |   |                                   | 54,242    |   |   | 78,901 |   |   | 78,189 |   |   | 211,332 |   |
| Home                equity              |   |                                   | 173,913   |   |   | 617,980 |   |   | 1,561,688 |   |   | 2,353,581 |   |
| Credit                lines             |   |                                   | 35,792    |   |   | 64,639 |   |   |   |   |   | 100,431 |   |
|                                    |   |                                   | 286,210   |   |   | 962,765 |   |   | 3,416,678 |   |   | 4,665,653 |   |
| Commercial                real estate:  |
| Investor                developer       |   |                                   | 448,954   |   |   | 1,106,878 |   |   | 445,842 |   |   | 2,001,674 |   |
| Construction                            |   |                                   | 182,564   |   |   | 107,259 |   |   | 707 |   |   | 290,530 |   |
|                                    |   |                                   | 631,518   |   |   | 1,214,137 |   |   | 446,549 |   |   | 2,292,204 |   |
| Total                loans              |   | $                                      | 3,261,504 |   | $ | 4,476,886 |   | $ | 4,920,262 |   | $ | 12,658,652 |   |
| Interest                rates:          |   |                                   |      |   |   |   |   |   |   |   |   |   |   |
| Predetermined                           |   | $                                      | 878,311   |   | $ | 3,131,488 |   | $ | 3,371,096 |   | $ | 7,380,895 |   |
| Floating                                |   |                                   | 2,383,193 |   |   | 1,345,398 |   |   | 1,549,166 |   |   | 5,277,757 |   |
| Total                loans              |   | $                                      | 3,261,504 |   | $ | 4,476,886 |   | $ | 4,920,262 |   | $ | 12,658,652 |   |

----

**Non-Performing      Loans and Assets**

|                                                                                                   |   |                                   |   |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------|
|                                                                                                   |   | Year                Ended December 31, |   |
|                                                                                                   |   | 2005                                   |   | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
| (dollars                in thousands)                                                                  |   |                                   |   |   |   |   |   |   |   |   |   |
| Non-accrual                loans (1):                                                                  |   |                                   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                             |   | $                                      | 16,712 |   | $ | 17,874 |   | $ | 10,972 |   | $ | 6,829 |   | $ | 9,104 |   |
| Consumer                                                                                               |   |                                   | 8,834  |   |   | 10,138 |   |   | 9,242 |   |   | 6,326 |   |   | 4,390 |   |
| Real                estate                                                                             |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                                                                           |   |                                   | 1,763  |   |   |   |   |   | 138 |   |   | 131 |   |   | 1,590 |   |
| Mortgage                                                                                               |   |                                   | 4,329  |   |   | 1,317 |   |   | 1,389 |   |   | 882 |   |   | 1,749 |   |
| Total                non-accrual loans                                                                 |   |                                   | 31,638 |   |   | 29,329 |   |   | 21,741 |   |   | 14,168 |   |   | 16,833 |   |
| Restructured                loans (1):                                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                             |   |                                   | 3,133  |   |   | 3,518 |   |   | 1 |   |   | 5 |   |   | 8 |   |
| Total                non-performingloans                                                               |   |                                   | 34,771 |   |   | 32,847 |   |   | 21,742 |   |   | 14,173 |   |   | 16,841 |   |
| Other                real estate                                                                       |   |                                   | 279    |   |   | 626 |   |   | 1,831 |   |   | 3,589 |   |   | 1,549 |   |
| Total                non-performingassets(1):                                                          |   | $                                      | 35,050 |   | $ | 33,473 |   | $ | 23,573 |   | $ | 17,762 |   | $ | 18,390 |   |
| Non-performing                assets                as a percent of                total assets        |   |                                   | 0.09   | % |   | 0.11 | % |   | 0.10 | % |   | 0.11 | % |   | 0.16 | % |
| Loans                past due 90 days                or more and stillaccruing                interest |   | $                                      | 248    |   | $ | 602 |   | $ | 538 |   | $ | 620 |   | $ | 519 |   |

| (1) | Interest                income of approximately $2,760,000, $2,906,000, $1,908,000, $1,352,000,                and $2,092,000 would have been recorded in 2005, 2004, 2003, 2002,                and                2001, respectively, on non-performing loans in accordance with their                original terms. Actual interest recorded on these loans amounted                to                $809,000 in 2005, $1,070,000 in 2004, $418,000 in 2003, $275,000                in 2002,                and $237,000 in 2001. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Allowance      for Credit Losses**

----

|                                                                                                      |   |                                   |    |
|-----------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                      |   | Year                Ended December 31, |    |
|                                                                                                      |   | 2005                                   |    | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
| *(dollars                in thousands)*                                                                   |   |                                   |    |   |   |   |   |   |   |   |   |
| Balance                at beginningof                period                                               |   | $                                      | 135,620 |   | $ | 112,057 |   | $ | 90,733 |   | $ | 66,981 |   | $ | 48,680 |   |
| Provisions                charged tooperating                expenses                                     |   |                                   | 19,150  |   |   | 39,238 |   |   | 31,850 |   |   | 33,150 |   |   | 26,384 |   |
|                                                                                                      |   |                                   | 154,770 |   |   | 151,295 |   |   | 122,583 |   |   | 100,131 |   |   | 75,064 |   |
| Recoveries                of loanspreviously                charged-off:                                  |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |                                   | 2,546   |   |   | 1,000 |   |   | 669 |   |   | 815 |   |   | 552 |   |
| Consumer                                                                                                  |   |                                   | 2,566   |   |   | 1,123 |   |   | 584 |   |   | 339 |   |   | 288 |   |
| Commercial                real estate                                                                     |   |                                   | 80      |   |   | 52 |   |   | 11 |   |   | 176 |   |   | 134 |   |
| Total                recoveries                                                                           |   |                                   | 5,192   |   |   | 2,175 |   |   | 1,264 |   |   | 1,330 |   |   | 974 |   |
| Loans                charged-off:                                                                         |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                                                                                |   |                                   | (13,944 | ) |   | (9,416 | ) |   | (5,601 | ) |   | (7,181 | ) |   | (5,862 | ) |
| Consumer                                                                                                  |   |                                   | (5,912  | ) |   | (6,733 | ) |   | (5,950 | ) |   | (3,514 | ) |   | (2,784 | ) |
| Commercial                real estate                                                                     |   |                                   | (1,136  | ) |   | (1,701 | ) |   | (239 | ) |   | (33 | ) |   | (411 | ) |
| Total                charged-off                                                                          |   |                                   | (20,992 | ) |   | (17,850 | ) |   | (11,790 | ) |   | (10,728 | ) |   | (9,057 | ) |
| Net                charge-offs                                                                            |   |                                   | (15,800 | ) |   | (15,675 | ) |   | (10,526 | ) |   | (9,398 | ) |   | (8,083 | ) |
| Allowance                for credit losses acquired bank                                                  |   |                                   | 2,494   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at end of period                                                                   |   | $                                      | 141,464 |   | $ | 135,620 |   | $ | 112,057 |   | $ | 90,733 |   | $ | 66,981 |   |
| Net                charge-offs as a percentage                of averageloans                outstanding  |   |                                   | 0.15    | % |   | 0.19 | % |   | 0.16 | % |   | 0.18 | % |   | 0.19 | % |
| Allowance                for credit losses as                a percentage ofyear-end                loans |   |                                   | 1.12    | % |   | 1.43 | % |   | 1.51 | % |   | 1.56 | % |   | 1.46 | % |
| Components:                                                                                               |   |                                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                for loan and lease losses                                                        |   | $                                      | 133,664 |   | $ | 135,620 |   | $ | 112,057 |   | $ | 90,733 |   | $ | 66,981 |   |
| Allowance                for unfunded credit commitments (1)                                              |   |                                   | 7,800   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                allowance for credit losses                                                          |   | $                                      | 141,464 |   | $ | 135,620 |   | $ | 112,057 |   | $ | 90,733 |   | $ | 66,981 |   |

| (1)   | During                2005, the allowance for unfunded credit commitments was reclassified                from                the allowance for loan and lease losses to other                liabilities. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Allocation      of the Allowance for Loan and Lease Losses**

|                                      | Allowance                  for Loan and Lease Losses at December 31, |
|-------------------------------------------|----------------------------------------------------------------------|
|                                      | 2005(1)                                                              |   | 2004 |   | 2003 |   | 2002 |   | 2001 |   |
|                                      |  Amount                                                         | %                  GrossLoans |   |  Amount | %                  GrossLoans |   |  Amount | %                  GrossLoans |   |  Amount | %                  GrossLoans |   |  Amount | %                  GrossLoans |   |
| *(dollars                  in thousands)* |                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                                | $                                                                    | 55,372 | 26 | % | $ | 47,230 | 26 | % | $ | 50,400 | 27 | % | $ | 33,708 | 26 | % | $ | 24,110 | 25 | % |
| Owner-occupied                            |                                                                 | 18,255 | 19 |   |   | 29,488 | 21 |   |   | 26,862 | 22 |   |   | 24,539 | 23 |   |   | 18,060 | 22 |   |
| Consumer                                  |                                                                 | 36,868 | 37 |   |   | 38,100 | 35 |   |   | 13,082 | 34 |   |   | 14,497 | 34 |   |   | 9,915 | 34 |   |
| Commercial                  real estate   |                                                                 |  23,169 |  18 |   |   |  20,802 |  18 |   |   |  21,713 |  17 |   |   |  17,989 |  17 |   |   |  14,896 |  19 |   |
|                                      | $                                                                    | 133,664 | 100 | % | $ | 135,620 | 100 | % | $ | 112,057 | 100 | % | $ | 90,733 | 100 | % | $ | 66,981 | 100 | % |

| (1)   | During                2005, the allowance for unfunded credit commitments of $7.8 million                was                reclassified from the allowance for loan and lease losses to other                liabilities. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Investment      Securities**

|                                                                                 |   |                        |       |
|--------------------------------------------------------------------------------------|--------|-----------------------------|------------|
|                                                                                 |   | December                31, |       |
|                                                                                 |   | 2005                        |       | 2004 |   | 2003 |   |
| *(dollars                in thousands)*                                              |   |
| U.S.                Government agency and                mortgage-backed obligations |   | $                           | 9,422,478  |   | $ | 7,902,816 |   | $ | 10,511,545 |   |
| Obligations                of state and political                subdivisions        |   |                        | 59,127     |   |   | 87,910 |   |   | 30,927 |   |
| Equity                securities                                                     |   |                        | 22,772     |   |   | 23,303 |   |   | 16,588 |   |
| Other                                                                                |   |                        | 14,444     |   |   | 30,121 |   |   | 91,595 |   |
| Securities                available for                sale                          |   | $                           | 9,518,821  |   | $ | 8,044,150 |   | $ | 10,650,655 |   |
| U.S.                Government agency and                mortgage-backed obligations |   | $                           | 12,415,587 |   | $ | 9,967,041 |   | $ | 2,193,577 |   |
| Obligations                of state and political                subdivisions        |   |                        | 490,257    |   |   | 398,963 |   |   | 227,199 |   |
| Other                                                                                |   |                        | 99,520     |   |   | 97,654 |   |   | 69,708 |   |
| Securities                held tomaturity                                            |   | $                           | 13,005,364 |   | $ | 10,463,658 |   | $ | 2,490,484 |   |

----

|                                                                                 |   |                             |    |
|--------------------------------------------------------------------------------------|--------|----------------------------------|---------|
|                                                                                 |   | December                31, 2005 |    |
|                                                                                 |   | Due                Under 1 Year  |    | Due                1-5 Years |   | Due                5-10 Years |   | Due                Over 10 Years |   | Total |   |
|                                                                                 |   | Amount                           |    | Yield |   | Amount |   | Yield |   | Amount |   | Yield |   | Amount |   | Yield |   | Amount |   | Yield |   |
| *(dollars                in thousands)*                                              |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                available for sale:                                        |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency and mortgage-backed                obligations |   | $                                | 87,367  |   |   | 3.12 | % |   |   |   |   |   |   | $ | 466,186 |   |   | 5.35 | % | $ | 8,868,925 |   |   | 5.10 | % | $ | 9,422,478 |   |   | 5.09 | % |
| Obligations                of state and political                subdivisions        |   |                             | 4,121   |   |   | 6.78 |   | $ | 914 |   |   | 5.91 | % |   | 748 |   |   | 5.50 |   |   | 53,344 |   |   | 6.85 |   |   | 59,127 |   |   | 6.81 |   |
| Other                securities                                                      |   |                             | 55      |   |   | 1.00 |   |   | 1,273 |   |   | 4.66 |   |   |   |   |   |   |   |   | 13,116 |   |   | 10.38 |   |   | 14,444 |   |   | 9.84 |   |
|                                                                                 |   | $                                | 91,543  |   |   | 3.28 | % | $ | 2,187 |   |   | 5.54 | % | $ | 466,934 |   |   | 5.35 | % | $ | 8,935,385 |   |   | 5.11 | % | $ | 9,496,049 |   |   | 5.11 | % |
| Securities                held to maturity:                                          |   |                             |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency and mortgage-backed                obligations |   |                             |    |   |   |   |   | $ | 436,542 |   |   | 3.90 | % | $ | 775,601 |   |   | 5.38 | % | $ | 11,203,444 |   |   | 4.92 | % | $ | 12,415,587 |   |   | 4.92 | % |
| Obligations                of state and political                subdivisions        |   | $                                | 367,951 |   |   | 4.31 | % |   | 4,946 |   |   | 6.35 |   |   | 8,369 |   |   | 5.41 |   |   | 108,991 |   |   | 6.18 |   |   | 490,257 |   |   | 4.76 |   |
| Other                securities                                                      |   |                             | 99,520  |   |   | 3.83 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 99,520 |   |   | 3.83 |   |
|                                                                                 |   | $                                | 467,471 |   |   | 4.20 | % | $ | 441,488 |   |   | 3.93 | % | $ | 783,970 |   |   | 5.38 | % | $ | 11,312,435 |   |   | 4.93 | % | $ | 13,005,364 |   |   | 4.90 | % |

**Deposits**

|             |   |                              |   |
|------------------|--------|-----------------------------------|--------|
|             |   |  December                31, |   |
|             |   |  2005                        |   |  2004 |   |
|  Consumer   |   | $                                 | 14,990 |   | $ | 12,227 |   |
|  Commercial |   |                              | 12,380 |   |   | 9,138 |   |
|  Government |   |                              | 6,500  |   |   | 5,292 |   |
|  Total      |   | $                                 | 33,870 |   | $ | 26,657 |   |

----

|                                                                              |   |    |       |    |   |    |   |
|-----------------------------------------------------------------------------------|--------|---------|------------|---------|--------|---------|--------|
|                                                                              |   | 2005    |       | 2004    |   | 2003    |   |
|                                                                              |   | Average |       | Average |   | Average |   | Average |   | Average |   | Average |   |
|                                                                              |   | Balance |       | Rate    |   | Balance |   | Rate |   | Balance |   | Rate |   |
| (dollars                in thousands)                                             |   |    |       |    |   |    |   |   |   |   |   |   |   |
| Demand                deposits:                                                   |   |    |       |    |   |    |   |   |   |   |   |   |   |
| Noninterest-bearing                                                               |   | $       | 7,143,552  |    |   |    |   | $ | 5,408,094 |   |   |   |   | $ | 3,826,885 |   |   |   |   |
| Interest-bearing                (money market and N.O.W.                accounts) |   |    | 12,474,260 |    |   | 2.03    | %      |   | 10,066,187 |   |   | 0.95 | % |   | 6,964,158 |   |   | 0.73 | % |
| Savings                deposits                                                   |   |    | 7,698,370  |    |   | 1.60    |   |   | 5,446,713 |   |   | 0.86 |   |   | 3,676,147 |   |   | 0.75 |   |
| Time                deposits/public funds                                         |   |    | 3,565,002  |    |   | 2.77    |   |   | 3,333,220 |   |   | 1.79 |   |   | 3,187,443 |   |   | 2.07 |   |
| Total                deposits                                                     |   | $       | 30,881,184 |    |   |    |   | $ | 24,254,214 |   |   |   |   | $ | 17,654,633 |   |   |   |   |

|                                  |   |   |      |   |   |      |   |
|---------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|
| Maturity                              |   | 2005   |      | 2004   |   | 2003      |   |
| (dollars                in thousands) |   |   |      |   |   |      |   |
| 3                months or less       |   | $      | 1,088,353 |   | $      | 983,909   |   | $ | 1,076,960 |   |
| 3                to 6 months          |   |   | 198,166   |   |   | 182,573   |   |   | 357,810 |   |
| 6                to 12 months         |   |   | 272,156   |   |   | 206,326   |   |   | 322,204 |   |
| Over                12 months         |   |   | 538,952   |   |   | 457,489   |   |   | 253,477 |   |
| Total                                 |   | $      | 2,097,627 |   | $      | 1,830,297 |   | $ | 2,010,451 |   |

|                                  |   |   |      |
|---------------------------------------|--------|--------|-----------|
| Maturity                              |   |   |      |
| (dollars                in thousands) |   |   |      |
| 2006                                  |   | $      | 2,882,419 |   |
| 2007                                  |   |   | 705,821   |   |
| 2008                                  |   |   | 51,975    |   |
| 2009                                  |   |   | 165,152   |   |
| 2010                                  |   |   | 128,026   |   |
| Thereafter                            |   |   | 52        |   |
| Total                                 |   | $      | 3,933,445 |   |

**Interest      Rate Sensitivity and Liquidity**

|                                                                                       |   |                                          |     |
|--------------------------------------------------------------------------------------------|--------|-----------------------------------------------|----------|
|                                                                                       |   | Interest                Rate Sensitivity Gaps |     |
|                                                                                       |   | December                31, 2005              |     |
|                                                                                       |   |  1-90Days                                |     |  91-180Days |   |  181-365Days |   |  1-5Years |   |  Beyond5                Years |   |   Total |   |
| (dollars                in millions)                                                       |   |                                          |     |   |   |   |   |   |   |   |   |   |   |
| Rate                sensitive:                                                             |   |                                          |     |   |   |   |   |   |   |   |   |   |   |
| Interest-earningassets                                                                     |   |                                          |     |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                                      |   | $                                             | 5,579.9  |   | $ | 198.0 |   | $ | 345.6 |   | $ | 3,155.7 |   | $ | 3,374.9 |   | $ | 12,654.1 |   |
| Investment                securities                                                       |   |                                          | 2,434.9  |   |   | 938.1 |   |   | 1,757.2 |   |   | 9,635.2 |   |   | 7,901.8 |   |   | 22,667.2 |   |
| Federal                funds sold                                                          |   |                                          | 12.7     |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12.7 |   |
| Total                interest-earning                assets                                |   |                                          | 8,027.5  |   |   | 1,136.1 |   |   | 2,102.8 |   |   | 12,790.9 |   |   | 11,276.7 |   |   | 35,334.0 |   |
| Interest-bearingliabilities                                                                |   |                                          |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Transaction                accounts                                                        |   |                                          | 7,011.5  |   |   |   |   |   |   |   |   |   |   |   | 15,761.9 |   |   | 22,773.4 |   |
| Time                deposits                                                               |   |                                          | 1,660.2  |   |   | 457.9 |   |   | 755.6 |   |   | 1,059.7 |   |   |   |   |   | 3,933.4 |   |
| Other                borrowed money                                                        |   |                                          | 1,106.4  |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,106.4 |   |
| Total                interest-bearingliabilities                                           |   |                                          | 9,778.1  |   |   | 457.9 |   |   | 755.6 |   |   | 1,059.7 |   |   | 15,761.9 |   |   | 27,813.2 |   |
| Period                gap                                                                  |   |                                          | (1,750.6 | ) |   | 678.2 |   |   | 1,347.2 |   |   | 11,731.2 |   |   | (4,485.2 | ) | $ | 7,520.8 |   |
| Cumulative                gap                                                              |   | $                                             | (1,750.6 | ) | $ | (1,072.4 | ) | $ | 274.8 |   | $ | 12,006.0 |   | $ | 7,520.8 |   |   |   |   |
| Cumulative                gap as apercentage                of totalinterest-earningassets |   |                                          | (5.0     | )% |   | (3.0 | )% |   | 0.8 | % |   | 34.0 | % |   | 21.3 | % |   |   |   |

----

|                              |                               |
|-----------------------------------|------------------------------------|
|                              | Basis                Point Change: |
|                              | Plus                200            | Minus                100 |
| December                31, 2005: |                               |   |
| Twelve                Months      | (6.9)%                             | 3.2% |
| Twenty                Four Months | (3.9)%                             | 0.7% |
|                              |                               |   |
| December                31, 2004: |                               |   |
| Twelve                Months      | 4.3%                               | (4.2)% |
| Twenty                Four Months | 9.0%                               | (9.6)% |

|                                 |   |                                  |   |                           |   |
|--------------------------------------|--------|---------------------------------------|--------|--------------------------------|--------|
|                                 |   | Market                Value of Equity |   |  Per                Share |   |
|                                 |   |                                  |   |                           |   |
| Plus                200 basis point  |   | $                                     | 7,748  |                           | $      | 43.17 |   |
| Current                Rate          |   | $                                     | 7,715  |                           | $      | 42.98 |   |
| Minus                100 basis point |   | $                                     | 6,789  |                           | $      | 37.82 |   |

----

**Other      Borrowed Money**

**Long-Term      Debt**

**Stockholders’      Equity and Dividends**

**Capital      Resources**

|                                      |   |                              |   |                                                          |   |
|-------------------------------------------|--------|-----------------------------------|--------|---------------------------------------------------------------|--------|
|                                      |   |  December                31, |   | Minimum                Regulatory                Requirements |   |
|                                      |   | 2005                              |   | 2004                                                          |   | 2005 |   | 2004 |   |
| Risk                based capital ratios: |   |                              |   |                                                          |   |   |   |
| Tier                1                     |   |                              | 11.81  | %                                                             |   | 12.30 | % |   | 4.00 | % |   | 4.00 | % |
| Total                capital              |   |                              | 12.58  |                                                          |   | 13.25 |   |   | 8.00 |   |   | 8.00 |   |
| Leverage                ratio             |   |                              | 6.04   |                                                          |   | 6.19 |   |   | 4.00 |   |   | 4.00 |   |

----

|                              |   |
|-----------------------------------|--------|
| Common                Share Data  |   |
|                              |   | Market                Prices |   | Dividends                Declared |   |
|                              |   | High |   | Low |   | Per                Share |   |
| 2005                Quarter Ended |   |   |   |   |   |   |   |
| December                31        |   | $ | 35.29 |   | $ | 28.08 |   | $ | 0.1200 |   |
| September                30       |   |   | 35.29 |   |   | 30.05 |   |   | 0.1100 |   |
| June                30            |   |   | 31.81 |   |   | 27.17 |   |   | 0.1100 |   |
| March                31           |   |   | 32.47 |   |   | 28.34 |   |   | 0.1100 |   |
|                              |   |   |   |   |   |   |   |   |   |   |
| 2004                Quarter Ended |   |   |   |   |   |   |   |   |   |   |
| December                31        |   | $ | 32.20 |   | $ | 28.16 |   | $ | 0.1100 |   |
| September                30       |   |   | 28.18 |   |   | 24.12 |   |   | 0.0950 |   |
| June                30            |   |   | 33.39 |   |   | 27.51 |   |   | 0.0950 |   |
| March                31           |   |   | 32.94 |   |   | 26.58 |   |   | 0.0950 |   |

**Off-Balance      Sheet Arrangements**

**Contractual      Obligations and Commitments**

|                                              |   |                                  |                                  |
|---------------------------------------------------|--------|---------------------------------------|---------------------------------------|
| Contractual                Obligations            |   | Payments                Due By Period |                                  |
|                                              |   |  One                Year or Less |                                  | One                to Three Years |   | Three                to Five Years |   | BeyondFive                Years |   |   Total |   |
| (dollars                in millions)              |   |                                  |                                  |   |   |   |   |   |   |   |   |
| Deposits                without a stated maturity |   | $                                     | 9,417.4                               |   |   |   |   |   |   |   | $ | 21,375.9 |   | $ | 30,793.3 |   |
| Time                deposits                      |   |                                  | 2,873.7                               |   | $ | 924.6 |   | $ | 135.1 |   |   |   |   |   | 3,933.4 |   |
| Other                borrowed money               |   |                                  | 1,106.4                               |   |   |   |   |   |   |   |   |   |   |   | 1,106.4 |   |
| Operating                leases                   |   |                                  | 51.2                                  |   |   | 101.1 |   |   | 102.1 |   |   | 519.4 |   |   | 773.8 |   |
| Total                                             |   | $                                     | 13,448.7                              |   | $ | 1,025.7 |   | $ | 237.2 |   | $ | 21,895.3 |   | $ | 36,606.9 |   |
|                                              |   |                                  |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                                  |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                                  |
| Commitments                                       |   | Expiration                by Period   |
|                                         |   |                                  | One                Year or Less  |   |   | One                to Three Years |   |   | Three                to Five Years |   |   | Beyond                Five Years |   |   | Total |   |
| (dollars                in millions)              |   |                                  |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Standby                letters of credit          |   | $                                     | 356.8                                 |   | $ | 274.4 |   | $ | 273.8 |   | $ | 9.1 |   | $ | 914.1 |   |
| Lines                of credit                    |   |                                  | 2,114.9                               |   |   | 294.9 |   |   | 237.5 |   |   | 62.1 |   |   | 2,709.4 |   |
| Commitments                to extend credit:      |   |                                  |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Construction                                      |   |                                  | 292.1                                 |   |   | 320.8 |   |   | 3.3 |   |   | 9.2 |   |   | 625.4 |   |
| Home                equity                        |   |                                  | 77.2                                  |   |   | 154.3 |   |   | 154.3 |   |   | 771.6 |   |   | 1,157.4 |   |
| Other                                             |   |                                  | 423.1                                 |   |   | 300.6 |   |   | 27.8 |   |   | 33.3 |   |   | 784.8 |   |
| Total                                             |   | $                                     | 3,264.1                               |   | $ | 1,345.0 |   | $ | 696.7 |   | $ | 885.3 |   | $ | 6,191.1 |   |
|                                              |   |                                  |                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Related      Parties**

** **

**Recent      Accounting Statements**

----

**Results      of Operations - 2004 versus 2003**

----

**Item      7A.** **Quantitative      and Qualitative Disclosures About Market Risk**

----

**Commerce      Bancorp, Inc. **

**Report      on Management’s Assessment of Internal Control Over Financial      Reporting**

|                              | /s/                Vernon W. Hill, II                            |
|-----------------------------------|------------------------------------------------------------------|
|                              |  Vernon                W. Hill, II                          |
|                              | President                and Chief Executive Officer             |
|                              | (Principal                Executive Officer)                     |
|                              |                                                             |
|                              |                                                             |
|                              | /s/                Douglas J. Pauls                              |
|                              |  Douglas                J. Pauls                            |
|                              | Senior                Vice President and Chief Financial Officer |
|  March 10,              2006 | (Principal                Financial and Accounting Officer)      |

----

**Report      of Ernst & Young LLP, Independent Registered Public Accounting Firm, on      Effectiveness of Internal Control Over Financial Reporting**

|   | Ernst                & Young LLP |
|--------|--------------------------------------|

----

**Report      of Ernst & Young LLP, Independent Registered Public Accounting Firm, on      Consolidated Financial Statements**

|   | Ernst                & Young LLP |
|--------|--------------------------------------|

----

**Item      8.**
**Financial      Statements and Supplementary Data**

**Consolidated      Balance Sheets**

|                                    |                                                                                                |                           |
|-----------------------------------------|-----------------------------------------------------------------------------------------------------|--------------------------------|
|                                    |                                                                                                | **December                31** |
|                                    | *(dollars                in thousands)*                                                             |                           | **2005** |   |   | 2004 |
| **Assets**                              | Cash                and due from banks                                                              | **$**                          | **1,284,064** |   | $ | 1,050,806 |
|                                    | Federal                funds sold                                                                   |                           | **12,700** |   |   |   |
|                                    | Cash                and cash equivalents                                                            |                           | **1,296,764** |   |   | 1,050,806 |
|                                    | Loans                held for sale                                                                  |                           | **30,091** |   |   | 44,072 |
|                                    | Trading                securities                                                                   |                           | **143,016** |   |   | 169,103 |
|                                    | Securities                available for sale                                                        |                           | **9,518,821** |   |   | 8,044,150 |
|                                    | Securities                held to maturity                                                          |                           | **13,005,364** |   |   | 10,463,658 |
|                                    | (market                value 2005 - $12,758,552; 2004 - $10,430,451)                                |                           |   |   |   |   |
|                                    | Loans                                                                                               |                           | **12,658,652** |   |   | 9,454,611 |
|                                    | Less                allowance for loan and lease losses                                             |                           | **133,664** |   |   | 135,620 |
|                                    |                                                                                                |                           | **12,524,988** |   |   | 9,318,991 |
|                                    | Bank                premises and equipment, net                                                     |                           | **1,378,786** |   |   | 1,059,519 |
|                                    | Goodwill                and other intangible assets                                                 |                           | **106,926** |   |   | 9,268 |
|                                    | Other                assets                                                                         |                           | **461,281** |   |   | 342,078 |
|                                    | Total                assets                                                                         | **$**                          | **38,466,037** |   | $ | 30,501,645 |
| **Liabilities**                         | Deposits:                                                                                           |                           |   |   |   |   |
|                                    | Demand:                                                                                             |                           |   |   |   |   |
|                                    | Noninterest-bearing                                                                                 | **$**                          | **8,019,878** |   | $ | 6,406,614 |
|                                    | Interest-bearing                                                                                    |                           | **13,286,678** |   |   | 11,604,066 |
|                                    | Savings                                                                                             |                           | **9,486,712** |   |   | 6,490,263 |
|                                    | Time                                                                                                |                           | **3,933,445** |   |   | 3,157,942 |
|                                    | Total                deposits                                                                       |                           | **34,726,713** |   |   | 27,658,885 |
|                                    |                                                                                                |                           |   |   |   |   |
|                                    | Other                borrowed money                                                                 |                           | **1,106,443** |   |   | 661,195 |
|                                    | Other                liabilities                                                                    |                           | **323,708** |   |   | 315,860 |
|                                    | Long-term                debt                                                                       |                           |   |   |   | 200,000 |
|                                    | Total                liabilities                                                                    |                           | **36,156,864** |   |   | 28,835,940 |
| **Stockholders'                Equity** | Common                stock, 179,498,717 shares issued (160,635,618 shares in                2004)  |                           | **179,499** |   |   | 160,636 |
|                                    | Capital                in excess of par value                                                       |                           | **1,450,843** |   |   | 951,476 |
|                                    | Retained                earnings                                                                    |                           | **750,710** |   |   | 543,978 |
|                                    | Accumulated                other comprehensive (loss) income                                        |                           | **(59,169)** |   |   | 20,953 |
|                                    |                                                                                                |                           | **2,321,883** |   |   | 1,677,043 |
|                                    | Less                treasury stock, at cost, 837,338 shares (795,610 shares in                2004) |                           | **12,710** |   |   | 11,338 |
|                                    | Total                stockholders' equity                                                           |                           | **2,309,173** |   |   | 1,665,705 |
|                                    | Total                liabilities and stockholders' equity                                           | **$**                          | **38,466,037** |   | $ | 30,501,645 |
|                                    | *See                accompanying notes.*                                                            |                           |   |   |   |   |

----

**Consolidated      Statements of Income**

|            |                                                                          | Year                Ended December 31, |
|-----------------|-------------------------------------------------------------------------------|----------------------------------------|
|            | *(dollars                in thousands, except per share amounts)*             |                                   | **2005** |   | 2004 |   | 2003 |
| **Interest**    | Interest                and fees on loans                                     | **$**                                  | **680,552** | $ | 483,186 | $ | 391,361 |
| **Income**      | Interest                on investment securities                              |                                   | **981,420** |   | 754,202 |   | 524,015 |
|            | Other                interest                                                 |                                   | **3,272** |   | 903 |   | 255 |
|            | Total                interest income                                          |                                   | **1,665,244** |   | 1,238,291 |   | 915,631 |
|            |                                                                          |                                   |   |   |   |   |   |
| **Interest**    | Interest                on deposits:                                          |                                   |   |   |   |   |   |
| **Expense**     | Demand                                                                        |                                   | **252,674** |   | 95,253 |   | 50,711 |
|            | Savings                                                                       |                                   | **123,419** |   | 46,680 |   | 27,596 |
|            | Time                                                                          |                                   | **98,780** |   | 59,808 |   | 66,115 |
|            | Total                interest on deposits                                     |                                   | **474,873** |   | 201,741 |   | 144,422 |
|            | Interest                on other borrowed money                               |                                   | **28,410** |   | 6,685 |   | 3,263 |
|            | Interest                on long-term debt                                     |                                   | **8,379** |   | 12,080 |   | 12,080 |
|            | Total                interest expense                                         |                                   | **511,662** |   | 220,506 |   | 159,765 |
|            |                                                                          |                                   |   |   |   |   |   |
|            | Net                interest income                                            |                                   | **1,153,582** |   | 1,017,785 |   | 755,866 |
|            | Provision                for credit losses                                    |                                   | **19,150** |   | 39,238 |   | 31,850 |
|            | Net                interest income after provision for credit losses          |                                   | **1,134,432** |   | 978,547 |   | 724,016 |
| **Noninterest** | Deposit                charges and service fees                               |                                   | **282,692** |   | 218,126 |   | 160,678 |
| **Income**      | Other                operating income                                         |                                   | **174,132** |   | 154,306 |   | 167,949 |
|            | Net                investment securities (losses) gains                       |                                   | **(14,030)** |   | 2,639 |   | 3,851 |
|            | Total                noninterest income                                       |                                   | **442,794** |   | 375,071 |   | 332,478 |
|            |                                                                          |                                   |   |   |   |   |   |
| **Noninterest** | Salaries                and benefits                                          |                                   | **526,428** |   | 431,144 |   | 354,954 |
| **Expense**     | Occupancy                                                                     |                                   | **165,077** |   | 121,210 |   | 95,926 |
|            | Furniture                and equipment                                        |                                   | **126,986** |   | 109,242 |   | 89,162 |
|            | Office                                                                        |                                   | **55,833** |   | 46,025 |   | 39,190 |
|            | Marketing                                                                     |                                   | **37,261** |   | 36,236 |   | 34,075 |
|            | Other                                                                         |                                   | **234,795** |   | 194,921 |   | 150,085 |
|            | Total                noninterest expense                                      |                                   | **1,146,380** |   | 938,778 |   | 763,392 |
|            | Income                before income taxes                                     |                                   | **430,846** |   | 414,840 |   | 293,102 |
|            | Provision                for federal and state income taxes                   |                                   | **147,907** |   | 141,422 |   | 98,815 |
|            | **Net                income**                                                 | **$**                                  | **282,939** | $ | 273,418 | $ | 194,287 |
|            |                                                                          |                                   |   |   |   |   |   |
|            | Net                income per common and common equivalent share:             |                                   |   |   |   |   |   |
|            | Basic                                                                         | **$**                                  | **1.70** | $ | 1.74 | $ | 1.36 |
|            | Diluted                                                                       | **$**                                  | **1.61** | $ | 1.63 | $ | 1.29 |
|            | Average                common and common equivalent shares  outstanding: |                                   |   |   |   |   |   |
|            | Basic                                                                         |                                   | **165,974** |   | 156,625 |   | 142,169 |
|            | Diluted                                                                       |                                   | **179,135** |   | 172,603 |   | 156,507 |
|            | Dividends                declared, common stock                               | **$**                                  | **0.45** | $ | 0.40 | $ | 0.34 |
|            | *See                accompanying notes.*                                      |                                   |   |   |   |   |   |

----

**Consolidated      Statements of Cash Flows**

|           |                                                                       |                                   |
|----------------|----------------------------------------------------------------------------|----------------------------------------|
|           |                                                                       | Year                Ended December 31, |
|           | *(dollars                in thousands)*                                    |                                   | **2005** |   |   | 2004 |   |   | 2003 |   |
| **Operating**  | Net                income                                                  | **$**                                  | **282,939** |   | $ | 273,418 |   | $ | 194,287 |   |
| **Activities** | Adjustments                to reconcile net income to net cash             |                                   |   |   |   |   |   |   |   |   |
|           | provided                by operating activities:                           |                                   |   |   |   |   |   |   |   |   |
|           | Provision                for credit losses                                 |                                   | **19,150** |   |   | 39,238 |   |   | 31,850 |   |
|           | Provision                for depreciation, amortization and accretion      |                                   | **163,502** |   |   | 133,535 |   |   | 132,432 |   |
|           | Loss                (gains) on sales of securities                         |                                   | **14,030** |   |   | (2,639 | ) |   | (3,851 | ) |
|           | Proceeds                from sales of loans held for sale                  |                                   | **1,001,884** |   |   | 750,854 |   |   | 1,554,440 |   |
|           | Originations                of loans held for sale                         |                                   | **(738,402** | **)** |   | (752,157 | ) |   | (1,500,289 | ) |
|           | Net                decrease in trading securities                          |                                   | **26,087** |   |   | 1,355 |   |   | 156,021 |   |
|           | Increase                in other assets                                    |                                   | **(78,898** | **)** |   | (58,429 | ) |   | (30,489 | ) |
|           | Increase                (decrease) in other liabilities                    |                                   | **32,666** |   |   | 82,851 |   |   | (55,229 | ) |
|           | Deferred                income tax (benefit) expense                       |                                   | **(17,612** | **)** |   | 16,005 |   |   | 15,417 |   |
|           | Net                cash provided by operating activities                   |                                   | **705,346** |   |   | 484,031 |   |   | 494,589 |   |
|           |                                                                       |                                   |   |   |   |   |   |   |   |   |
| **Investing**  | Proceeds                from the sales of securities available for sale    |                                   | **3,722,875** |   |   | 2,119,230 |   |   | 4,864,321 |   |
| **Activities** | Proceeds                from the sales of securities held to maturity      |                                   |   |   |   | 125,580 |   |   |   |   |
|           | Proceeds                from the maturity of securities available for sale |                                   | **2,732,109** |   |   | 3,876,918 |   |   | 4,828,747 |   |
|           | Proceeds                from the maturity of securities held to maturity   |                                   | **2,627,750** |   |   | 1,019,449 |   |   | 613,848 |   |
|           | Purchase                of securities available for sale                   |                                   | **(8,046,583** | **)** |   | (9,304,341 | ) |   | (12,777,850 | ) |
|           | Purchase                of securities held to maturity                     |                                   | **(5,191,021** | **)** |   | (3,203,025 | ) |   | (2,342,384 | ) |
|           | Net                increase in loans                                       |                                   | **(3,160,857** | **)** |   | (2,029,710 | ) |   | (1,628,513 | ) |
|           | Capital                expenditures                                        |                                   | **(424,476** | **)** |   | (339,956 | ) |   | (300,335 | ) |
|           | Cash                acquired in purchase acquisition                       |                                   | **5,664** |   |   |   |   |   |   |   |
|           | Net                cash used by investing activities                       |                                   | **(7,734,539** | **)** |   | (7,735,855 | ) |   | (6,742,166 | ) |
|           |                                                                       |                                   |   |   |   |   |   |   |   |   |
| **Financing**  | Net                increase in demand and savings deposits                 |                                   | **6,138,554** |   |   | 7,129,650 |   |   | 5,631,174 |   |
| **Activities** | Net                increase (decrease) in time deposits                    |                                   | **626,949** |   |   | (172,165 | ) |   | 521,385 |   |
|           | Net                increase (decrease) in other borrowed money             |                                   | **445,248** |   |   | 349,685 |   |   | (80,131 | ) |
|           | Dividends                paid                                              |                                   | **(72,363** | **)** |   | (59,205 | ) |   | (46,525 | ) |
|           | Issuance                of common stock                                    |                                   |   |   |   |   |   |   | 208,825 |   |
|           | Redemption                of long term debt                                |                                   | **(57,255** | **)** |   |   |   |   |   |   |
|           | Proceeds                from issuance of common stock under                |                                   |   |   |   |   |   |   |   |   |
|           | dividend                reinvestment and other stock plans                 |                                   | **194,022** |   |   | 146,057 |   |   | 116,908 |   |
|           | Other                                                                      |                                   | **(4** | **)** |   | (1,484 | ) |   | (5,401 | ) |
|           | Net                cash provided by financing activities                   |                                   | **7,275,151** |   |   | 7,392,538 |   |   | 6,346,235 |   |
|           |                                                                       |                                   |   |   |   |   |   |   |   |   |
|           | Increase                in cash and cash equivalents                       |                                   | **245,958** |   |   | 140,714 |   |   | 98,658 |   |
|           | Cash                and cash equivalents at beginning of year              |                                   | **1,050,806** |   |   | 910,092 |   |   | 811,434 |   |
|           | Cash                and cash equivalents at end of year                    | **$**                                  | **1,296,764** |   | $ | 1,050,806 |   | $ | 910,092 |   |
|           |                                                                       |                                   |   |   |   |   |   |   |   |   |
|           | Supplemental                disclosures of cash flow information:          |                                   |   |   |   |   |   |   |   |   |
|           | Cash                paid during the year for:                              |                                   |   |   |   |   |   |   |   |   |
|           | Interest                                                                   | **$**                                  | **506,574** |   | $ | 218,986 |   | $ | 161,637 |   |
|           | Income                taxes                                                |                                   | **151,757** |   |   | 127,538 |   |   | 62,569 |   |
|           | Other                noncash activities:                                   |                                   |   |   |   |   |   |   |   |   |
|           | Transfer                of loans to held for sale                          |                                   | **249,500** |   |   |   |   |   |   |   |
|           | Transfer                of securities to securities held to maturity       |                                   |   |   |   | 5,919,301 |   |   |   |   |
|           | Fair                value of non-cash net assets acquired:                 |                                   |   |   |   |   |   |   |   |   |
|           | Assets                acquired                                             |                                   | **380,191** |   |   |   |   |   |   |   |
|           | Liabilities                assumed                                         |                                   | **366,160** |   |   |   |   |   |   |   |
|           | *See                accompanying notes.*                                   |                                   |   |   |   |   |   |   |   |   |

----

**Consolidated      Statements of Changes in Stockholders’ Equity**

| Years                ended December 31, 2005, 2004 and 2003          |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |
|----------------------------------------------------------------------|--------|---------------------|-------------|---------------------------------------------------|--------|--------------------------------------|--------|-----------------------|-------------|-------------------------------------------------------------------|--------|-------------|--------|
|  *(in                thousands)*                                |   | **Common****Stock** |        | **Capital                in Excess of Par Value** |   | **Retained                Earnings** |   | **Treasury****Stock** |        | **Accumulated                Other Compre-hensive Income (Loss)** |   | **Total**   |   |
| **Balances                at December 31, 2002**                     |   | **$**               | **136,086** |                                              | **$**  | **470,752**                          |   | **$**                 | **199,604** |                                                              | **$**  | **(2,046**  | **)**  | **$** | **113,614** |   | **$** | **918,010** |   |
| Net                income                                            |   |                |        |                                              |   |                                 |   |                  | 194,287     |                                                              |   |        |   |   |   |   |   | 194,287 |   |
| Other                comprehensive loss, net of tax                  |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| Unrealized                loss on securities (pre-tax $146,701)      |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | (93,273 | ) |   | (93,273 | ) |
| Reclassification                adjustment (pre-tax $36,988)         |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | (24,043 | ) |   | (24,043 | ) |
| Other                comprehensive loss                              |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | (117,316 | ) |
| Total                comprehensive income                            |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | 76,971 |   |
| Cash                dividends                                        |   |                |        |                                              |   |                                 |   |                  | (46,525     | )                                                                 |   |        |   |   |   |   |   | (46,525 | ) |
| Shares                issued under dividend reinvestment and         |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| compensation                and benefit plans (7,564 shares)         |   |                | 7,564       |                                              |   | 109,344                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 116,908 |   |
| Common                stock issued (10,000 shares)                   |   |                | 10,000      |                                              |   | 198,825                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 208,825 |   |
| Acquisition                of insurance brokerage agency (88 shares) |   |                | 88          |                                              |   | 1,804                                |   |                  |        |                                                              |   |        |   |   |   |   |   | 1,892 |   |
| Other                                                                |   |                | 1           |                                              |   | 8,500                                |   |                  | (1          | )                                                                 |   | (7,293      | )      |   |   |   |   | 1,207 |   |
| **Balances                at December 31, 2003**                     |   | **$**               | **153,739** |                                              | **$**  | **789,225**                          |   | **$**                 | **347,365** |                                                              | **$**  | **(9,339**  | **)**  | **$** | **(3,702** | **)** | **$** | **1,277,288** |   |
| Net                income                                            |   |                |        |                                              |   |                                 |   |                  | 273,418     |                                                              |   |        |   |   |   |   |   | 273,418 |   |
| Other                comprehensive income, net of tax                |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| Unrealized                gain on securities (pre-tax $3,222)        |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | 1,465 |   |   | 1,465 |   |
| Reclassification                adjustment (pre-tax $35,677)         |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | 23,190 |   |   | 23,190 |   |
| Other                comprehensive income                            |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | 24,655 |   |
| Total                comprehensive income                            |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | 298,073 |   |
| Cash                dividends                                        |   |                |        |                                              |   |                                 |   |                  | (62,258     | )                                                                 |   |        |   |   |   |   |   | (62,258 | ) |
| Shares                issued under dividend reinvestment and         |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| compensation                and benefit plans (6,898 shares)         |   |                | 6,898       |                                              |   | 139,159                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 146,057 |   |
| Other                                                                |   |                | (1          | )                                                 |   | 23,092                               |   |                  | (14,547     | )                                                                 |   | (1,999      | )      |   |   |   |   | 6,545 |   |
| **Balances                at December 31, 2004**                     |   | **$**               | **160,636** |                                              | **$**  | **951,476**                          |   | **$**                 | **543,978** |                                                              | **$**  | **(11,338** | **)**  | **$** | **20,953** |   | **$** | **1,665,705** |   |
| Net                income                                            |   |                |        |                                              |   |                                 |   |                  | 282,939     |                                                              |   |        |   |   |   |   |   | 282,939 |   |
| Other                comprehensive loss, net of tax                  |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| Unrealized                loss on securities (pre-tax $136,027)      |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | (85,768 | ) |   | (85,768 | ) |
| Reclassification                adjustment (pre-tax $8,686)          |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   | 5,646 |   |   | 5,646 |   |
| Other                comprehensive loss                              |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | (80,122 | ) |
| Total                comprehensive income                            |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   | 202,817 |   |
| Cash                dividends                                        |   |                |        |                                              |   |                                 |   |                  | (76,203     | )                                                                 |   |        |   |   |   |   |   | (76,203 | ) |
| Shares                issued under dividend reinvestment and         |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| compensation                and benefit plans (7,933 shares)         |   |                | 7,933       |                                              |   | 185,144                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 193,077 |   |
| Shares                issued upon redemption of Convertible Trust    |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| Capital                Securities (7,576 shares)                     |   |                | 7,576       |                                              |   | 187,493                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 195,069 |   |
| Acquisition                of Palm                                   |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |
| Beach                County Bank (3,325 shares)                      |   |                | 3,325       |                                              |   | 109,309                              |   |                  |        |                                                              |   |        |   |   |   |   |   | 112,634 |   |
| Acquisition                of insurance brokerage agency (29 shares) |   |                | 29          |                                              |   | 797                                  |   |                  |        |                                                              |   |        |   |   |   |   |   | 826 |   |
| Other                                                                |   |                |        |                                              |   | 16,624                               |   |                  | (4          | )                                                                 |   | (1,372      | )      |   |   |   |   | 15,248 |   |
| **Balances                at December 31, 2005**                     |   | **$**               | **179,499** |                                              | **$**  | **1,450,843**                        |   | **$**                 | **750,710** |                                                              | **$**  | **(12,710** | **)**  | **$** | **(59,169** | **)** | **$** | **2,309,173** |   |
| *See                accompanying notes.*                             |   |                |        |                                              |   |                                 |   |                  |        |                                                              |   |        |   |   |   |   |   |   |   |

----

| **1.**                                                                                                                                                                                                                                                                                                                                                                                                             | **Significant****Accounting****Policies**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **Basis                of Presentation** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|
| The                consolidated financial statements include the accounts of Commerce                Bancorp, Inc. (the Company) and its consolidated subsidiaries. All                material intercompany transactions have been eliminated. Certain                amounts                from prior years have been reclassified to conform with the current                year                presentation. |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | The                Company is a multi-bank holding company headquartered in Cherry Hill,                New                Jersey, operating primarily in the metropolitan New York, metropolitan                Philadelphia, metropolitan Washington, D.C. and Southeast Florida                markets.                Through its subsidiaries, the Company provides retail and commercial                banking services, corporate trust services, insurance brokerage services,                and certain securities services.                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | The                preparation of financial statements in conformity with accounting                principles generally accepted in the United States requires management                to                make estimates and assumptions that affect the amounts reported in                the                financial statements and accompanying notes. Actual results could                differ                from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | **Stock                Split**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Per                share data and other appropriate share information for all periods                presented have been restated for the two-for-one stock split in the                form                of a 100% stock dividend effective March 7, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | **Business                Combinations**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Business                combinations are accounted for under the purchase method of accounting.                Under the purchase method, assets and liabilities of the business                acquired                are recorded at their estimated fair values as of the date of acquisition                with any excess of the cost of the acquisition over the fair value                of the                net tangible and intangible assets acquired recorded as goodwill.                Results                of operations of the acquired business are included in the income                statement from the date of acquisition.                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | **Cash                and Cash Equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Cash                and cash equivalents are defined as short-term investments, which                have an                original maturity of three months or less and are readily convertible                into                cash.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | **Investment                Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Investment                securities are classified as held to maturity when the Company has                the                intent and ability to hold those securities to maturity. Securities                held                to maturity are stated at cost and adjusted for accretion of discounts                and                amortization of premiums.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Those                securities that could be sold in response to changes in market interest                rates, prepayment risk, the Company's income tax position, the need                to                increase regulatory capital, or similar other factors are classified                as                available for sale. Available for sale securities are carried at                fair                value, with unrealized gains and losses, net of tax, reported as                a                component of stockholders' equity. The amortized cost of debt securities                in this category is adjusted for accretion of discounts and amortization                of premiums. Realized gains and losses are determined on the specific                identification method and are included in noninterest                income. |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | The                Company reviews the fair value of the investment portfolio and evaluates                individual securities for declines in fair value that may be other                than                temporary. If declines are deemed other than temporary, an impairment                loss                is recognized and the security is written down to its current fair                value.                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Commerce                Capital Markets, Inc. (CCMI) maintains a portfolio of trading account                securities, which are carried at market. Gains and losses, both realized                and unrealized, are included in other operating income. Trading gains                of                $2.1 million, $4.4 million, and $13.0 million were recorded in 2005,                2004,                and 2003, respectively, including an unrealized gain of $54,000 and                an                unrealized loss of $85,000 at December 31, 2005 and 2004, respectively.                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                               | **Loans**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                               | Loans                are stated at principal amounts outstanding, net of deferred loan                origination fees and costs. Interest income on loans is accrued and                credited to interest income monthly as earned. Loans held for sale                are                valued on an aggregate basis at the lower of cost or fair value.                Net                deferred loan origination fees and costs are amortized over the estimated                lives of the related loans as an adjustment to the                yield.                                                                                                                                                                                                                                                                                                            |

----

**Notes            to Consolidated Financial            Statements**

|   | Loans                are placed on a non-accrual status and cease accruing interest when                loan                payment performance is deemed unsatisfactory. However, all loans                past due                90 days are placed on non-accrual status, unless the loan is both                well                secured and in the process of collection.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **Allowance                for Credit Losses**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The                Company maintains an allowance for losses inherent in the loan and                lease                portfolio and an allowance for losses on unfunded credit commitments.                During 2005, the Company reclassified the allowance related to losses                on                unfunded credit commitments out of the allowance for loan and lease                losses                to other liabilities. Prior to 2005, the Company included the portion                of                the allowance related to unfunded credit commitments in its allowance                for                loan and lease losses. The allowance for credit losses is increased                by                provisions charged to expense and reduced by charge-offs net of                recoveries. The level of the allowance for loan and lease losses                is based                on an evaluation of individual large classified loans and nonaccrual                loans, estimated losses based on risk characteristics of loans in                the                portfolio and other qualitative factors. The level of the allowance                for                losses on unfunded credit commitments is based on a risk characteristic                methodology similar to that used in determining the allowance for                loan and                lease losses, taking into consideration the probability of funding                these                commitments. While the allowance for credit losses is maintained                at a                level considered to be adequate by management for estimated credit                losses,                determination of the allowance is inherently subjective, as it requires                estimates that may be susceptible to significant                change. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **Transfers                of Financial Assets**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The                Company accounts for the transfers of financial assets, including                sales of                loans, as sales when control over the asset has been surrendered.                Control                over transferred assets is deemed to be surrendered when (1) the                assets                have been isolated from the Company, (2) the transferee obtains the                right                (free of conditions that constrain it from taking advantage of that                right)                to pledge or exchange the transferred assets, and (3) the Company                does not                maintain effective control over the transferred assets through an                agreement to repurchase before their maturity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **Bank                Premises and Equipment**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Bank                premises and equipment are carried at cost less accumulated depreciation.                Depreciation and amortization are recorded on a straight-line                basis over the estimated useful lives of the assets for financial                reporting purposes, and accelerated methods for income tax purposes.                The                estimated useful lives range from 15 to 40 years for buildings, 3                to 5                years for furniture, fixtures and equipment and the shorter of the                lease                terms or the estimated useful lives of leasehold improvements. When                capitalizing costs for store construction, the Company includes the                costs                of purchasing the land, developing the site, constructing the building                (or                leasehold improvements if the property is leased), and furniture,                fixtures                and equipment necessary to equip the store. Depreciation charges                commence                the month in which the store opens. All other pre-opening and post-opening                costs related to stores are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **Other                Real Estate (ORE)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Real                estate acquired in satisfaction of a loan is reported in other assets                at                the lower of cost or fair value less disposition costs. Properties                acquired by foreclosure or deed in lieu of foreclosure are transferred                to                ORE and recorded at the lower of cost or fair value less disposition                costs                based on their appraised value at the date actually or constructively                received. Losses arising from the acquisition of such property are                charged                against the allowance for loan and lease losses. Subsequent adjustments                to                the carrying values of ORE properties are charged to operating expense.                Included in other noninterest expense is $851,000, $916,000, and                $357,000                related to ORE expenses for 2005, 2004, and 2003, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | **Other                Investments**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The                Company makes investments directly in low-income housing tax credit                (LIHTC) operating partnerships, private venture capital funds and                Small                Business Investment Companies (SBIC). At December 31, 2005 and 2004,                the                Company’s investment in these entities totaled $53.5 million and $46.8                million, respectively. The majority of these investments are accounted                for                under the equity method of                accounting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

**Notes            to Consolidated Financial            Statements**

|   | **Goodwill                and Other Intangible Assets**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Goodwill,                the excess of cost over fair value of net assets acquired, amounted                to                $96.9 million and $5.5 million at December 31, 2005 and 2004,                respectively. Goodwill is not amortized into net income but rather                is                tested at least annually for impairment. Other intangible assets,                which                include core deposit intangibles, totaled $10.0 million and $3.8                million                at December 31, 2005 and 2004, respectively. These amounts are amortized                over their estimated useful lives, generally 10-15 years, and also                continue to be subject to impairment testing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Amortization                expense of other intangible assets amounted to $614,000, $591,000,                and                $583,000 for 2005, 2004, and 2003, respectively. The estimated                amortization expense for the next five years is $1.2 million per                year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Advertising                Costs**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Advertising                costs are expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Income                Taxes**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | The                provision for income taxes is based on current taxable income. Deferred                income taxes are provided on temporary differences between amounts                reported for financial statement and tax purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Restriction                on Cash and Due From Banks**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The                Company's banking subsidiaries are required to maintain reserve balances                with the Federal Reserve Bank. The weighted average amount of the                reserve                balances for 2005 and 2004 were approximately $138.4 million and                $110.8                million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Derivative                Financial Instruments**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | As                part of CCMI’s broker-dealer activities, CCMI maintains a trading                securities portfolio for distribution to customers in order to meet                those                customers’ needs. Derivative instruments, primarily interest rate futures                and options, are used in order to reduce the exposure to interest                rate                risk relating to the trading portfolio. These contracts are carried                at                fair value with changes in fair value included in other operating                income                and recorded in the same period as changes in fair value of the trading                portfolio. As an accommodation to its loan customers, the Company                enters                into interest rate swap agreements. The Company minimizes its risk                by                matching these positions with a counterparty. These swaps are carried                at                fair value with changes in fair value included in noninterest                income.                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | **Recent                Accounting Statements**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In                November 2005, the Financial Accounting Standards Board (FASB) issued                Staff Position 115-1 and 124-1, “The Meaning of Other-Than-Temporary                Impairment and Its Application to Certain Investments” (FSP 115-1 and                124-1). FSP 115-1 and 124-1 provides additional guidance on when                an                investment in a debt or equity security should be considered impaired                and                when that impairment should be considered other-than-temporary and                recognized as a loss in earnings. Specifically, the guidance clarifies                that an investor should recognize an impairment loss no later than                when                the impairment is deemed other-than-temporary, even if a decision                to sell                has not been made. FSP 115-1 and 124-1 also requires certain disclosures                about unrealized losses that have not been recognized as                other-than-temporary impairments. FSP 115-1 and 124-1 is effective                for                reporting periods beginning after December 15, 2005. The Company                does not                believe the adoption of FSP 115-1 and 124-1 will have a material                impact on                its results of operations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | In                June 2005, the EITF reached a consensus on Issue 05-6, “Determining the                Amortization Period for Leasehold Improvements” (Issue 05-6). Issue 05-6                requires that leasehold improvements acquired in a business combination                or                purchased subsequent to the inception of the lease be amortized over                the                lesser of the useful life of the asset or the lease term that includes                reasonably assured lease renewals as determined on the date of the                acquisition of the leasehold improvement. The consensus should be                applied                prospectively to leasehold improvements that are purchased or acquired                in                reporting periods beginning after June 29, 2005. The adoption of                Issue                05-6 did not have a material impact on the                Company's results of operations.                                                                                                                                                                                                                                                                                                                                                                     |

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**Notes              to Consolidated Financial              Statements**

|   | In                May 2005, the FASB issued Statement No. 154, “Accounting Changes and Error                Corrections” (FAS 154). FAS 154 requires retrospective application for the                reporting of voluntary changes in accounting principles and changes                required by an accounting pronouncement when transition provisions                are not                specified. FAS 154 is effective for accounting changes and corrections                of                errors made in fiscal years beginning after December 15, 2005. The                Company                does not believe the adoption of FAS 154 will have a material impact                on                its results of operations.                                                                                                                                                                                                                                                                                       |
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | In                December 2004, the FASB issued Statement No. 123 (revised 2004),                “Share-Based Payment” (FAS 123R), which is a revision of FASB Statement                No. 123, “Accounting for Stock-Based Compensation” (FAS 123). FAS 123R                supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”                (APB 25), and amends FASB Statement No. 95, “Statement of Cash Flows” (FAS                95). FAS 123R requires all share-based payments to employees to be                recognized in the income statement based on their fair values and                no                longer allows pro forma disclosure as an alternative to reflecting                the                impact of share-based payments on net income and net income per                share. The implementation date of FAS 123R was subsequently delayed                to                fiscal years beginning after June 15, 2005. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The                Company will adopt FAS 123R on January 1, 2006 using the modified                prospective method, which recognizes compensation cost beginning                with the                effective date of adoption for all share-based payments granted after                the                effective date and all awards granted prior to the effective date,                but                that remain unvested on the effective date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Through                December 31, 2005, the Company accounted for share-based payments                to                employees using APB 25’s intrinsic value method and therefore did not                typically recognize compensation expense for employee stock options.                Accordingly, the adoption of FAS 123R will impact the Company’s financial                results. Had the Company adopted FAS 123R in prior periods, the impact                would have approximated the impact of FAS 123 as described in the                disclosure of pro forma net income and pro forma net income per share                below (in thousands, except per share                amounts):                                                                                                                                                                                                                                                                                                                    |

|                                                                             |   |                                       |        |
|----------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|
|                                                                             |   | **Year                Ended December 31,** |        |
|                                                                             |   | **2005**                                   |        | 2004 |   | 2003 |   |
|                                                                             |   |                                       |        |   |   |   |   |
| Reported                net income                                               |   | **$**                                      | **282,939** |   | $ | 273,418 |   | $ | 194,287 |   |
| Less:                Stock option compensation expense                           |   |                                       |        |   |   |   |   |   |   |   |
|                    determined under fair value method, net of tax |   |                                       | **(55,541** | **)** |   | (11,849 | ) |   | (10,048 | ) |
|                                                                             |   |                                       |        |   |   |   |   |   |   |   |
| Pro                forma net income, basic                                       |   |                                       | **227,398** |   |   | 261,569 |   |   | 184,239 |   |
|                                                                             |   |                                       |        |   |   |   |   |   |   |   |
| Add:                Interest expense on Convertible Trust                        |   |                                       |        |   |   |   |   |   |   |   |
|                     Capital Securities, net of tax           |   |                                       | **5,446**   |   |   | 7,852 |   |   | 7,852 |   |
|                                                                             |   |                                       |        |   |   |   |   |   |   |   |
| Pro                forma net income, diluted                                     |   | **$**                                      | **232,844** |   | $ | 269,421 |   | $ | 192,091 |   |
|                                                                             |   |                                       |        |   |   |   |   |   |   |   |
| Reported                net income per share:                                    |   |                                       |        |   |   |   |   |   |   |   |
| Basic                                                                            |   | **$**                                      | **1.70**    |   | $ | 1.74 |   | $ | 1.36 |   |
| Diluted                                                                          |   |                                       | **1.61**    |   |   | 1.63 |   |   | 1.29 |   |
|                                                                             |   |                                       |        |   |   |   |   |   |   |   |
| Pro                forma net income per share:                                   |   |                                       |        |   |   |   |   |   |   |   |
| Basic                                                                            |   | **$**                                      | **1.37**    |   | $ | 1.67 |   | $ | 1.30 |   |
| Diluted                                                                          |   |                                       | **1.30**    |   |   | 1.56 |   |   | 1.23 |   |

|   | On                December 8, 2005, the Company’s board of directors approved the                acceleration of vesting of all outstanding unvested stock options                awarded                prior to July 1, 2005 to employees and directors. This acceleration                was                effective as of December 16, 2005. As a result of the acceleration,                options to purchase approximately 10.6 million shares of common stock                became immediately exercisable. The effect of the acceleration,                approximately $41.0 million, net of tax, is reflected in the 2005                pro                forma amounts above. The purpose of the acceleration was to eliminate                future compensation expense that otherwise would have been recognized                in                the consolidated statement of operations with respect to these options                when FAS 123R is adopted in January 2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**Notes            to Consolidated Financial            Statements**

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | The                fair value of options granted in 2005, 2004, and 2003 was estimated                at the                date of grant using a Black-Scholes option pricing model with the                following weighted average assumptions: risk-free interest rates                of 3.00%                to 4.05%, dividend yields of 1.33% to 1.50%, volatility factors of                the                expected market price of the Company’s common stock of .255 to .304, and                weighted average expected lives of the options of 5.22 to 5.27                years.                                                                                                                                                                                                                                                                                                                                               |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | The                Black-Scholes option valuation model was developed for use in estimating                the fair value of traded options which have no vesting restrictions                and                are fully transferable. In addition, option valuation models require                the                input of highly subjective assumptions including the expected stock                price                volatility. Because the Company’s stock options have characteristics                significantly different from those of traded options, and because                changes                in the subjective input assumptions can materially affect the fair                value                estimate, in management’s opinion, the existing models do not necessarily                provide a reliable single measure of the fair value of its stock                options.                           |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **2.**       | **Mergers                and Acquisitions**                                                                                                                                                                                                                                                                                                                                                                                                                          | On                December 5, 2005, the Company completed the acquisition of Palm Beach                County Bank (PBCB), based in West Palm Beach, Florida. PBCB was a                privately held bank with approximately $370.0 million in assets and                seven                retail stores. The Company issued approximately 3.3 million shares                of                common stock in exchange for the outstanding PBCB shares. The purchase                price was approximately $110.0 million based on the value of common                stock                exchanged. In connection with the acquisition, the Company recorded                $90.9                million of goodwill and $6.0 million of core deposit intangible.                The core                deposit intangible is being amortized over ten years, the estimated                useful                life, on a straight-line basis. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|         | On                December 30, 2005, the Company entered into an agreement to acquire                eMoney                Advisors, Inc. (eMoney), a leading provider of web enabled wealth                and                financial planning solutions. The acquisition closed on February                1, 2006.                The Company issued approximately 900,000 shares of common stock in                exchange for the outstanding eMoney shares. |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **3. ** | **Investment ****Securities**                                                                                                                                                                                                                                                                                                                                                                                                                                   | A                summary of the amortized cost and market value of securities available                for                sale and securities held to maturity (in thousands) at December 31,                2005                and 2004 follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|                                                                                 |   |                        |           |
|--------------------------------------------------------------------------------------|--------|-----------------------------|----------------|
|                                                                                 |   | December                31, |           |
|                                                                                 |   | **2005**                    |           | 2004 |   |
|                                                                                 |   | **Amortized****Cost**       |           | **Gross****Unrealized****Gains** |   | **Gross****Unrealized                Losses** |   |  **Market****Value** |   |  AmortizedCost |   | GrossUnrealizedGains |   | GrossUnrealizedLosses |   |  Market                Value |   |
| U.S.                Government agency and                mortgage-backed obligations |   | **$**                       | **9,529,645**  |   | **$** | **5,779** |   | **$** | **(112,946** | **)** | **$** | **9,422,478** |   | $ | 7,884,113 |   | $ | 40,141 |   | $ | (21,438 | ) | $ | 7,902,816 |   |
| Obligations                of state andpolitical                subdivisions         |   |                        | **59,517**     |   |   | **41** |   |   | **(431** | **)** |   | **59,127** |   |   | 87,605 |   |   | 305 |   |   |   |   |   | 87,910 |   |
| Equity                securities                                                     |   |                        | **9,679**      |   |   | **13,093** |   |   |   |   |   | **22,772** |   |   | 10,129 |   |   | 13,174 |   |   |   |   |   | 23,303 |   |
| Other                                                                                |   |                        | **14,330**     |   |   | **116** |   |   | **(2** | **)** |   | **14,444** |   |   | 29,312 |   |   | 809 |   |   |   |   |   | 30,121 |   |
| Securities                available for                sale                          |   | **$**                       | **9,613,171**  |   | **$** | **19,029** |   | **$** | **(113,379** | **)** | **$** | **9,518,821** |   | $ | 8,011,159 |   | $ | 54,429 |   | $ | (21,438 | ) | $ | 8,044,150 |   |
| U.S.                Government agency and                mortgage-backed obligations |   | **$**                       | **12,415,587** |   | **$** | **5,191** |   | **$** | **(252,231** | **)** | **$** | **12,168,547** |   | $ | 9,967,041 |   | $ | 43,982 |   | $ | (81,028 | ) | $ | 9,929,995 |   |
| Obligations                of state andpolitical                subdivisions         |   |                        | **490,257**    |   |   | **1,216** |   |   | **(988** | **)** |   | **490,485** |   |   | 398,963 |   |   | 3,867 |   |   | (28 | ) |   | 402,802 |   |
| Other                                                                                |   |                        | **99,520**     |   |   |   |   |   |   |   |   | **99,520** |   |   | 97,654 |   |   |   |   |   |   |   |   | 97,654 |   |
| Securities                held to maturity                                           |   | **$**                       | **13,005,364** |   | **$** | **6,407** |   | **$** | **(253,219** | **)** | **$** | **12,758,552** |   | $ | 10,463,658 |   | $ | 47,849 |   | $ | (81,056 | ) | $ | 10,430,451 |   |

|   | The                Company’s investment portfolio consists primarily of U.S. Government                agency and mortgage-backed obligations. These securities have little,                if                any, credit risk since they are either backed by the full faith and                credit                of the U.S. Government, or are guaranteed by an agency of the U.S.                Government, or are AAA rated. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                         |

----

**Notes        to Consolidated Financial Statements**

|   | The amortized cost and estimated market                value                of investment securities (in thousands) at December 31, 2005, by                contractual maturity are shown below. Actual maturities will differ                from                contractual maturities because obligors have the right to repay                obligations without prepayment                penalties.  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   |                                  |      |                                |   |
|-------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|
|                                                  |   | **Available                for Sale** |      | **Held                to Maturity** |   |
|                                                  |   | **Amortized****Cost**                 |      | **Market                Value**     |   | **Amortized                Cost** |   | **Market                Value** |   |
| Due                in one year or less                |   | $                                     | 91,515    |                                | $      | 91,543 |   | $ | 467,471 |   | $ | 466,936 |   |
| Due                after one year through five years  |   |                                  | 2,185     |                                |   | 2,187 |   |   | 441,252 |   |   | 425,483 |   |
| Due                after five years through ten years |   |                                  | 470,587   |                                |   | 466,934 |   |   | 752,701 |   |   | 745,490 |   |
| Due                after ten years                    |   |                                  | 86,031    |                                |   | 85,296 |   |   | 138,992 |   |   | 139,169 |   |
| Mortgage-backed                securities             |   |                                  | 8,953,174 |                                |   | 8,850,089 |   |   | 11,204,948 |   |   | 10,981,474 |   |
| Equity                securities                      |   |                                  | 9,679     |                                |   | 22,772 |   |   |   |   |   |   |   |
|                                                  |   | $                                     | 9,613,171 |                                | $      | 9,518,821 |   | $ | 13,005,364 |   | $ | 12,758,552 |   |

|   | Proceeds                from sales of securities available for sale during 2005, 2004 and                2003                were $3.7 billion, $2.1 billion and $4.9 billion, respectively. Gross                gains of $12.5 million, $16.7 million and $32.6 million were realized                on                the sales in 2005, 2004, and 2003, respectively, and gross losses                of $26.6                million, $14.1 million and $28.8 million were realized in 2005, 2004                and                2003, respectively. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | At                December 31, 2005 and 2004, investment securities with a carrying                value of                $7.8 billion and $6.2 billion, respectively, were pledged to secure                deposits of public funds.                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The                unrealized losses and related fair value of investments with unrealized                losses less than 12 months and those with unrealized losses 12 months                or                longer (in thousands) as of December 31, 2005 are shown                below.                                                                                                                                                                                                                                                               |

|                                                                                  |   |                                   |      |                                 |   |                                |   |                                 |      |                                |   |
|---------------------------------------------------------------------------------------|--------|----------------------------------------|-----------|--------------------------------------|--------|-------------------------------------|--------|--------------------------------------|-----------|-------------------------------------|--------|
|                                                                                  |   | **Less                than 12 months** |      | **12                months or more** |   | **Totals**                          |   |
|                                                                                  |   |  **Fair                Value**    |      | **Unrealized                Losses** |   |  **Fair                Value** |   | **Unrealized                Losses** |      |  **Fair                Value** |   | **Unrealized                Losses** |   |
| **Available                for sale:**                                                |   |                                   |      |                                 |   |                                |   |                                 |      |                                |   |   |   |
| U.S.                Government agency and mortgage- backed                obligations |   | $                                      | 5,886,263 |                                 | $      | 77,291                              |   | $                                    | 1,674,800 |                                | $      | 35,655 |   | $ | 7,561,063 |   | $ | 112,946 |   |
| Obligations                of state and political subdivisions/other                  |   |                                   | 54,538    |                                 |   | 433                                 |   |                                 |      |                                |   |   |   |   | 54,538 |   |   | 433 |   |
| **Securities                available** **for                sale**              |   | $                                      | 5,940,801 |                                 | $      | 77,724                              |   | $                                    | 1,674,800 |                                | $      | 35,655 |   | $ | 7,615,601 |   | $ | 113,379 |   |
|                                                                                  |   |                                   |      |                                 |   |                                |   |                                 |      |                                |   |   |   |   |   |   |   |   |   |
| **Held                to maturity:**                                                  |   |                                   |      |                                 |   |                                |   |                                 |      |                                |   |   |   |   |   |   |   |   |   |
| U.S.                Government agency and mortgage- backed                obligations |   | $                                      | 7,230,081 |                                 | $      | 113,871                             |   | $                                    | 4,185,613 |                                | $      | 138,360 |   | $ | 11,415,694 |   | $ | 252,231 |   |
| Obligations                of state and politicalsubdivisions/other                   |   |                                   | 284,722   |                                 |   | 912                                 |   |                                 | 3,174     |                                |   | 76 |   |   | 287,896 |   |   | 988 |   |
| **Securities                held to maturity**                                        |   | $                                      | 7,514,803 |                                 | $      | 114,783                             |   | $                                    | 4,188,787 |                                | $      | 138,436 |   | $ | 11,703,590 |   | $ | 253,219 |   |

|   | As                described in Note 1 - Significant Accounting Policies, the Company                reviews                the investment securities portfolio to determine if other-than-temporary                impairment has occurred. Management does not believe any individual                unrealized loss as of December 31, 2005 represents an other-than-temporary                impairment. The unrealized losses on these securities are caused                by the                changes in general market interest rates and not by material changes                in                the credit characteristics of the investment securities portfolio.                The                duration and average life of securities with unrealized losses at                December                31, 2005 was 3.42 years and 5.82 years, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | During                2005, $1.0 billion of securities were sold which had unrealized losses                at                December 31, 2004. Gross gains and losses on these securities were                $246                thousand and $20.0 million,                respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

----

**Notes              to Consolidated Financial              Statements**

| **4.** | **Loans** | The                following is a summary of loans outstanding (in thousands) at December                31,                2005 and 2004: |
|--------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   |                          |           |
|-----------------------------------------------------|--------|-------------------------------|----------------|
|                                                |   | December                  31, |           |
|                                                |   | **2005**                      |           | 2004 |   |
| Commercial:                                         |   |                          |           |   |   |
| Term                                                |   | **$**                         | **1,781,148**  |   | $ | 1,283,476 |   |
| Line                  of credit                     |   |                          | **1,517,347**  |   |   | 1,168,542 |   |
|                                                |   |                          | **3,298,495**  |   |   | 2,452,018 |   |
|                                                |   |                          |           |   |   |   |   |
| Owner-occupied                                      |   |                          | **2,402,300**  |   |   | 1,998,203 |   |
|                                                |   |                          |           |   |   |   |   |
| Consumer:                                           |   |                          |           |   |   |   |   |
| Mortgages                  (1-4 family residential) |   |                          | **2,000,309**  |   |   | 1,340,009 |   |
| Installment                                         |   |                          | **211,332**    |   |   | 132,646 |   |
| Home                  equity                        |   |                          | **2,353,581**  |   |   | 1,799,841 |   |
| Credit                  lines                       |   |                          | **100,431**    |   |   | 69,079 |   |
|                                                |   |                          | **4,665,653**  |   |   | 3,341,575 |   |
|                                                |   |                          |           |   |   |   |   |
| Commercial                  real estate:            |   |                          |           |   |   |   |   |
| Investor                  developer                 |   |                          | **2,001,674**  |   |   | 1,455,891 |   |
| Construction                                        |   |                          | **290,530**    |   |   | 206,924 |   |
|                                                |   |                          | **2,292,204**  |   |   | 1,662,815 |   |
|                                                |   | **$**                         | **12,658,652** |   | $ | 9,454,611 |   |

|   | Loans                to executive officers and directors of the Company and its subsidiaries,                and companies with which they are associated, are made in the ordinary                course of business and on substantially the same terms as comparable                unrelated transactions. The following table summarizes the Company’s                related party loans (in millions) at December 31, 2005 and                2004:  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   |                        |    |
|-----------------------------------|--------|-----------------------------|---------|
|                              |   | December                31, |    |
|                              |   | **2005**                    |    | 2004 |   |
|                              |   |                        |    |   |   |
| Executive                officers |   | **$**                       | **2.2** |   | $ | 1.6 |   |
| Bancorp                directors  |   |                        | **4.4** |   |   | 6.4 |   |
|                              |   | **$**                       | **6.6** |   | $ | 8.0 |   |

|   | In                addition, the Company had loans to directors of its subsidiary banks                totaling $4.6 million and $89.8 million at December 31, 2005 and                2004,                respectively. The decrease in outstanding loans is due to the                consolidation of two subsidiary banks and the elimination of the                respective boards of directors during 2005.                                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | In                addition to the services referenced in Note 7 - Bank Premises, Equipment,                and Leases, the Company purchased goods and services, including legal                services, from related parties. Such disbursements aggregated $1.4                million, $1.9 million, and $1.2 million, in 2005, 2004, and 2003,                respectively. Management believes disbursements made to related parties                were substantially equivalent to those that would have been paid                to                unaffiliated companies for similar goods and                services. |

----

**Notes            to Consolidated Financial            Statements**

| **5.** | **Allowance****for                Credit****Losses** | The                following is an analysis of changes in the allowance for credit losses                (in                thousands) for 2005, 2004 and 2003: |
|--------|------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                           |   |                                     |        |
|----------------------------------------------------------------|--------|------------------------------------------|-------------|
|                                                           |   | Year                  Ended December 31, |        |
|                                                           |   | **2005**                                 |        | 2004 |   | 2003 |   |
|                                                           |   |                                     |        |   |   |   |   |
| Balance,                  January 1                            |   | **$**                                    | **135,620** |   | $ | 112,057 |   | $ | 90,733 |   |
| Provision                  charged to operating expense        |   |                                     | **19,150**  |   |   | 39,238 |   |   | 31,850 |   |
| Recoveries                  of loans previously charged off    |   |                                     | **5,192**   |   |   | 2,175 |   |   | 1,264 |   |
| Loan                  charge-offs                              |   |                                     | **(20,992** | **)** |   | (17,850 | ) |   | (11,790 | ) |
| Allowance                  for credit losses acquired bank     |   |                                     | **2,494**   |   |   |   |   |   |   |   |
| Balance,                  December 31                          |   | **$**                                    | **141,464** |   | $ | 135,620 |   | $ | 112,057 |   |
| Amount                  reclassified as allowance for unfunded |   |                                     |        |   |   |   |   |   |   |   |
| credit                  commitments                            |   |                                     | **7,800**   |   |   |   |   |   |   |   |
| Allowance                  for loan and lease losses           |   | **$**                                    | **133,664** |   | $ | 135,620 |   | $ | 112,057 |   |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | During                2005, the Company reclassified $7.8 million of the allowance related                to                unfunded credit commitments out of the allowance for loan and lease                losses                to other liabilities. Prior to 2005, the Company included the portion                of                the allowance related to unfunded credit commitments in its allowance                for                loan and lease losses. Because of this reclassification, the Company                now                refers to its allowance for loan and lease losses and its liability                for                unfunded credit commitments as the allowance for credit                losses. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| **6.** | **Non-****Performing****Loans                and****Other                Real****Estate**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Total                non-performing loans (non-accrual and restructured loans) were $34.8                million and $32.8 million at December 31, 2005 and 2004, respectively.                Non-performing loans of $748 thousand and $2.0 million were transferred                to                other real estate during 2005 and 2004, respectively. Other real                estate                ($279 thousand and $626 thousand at December 31, 2005 and 2004,                respectively) is included in other assets.                                                                                                                                                                                                         |
|   | At                December 31, 2005 and 2004, the recorded investment in loans considered                to                be impaired under FASB Statement No. 114 "Accounting by Creditors                for                Impairment of a Loan" totaled $26.0 million and $13.4 million,                respectively, all of which are included in non-performing loans.                The                reserve for loan and lease losses related to impaired loans totaled                approximately $6.6 million and $4.1 million at December 31, 2005                and 2004,                respectively. As permitted, all homogenous smaller balance consumer,                commercial and residential mortgage loans are excluded from individual                review for impairment. The majority of impaired loans were measured                using                the fair market value of collateral. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Impaired                loans averaged approximately $25.6 million and $14.5 million during                2005                and 2004, respectively. Interest income of approximately $2.8 million,                $2.9 million, and $1.9 million would have been recorded on non-performing                loans (including impaired loans) in accordance with their original                terms                in 2005, 2004, and 2003, respectively. Actual interest income recorded                on                these loans amounted to $809 thousand, $1.1 million, and $418 thousand                during 2005, 2004, and 2003,                respectively.                                                                                                                                                                                                                                                       |

| ****7.**** | **Bank****Premises,****Equipment,****and                  Leases** | A                  summary of bank premises and equipment (in thousands) is as                  follows: |
|------------|--------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|

|                                                       |   |                          |          |   |   |
|------------------------------------------------------------|--------|-------------------------------|---------------|--------|--------|
|                                                       |   | December                  31, |          |
|                                                       |   | **2005**                      |          | 2004   |   |
| Land                                                       |   | **$**                         | **297,644**   |   | $      | 239,639 |   |
| Buildings                                                  |   |                          | **570,905**   |   |   | 444,152 |   |
| Leasehold                  improvements                    |   |                          | **207,193**   |   |   | 161,220 |   |
| Furniture,                  fixtures and equipment         |   |                          | **541,106**   |   |   | 433,581 |   |
| Leased                  property under capital leases      |   |                          | **124**       |   |   | 124 |   |
|                                                       |   |                          | **1,616,972** |   |   | 1,278,716 |   |
| Accumulated                  depreciation and amortization |   |                          | **(437,247**  | **)**  |   | (328,831 | ) |
|                                                       |   |                          | **1,179,725** |   |   | 949,885 |   |
| Premises                  and equipment in progress        |   |                          | **199,061**   |   |   | 109,634 |   |
|                                                       |   | **$**                         | **1,378,786** |   | $      | 1,059,519 |   |
|                                                       |   |                          |          |   |   |   |   |

----

**Notes            to Consolidated Financial            Statements**

|   | The                Company has certain operating leases for land and bank premises with                related parties. Rents paid under these agreements represent market                rates,                are supported by independent appraisals and approved by the independent                members of the Board of Directors. The aggregate annual rental under                these                leases was approximately $1.9 million, $1.7 million, and $1.9 million                in                2005, 2004, and 2003, respectively. These leases expire periodically                beginning in 2008 but are renewable through 2042. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Total                rent expense charged to operations under operating leases was                approximately $60.0 million in 2005, $40.1 million in 2004, and $33.7                million in 2003. Total depreciation expense charged to operations                was                $112.5 million, $91.9 million and $69.7 million in 2005, 2004 and                2003,                respectively.                                                                                                                                                                                                                                               |

|   | The                future minimum rental commitments, by year, under the non-cancelable                leases, including escalation clauses, are as follows (in thousands)                at                December 31, 2005: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   |      |    |
|-------------------------------------------|--------|-----------|---------|
|                                      |   | Operating |    |
| 2006                                      |   | $         | 51,173  |   |
| 2007                                      |   |      | 50,271  |   |
| 2008                                      |   |      | 50,846  |   |
| 2009                                      |   |      | 50,256  |   |
| 2010                                      |   |      | 51,905  |   |
| Later                years                |   |      | 519,371 |   |
| Net                minimum lease payments |   | $         | 773,822 |   |

|                     | The                Company has obtained architectural design and facilities management                services for over 25 years from a business owned by the spouse of                the                Chairman of the Board of the Company. The Company spent $7.5 million,                $6.5                million, and $6.4 million in 2005, 2004, and 2003, respectively,                for such                services and related costs. Additionally, the business received additional                revenues for project management of approximately $0.1 million and                $3.8                million in 2004 and 2003, respectively, on furniture and facility                purchases made directly by the Company. In 2003, the Board approved                the                transfer, without cost, into the Company of the project management                services, which was completed during 2004. The business will continue                to                provide architectural and design services to the Company. Management                believes these disbursements were substantially equivalent to those                that                would have been paid to unaffiliated companies for similar services.                The                Board of Directors believes this arrangement has been an important                factor                in the success of the Commerce brand. |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **8.**                   | **Deposits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | The                aggregate amount of time certificates of deposits in denominations                of                $100,000 or more was $2.1 billion and $1.8 billion at December 31,                2005                and 2004, respectively. |
|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |
| **9.                9.** | **Other****Borrowed****Money**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Other                borrowed money consists primarily of securities sold under agreements                to                repurchase, federal funds purchased, and lines of credit. The following                table represents information for other borrowed money (in thousands)                at                December 31, 2005 and 2004: |

|                                                                         |   |                        |          |
|------------------------------------------------------------------------------|--------|-----------------------------|---------------|
|                                                                         |   | December                31, |          |
|                                                                         |   | **2005**                    |          | 2004 |   |
|                                                                         |   |  **Amount**            |          | **Average****Rate** |   |  Amount |   | Average                Rate |   |
| Securities                sold under agreements                to repurchase |   | **$**                       | **981,443**   |   |   | **4.31** | **%** | $ | 586,195 |   |   | 2.28 | % |
| Federal                funds purchased                                       |   |                        | **125,000**   |   |   | **4.36** | **%** |   | 75,000 |   |   | 2.46 | % |
| Total                                                                        |   | **$**                       | **1,106,443** |   |   | **4.32** | **%** | $ | 661,195 |   |   | 2.30 | % |
|                                                                         |   |                        |          |   |   |   |   |   |   |   |   |   |   |
| Average                amount outstanding                                    |   | **$**                       | **826,400**   |   |   | **3.44** | **%** | $ | 465,137 |   |   | 1.44 | % |
| Maximum                month-end balance                                     |   |                        | **1,244,059** |   |   |   |   |   | 944,040 |   |   |   |   |

|   | As                of December 31, 2005, the Company had a line of credit of $1.3 billion                from the Federal Home Loan Bank of Pittsburgh, a line of credit of                $102.3                million from the Federal Home Loan Bank of New York, and a $110.0                million                line of credit from a group of other banks, all of which was available. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Notes            to Consolidated Financial            Statements**

| **10.** | **Long-Term****Debt** | Effective                September 14, 2005, the Company redeemed all $200.0 million of its                5.95%                Convertible Trust Capital Securities issued through Commerce Capital                Trust                II, a Delaware business trust, on March 11, 2002. Each outstanding                security was converted into 1.8956 shares of the Company’s common stock,                resulting in the issuance of approximately 7.6 million shares. |
|---------|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                  |
| **11.** | **Income****Taxes**   | The                provision for income taxes consists of the following (in                thousands):                                                                                                                                                                                                                                                                                                                                                                                  |

|      |   |                            |        |
|-----------|--------|---------------------------------|-------------|
|      |   | **December                31,** |        |
|      |   | **2005**                        |        | 2004 |   | 2003 |   |
| Current:  |   |                            |        |   |   |   |   |
| Federal   |   | **$**                           | **156,805** |   | $ | 118,301 |   | $ | 77,437 |   |
| State     |   |                            | **8,714**   |   |   | 7,116 |   |   | 5,961 |   |
| Deferred: |   |                            |        |   |   |   |   |   |   |   |
| Federal   |   |                            | **(17,612** | **)** |   | 16,005 |   |   | 15,417 |   |
|      |   | **$**                           | **147,907** |   | $ | 141,422 |   | $ | 98,815 |   |

|   | The                above provision includes an income tax benefit of $4.9 million related                to                net investment security losses recorded in 2005, as compared to income                tax                expenses of $900,000 and $1.3 million on net investment security                gains for                2004 and 2003, respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                                                       |   |                            |     |
|------------------------------------------------------------|--------|---------------------------------|----------|
|                                                       |   | **December                31,** |     |
|                                                       |   | **2005**                        |     | 2004 |   | 2003 |   |
| Expected                provision at statutory rate:       |   |                            | **35.0** | **%** |   | 35.0 | % |   | 35.0 | % |
| Difference                resulting from:                  |   |                            |     |   |   |   |   |   |   |   |
| Tax-exempt                interest on loans                |   |                            | **(1.3** | **)** |   | (1.2 | ) |   | (1.5 | ) |
| Tax-exempt                interest on securities           |   |                            | **(1.0** | **)** |   | (1.4 | ) |   | (1.7 | ) |
| State                income taxes (net of federal benefit) |   |                            | **1.3**  |   |   | 1.1 |   |   | 1.3 |   |
| Other                                                      |   |                            | **0.3**  |   |   | 0.6 |   |   | 0.6 |   |
|                                                       |   |                            | **34.3** | **%** |   | 34.1 | % |   | 33.7 | % |

|   | The                amounts payable for federal income taxes during 2005 and 2004 were                reduced                by approximately $14.6 million and $22.6 million, respectively, which                related to the exercise of stock options.                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                         |
|   | Deferred                income taxes reflect the net tax effects of temporary differences                between                the carrying amounts of assets and liabilities for financial reporting                purposes and the amounts used for income tax purposes. |
|   |                                                                                                                                                                                                                                                                         |
|   | The                significant components of the Company's deferred tax liabilities                and                assets as of December 31, 2005 and 2004 are as follows (in                thousands):                                                             |

|                                                                |   |                            |    |
|---------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                |   | **December                31,** |    |
|                                                                |   | **2005**                        |    | 2004 |   |
| Deferred                tax assets:                                 |   |                            |    |   |   |
| Loan                loss reserves                                   |   | $                               | 48,640  |   | $ | 47,069 |   |
| Intangibles                                                         |   |                            | 1,832   |   |   | 1,913 |   |
| Deferred                rents                                       |   |                            | 11,460  |   |   | 4,492 |   |
| Fair                value adjustment, available for sale securities |   |                            | 35,181  |   |   |   |   |
| Other                reserves                                       |   |                            | 3,024   |   |   | 7,742 |   |
| Total                deferred tax assets                            |   |                            | 100,137 |   |   | 61,216 |   |
| Deferred                tax liabilities:                            |   |                            |    |   |   |   |   |
| Depreciation                                                        |   |                            | (51,996 | ) |   | (64,503 | ) |
| Fair                value adjustment, available for sale securities |   |                            |    |   |   | (12,038 | ) |
| Other                                                               |   |                            | (9,028  | ) |   | (10,393 | ) |
| Total                deferred tax liabilities                       |   |                            | (61,024 | ) |   | (86,934 | ) |
| Net                deferred assets (liabilities)                    |   | $                               | 39,113  |   | $ | (25,718 | ) |

|   | No                valuation allowance was recognized for the deferred tax assets at                December                31, 2005 or 2004. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                         |   |

----

**Notes            to Consolidated Financial            Statements**

| **12.** | **Commitments,****Letters                of****Credit                and****Guarantees**                                                                                                                                                                                                                                                                                                                                                                              | In                the normal course of business, there are various outstanding commitments                to extend credit, such as letters of credit, which are not reflected                in                the accompanying consolidated financial statements. These arrangements                have credit risk essentially the same as that involved in extending                loans                to customers and are subject to the Company's normal credit policies.                Collateral is obtained based on management's credit assessment of                the                borrower. At December 31, 2005, the Company had outstanding standby                letters of credit in the amount of $914.1 million. Fees associated                with                standby letters of credit have been deferred and recorded in other                liabilities on the Consolidated Balance Sheets. These fees are immaterial                to the Company’s consolidated financial statements at December 31,                2005. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    | In                addition, the Company is committed as of December 31, 2005 to advance                $625.4 million on construction loans, $1.2 billion on home equity                lines of                credit and $2.7 billion on other lines of credit. All other commitments                total approximately $784.8 million. The Company does not anticipate                any                material losses as a result of these transactions.  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    | The                Company has commitments to fund LIHTC partnerships, private venture                capital funds and SBICs that total approximately $42.1 million at                December                31, 2005.                                                                                                                                                                                                                                              |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **13.** | **Common****Stock**                                                                                                                                                                                                                                                                                                                                                                                                                                                   | At                December 31, 2005, the Company's common stock had a par value of                $1.00.                The Company is authorized to issue 500,000,000 shares as of this                date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    | On                December 20, 2005, the Board of Directors declared a cash dividend                of                $0.12 for each share of common stock outstanding payable January                20, 2006                to stockholders of record on January 6, 2006.                                                                                                                                                                                           |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    | On                February 15, 2005, the Board of Directors declared a two-for-one                stock                split in the form of a 100% stock dividend distributed on March 7,                2005 to                stockholders of record on February 25, 2005.                                                                                                                                                                                          |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| **14.** | **Earnings****Per                Share**                                                                                                                                                                                                                                                                                                                                                                                                                              | The                calculation of earnings per share follows (in thousands, except for                per                share amounts):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|                                                                                  |   |                                   |        |
|---------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|
|                                                                                  |   | Year                Ended December 31, |        |
|                                                                                  |   | **2005**                               |        | 2004 |   | 2003 |   |
| **Basic:**                                                                            |   |                                   |        |   |   |   |   |
| Net                income applicable to common stock                                  |   | **$**                                  | **282,939** |   | $ | 273,418 |   | $ | 194,287 |   |
| Average                common shares outstanding                                      |   |                                   | **165,974** |   |   | 156,625 |   |   | 142,169 |   |
| Net                income per common share                                            |   | **$**                                  | **1.70**    |   | $ | 1.74 |   | $ | 1.36 |   |
|                                                                                  |   |                                   |        |   |   |   |   |   |   |   |
| **Diluted:**                                                                          |   |                                   |        |   |   |   |   |   |   |   |
| Net                income applicable to common stockon                a diluted basis |   | **$**                                  | **282,939** |   | $ | 273,418 |   | $ | 194,287 |   |
| AAdd:                Interest expense on Convertible Trust Capital Securities         |   |                                   | **5,446**   |   |   | 7,852 |   |   | 7,852 |   |
|                                                                                  |   | **$**                                  | **288,385** |   | $ | 281,270 |   | $ | 202,139 |   |
|                                                                                  |   |                                   |        |   |   |   |   |   |   |   |
|                                                                                  |   |                                   |        |   |   |   |   |   |   |   |
| Average                common shares outstanding                                      |   |                                   | **165,974** |   |   | 156,625 |   |   | 142,169 |   |
| Additional                shares considered in diluted                                |   |                                   |        |   |   |   |   |   |   |   |
| computation                assuming:                                                  |   |                                   |        |   |   |   |   |   |   |   |
| Exercise                of stock options                                              |   |                                   | **7,843**   |   |   | 8,396 |   |   | 6,756 |   |
| Conversion                of trust capital securities                                 |   |                                   | **5,318**   |   |   | 7,582 |   |   | 7,582 |   |
| Average                common and common equivalentshares                outstanding  |   |                                   | **179,135** |   |   | 172,603 |   |   | 156,507 |   |
| Net                income per common and common equivalent                share       |   | **$**                                  | **1.61**    |   | $ | 1.63 |   | $ | 1.29 |   |

----

**Notes            to Consolidated Financial            Statements**

| **15.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | **Benefit****Plans**                                                                                                               | *Stock                Option Plans* |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------|
| In                2004, the Board of Directors adopted and Company shareholders approved                the                2004 Employee Stock Option Plan (the 2004 Plan) for the officers                and                employees of the Company and its subsidiaries. The 2004 Plan authorizes                the issuance of up to 30,000,000 shares of common stock (as adjusted                for                all stock splits and stock dividends) upon the exercise of options.                As of                December 31, 2005, options to purchase 3,902,027 shares of common                stock                have been issued under the 2004 Plan. In addition to the 2004 Plan,                the                Company has a plan for its non-employee directors. The option price                for                options issued under the 2004 Plan must be at least equal to 100%                of the                fair market value of the Company's common stock as of the date the                option                is granted. All options granted will vest evenly over four years                from the                date of grant.                The                options expire not later than 10 years from the date of grant. In                addition, there are options outstanding from prior stock option plans                of                the Company, which were granted under similar terms. No additional                options                may be issued under these prior plans. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Information                concerning option activity for all option plans for the periods indicated                is as follows: |

|                                            |   |                              |           |                                           |   |
|-------------------------------------------------|--------|-----------------------------------|----------------|------------------------------------------------|--------|
|                                            |   | Shares                UnderOption |           | Weighted                Average Exercise Price |   |
| Balance                at January 1, 2003       |   |                              | 22,097,106     |                                           | $      | 11.86 |   |
| Options                granted                  |   |                              | 5,349,920      |                                           |   | 21.24 |   |
| Options                exercised                |   |                              | 3,144,440      |                                           |   | 7.65 |   |
| Options                canceled                 |   |                              | 387,382        |                                           |   | 18.78 |   |
| Balance                at December 31, 2003     |   |                              | 23,915,204     |                                           |   | 14.38 |   |
| Options                granted                  |   |                              | 6,112,444      |                                           |   | 29.37 |   |
| Options                exercised                |   |                              | 3,064,024      |                                           |   | 12.39 |   |
| Options                canceled                 |   |                              | 439,488        |                                           |   | 24.92 |   |
| Balance                at December 31, 2004     |   |                              | 26,524,136     |                                           |   | 17.89 |   |
| **Options                granted**              |   |                              | **3,807,829**  |                                           |   | **31.17** |   |
| **Options                exercised**            |   |                              | **2,869,666**  |                                           |   | **14.25** |   |
| **Options                canceled**             |   |                              | **568,223**    |                                           |   | **27.77** |   |
| **Balance                at December 31, 2005** |   |                              | **26,894,076** |                                           |   | **19.88** |   |

|   | Additional                information concerning options outstanding as of December 31, 2005                is as                follows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   |                                   |      |                                                                 |   |
|---------------------------------------------------------|--------|----------------------------------------|-----------|----------------------------------------------------------------------|--------|
|                                                    |   | **Options                Outstanding** |      | **Options                Exercisable**                               |   |
|   **Range                of exercise prices** |   |  **Number****Outstanding**        |      | **Weighted-Average****Remaining****Contractual                Life** |   | **Weighted-****Average****Exercise                Price** |   | **Exercisable****as                of****12/31/2005** |   | **Weighted-****Average****Exercise                Price** |   |
| $3.44                to $5.00                           |   |                                   | 1,224,990 |                                                                 |   | 0.7 |   | $ | 4.44 |   |   | 1,224,990 |   | $ | 4.44 |   |
| $5.01                to $10.00                          |   |                                   | 3,519,130 |                                                                 |   | 3.2 |   |   | 8.94 |   |   | 3,519,130 |   |   | 8.94 |   |
| $10.01                to $17.50                         |   |                                   | 5,933,037 |                                                                 |   | 3.9 |   |   | 13.04 |   |   | 5,933,037 |   |   | 13.04 |   |
| $17.51                to $25.00                         |   |                                   | 7,308,151 |                                                                 |   | 6.6 |   |   | 20.81 |   |   | 7,288,525 |   |   | 20.81 |   |
| $25.01                to $37.53                         |   |                                   | 8,908,768 |                                                                 |   | 8.5 |   |   | 30.12 |   |   | 8,848,958 |   |   | 30.11 |   |

|   | *Employee                401(k) Plan*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The                Company has a defined contribution plan under Section 401(k) of the                Internal Revenue Code. The plan allows all eligible employees to                defer a                percentage of their income on a pretax basis through contributions                to the                plan. Under the provisions of the plan, the Company may match a percentage                of the employees' contributions subject to a maximum limit. The charge                to                operations for Company matching contributions was $5.5 million, $3.3                million and $3.4 million for 2005, 2004 and 2003, respectively. As                part of                the 401(k) plan, the Company maintains an Employee Stock Ownership                Plan                (ESOP) component for all eligible employees. As of December 31, 2005,                the                ESOP held 2,860,644 shares of the Company’s common stock, all of which                were allocated to participant accounts. Employer contributions are                determined at the discretion of the Board of Directors. No contribution                expense was recorded for the ESOP in 2005, 2004 or 2003. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | *Supplemental                Executive Retirement Plan*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Effective                January 1, 2004, the Company’s Board of Directors formalized a                Supplemental Executive Retirement Plan (SERP), which was previously                approved January 1, 1992, for certain designated executives in order                to                provide supplemental retirement income. The SERP is a defined contribution                plan, is unfunded, and contributions are made at the Company’s discretion.                For the years ended December 31, 2005 and 2004, the Company expensed                $355,000 and $7.2 million, respectively, for the                SERP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

----

**Notes        to Consolidated Financial Statements**

|    |                                                                                                                                                                                                                                                                                                        |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | *Post-employment                or Post-retirement Benefits*                                                                                                                                                                                                                                                |
|    | The                Company offers no post-employment or post-retirement                benefits.                                                                                                                                                                                                            |
|    |                                                                                                                                                                                                                                                                                                        |
| **16.** | **Fair****Value                of****Financial****Instruments**                                                                                                                                                                                                                                             | FASB                Statement No. 107, "Disclosures about Fair Value of Financial Instruments"                (FAS 107), requires disclosure of fair value information about financial                instruments, whether or not recognized in the balance sheet, for                which it                is practicable to estimate that value. In cases where quoted market                prices                are not available, fair values are based on estimates using present                value                or other valuation techniques. Those techniques are significantly                affected                by the assumptions used, including the discount rate and estimates                of                future cash flows. In that regard, the derived fair value estimates                cannot                be substantiated by comparison to independent markets and, in many                cases,                could not be realized in immediate settlement of the instrument. |
|    |                                                                                                                                                                                                                                                                                                        |
|    | FAS                107 excludes certain financial instruments and all non-financial                instruments from its disclosure requirements. Accordingly, the aggregate                fair value amounts presented do not represent the underlying value                of the                Company. |
|    |                                                                                                                                                                                                                                                                                                        |
|    | The                following table represents the carrying amounts and fair values of                the                Company's financial instruments at December 31, 2005 and                2004:                                                                                                       |

|                                          |   |                               |           |
|-----------------------------------------------|--------|------------------------------------|----------------|
|                                          |   | **December                31,**    |           |
|                                          |   | **2005**                           |           | 2004 |   |
|                                          |   | **Carrying                Amount** |           | **Fair****Value** |   | Carrying                Amount |   | FairValue |   |
| Financial                assets:              |   |                               |           |   |   |   |   |   |   |
| Cash                and cash equivalents      |   | **$**                              | **1,296,764**  |   | **$** | **1,296,764** |   | $ | 1,050,806 |   | $ | 1,050,806 |   |
| Loans                held for sale            |   |                               | **30,091**     |   |   | **30,091** |   |   | 44,072 |   |   | 44,072 |   |
| Trading                securities             |   |                               | **143,016**    |   |   | **143,016** |   |   | 169,103 |   |   | 169,103 |   |
| Investment                securities          |   |                               | **22,524,185** |   |   | **22,277,373** |   |   | 18,507,808 |   |   | 18,474,601 |   |
| Loans                (net)                    |   |                               | **12,524,988** |   |   | **12,729,831** |   |   | 9,318,991 |   |   | 9,422,638 |   |
|                                          |   |                               |           |   |   |   |   |   |   |   |   |   |   |
| Financial                liabilities:         |   |                               |           |   |   |   |   |   |   |   |   |   |   |
| Deposits                                      |   |                               | **34,726,713** |   |   | **34,740,409** |   |   | 27,658,885 |   |   | 27,662,167 |   |
| Other                borrowed money           |   |                               | **1,106,443**  |   |   | **1,106,443** |   |   | 661,195 |   |   | 661,195 |   |
| Long-term                debt                 |   |                               |           |   |   |   |   |   | 200,000 |   |   | 255,000 |   |
| Off-balance                sheet instruments: |   |                               |           |   |   |   |   |   |   |   |   |   |   |
| Standby                letters of credit      |   | **$**                              | **2,605**      |   | **$** | **2,605** |   | $ | 2,163 |   | $ | 2,163 |   |
| Commitments                to extend credit   |   |                               |           |   |   | **1,283** |   |   |   |   |   | 2,163 |   |

|   | Refer                to Note 20 - Derivative Financial Instruments for fair value information                on derivative financial                instruments. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The                following methods and assumptions were used by the Company in estimating                its fair value disclosures for financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | *Cash                and cash equivalents, loans held for sale and trading securities:*The                carrying amounts reported approximate those assets' fair                value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | *Investment                securities:*Fair                values for investment securities are based on quoted market prices,                where                available. If quoted market prices are not available, fair values                are                based on quoted market prices of comparable                instruments.                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | *Loans:*For                variable-rate loans that reprice frequently and with no significant                change                in credit risk, fair values are based on carrying values. The fair                values                for other loans receivable were estimated using discounted cash flow                analyses, using interest rates currently being offered for loans                with                similar terms to borrowers of similar credit quality. Loans with                significant collectibility concerns were fair valued on a loan-by-loan                basis utilizing a discounted cash flow method. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

**Notes            to Consolidated Financial            Statements**

|   | *Deposit                liabilities:*The                fair values disclosed for demand deposits (e.g., interest-bearing                and                noninterest-bearing checking, passbook savings, and certain types                of money                market accounts) are, by definition, equal to the amount payable                on demand                at the reporting date (i.e., their carrying amounts). Fair values                for                fixed-rate certificates of deposit are estimated using a discounted                cash                flow calculation that applies interest rates currently being offered                on                certificates of deposit to a schedule of aggregated expected monthly                maturities on time deposits. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | *Other                borrowed money:*The                carrying amounts reported approximate fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | *Long-term                debt:*Current                quoted market prices were used to estimate fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | *Off-balance                sheet liabilities:*Off-balance                sheet liabilities of the Company consist of letters of credit, loan                commitments and unfunded lines of credit. Fair values for the Company's                off-balance sheet liabilities are based on fees currently charged                to enter                into similar agreements, taking into account the remaining terms                of the                agreements and the counterparties' credit                standing.                                                                                                                                                                                                                                                                           |

| **17.** | **Quarterly****Financial****Data****(unaudited)** | The                following represents summarized unaudited quarterly financial data                of the                Company which, in the opinion of management, reflects adjustments                (comprising only normal recurring accruals) necessary for fair                presentation. |
|---------|---------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                       |   |                                  |    |
|----------------------------------------------------------------------------|--------|---------------------------------------|---------|
|                                                                       |   | Three                Months Ended     |    |
|                                                                       |   | December                31            |    | September                30 |   | June                30 |   | March                31 |   |
|                                                                       |   | (dollars                in thousands) |    |
| **2005**                                                                   |   |                                  |    |   |   |   |   |   |   |
| Interest                income                                             |   | $                                     | 473,227 |   | $ | 423,839 |   | $ | 397,698 |   | $ | 370,480 |   |
| Interest                expense                                            |   |                                  | 174,387 |   |   | 136,465 |   |   | 109,231 |   |   | 91,579 |   |
| Net                interest income                                         |   |                                  | 298,840 |   |   | 287,374 |   |   | 288,467 |   |   | 278,901 |   |
| Provision                for credit losses                                 |   |                                  | 5,400   |   |   | 3,000 |   |   | 4,500 |   |   | 6,250 |   |
| Provision                for federal and state income                taxes |   |                                  | 24,292  |   |   | 41,116 |   |   | 41,702 |   |   | 40,797 |   |
| Net                income                                                  |   |                                  | 46,938  |   |   | 79,455 |   |   | 79,409 |   |   | 77,137 |   |
|                                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share:                                |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   | $                                     | 0.27    |   | $ | 0.48 |   | $ | 0.49 |   | $ | 0.48 |   |
| Diluted                                                                    |   |                                  | 0.26    |   |   | 0.45 |   |   | 0.46 |   |   | 0.45 |   |
|                                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| **2004**                                                                   |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Interest                income                                             |   | $                                     | 353,395 |   | $ | 320,814 |   | $ | 292,030 |   | $ | 272,052 |   |
| Interest                expense                                            |   |                                  | 74,953  |   |   | 56,432 |   |   | 47,281 |   |   | 41,840 |   |
| Net                interest income                                         |   |                                  | 278,442 |   |   | 264,382 |   |   | 244,749 |   |   | 230,212 |   |
| Provision                for credit losses                                 |   |                                  | 8,240   |   |   | 10,750 |   |   | 10,748 |   |   | 9,500 |   |
| Provision                for federal and state income                taxes |   |                                  | 38,424  |   |   | 36,493 |   |   | 33,786 |   |   | 32,719 |   |
| Net                income                                                  |   |                                  | 75,118  |   |   | 70,090 |   |   | 66,235 |   |   | 61,975 |   |
|                                                                       |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Net                income per common share:                                |   |                                  |    |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                      |   | $                                     | 0.47    |   | $ | 0.45 |   | $ | 0.42 |   | $ | 0.40 |   |
| Diluted                                                                    |   |                                  | 0.44    |   |   | 0.42 |   |   | 0.40 |   |   | 0.37 |   |

----

**Notes            to Consolidated Financial            Statements**

| **18.** | **Condensed**                | **Balance                Sheets**                            |                        |
|---------|------------------------------|--------------------------------------------------------------|-----------------------------|
|    | **Financial**                |                                                         |                        |
|    | **Statements**               |                                                         | December                31, |
|    | **of                the**    | *(dollars                in thousands)*                      | **2005**                    | 2004 |
|    | **Parent**                   | **Assets**                                                   |                        |   |
|    | **Company**                  | Cash                                                         | **$**                       | **4,530** | $ | 5,524 |
|    | **and                Other** | Securities                available for sale                 |                        | **82,754** |   | 63,310 |
|    | **Matters**                  | Investment                in subsidiaries                    |                        | **2,278,869** |   | 1,828,492 |
|    |                         | Other                assets                                  |                        | **21,496** |   | 21,896 |
|    |                         | Total                assets                                  | **$**                       | **2,387,649** | $ | 1,919,222 |
|    |                         | **Liabilities**                                              |                        |   |
|    |                         | Other                liabilities                             | **$**                       | **78,476** | $ | 53,517 |
|    |                         | Long-term                debt                                |                        |   |   | 200,000 |
|    |                         | Total                liabilities                             |                        | **78,476** |   | 253,517 |
|    |                         | **Stockholders'                equity**                      |                        |   |
|    |                         | Common                stock                                  |                        | **179,499** |   | 160,636 |
|    |                         | Capital                in excess of par value                |                        | **1,450,843** |   | 951,476 |
|    |                         | Retained                earnings                             |                        | **750,710** |   | 543,978 |
|    |                         | Accumulated                other comprehensive (loss) income |                        | **(59,169** | **)**  | 20,953 |
|    |                         |                                                         |                        | **2,321,883** |   | 1,677,043 |
|    |                         | Less                treasury stock, at cost                  |                        | **12,710** |   | 11,338 |
|    |                         | Total                stockholders' equity                    |                        | **2,309,173** |   | 1,665,705 |
|    |                         | Total                liabilities and stockholders' equity    | **$**                       | **2,387,649** | $ | 1,919,222 |

| **Statements                of Income**                                                                    |   |                                   |        |   |   |    |   |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|-------------|--------|--------|---------|--------|
|                                                                                                       |   |                                   |        |   |   |    |   |
|                                                                                                       |   | Year                Ended December 31, |        |
| *(dollars                in thousands)*                                                                    |   | **2005**                               |        | 2004   |   | 2003    |   |
| Income:                                                                                                    |   |                                   |        |   |   |    |   |
| Dividends                from subsidiaries                                                                 |   | **$**                                  | **25,000**  |   | $      | 20,000  |   | $ | 44,500 |   |
| Interest                income                                                                             |   |                                   | **438**     |   |   | 499     |   |   | 476 |   |
| Other                                                                                                      |   |                                   | **3,659**   |   |   | 8,028   |   |   | 1,711 |   |
|                                                                                                       |   |                                   | **29,097**  |   |   | 28,527  |   |   | 46,687 |   |
| Expenses:                                                                                                  |   |                                   |        |   |   |    |   |   |   |   |
| Interest                expense                                                                            |   |                                   | **8,639**   |   |   | 12,448  |   |   | 12,448 |   |
| Operating                expenses                                                                          |   |                                   | **(2,712**  | **)**  |   | 10,370  |   |   | 3,877 |   |
|                                                                                                       |   |                                   | **5,927**   |   |   | 22,818  |   |   | 16,325 |   |
| Income                before income taxes and equityin                undistributed income of subsidiaries |   |                                   | **23,170**  |   |   | 5,709   |   |   | 30,362 |   |
| Income                tax expense (benefit)                                                                |   |                                   | **2,220**   |   |   | (5,025  | )      |   | (4,971 | ) |
|                                                                                                       |   |                                   | **20,950**  |   |   | 10,734  |   |   | 35,333 |   |
| Equity                in undistributed income of subsidiaries                                              |   |                                   | **261,989** |   |   | 262,684 |   |   | 158,954 |   |
| Net                income                                                                                  |   | **$**                                  | **282,939** |   | $      | 273,418 |   | $ | 194,287 |   |
|                                                                                                       |   |                                   |        |   |   |    |   |   |   |   |
|                                                                                                       |   |                                   |        |   |   |    |   |   |   |   |

----

**Notes            to Consolidated Financial            Statements**

| **Statements                of Cash Flows**                                                                    |   |                                   |         |
|----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|--------------|
|                                                                                                           |   |                                   |         |
|                                                                                                           |   | Year                Ended December 31, |         |
| *(dollars                in thousands)*                                                                        |   | **2005**                               |         | 2004 |   | 2003 |   |
|                                                                                                           |   |                                   |         |   |   |   |   |
| Operating                activities:                                                                           |   |                                   |         |   |   |   |   |
| Net                income                                                                                      |   | **$**                                  | **282,939**  |   | $ | 273,418 |   | $ | 194,287 |   |
| Adjustments                to reconcile net income to netcash                provided by operating activities: |   |                                   |         |   |   |   |   |   |   |   |
| Provision                for depreciation, amortization and accretion                                          |   |                                   | **152**      |   |   | 189 |   |   | 212 |   |
| Undistributed                income of subsidiaries                                                            |   |                                   | **(261,989** | **)** |   | (262,684 | ) |   | (158,954 | ) |
| (Increase)                decrease in other assets                                                             |   |                                   | **(4,601**   | **)** |   | (13,278 | ) |   | 384 |   |
| Increase                in other liabilities                                                                   |   |                                   | **35,453**   |   |   | 45,072 |   |   | 5,946 |   |
| Net                cash provided by operating activities                                                       |   |                                   | **51,954**   |   |   | 42,717 |   |   | 41,875 |   |
| Investing                activities:                                                                           |   |                                   |         |   |   |   |   |   |   |   |
| Investments                in subsidiaries                                                                     |   |                                   | **(155,000** | **)** |   | (168,700 | ) |   | (239,500 | ) |
| Proceeds                from the maturity of securities available for sale                                     |   |                                   | **158,000**  |   |   | 198,000 |   |   | 144,327 |   |
| Purchase                of securities available for sale                                                       |   |                                   | **(177,451** | **)** |   | (154,528 | ) |   | (218,984 | ) |
| Net                cash used by investing activities                                                           |   |                                   | **(174,451** | **)** |   | (125,228 | ) |   | (314,157 | ) |
| Financing                activities:                                                                           |   |                                   |         |   |   |   |   |   |   |   |
| Proceeds                from issuance of common stock                                                          |   |                                   |         |   |   |   |   |   |   |   |
| under                dividend reinvestment and other stock plans                                               |   |                                   | **194,022**  |   |   | 146,057 |   |   | 116,908 |   |
| Dividends                paid                                                                                  |   |                                   | **(72,363**  | **)** |   | (59,205 | ) |   | (46,525 | ) |
| Issuance                of common stock                                                                        |   |                                   |         |   |   |   |   |   | 208,825 |   |
| Redemption                of long-term debt                                                                    |   |                                   | **(155**     | **)** |   |   |   |   |   |   |
| Other                                                                                                          |   |                                   | **(1**       | **)** |   | (1,484 | ) |   | (7,293 | ) |
| Net                cash provided by financing activities                                                       |   |                                   | **121,503**  |   |   | 85,368 |   |   | 271,915 |   |
| (Decrease)                increase in cash and cash equivalents                                                |   |                                   | **(994**     | **)** |   | 2,857 |   |   | (367 | ) |
| Cash                and cash equivalents at beginning of year                                                  |   |                                   | **5,524**    |   |   | 2,667 |   |   | 3,034 |   |
| Cash                and cash equivalents at end of year                                                        |   | **$**                                  | **4,530**    |   | $ | 5,524 |   | $ | 2,667 |   |
| Supplemental                disclosures of cash flow information:                                              |   |                                   |         |   |   |   |   |   |   |   |
| Cash                paid during the period for:                                                                |   |                                   |         |   |   |   |   |   |   |   |
| Interest                                                                                                       |   | **$**                                  | **9,201**    |   | $ | 12,268 |   | $ | 12,268 |   |
| Income                taxes                                                                                    |   |                                   | **144,479**  |   |   | 121,766 |   |   | 56,357 |   |

|   | Holders                of common stock of the Company are entitled to receive dividends                when                declared by the Board of Directors out of funds legally available.                Under                the New Jersey Business Corporation Act, the Company may pay dividends                only if it is solvent and would not be rendered insolvent by the                dividend                payment and only to the extent of surplus (the excess of the net                assets of                the Company over its stated capital).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The                approval of the Comptroller of the Currency is required for a national                bank to pay dividends if the total of all dividends declared in any                calendar year exceeds net profits (as defined) for that year combined                with                its retained net profits for the preceding two calendar years. New                Jersey                state banks are subject to similar dividend restrictions.* *Commerce                N.A. and Commerce North can declare dividends in 2006 without additional                approval of approximately $440.5 million and $86.0 million, respectively,                plus an additional amount equal to each bank's net profit for 2006                up to                the date of any such dividend declaration.                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The                Federal Reserve Act requires the extension of credit by any of the                Company’s banking subsidiaries to certain affiliates, including Commerce                Bancorp, Inc. (parent), be secured by readily marketable securities,                that                extension of credit to any one affiliate be limited to 10% of the                capital                and capital in excess of par or stated value, as defined, and that                extensions of credit to all such affiliates be limited to 20% of                capital                and capital in excess of par or stated value. At December 31, 2005                and                2004, the Company complied with these guidelines.                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The                Company and its subsidiaries are subject to various regulatory capital                requirements administered by the federal banking agencies. Failure                to meet                minimum capital requirements can initiate certain mandatory and possibly                additional discretionary actions by regulators that, if undertaken,                could                have a direct material effect on the Company's financial statements.                Under                capital adequacy guidelines and the regulatory framework for prompt                corrective action, the Company must meet specific guidelines that                involve                quantitative measures of the Company's assets, liabilities, and certain                off-balance-sheet items as calculated under regulatory accounting                practices. The Company's capital amounts and classification are also                subject to qualitative judgments by the regulators about components,                risk                weightings, and other factors. |

----

**Notes        to Consolidated Financial Statements**

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | As                of December 31, 2005 and 2004, the Company and each of its subsidiary                banks were categorized as “well-capitalized” under the regulatory                framework for prompt corrective action. There are no conditions or                events                since December 31, 2005 that management believes have changed any                subsidiary bank's capital category.                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Quantitative                measures established by regulation to ensure capital adequacy require                the                Company and its subsidiaries to maintain minimum amounts and ratios                of                total and Tier I capital (as defined in the regulations) to risk-based                assets (as defined in the regulations) and of Tier I capital to average                assets (as defined in the regulations), or leverage. Management believes,                as of December 31, 2005, that the Company and its subsidiaries meet                all                capital adequacy requirements to which they are                subject. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The                following table presents the Company's and Commerce N.A.'s risk-based                and                leverage capital ratios at December 31, 2005 and 2004. The 2004 ratios                for                Commerce N.A. have been adjusted to reflect the consolidation of                Commerce                Delaware and Commerce Pennsylvania during                2005.                                                                                                                                                                                                                                                                                   |

|                                      |   |       |      |                                         |   |
|-------------------------------------------|--------|------------|-----------|----------------------------------------------|--------|
|                                      |   |       |      | **Per                Regulatory Guidelines** |   |
|                                      |   | **Actual** |      | **Minimum**                                  |   | **“Well                Capitalized”** |   |
|                                      |   | **Amount** |      | **Ratio**                                    |   | **Amount** |   | **Ratio** |   | **Amount** |   | **Ratio** |   |
|                                      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |
| **December                31, 2005**      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |
| Company                                   |   |       |      |                                         |   |   |   |   |   |   |   |   |   |
| Risk                based capital ratios: |   |       |      |                                         |   |   |   |   |   |   |   |   |   |
| Tier                I                     |   | $          | 2,261,416 |                                         |   | 11.81 | % | $ | 765,812 |   |   | 4.00 | % | $ | 1,148,718 |   |   | 6.00 | % |
| Total                capital              |   |       | 2,408,772 |                                         |   | 12.58 |   |   | 1,531,625 |   |   | 8.00 |   |   | 1,914,531 |   |   | 10.00 |   |
| Leverage                ratio             |   |       | 2,261,416 |                                         |   | 6.04 |   |   | 1,497,889 |   |   | 4.00 |   |   | 1,872,362 |   |   | 5.00 |   |
|                                      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commerce                N.A.              |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk                based capital ratios: |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1                     |   | $          | 2,004,448 |                                         |   | 11.46 | % | $ | 699,719 |   |   | 4.00 | % | $ | 1,049,578 |   |   | 6.00 | % |
| Total                capital              |   |       | 2,130,878 |                                         |   | 12.18 |   |   | 1,399,438 |   |   | 8.00 |   |   | 1,749,297 |   |   | 10.00 |   |
| Leverage                ratio             |   |       | 2,004,448 |                                         |   | 5.92 |   |   | 1,354,615 |   |   | 4.00 |   |   | 1,693,269 |   |   | 5.00 |   |
|                                      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **December                31, 2004**      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                   |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk                based capital ratios: |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                I                     |   | $          | 1,835,484 |                                         |   | 12.30 | % | $ | 596,834 |   |   | 4.00 | % | $ | 895,251 |   |   | 6.00 | % |
| Total                capital              |   |       | 1,977,032 |                                         |   | 13.25 |   |   | 1,193,668 |   |   | 8.00 |   |   | 1,492,086 |   |   | 10.00 |   |
| Leverage                ratio             |   |       | 1,835,484 |                                         |   | 6.19 |   |   | 1,187,037 |   |   | 4.00 |   |   | 1,483,796 |   |   | 5.00 |   |
|                                      |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commerce                N.A.              |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Risk                based capital ratios: |   |       |      |                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                1                     |   | $          | 1,611,103 |                                         |   | 11.90 | % | $ | 541,712 |   |   | 4.00 | % | $ | 812,568 |   |   | 6.00 | % |
| Total                capital              |   |       | 1,734,591 |                                         |   | 12.81 |   |   | 1,083,424 |   |   | 8.00 |   |   | 1,354,279 |   |   | 10.00 |   |
| Leverage                ratio             |   |       | 1,611,103 |                                         |   | 6.04 |   |   | 1,066,481 |   |   | 4.00 |   |   | 1,333,102 |   |   | 5.00 |   |

| **19.** | **Segment****Reporting** | The                Company operates one reportable segment of business, Community Banks,                which includes Commerce N.A. and Commerce North. Through its Community                Banks, the Company provides a broad range of retail and commercial                banking                services, and corporate trust services. Parent/Other includes the                holding                company, Commerce Insurance (whose revenues of $76.2 million, $72.5                million and $66.5 million in 2005, 2004, and 2003, respectively,                were                reported in other operating income), and CCMI (whose noninterest                revenues                of $25.4 million, $28.1 million, and $42.5 million in 2005, 2004,                and                2003, respectively, were reported in other operating                income). |
|---------|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                     |

----

**Notes            to Consolidated Financial            Statements**

|   | Selected                segment information for each of the three years ended December 31                is as                follows (in thousands):  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                              |   |                               |          |                 |   |            |   |
|-------------------------------------------------------------------|--------|------------------------------------|---------------|----------------------|--------|-----------------|--------|
|                                                              |   | **2005**                           |          | 2004                 |   | 2003            |   |
|                                                              |   | **Community                Banks** |          | **Parent/****Other** |   |  **Total** |   | CommunityBanks |   | Parent/Other |   |  Total |   | CommunityBanks |   | Parent/Other |   |  Total |   |
| Net                interest income (expense)                      |   | **$**                              | **1,157,208** |                 | **$**  | **(3,626**      | **)**  | **$** | **1,153,582** |   | $ | 1,024,092 |   | $ | (6,307 | ) | $ | 1,017,785 |   | $ | 761,530 |   | $ | (5,664 | ) | $ | 755,866 |   |
| Provision                for credit losses                        |   |                               | **19,150**    |                 |   |            |   |   | **19,150** |   |   | 39,238 |   |   | - |   |   | 39,238 |   |   | 31,850 |   |   | - |   |   | 31,850 |   |
| Net                interest income after                provision |   |                               | **1,138,058** |                 |   | **(3,626**      | **)**  |   | **1,134,432** |   |   | 984,854 |   |   | (6,307 | ) |   | 978,547 |   |   | 729,680 |   |   | (5,664 | ) |   | 724,016 |   |
| Noninterest                income                                 |   |                               | **337,979**   |                 |   | **104,815**     |   |   | **442,794** |   |   | 267,912 |   |   | 107,159 |   |   | 375,071 |   |   | 222,967 |   |   | 109,511 |   |   | 332,478 |   |
| Noninterest                expense                                |   |                               | **1,063,467** |                 |   | **82,913**      |   |   | **1,146,380** |   |   | 846,421 |   |   | 92,357 |   |   | 938,778 |   |   | 676,265 |   |   | 87,127 |   |   | 763,392 |   |
| Income                beforeincome                taxes           |   |                               | **412,570**   |                 |   | **18,276**      |   |   | **430,846** |   |   | 406,345 |   |   | 8,495 |   |   | 414,840 |   |   | 276,382 |   |   | 16,720 |   |   | 293,102 |   |
| Income                tax expense                                 |   |                               | **141,610**   |                 |   | **6,297**       |   |   | **147,907** |   |   | 138,879 |   |   | 2,543 |   |   | 141,422 |   |   | 93,314 |   |   | 5,501 |   |   | 98,815 |   |
| Net                income                                         |   | **$**                              | **270,960**   |                 | **$**  | **11,979**      |   | **$** | **282,939** |   | $ | 267,466 |   | $ | 5,952 |   | $ | 273,418 |   | $ | 183,068 |   | $ | 11,219 |   | $ | 194,287 |   |
| Average                assets(in                millions)         |   | **$**                              | **31,534**    |                 | **$**  | **2,472**       |   | **$** | **34,006** |   | $ | 24,452 |   | $ | 2,167 |   | $ | 26,619 |   | $ | 17,754 |   | $ | 1,836 |   | $ | 19,590 |   |

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

| **20.** | **Derivative****Financial****Instruments** | As                part of CCMI’s broker-dealer activities, CCMI maintains a trading                securities portfolio for distribution to its customers in order to                meet                those customers’ needs. In order to reduce the exposure to market risk                relating to the trading securities portfolio, CCMI buys and sells                derivative financial instruments, primarily interest rate futures                and                option contracts. Market risk includes changes in interest rates                or value                fluctuations in the underlying financial instruments. Notional (contract)                amounts are used to measure derivative activity. Notional amounts                are not                included on the balance sheet, as those amounts are not actually                paid or                received at settlement. The following table reflects the open commitments                for futures and options and the associated unrealized losses (in                thousands) at December 31, 2005 and                2004: |
|---------|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |                                      |                                                          |
|-------------------------------------------|-------------------------------------------|---------------------------------------------------------------|
|                                      | NotionalAmountLong                (Short) |  Net                UnrealizedGain                (Loss) |
|                                      | **2005**                                  | 2004                                                          | **2005** | 2004 |
| Treasury                bond futures      | **$**                                     | **(3,000**                                                    | **)** | $ | 28,800 |   | **$** | **11** |   | $ | 28 |   |
| Treasury                bond put options  |                                      | **5,000**                                                     |   |   | 20,000 |   |   | **(11** | **)** |   | (62 | ) |
| Treasury                bond call options |                                      |                                                          |   |   | (123,500 | ) |   |   |   |   | (525 | ) |
| Total                                     | **$**                                     | **2,000**                                                     |   | $ | (74,700 | ) | **$** | **-** |   | $ | (559 | ) |

|   |  The                average notional amount for futures and options contracts for the                years                ended December 31, 2005 and 2004 was $99.9 million and $293.5 million,                respectively. Realized and unrealized gains and losses on derivative                financial instruments are included in other operating                income.                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | As                an accommodation to its loan customers, the Company enters into interest                rate swap agreements. The Company minimizes its risk by matching                the                positions with a counterparty. These swaps are carried at estimated                fair                value with changes in estimated fair value included in other operating                income. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                              |

|   | The                following table discloses the notional amounts and related estimated                fair                value of the Company’s interest rate swap positions (in thousands) at                December 31, 2005 and 2004:  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                |           |                                                     |
|-------------------------------------|----------------|----------------------------------------------------------|
|                                | NotionalAmount |  Estimated                Fair                Value |
|                                | **2005**       | 2004                                                     | **2005** | 2004 |
| Interest                Rate Swaps: |           |                                                     |   |   |
| Assets                              | **$**          | **255,256**                                              |   | $ | 179,744 |   | **$** | **4,258** |   | $ | 7,363 |   |
| Liabilities                         |           | **255,256**                                              |   |   | 179,744 |   |   | **(2,844** | **)** |   | (6,537 | ) |
|                                |           |                                                     | **$** | **1,414** |   | $ | 826 |   |

|   | As                part of the Company’s residential mortgage activities, the Company enters                into interest rate lock commitments with its customers. The interest                rate                lock commitments on residential mortgage loans intended to be held                for                sale are considered free standing derivative instruments. The option                to                sell the mortgage loans at the time the commitments are made are                also free                standing derivative instruments. Generally, the change in fair value                of                these derivative instruments due to changes in interest rates offset                each                other. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      9A. Controls and Procedures**

**Item      9B. Other Information**

**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 and Related      Stockholder Matters**

|                                                                            | (a)                                                                                                                                                      | (b)                                                                                                                            | (c)                                                                                                                                                                                                                    |
|---------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                 |  Number                of securities to be                issued upon exercise of                outstanding options, warrants                and rights |  Weighted-average exercise                price of outstanding                options, warrants                and rights | Number                of securities remaining available                for future issuance under                equity compensation plans                (excluding securities reflected                in column (a)) |
|  Equity                compensation plans approved by security holders     | 26,894,076                                                                                                                                                    | $19.88                                                                                                                              | 26,696,725                                                                                                                                                                                                                  |
|  Equity                compensation plans not approved by security holders |  N/A                                                                                                                                                     |  N/A                                                                                                                           |  N/A                                                                                                                                                                                                                   |
|  Total                                                                     |  26,894,076                                                                                                                                              |  $19.88                                                                                                                        |  26,696,725                                                                                                                                                                                                            |

**Item      13. Certain Relationships and Related Transactions**

**Item      14. Principal Accounting Fees and Services**

**Part      IV**

**Item      15.** **Exhibits      and Financial Statement Schedules**

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|          | ExhibitNumber     |  Description                of Exhibit                                                                                                                                                                                                    |  Location                                                                                                                                                                                  |
|---------------|-------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |  3.1    |  Restated                Certificate of Incorporation of the Company, as amended.                                                                                                                                                    |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 2004.                             |
|          |  3.2    |  By-laws                of the Company, as amended.                                                                                                                                                                                  |  Incorporated                by reference from the Company’s Form 10-Q for the quarter ended June 30,                2004.                                                      |
|          |  10.1   |  Ground                lease, dated July 1, 1984, among Commerce N.A. and Group Four Equities,                relating to the store in Gloucester Township, New Jersey.                                                              |  Incorporated                by reference from the Company’s Registration Statement on Form S-1, and                Amendments Nos. 1 and 2 thereto (Registration No. 2-94189)  |
|          |  10.2   |  Ground                lease, dated April 15, 1986, between Commerce N.A. and Mount Holly                Equities, relating to Commerce N.A.'s store in Mt. Holly, New Jersey.                                                       |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1987.                             |
|  *  |  10.4   |  The                Company's Employee Stock Ownership Plan.                                                                                                                                                                         |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1989.                             |
|          |  10.10  |  Ground                lease, dated February 15, 1988, between Commerce N.A. and Holly Ravine                Equities of New Jersey, relating to one of the Commerce N.A.’s stores in                Cherry Hill, New Jersey.  |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1988.                             |
|  *  |  10.11  |  The                Company's 1989 Stock Option Plan for Non-Employee Directors.                                                                                                                                                     |  Incorporated                by reference from the Company’s Registration Statement on Form S-2 and                Amendments Nos. 1 and 2 thereto (Registration No. 33-31042)  |
|  *  |  10.12  |  A                copy of employment contract with Peter Musumeci, Jr., dated January                2,                1992.                                                                                                         |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1991.                             |
|  *  |  10.13  |  A                copy of the Retirement Plan for Outside Directors of Commerce Bancorp,                Inc.                                                                                                                         |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1992.                             |
|  *  |  10.14  |  The                Company's 1994 Employee Stock Option Plan.                                                                                                                                                                       |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1994.                             |
|  *  |  10.15  |  The                Company's 1997 Employee Stock Option Plan.                                                                                                                                                                       |  Incorporated                by reference from the Company’s Definitive Proxy Statement for its 1997                Annual Meeting of Shareholders, Exhibit A thereto.          |
|  *  |  10.16  |  A                copy of employment contracts with Dennis M. DiFlorio and Robert D.                Falese                dated January 1, 1998.                                                                                     |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1997.                             |
|          |  10.17  |  Ground                lease, dated June 1, 1994, between Commerce N.A. and Absecon Associates,                L.L.C., relating to Commerce N.A.’s branch office in Absecon, New                Jersey.                        |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1997.                             |

----

|          |  10.18  |  Ground                lease, dated September 11, 1995, between Commerce Shore (merged with                and                into Commerce N.A. in 2004) and Whiting Equities, L.L.C., relating                to                Commerce Shore’s stores in Manchester Township, New Jersey.  |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1997.                     |
|---------------|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |  10.19  |  Ground                lease, dated November 1, 1995, between Commerce N.A. and Evesboro                Associates, L.L.C., relating to Commerce N.A.’s stores in Evesham                Township, New Jersey.                                                                                 |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1997.                     |
|          |  10.20  |  Ground                lease, dated October 1, 1996, between Commerce N.A. and Triad Equities,                L.L.C., relating to one of Commerce N.A.’s stores in Gloucester Township,                New Jersey.                                                                             |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1997.                     |
|          |  10.22  |  Ground                lease, dated January 16, 1998, between Commerce N.A. and Ewing Equities,                L.L.C., relating to Commerce N.A.’s store in Ewing, New                Jersey.                                                                                                  |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1998.                     |
|  *  |  10.23  |  The                Company’s 1998 Stock Option Plan for Non-Employee Directors.                                                                                                                                                                                                               |  Incorporated                by reference from the Company’s Definitive Proxy Statement for its 1998                Annual Meeting of Shareholders, Exhibit A thereto.  |
|          |  10.25  |  Ground                lease, dated November 30, 1998, between Commerce Shore (merged with                and                into Commerce N.A. in 2004) and Brick/Burnt Tavern Equities, L.L.C.,                relating to Commerce Shore’s stores in Brick, New Jersey.                     |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1999.                     |
|          |  10.26  |  Ground                lease, dated November 30, 1998, between Commerce Shore (merged with                and                into Commerce N.A. in 2004) and Aberdeen Equities, L.L.C., relating                to                Commerce Shore’s store in Aberdeen, New Jersey.              |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1999.                     |
|          |  10.27  |  Ground                lease, dated November 30, 1998, between Commerce N.A. and Hamilton/Wash                Properties, L.L.C., relating to Commerce N.A.’s store in Hamilton                Township, New Jersey.                                                                           |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1999.                     |
|          |  10.28  |  Ground                lease, dated April 2, 1999, between Commerce PA and Abington Equities,                L.L.C., relating to Commerce PA’s store in Abington Township,                Pennsylvania.                                                                                        |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 1999.                     |
|          |  10.29  |  Ground                lease, dated October 1999, between Commerce PA and Bensalem Equities,                L.L.C., relating to Commerce PA’s store in Bensalem,                Pennsylvania.                                                                                                  |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 2000.                     |
|          |  10.32  |  Ground                lease, dated March 10, 2000, between Commerce PA and Chalfont Equities,                L.L.C., relating to Commerce PA’s store in New Britain Township,                Pennsylvania.                                                                                    |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 2001.                     |
|          |  10.33  |  Ground                lease, dated January 4, 2001, between Commerce PA and Warminster                Equities,                L.L.C., relating to Commerce PA’s store in Warminster Township,                Pennsylvania.                                                                   |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 2001.                     |

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|          |  10.34  |  Ground                lease dated January 1, 2001, between Commerce N.A. and Willingboro                Equities, L.L.C., relating to Commerce N.A.’s store in Willingboro, New                Jersey.                                                    |  Incorporated                by reference to the Company’s Form 10-Q for the quarter ended March 31,                2003.                            |
|---------------|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |  10.35  |  Ground                lease dated November 27, 2001, between Commerce PA and Warrington                Equities, L.L.C., relating to Commerce PA’s store in Warrington,                Pennsylvania.                                                      |  Incorporated                by reference to the Company’s Form 10-Q for the quarter ended March 31,                2003.                            |
|  *  |  10.36  |  The                Company’s Supplemental Executive Retirement Plan.                                                                                                                                                                                      |  Incorporated                by reference from the Company’s Annual Report on Form 10-K for the fiscal                year ended December 31, 2003.  |
|  *  |  10.37  |  The                Company's 2004 Employee Stock Option Plan.                                                                                                                                                                                                   |  Incorporated                by reference from the Company’s Form 10-Q for the quarter ended June 30,                2004.                           |
|  *  |  10.38  |  A                copy of employment contract with George E. Norcross,                III dated November 15, 1996.                                                                                                                                               |                                                                                                                                                                 |
|  *  |  10.39  |  A                copy of amended and restated employment contract with                Vernon W. Hill, II entered into on March 14, 2006, with an effective                date                of January 1, 2006.                                               |                                                                                                                                                                 |
|          |  21.1   |  Subsidiaries                of the Company.                                                                                                                                                                                                                     |  Incorporated                by reference from PART 1, Item 1. “BUSINESS” of this Report on Form                10-K.                          |
|          |  23.1   |  Consent                of Ernst & Young LLP.                                                                                                                                                                                                                |                                                                                                                                                                 |
|          |  31.1   |  Certification                of the Company’s Chief Executive Officer                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                              |                                                                                                                                                                 |
|          |  31.2   |  Certification                of the Company’s Chief Financial Officer                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                302 of                the Sarbanes-Oxley Act of 2002.                              |                                                                                                                                                                 |
|          |  32     |  Certification                of the Company’s Chief Executive Officer and                Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.  |                                                                                                                                                                 |

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**SIGNATURES**

|                                |  Commerce                Bancorp, Inc. |
|-------------------------------------|---------------------------------------------|
|                                |                                        |   |
|                                | By                                          | /s/                Vernon W. Hill, II |
|                                |                                        |  **Vernon                W. Hill, II** |
| Date:                March 15, 2006 |                                        | **Chairman                of the Board and President** |
|                                |                                        | **(Principal                Executive Officer)** |
|                                |                                        |   |
|                                | By                                          | /s/                Douglas J. Pauls |
|                                |                                        | **Douglas                J. Pauls** |
|                                |                                        | **Senior                Vice President and Chief Financial Officer** |
|                                |                                        | **(Principal                Financial and Accounting                Officer)** |

| **Signature**                                   |   | **Title**                                                    | **Date**                      |
|-------------------------------------------------|--------|--------------------------------------------------------------|-------------------------------|
|                                            |   |                                                         |                          |
| /s/ Vernon                W. Hill, II      |   | Chairman                of the Board, President and Director | March                15, 2006 |
| **Vernon                W. Hill, II**           |   | (Principal                Executive Officer)                 |                          |
|                                            |   |                                                         |                          |
| /s/ Jack                R Bershad          |   | Director                                                     | March                15, 2006 |
| **Jack                R Bershad**               |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/ Joseph                Buckelew         |   | Director                                                     | March                15, 2006 |
| **Joseph                Buckelew**              |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/ Donald                T. DiFrancesco   |   | Director                                                     | March                15, 2006 |
| **Donald                T. DiFrancesco**        |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/ Morton                N. Kerr          |   | Director                                                     | March                15, 2006 |
| **Morton                N. Kerr**               |   |                                                         |                          |
|                                            |   |                                                         |                          |
|                                            |   | Director                                                     | March                15, 2006 |
| **Steven                M. Lewis**              |   |                                                         |                          |
|                                            |   |                                                         |                          |
|                                            |   | Director                                                     | March                15, 2006 |
| **John                K. Lloyd**                |   |                                                         |                          |
|                                            |   |                                                         |                          |
|                                            |   | Director                                                     | March                15, 2006 |
| **George                E. Norcross, III**      |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/ Daniel                J. Ragone        |   | Director                                                     | March                15, 2006 |
| **Daniel                J. Ragone**             |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/ William                A. Schwartz Jr. |   | Director                                                     | March                15, 2006 |
| **William                A. Schwartz Jr.**      |   |                                                         |                          |
|                                            |   |                                                         |                          |
| /s/Joseph                T. Tarquini Jr.        |   | Director                                                     | March                15, 2006 |
| **Joseph                T. Tarquini Jr.**       |   |                                                         |                          |
|                                            |   |                                                         |                          |
|                                            |   | Director                                                     | March                15, 2006 |
| **Joseph                S. Vassalluzzo**        |   |                                                         |                          |

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