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

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [FEE REQUIRED]
                  For the fiscal year ended December 31, 1997
                                       OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

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

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

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

        Registrant's telephone number, including area code: 609-751-9000
                         ------------------------------
  Securities registered pursuant to Section 12(b) of the Act:

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


        Securities registered pursuant to Section 12(g) of the Act: None
                         ------------------------------
     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12  months  (or for such  shorter  periodthat  the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __.

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

     The aggregate  market value of voting stock held by  non-affiliates  of the
Registrant is $757,008,600.(1)

                     APPLICABLE ONLY TO CORPORATE ISSUERS:
                         ------------------------------
     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the last practicable date.

Common Stock $1.5625 Par Value                          17,637,688
        Title of Class                  No. of Shares Outstanding as of 3/6/98
                         ------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
     Parts  II and IV incorporate  certain  information  by  reference  from the
Registrant's  Annual Report to  Shareholders  for the fiscal year ended December
31, 1997 (the "Annual  Report").  Part III  incorporatescertain  information  by
reference from the  Registrant's  Proxy Statement for the 1998 Annual Meeting of
Shareholders.

(1) The aggregate  dollar amount of the voting stock set forth equals the number
of shares of the Registrant's Common Stock outstanding, reduced by the amount of
Common Stock held by officers,  directors,  and shareholders owning in excess of
10% of the  Registrant's  Common Stock multiplied by the last sale price for the
Registrant's Common Stock on March 6, 1998. The information provided shall in no
way be construed as an admission that the officer,  director, or 10% shareholder
in the Registrant may be deemed an affiliate of the Registrant or that he is the
beneficial  owner of the  shares  reported  as being  held by him,  and any such
inference is hereby  disclaimed.  The  information  provided  herein is included
solely for the recordkeeping purpose of the Securities and Exchange Commission.

<PAGE>
                             COMMERCE BANCORP, INC.
                        FORM 10-K CROSS-REFERENCE INDEX

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

Page
Part I
Item 1. Business ..........................................................59
Item 2. Properties ........................................................59
Item 3. Legal Proceedings .................................................65
Item 4. Submission  of Matters to a Vote of Security  Holders
         (This item is omitted since no matters were submitted
         for security vote during the fourth quarter of 1997.)

Part II
Item 5. Market for the Registrant's Common Stock and Related
        Stockholders Matters ..............................................28
Item 6. Selected Financial Data ............................................1
Item 7. Management's Discussion and Analysis of Financial Condition
        and Results of Operations .........................................17
Item 7A.Quantitative and Qualitative Disclosures About Market Risk.........26
Item 8. Financial Statements and Supplementary Financial Data .............30
Item 9. Changes in and Disagreements with Accountants on
        Accounting and Financial Disclosure
        (This item is omitted since it is not applicable)

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

Part IV
Item 14.Exhibits, Financial Statement Schedules and Reports on Form 8-K ...56
        (a) (3) - Exhibits:
                2.1     Agreement and Plan of Reorganization, dated October 15,
                        1996 by and between Commerce Bancorp, Inc. and
                        Independence Bancorp, Inc. The Schedules to this
                        agreement are not filed as an exhibit hereto pursuant to
                        Regulation S-K, Item 601 (b) (2); however, the
                        Registrant will furnish a copy of these Schedules to the
                        Commision upon its request. (K)
                2.2     Agreement and Plan of Merger, dated October 15, 1996 by
                        and between Commerce Bancorp, Inc., and Independence
                        Bancorp, Inc. (K)
                3.1     Restated Certificate of Incorporation of the Company, as
                        amended. (I)
                3.2     Certificate of Amendment to the Restated  Certificate of
                        Incorporation   of  the  Company,   setting   forth  the
                        preferences,  limitations  and  relative  rights  of the
                        Company's Series C ESOP Cumulative Convertible Preferred
                        Stock. (I)
                3.3     By-laws of the Company, as amended. (L)
                4.1     Form of Trust  Indenture,  dated July 15, 1993,  between
                        the Company and United Jersey Bank,  with respect to the
                        Company's $23,000,000 8 3/8% Subordinated Notes due July
                        15, 2003. (I)
                4.2     Form of Indenture between the Company and Wilmington
                        Trust Company, as Debenture Trustee. (N)
                4.3     Certificate of Trust of Commerce Capital Trust I. (N)
                4.4     Form of Amended and Restated Declaration of Trust of
                        Commerce Capital Trust I. (N)
                4.5     Form of Capital Security Certificate for Commerce
                        Capital Trust I (included in Exhibit 4.4). (N)
                4.6     Form of Guarantee Agreement. (N)
               10.1     Ground lease, dated July 1, 1984, between Commerce NJ
                        and Group Four Equities, relating to the branch office
                        in Gloucester Township, New Jersey. (A)

                                       56
<PAGE>
                10.2    Ground lease, dated April 15, 1986, between Commerce NJ
                        and Mount Holly Equities, relating to Commerce NJ's
                        branch office in Mt. Holly, New Jersey. (C)
               *10.3    The Company's 1984 Incentive Stock Option Plan. (A)
               *10.4    The Company's Employee Stock Ownership Plan. (F)
                10.5    Lease, dated March 29, 1985, between Commerce PA and
                        Devon Properties (Ltd.), and lease dated September 4,
                        1985, between Commerce PA and Devon Properties (Ltd.),
                        relating to Commerce PA's branch office in Devon,
                        Pennsylvania. (B)
                10.6    Assignment of Lease and Assumption Agreement dated
                        November 30, 1987, between the Company and Commerce PA,
                        relating to Commerce PA's branch office in Devon,
                        Pennsylvania. (C)
                10.7    Lease between the Company and Astoria Associates,
                        relating to the Company's and Commerce NJ's headquarters
                        facilities. (B)
                10.8    Ground lease, dated April 15, 1986, between Commerce NJ
                        and U.S. Equities, relating to one of Commerce NJ's
                        branch offices in Washington Township, New Jersey. (D)
                10.9    Ground lease, dated February 1, 1988, between Commerce
                        NJ and Diversified Properties of New Jersey, relating to
                        one of Commerce NJ's branch offices in Washington
                        Township, New Jersey. (D)
                10.10   Ground lease, dated February 15, 1988, between Commerce
                        NJ and Diversified Properties of New Jersey, relating to
                        one of Commerce NJ's branch offices in Cherry Hill, New
                        Jersey. (D)
               *10.11   The Company's 1989 Stock Option Plan for Non-Employee
                        Directors. (E)
               *10.12   A copy of employment contracts with Vernon W. Hill, II,
                        C. Edward Jordan, Jr., and Peter Musumeci, Jr., dated
                        January 2, 1992. (G)
               *10.13   A copy of the Retirement Plan for Outside Directors of
                        Commerce Bancorp, Inc. (H)
               *10.14   The Company's 1994 Employee Stock Option Plan. (J)
                10.15   Term Loan Agreement between Commerce Bancorp, Inc.
                        Employee Stock Ownership Trust and Mellon Bank, N.A.
                        dated as of November 29, 1994. (J)
               *10.16   The Company's 1997 Employee Stock Option Plan. (M)
               *10.17   A copy of employment contracts with Dennis M. DiFlorio
                        and Robert D. Falese dated January 1, 1998.
                10.18   Ground lease,  dated June 1, 1994,  between  Commerce NJ
                        and  Absecon  Associates,  L.L.C.,  relating to Commerce
                        NJ's branch office in Absecon, New Jersey.
                10.19   Ground lease, dated September 11, 1995, between Commerce
                        Shore and Whiting Equities, L.L.C., relating to Commerce
                        Shore's  branch  office  in  Manchester  Township,   New
                        Jersey.
                10.20   Ground lease,  dated November 1, 1995,  between Commerce
                        NJ and Evesboro Associates, L.L.C., relating to Commerce
                        NJ's branch office in Evesham Township, New Jersey.
                10.21   Ground lease, dated October 1, 1996, between Commerce NJ
                        and Triad Equities,  L.L.C., relating to one of Commerce
                        NJ's branch offices in Gloucester Township, New Jersey.
                10.22   Ground lease,  dated October 11, 1996,  between Commerce
                        PA and Plymouth Equities,  L.L.C.,  relating to Commerce
                        PA's branch office in Plymouth Township, PA.
                11.1    Computation of Net Income Per Share .................44
                13.1    The  Registrant's  Annual Report to Shareholders for its
                        fiscal year ended December 31, 1997.
                21.1    Subsidiaries of the Company (incorporated by reference
                        from PART I, Item 1. "Business" of this Report
                        on Form 10-K.) ......................................59
                23.1    Consent of Ernst & Young LLP.
                27.1    The Registrant's Financial Data Schedule.
-----------------------------
                (A)     Incorporated    by   reference    from   the   Company's
                        Registration  Statement on Form S-1, and Amendments Nos.
                        1 and 2 thereto (Registration No. 2-94189).
                (B)     Incorporated    by   reference    from   the   Company's
                        Registration  Statement  on Form  S-2  (Registration  No
                        33-12603).
                (C)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1987.
                (D)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1988.

                                       57
<PAGE>
                (E)     Incorporated    by   reference    from   the   Company's
                        Registration  Statement on Form S-2, and Amendments Nos.
                        1 and 2 thereto (Registration No. 33-31042).
                (F)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1989.
                (G)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1991.
                (H)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1992.
                (I)     Incorporated    by   reference    from   the   Company's
                        Registration Statement on Form S-2 and Amendments Nos. 1
                        and 2 thereto (Registration No. 33-62702).
                (J)     Incorporated  by  reference  from the  Company's  Annual
                        Report on Form 10-K for the fiscal  year ended  December
                        31, 1994.
                (K)     Incorporated  by reference  from the  Company's  Current
                        Report on Form 8-K dated  October 21,  1996  (Exhibits 3
                        and 4).
                (L)     Incorporated    by   reference    from   the   Company's
                        Registration Statement on Form S-4 (Registration No.
                        333-10771).
                (M)     Incorporated by reference from the Company's  Definitive
                        Proxy   Statement   for  its  1997  Annual   Meeting  of
                        Shareholders, Exhibit A thereto.
                (N)     Incorporated    by   reference    from   the   Company's
                        Registration Statement on Form S-3 (Registration No.
                        333-28311).
                    * Management contract or compensation plan or arrangement.

         (b) There were no  reports  on Form 8-K filed in the fourth  quarter of
         1997.
         (c)(d)  Exhibits and Financial  Statement  Schedules - All other
         exhibits and  schedules for which  provision is made in the  applicable
         accounting regulation of the Securities and Exchange Commission are not
         required  under  the  related  instruction  or  are  inapplicable  and,
         therefore, have been omitted.

Item 15.        Signatures ..................................................66

                                       58
<PAGE>
                                     PART I
Item 1. Business
General

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

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

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

     Effective December 1, 1996, a third insurance  brokerage agency,  Chesley &
Cline,  Inc.,  Mount  Holly,  New  Jersey  was  merged  with and  into  Commerce
Insurance.  Effective  January 1, 1997,  a fourth  insurance  brokerage  agency,
Colkate, Inc., t/a The Morrissey Agency, Mt. Laurel, New Jersey, was merged with
and into Commerce Insurance.  Effective December 1, 1997, Joseph J. Reinhart and
Associates, Inc., Cherry Hill, NJ, a risk/loss management and loss investigation
consulting firm, and Associated Insurance Management,  Inc., Haddonfield, NJ, an
employee  and  executive  benefit  consulting  firm,  were  merged with and into
Commerce Insurance.

     On June 9, 1997,  the Company  issued  $57,500,000  of 83/4% Trust  Capital
Securities  through Commerce  Capital Trust I, a newly formed Delaware  business
trust subsidiary of the Company.

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

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

     The total number of full-time  equivalent  persons  employed by the Company
was 2,160 as of December 31, 1997.  The Company  believes that its  relationship
with its employees is good.

Commerce NJ

     Commerce NJ provides  retail and  commercial  banking  services  through 40
retail branch offices in Camden, Burlington,  Gloucester, Atlantic, and Cape May
Counties in Southern New Jersey.  It  currently  has six offices in Cherry Hill,
three offices in Washington  Township,  two offices each in Gloucester Township,
Marlton, Medford and Moorestown, and one office each in Absecon, Atco, Bellmawr,
Berlin,  Brigantine,  Cinnaminson,  Evesham  Township,  Glassboro,  Haddonfield,
Hammonton,  Lumberton,  Marmora,  Mount Holly, Mullica Hill,  Northfield,  Ocean
City,   Sicklerville,   Somers  Point,   Stratford,   Voorhees,  West  Deptford,
Williamstown,  and  Woodbury.  Commerce NJ's deposits are insured by the Federal
Deposit Insurance Corporation ("FDIC").

     As of December  31, 1997,  Commerce NJ had total assets of $2.719  billion,
total  deposits  of $2.177  billion,  and total  stockholders'  equity of $163.4
million.

                                       59
<PAGE>

Service Area

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

Retail Banking Activities

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

Trust Activities

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

Commercial Banking Activities

     Commerce NJ offers a broad range of commercial banking services,  including
free  checking  accounts   (subject  to  minimum   balance),   night  depository
facilities, money market accounts, certificates of deposit, short-term loans for
seasonal or working capital purposes,  term loans for fixed assets and expansion
purposes,  revolving credit plans and other commercial loans to fit the needs of
its customers. Commerce NJ also finances the construction of business properties
and makes real estate mortgage loans on completed buildings.  Where the needs of
a  customer  exceed  Commerce  NJ's  legal  lending  limit for any one  customer
(approximately  $26.3  million  as  of  December  31,  1997),  Commerce  NJ  may
participate  with other  banks,  including  Commerce  PA,  Commerce  Shore,  and
Commerce North, in making a loan.

Commerce PA

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

     Commerce  PA was  organized  as a national  bank on  December  28, 1983 and
commenced  operations on June 29, 1984. As of December 31, 1997, Commerce PA had
total  assets of $475.5  million,  total  deposits  of $443.0  million and total
stockholders' equity of $29.0 million.

     Commerce PA provides  retail and  commercial  banking  services  through 16
retail branch offices in Philadelphia, Chester, Delaware and Montgomery Counties
in  Southeastern  Pennsylvania.  It  currently  has one  office in  Center  City
Philadelphia,  one in West  Philadelphia,  one in  South  Philadelphia,  and one
office each in the Philadelphia suburbs of Brookhaven, Chichester, Collegeville,
Devon,  Haverford,  Lawrence Park,  Media,  Newtown Square,  Plymouth  Township,
Springfield,  Trooper, Wayne and Whitpain. Commerce PA's deposits are insured by
the FDIC.

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

Commerce Shore

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

     Commerce Shore was organized as a state-chartered  bank on December 8, 1972
and commenced  operations on January 29, 1973. In 1989, Commerce Shore converted
to a national charter.  As of December 31, 1997, Commerce Shore had total assets
of $398.9  million,  total  deposits of $349.1  million and total  stockholders'
equity of $26.8 million.

     Commerce Shore provides retail and commercial  banking  services through 10
retail branch offices in Ocean County,  New Jersey. It currently has two offices
in Toms River, and one office each in Barnegat,  Bayville, Forked River, Jackson
Township, Long Beach Island, Manahawkin, Manchester Township, and Stafford.
Commerce Shore's deposits are insured by the FDIC.

                                       60
<PAGE>

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

Commerce North

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

     Commerce  North  was  organized  as a  state-chartered  bank  in  1974  and
commenced  operations in 1975. As of December 31, 1997, Commerce North had total
assets  of  $516.9  million,   total  deposits  of  $467.4  million,  and  total
stockholders' equity of $35.2 million.

     Commerce North provides retail and commercial  banking  services through 10
retail branch offices in Bergen and Passaic  Counties,  New Jersey. It currently
has two  offices  in  Ramsey,  and one  office  each in  Allendale,  Hackensack,
Hawthorne,  Mahwah,  Montvale,  Park Ridge,  Ridgewood,  and Westwood.  Commerce
North's deposits are insured by the FDIC.

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

Commerce Insurance

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

Commerce Capital Markets, Inc.

     In November, 1997, the Company reached an agreement in principle to acquire
A. H.  Williams  & Co.,  Inc.,  (Williams)  Philadelphia,  PA, a public  finance
investment firm. The Company anticipates the acquisition will close by March 31,
1998, and plans to combine Williams with Commerce  Capital,  the bank securities
dealer  division of Commerce  NJ, to form  Commerce  Capital  Markets,  Inc.,  a
wholly-owned  nonbank  subsidiary of the Company engaging in certain  securities
activities permitted under Section 20 of the Glass-Steagall Act. The acquisition
will be  completed  by the  issuance  of common  stock of the  Company  totaling
approximately 330,000 shares. The transaction will be accounted for as a pooling
of  interests.  However,  the Company  does not expect to restate the  financial
statements  of the periods  prior to the  acquisition,  as the  changes,  in the
aggragate, would be immaterial.

Other Activities

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

     As part of the Commerce Network, the Company has an equity investment in
Commerce Bank/Harrisburg, Camp Hill, Pennsylvania (15.42% beneficial ownership).
The Commerce Network provides certain marketing support and technical support
services to its members.

Competition

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

     In commercial transactions, Commerce NJ's, Commerce PA's, Commerce Shore's,
and Commerce

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<PAGE>
North's legal lending limit to a single borrower  (approximately  $26.3
million,  $4.7 million,  $4.3 million,  and $5.8  million,  respectively,  as of
December  31,  1997)  enables  them to compete  effectively  for the business of
smaller  and  mid-sized  businesses.  However,  these legal  lending  limits are
considerably lower than that of various competing  institutions and thus may act
as  a  constraint  on  Commerce  NJ's,   Commerce  PA's  and  Commerce   Shore's
effectiveness in competing for financing in excess of these limits.

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

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

Supervision and Regulation

     THE FOLLOWING DISCUSSION SETS FORTH CERTAIN OF THE MATERIAL ELEMENTS OF THE
REGULATORY FRAMEWORK APPLICABLE TO BANK HOLDING COMPANIES AND THEIR SUBSIDIARIES
AND  PROVIDES  CERTAIN  SPECIFIC   INFORMATION  RELEVANT  TO  THE  COMPANY.  THE
REGULATORY  FRAMEWORK IS INTENDED  PRIMARILY FOR THE  PROTECTION OF  DEPOSITORS,
OTHER  CUSTOMERS  AND  THE  FEDERAL  DEPOSIT  INSURANCE  FUNDS  AND  NOT FOR THE
PROTECTION OF SECURITY  HOLDERS.  TO THE EXTENT THAT THE  FOLLOWING  INFORMATION
DESCRIBES STATUTORY AND REGULATORY  PROVISIONS,  IT IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO THE PARTICULAR STATUTORY AND REGULATORY PROVISIONS.  A CHANGE IN
APPLICABLE STATUTES, REGULATIONS OR REGULATORY POLICY MAY HAVE A MATERIAL EFFECT
ON THE BUSINESS OF THE COMPANY.

The Company

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

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

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

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

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

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

                                       62
<PAGE>
     There are various legal restrictions on the extent to which the Company and
its nonbank  subsidiaries can borrow or otherwise obtain credit from its banking
subsidiaries. In general, these restrictions require that any such extensions of
credit must be secured by  designated  amounts of specified  collateral  and are
limited,  as to any one of the  Company  or such  nonbank  subsidiaries,  to ten
percent of the lending bank's  capital stock and surplus,  and as to the Company
and all such  nonbank  subsidiaries  in the  aggregate,  to 20  percent  of such
lending bank's capital stock and surplus.  Further,  a bank holding  company and
its subsidiaries are prohibited from engaging in certain tie-in  arrangements in
connection with any extension of credit, lease or sale of property or furnishing
of services.

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

     A discussion of capital  guidelines  and capital is included in the section
entitled  "Stockholders'  Equity and Dividends"  contained  within  Management's
Discussion and Analysis of Financial Condition and Results of Operations on page
28 of the  Company's  Annual  Report to  Shareholders  for the fiscal year ended
December 31, 1997, which page of the Annual Report appears elsewhere herein.

Commerce NJ, Commerce PA, Commerce Shore and Commerce North

     Commerce NJ, Commerce PA and Commerce Shore, as national banks, are subject
to the National  Bank Act.  Each is also subject to the  supervision  of, and is
regularly examined by, the Office of the Comptroller of the Currency ("OCC") and
is required to furnish  quarterly reports to the OCC. The approval of the OCC is
required for the  establishment  of  additional  branch  offices by any national
bank, subject to applicable state law restrictions.

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

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

     Under present  Pennsylvania  law, Commerce PA would be permitted to operate
offices within any county in Pennsylvania, subject to prior regulatory approval.
Under  the  Community  Reinvestment  Act,  as  amended  ("CRA"),  a  bank  has a
continuing  and  affirmative  obligation  consistent  with its  safe  and  sound
operation to help meet the credit needs of its entire community,  including low-
and  moderate-income  neighborhoods.  CRA does not  establish  specific  lending
requirements  or  programs  for  financial  institutions  nor  does it  limit an
institution's  discretion  to develop the types of products and services that it
believes are best suited to its particular  community,  consistent with CRA. CRA
requires that the applicable regulatory agency to assess an institution's record
of meeting  the  credit  needs of its  community  and to take such  record  into
account in its evaluation of certain  applications by such institution.  The CRA
requires public  disclosure of an institution's CRA rating and requires that the
applicable  regulatory  agency provide a written  evaluation of an institution's
CRA  performance   utilizing  a  four-tiered   descriptive   rating  system.  An
institution's  CRA  rating  is  considered  in  determining,  whether  to  grant
charters,   branches  and  other  deposit  facilities,   relocations,   mergers,
consolidations  and acquisitions.  Performance less than satisfactory may be the
basis for denying an application.  In addition,  under applicable  regulations a
bank having a less than  satisfactory  rating is not entitled to  participate on
the bid list for FDIC  offerings.  In 1997,  Commerce NJ,  Commerce PA, Commerce
Shore and Commerce North each received a "satisfactory" rating.

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

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

                                       63
<PAGE>
     The OCC has authority under the Financial  Institutions  Supervisory Act to
prohibit  national  banks from  engaging  in any  activity  which,  in the OCC's
opinion,   constitutes  an  unsafe  or  unsound  practice  in  conducting  their
businesses.  The Federal Reserve Board has similar authority with respect to the
Company and the Company's non-bank subsidiaries.  The FDIC has similar authority
with respect to Commerce North.

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

Interstate  Banking

     On  September  29, 1994,  the  President  signed into law the  "Riegle-Neal
Interstate Banking and Branching Efficiency Act of 1994" (the "Interstate Act").
Among other things, the Interstate Act permits bank holding companies to acquire
banks in any state after September 29, 1995.  Beginning June 1, 1997, a bank may
merge with a bank in another  state so long as both states have not opted out of
interstate branching between the date of enactment of the Interstate Act and May
31, 1997.  States may enact laws opting out of interstate  branching before June
1, 1997,  subject to certain  conditions.  States may also enact laws permitting
interstate merger  transactions  before June 1, 1997, and host states may impose
conditions on a branch  resulting  from an interstate  merger  transaction  that
occurs  before  June 1, 1997,  if the  conditions  do not  discriminate  against
out-of-state banks, are not preempted by Federal law and do not apply or require
performance  after May 31, 1997. New Jersey and  Pennsylvania  have enacted laws
opting  in   immediately   to  interstate   merger  and   interstate   branching
transactions.  Interstate  acquisitions  and mergers  would both be subject,  in
general, to certain  concentration  limits and state entry rules relating to the
age of the bank.

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

Commerce Insurance/Commerce  Capital Markets

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

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

                                       64
<PAGE>

National Monetary Policy

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

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

Legal  Proceedings

     Other than  routine  litigation  incidental  to its  business,  none of the
Company,  Commerce NJ,  Commerce PA, Commerce  Shore,  Commerce North,  Commerce
Capital Trust I,  Commerce  National  Insurance  Services,  or Commerce  Capital
Markets,  Inc.,  or any of their  properties  is subject to any  material  legal
proceedings, nor are any such proceedings known to be contemplated.

Employee Stock Ownership Plan

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

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

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

     The Company's  Board of Directors  approved the creation of a new series of
cumulative  convertible  preferred  stock  known as  "Series  C ESOP  Cumulative
Convertible  Preferred  Stock." On January  31,  1990,  the ESOP  borrowed  $7.5
million from another  financial  institution to complete the purchase of 417,000
shares of Series C ESOP Cumulative Convertible Preferred Stock from the Company,
at $18.00  per  share,  with an  annual  dividend  rate of $1.35.  This loan was
guaranteed by the Company.  During 1994,  the loan was  refinanced  with another
financial  institution,  also with the guarantee of the Company.  The balance of
the loan at December 31, 1997 was $2,308,000.

     Effective  March 1, 1998, the Trustees of the ESOP exercised their right to
convert all 417,000  shares of Series C ESOP  Cumulative  Convertible  Preferred
Stock held by the ESOP into 646,904  shares of the Company's  common stock.  The
unallocated  shares of common stock the ESOP Trust held of record as of March 1,
1998 was approximately 1.13% of the Company's common stock.


                                       65

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

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

Date: March 30, 1998


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

<TABLE>
<CAPTION>
Signature                               Title                                             Date
<S>                                     <C>                                              <C>
        /s/     Vernon W. Hill, II      Chairman of the Board and President               March 30, 1998
                Vernon W. Hill, II      (Principal Executive Officer)

        /s/     C. Edward Jordan Jr.    Executive Vice President and Director             March 30, 1998
                C. Edward Jordan Jr.    (Principal Financial and Accounting Officer)

        /s/     Robert C. Beck          Secretary and Director                            March 30, 1998
                Robert C. Beck

        /s/     David Baird, IV         Director                                          March 30, 1998
                David Baird, IV

        /s/     Jack R Bershad          Director                                          March 30, 1998
                Jack R Bershad

        /s/     Morton N. Kerr          Director                                          March 30, 1998
                Morton N. Kerr

        /s/     Steven M. Lewis         Director                                          March 30, 1998
                Steven M. Lewis

        /s/     Daniel J. Ragone        Director                                          March 30, 1998
                Daniel J. Ragone

        /s/     Joseph T. Tarquini Jr.  Director                                          March 30, 1998
                Joseph T. Tarquini Jr.

        /s/     Joseph Buckelew         Director                                          March 30, 1998
                Joseph Buckelew
</TABLE>