================================================================================
                                  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, 1999
                                       OR
[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
      For the transition period from ________________ to ________________.
                            Commission File #0-12874
                             COMMERCE BANCORP, INC.
             (Exact name of registrant as specified in its charter)

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

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

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

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

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

     Securities registered pursuant to Section 12(g) of the Act: None
                                ---------------
     Indicate by check mark  whether the  registrant ( 1 ) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such report(s), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____.
     Indicate by check mark if disclosure of' delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
     The aggregate  market value of voting stock held by  non-affiliates  of the
Registrant is $923,929,500.(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                       30,334,028
  ------------------------------          --------------------------------------
         Title of Class                   No. of Shares Outstanding as of 3/3/00
                                ---------------
                       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, 1999 (the "Annual  Report").  Part III incorporates  certain  information by
reference from the  Registrant's  Proxy Statement for the 2000 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 3, 2000. 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...........................................................66
Item 2.    Properties.........................................................67
Item 3.    Legal Proceedings .................................................73
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 1999.)
                              Part II
Item 5.    Market for the Registrant's Common Stock and
           Related Stockholders Matters ......................................35
Item 6.    Selected Financial Data ...........................................23
Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations .........................................24
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk ........33
Item 8.    Financial Statements and Supplementary Financial Data .............37
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 ...............................................63

           (a)  (3) - Exhibits:
                      3.1    Restated Certificate of Incorporation of the
                             Company, as amended. (I)
                      3.2    Certificate of Amendment to the Restated
                             Certificate of Incorporation of the Company,
                             setting forth the preferences, limitations and
                             relative rights of the Company's Series C ESOP
                             Cumulative Convertible Preferred Stock. (I)
                      3.3    By-laws of the Company, as amended. (K)
                      4.1    Form of Trust Indenture, dated July 15, 1993,
                             between the Company and United Jersey Bank, with
                             respect to the Company's $23,000,000 8 3/8%
                             Subordinated Notes due July 15, 2003. (I)
                      4.2    Form of Indenture between the Company and
                             Wilmington Trust Company, as Debenture Trustee. (M)
                      4.3    Certificate of Trust of Commerce Capital Trust I.
                             (M)
                      4.4    Form of Amended and Restated Declaration of Trust
                             of Commerce Capital Trust I. (M)
                      4.5    Form of Capital Security Certificate for Commerce
                             Capital Trust I (included in Exhibit 4.4). (M)
                      4.6    Form of Guarantee Agreement. (M)
                      10.1   Ground lease, dated July 1, 1984, between Commerce
                             NJ and Group Four Equities, relating to the branch
                             office in Gloucester Township, New Jersey. (A)
                      10.2   Ground lease, dated April 15, 1986, between
                             Commerce NJ and Mount Holly Equities, relating to
                             Commerce NJ's branch office in Mt. Holly, New
                             Jersey. (C)
                     *10.3   The Company's 1984 Incentive Stock Option Plan. (A)
                     *10.4   The Company's Employee Stock Ownership Plan. (F)
                      10.5   Lease, dated March 29, 1985, between Commerce PA
                             and Devon Properties (Ltd.), and lease dated
                             September 4, 1985, between Commerce PA and Devon
                             Properties (Ltd.), relating to Commerce PA's branch
                             office in Devon, Pennsylvania. (B)
                      10.6   Assignment of Lease and Assumption Agreement dated
                             November 30, 1987, between the Company and Commerce
                             PA, relating to Commerce PA's branch office in
                             Devon, Pennsylvania. (C)

                                                                              63

<PAGE>

                       10.7  Lease between the Company and Astoria Associates,
                             relating to the Company's and Commerce NJ's
                             headquarters facilities. (B)
                       10.8  Ground lease, dated April 15, 1986, between
                             Commerce NJ and U.S. Equities, relating to one of
                             Commerce NJ's branch offices in Washington
                             Township, New Jersey. (D)
                       10.9  Ground lease, dated February 1, 1988, between
                             Commerce NJ and Diversified Properties of New
                             Jersey, relating to one of Commerce NJ's branch
                             offices in Washington Township, New Jersey. (D)
                      10.10  Ground lease, dated February 15, 1988, between
                             Commerce NJ and Diversified Properties of New
                             Jersey, relating to one of Commerce NJ's branch
                             offices in Cherry Hill, New Jersey. (D)
                     *10.11  The Company's 1989 Stock Option Plan for
                             Non-Employee Directors. (E)
                     *10.12  A copy of employment contracts with Vernon W. Hill,
                             II, C. Edward Jordan, Jr., and Peter Musumeci, Jr.,
                             dated January 2, 1992. (G)
                     *10.13  A copy of the Retirement Plan for Outside Directors
                             of Commerce Bancorp, Inc. (H)
                     *10.14  The Company's 1994 Employee Stock Option Plan. (J)
                      10.15  Term Loan Agreement between Commerce Bancorp, Inc.
                             Employee Stock Ownership Trust and Mellon Bank,
                             N.A. dated as of November 29, 1994. (J)
                     *10.16  The Company's 1997 Employee Stock Option Plan. (L)
                     *10.17  A copy of employment contracts with Dennis M.
                             DiFlorio and Robert D. Falese dated January 1,
                             1998. (N)
                      10.18  Ground lease, dated June 1, 1994, between Commerce
                             NJ and Absecon Associates, L.L.C., relating to
                             Commerce NJ's branch office in Absecon, New Jersey.
                             (N)
                      10.19  Ground lease, dated September 11, 1995, between
                             Commerce Shore and Whiting Equities, L.L.C.,
                             relating to Commerce Shore's branch office in
                             Manchester Township, New Jersey. (N)
                      10.20  Ground lease, dated November 1, 1995, between
                             Commerce NJ and Evesboro Associates, L.L.C.,
                             relating to Commerce NJ's branch office in Evesham
                             Township, New Jersey. (N)
                      10.21  Ground lease, dated October 1, 1996, between
                             Commerce NJ and Triad Equities, L.L.C., relating to
                             one of Commerce NJ's branch offices in Gloucester
                             Township, New Jersey. (N)
                      10.22  Ground lease, dated October 11, 1996, between
                             Commerce PA and Plymouth Equities, L.L.C., relating
                             to Commerce PA's branch office in Plymouth
                             Township, PA. (N)
                      10.23  Ground lease, dated January 16, 1998, between
                             Commerce NJ and Ewing Equities, L.L.C., relating to
                             Commerce NJ's branch in Ewing, New Jersey. (P)
                     *10.24  The Company's 1998 Stock Option Plan for
                             Non-Employee Directors. (O)
                      10.25  Ground lease, dated July 31, 1998, between Commerce
                             NJ and English Creek Properties, L.L.C., relating
                             to Commerce NJ's branch in Egg Harbor Township, New
                             Jersey. (P)
                      10.26  Ground lease, dated November 30, 1998, between
                             Commerce Shore and Brick/Burnt Tavern Equities,
                             L.L.C., relating to Commerce Shore's branch office
                             in Brick, New Jersey.
                      10.27  Ground lease, dated November 30, 1998, between
                             Commerce Shore and Aberdeen Equities, L.L.C.,
                             relating to Commerce Shore's branch office in
                             Aberdeen, New Jersey.
                      10.28  Ground lease, dated November 30, 1998, between
                             Commerce NJ and Hamilton/Wash Properties, L.L.C.,
                             relating to Commerce NJ's branch office in Hamilton
                             Township, New Jersey.
                      10.29  Ground lease, dated April 2, 1999, between Commerce
                             PA and Abington Equities, L.L.C., relating to
                             Commerce PA's branch office in Abington Township,
                             Pennsylvania.
                      11.1   Computation of Net Income Per Share..............51
                      13.1   The Registrant's Annual Report to Shareholders for
                             its fiscal year ended December 31,1999.
                      21.1   Subsidiaries of the Company (incorporated by
                             reference from PART I, Item 1. "BUSINESS" of this
                             Report on Form 10-K.)............................66
                      23.1   Consent of Ernst & Young LLP.
                      27.1   The Registrant's Financial Data Schedule.

                      --------------
                      (A)    Incorporated by reference from the Company's
                             Registration Statement on Form S-1, and Amendments
                             Nos. I and 2 thereto (Registration No. 2-94189).

64
<PAGE>
                      (B)    Incorporated by reference from the Company's
                             Registration Statement on Form S-2 (Registration No
                             33-12603).
                      (C)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1987.
                      (D)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1988.
                      (E)    Incorporated by reference from the Company's
                             Registration Statement on Form S-2 and Amendments
                             Nos. 1 and 2 thereto (Registration No. 33-31042).
                      (F)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1989.
                      (G)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1991.
                      (H)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1992.
                      (I)    Incorporated by reference from the Company's
                             Registration Statement on Form S-2 and Amendments
                             Nos. 1 and 2 thereto (Registration No. 33-62702).
                      (J)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1994.
                      (K)    Incorporated by reference from the Company's
                             Registration Statement on Form S-4 (Registration
                             No. 333-10771).
                      (L)    Incorporated by reference from the Company's
                             Definitive Proxy Statement for its 1997 Annual
                             Meeting of Shareholders, Exhibit A thereto.
                      (M)    Incorporated by reference from the Company's
                             Registration Statement on Form S-3 (Registration
                             No. 333-28311).
                      (N)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1997.
                      (O)    Incorporated by reference from the Company's
                             Definitive Proxy Statement for its 1998 Annual
                             Meeting of Shareholders, Exhibit A thereto.
                      (P)    Incorporated by reference from the Company's Annual
                             Report on Form 10-K for the fiscal year ended
                             December 31, 1998.
                             * Management contract or compensation plan or
                               arrangement.
           (b) There were no reports on Form 8-K filed in the fourth quarter of
           1999.
           (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.........................................................74




                                                                              65
<PAGE>
                                     PART I
Item 1. Business

Forward-Looking Statements

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

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

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

General

        The Company is a New Jersey business  corporation which is registered as
a bank holding  company  under the Bank Holding  Company Act of 1956, as amended
(the "Holding  Company Act").  The Company was  incorporated on December 9, 1982
and  became  an  active  bank  holding  company  on June 30,  1983  through  the
acquisition of 100% of the outstanding shares of Commerce Bank, N.A. ("Commerce,
NJ"). On January 2, 1987, the Company acquired all of the outstanding  shares of
Commerce  Bank/Pennsylvania,  N.A.  ("Commerce  PA").  On December  31, 1988 the
Company  acquired all of the  outstanding  shares of Citizens  State Bank of New
Jersey, Forked River, which was subsequently converted to a national charter and
renamed Commerce Bank/Shore, N.A. ("Commerce Shore"). On September 30, 1993, the
Company acquired all of the outstanding  shares of The Coastal Bank, Ocean City,
New Jersey, ("Coastal") which was merged into Commerce NJ. Effective January 21,
1997, the Company acquired  Independence  Bancorp,  Inc., a bank holding company
headquartered  in  Bergen  County,  New  Jersey.  Independence  Bancorp,  Inc.'s
wholly-owned  state-chartered bank subsidiary,  Independence Bank of New Jersey,
was  subsequently  renamed Commerce  Bank/North  ("Commerce  North").  Effective
January 15, 1999, the Company acquired Community First Banking Company ("CFBC"),
a one-bank holding company  headquartered  in Tinton Falls,  New Jersey.  CFBC's
wholly-owned bank subsidiary,  Tinton Falls State Bank, was merged with and into
Commerce  Shore.  At the time of  acquisition,  Tinton  Falls State Bank had six
branch offices in Monmouth County, New Jersey, and approximately $201 million in
assets. Also effective January 15, 1999, the Company acquired Prestige Financial
Corp.  ("PFC"),  a one-bank  holding company  headquartered  in Flemington,  New
Jersey. PFC's wholly-owned state-chartered bank subsidiary, Prestige State Bank,
was   subsequently   re-chartered  as  a  national  bank  and  renamed  Commerce
Bank/Central,  N.A. ("Commerce Central").  At the time of acquisition,  Prestige
State Bank had seven  branches in Hunterdon and Somerset  Counties,  New Jersey,
and had  approximately  $328 million in assets.  In 1998,  the Company  received
regulatory approvals to open Commerce Bank/Delaware, N.A. ("Commerce Delaware").
Commerce  Delaware's  first branch  opened in New Castle  County,  Delaware,  on
December 18, 1999.

        On  November  15,  1996,  two  insurance  brokerage  agencies,  Keystone
National  Companies,  Inc.,  Cherry  Hill,  New Jersey,  and  Morales,  Potter &
Buckelew, Inc., t/a Buckelew & Associates, Toms River, New Jersey, were acquired
by the  Company  and  thereafter  merged  to form  Commerce  National  Insurance
Services,  Inc.  ("Commerce  Insurance").  Commerce  Insurance  is  currently  a
wholly-owned  subsidiary of Commerce North.  In December 1996,  Chesley & Cline,
Inc., Mount Holly, New Jersey, was merged with and into Commerce  Insurance.  In
January 1997,  Colkate,  Inc., t/a The Morrissey Agency, Mt. Laurel, New Jersey,
was  merged  with and into  Commerce  Insurance.  In  December  1997,  Joseph J.
Reinhart and Associates,  Inc., Cherry Hill, NJ, a risk/loss management and loss
investigation   consulting  firm,  and  Associated  Insurance  Management  Inc.,
Haddonfield,  NJ, an employee and executive benefit consulting firm, were merged
with and into  Commerce  Insurance.  In  August  1998,  J.A.  Montgomery,  Inc.,
Wilmington, DE, an insurance brokerage agency, was merged with and into Commerce
Insurance.  In


66

<PAGE>

November,  1999,  Mullaney  Insurance  Associates,  Oakhurst,  NJ, an  insurance
brokerage agency, was merged with and into Commerce Insurance. In January, 2000,
Traber and Vreeland,  Inc.,  Randolph,  NJ, an insurance  brokerage agency,  was
merged with and into Commerce Insurance.

        On March 27,  1998,  the  Company  completed  the  acquisition  of A. H.
Williams & Co., Inc., ("Williams") Philadelphia, PA, a public finance investment
firm, and combined  Williams with Commerce  Capital,  the bank securities dealer
division of Commerce  NJ, to form  Commerce  Capital  Markets,  Inc.  ("CCMI") a
wholly-owned  nonbank  subsidiary of the Company engaging in certain  securities
activities permitted under Section 20 of the Glass-Steagall Act.

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

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

        The  Company's  principal  executive  offices  are  located at  Commerce
Atrium,  1701  Route  70 East,  Cherry  Hill,  New  Jersey  08034-5400,  and its
telephone number is (856) 751-9000.

        The total number of full-time equivalent persons employed by the Company
was 3,487 as of December 31, 1999.  The Company  believes that its  relationship
with its employees is good.

Commerce NJ

        Commerce NJ provides retail and commercial  banking  services through 48
retail branch offices in Camden, Burlington,  Gloucester,  Mercer, Atlantic, and
Cape May  Counties in New  Jersey.  Commerce  NJ' s deposits  are insured by the
Federal Deposit Insurance Corporation ("FDIC").

        As of December 31, 1999, Commerce NJ had total assets of $3.612 billion,
total  deposits  of $3.008  billion,  and total  stockholders'  equity of $203.5
million.

   Service Area

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

   Retail Banking Activities

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

   Trust Activities

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

   Commercial Banking Activities

        Commerce  NJ  offers  a broad  range  of  commercial  banking  services,
including free checking accounts (subject to minimum balance),  night depository
facilities, money market accounts, certificates of deposit, short-term loans for
seasonal or working capital purposes,  term loans for fixed assets and expansion
purposes,  revolving credit plans and other commercial loans to fit the needs of
its customers. Commerce NJ also finances the construction of business properties
and makes real estate mortgage loans on completed buildings.  Where the needs of
a  customer  exceed  Commerce  NJ's  legal  lending  limit for any one  customer
(approximately  $36.9  million  as  of  December  31,  1999),  Commerce  NJ  may
participate with other banks,  including  Commerce PA, Commerce Shore,  Commerce
North, Commerce Central, and Commerce Delaware in making a loan.

Commerce PA

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

                                                                              67

<PAGE>

        Commerce PA was  organized  as a national  bank on December 28, 1983 and
commenced  operations on June 29, 1984. As of December 31, 1999, Commerce PA had
total  assets of $990.1  million,  total  deposits  of $880.6  million and total
stockholders' equity of $51.4 million.

        Commerce PA provides retail and commercial  banking  services through 27
retail branch offices in Philadelphia,  Bucks, Chester,  Delaware and Montgomery
Counties in Southeastern Pennsylvania. Commerce PA's deposits are insured by the
FDIC.

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

Commerce Shore

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

        Commerce  Shore was organized as a  state-chartered  bank on December 8,
1972 and  commenced  operations  on January 29, 1973.  In 1989,  Commerce  Shore
converted to a national  charter.  As of December 31, 1999,  Commerce  Shore had
total  assets of $876.7  million,  total  deposits  of $791.6  million and total
stockholders' equity of $51.3 million.

        Commerce Shore provides retail and commercial  banking  services through
23 retail branch offices in Ocean and Monmouth  Counties,  New Jersey.  Commerce
Shore's deposits are insured by the FDIC.

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

Commerce North

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

        Commerce  North  was  organized  as a  state-chartered  bank in 1974 and
commenced  operations in 1975. As of December 31, 1999, Commerce North had total
assets  of  $812.7  million,   total  deposits  of  $666.1  million,  and  total
stockholders' equity of $43.7 million.

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

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

Commerce Central

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

        Commerce Central was organized as a  state-chartered  bank and commenced
operations in 1990. As of December 31, 1999,  Commerce  Central had total assets
of $320.1  million,  total deposits of $259.2 million,  and total  stockholders'
equity of $27.7 million.

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

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

Commerce Delaware

        In 1998,  the Company  received  regulatory  approvals to open  Commerce
Delaware.  Commerce  Delaware  began  operations on December 18, 1999,  with the
opening of its first  branch  office in New Castle  County,  Delaware.  Commerce
Delaware's deposits are insured by the FDIC.

        As of December  31,  1999,  Commerce  Delaware had total assets of $23.6
million, total deposits of $15.7 million, and total stockholders' equity of $7.9
million.

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

68

<PAGE>
Commerce Insurance

        Commerce  Insurance  operates  as a regional  insurance  brokerage  firm
concentrating  on commercial  property,  casualty and surety as well as personal
lines.  In  addition,  Commerce  Insurance  offers  a line of  employee  benefit
programs including both group as well as individual  medical,  life,  disability
and pension.  Commerce  Insurance  currently operates out of 11 locations in New
Jersey and three locations in Delaware.  Commerce Insurance places insurance for
clients in multiple states, primarily New Jersey, Pennsylvania, and Delaware.

Commerce Capital Markets, Inc.

        Commerce Capital Markets,  Inc. is a wholly-owned  nonbank subsidiary of
the Company engaging in certain securities activities permitted under Section 20
of  the  Glass-Steagall  Act,  including  trading,  underwriting,  and  advisory
services. CCMI's principal place of business is Philadelphia, Pennsylvania, with
branch  locations  in  Pittsburgh,   Pennsylvania,   Cherry  Hill,  New  Jersey,
Burlingame, California, and Fort Lauderdale, Florida.

Other Activities

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

        As part of the Commerce Network, the Company has an equity investment in
Commerce Bank/Harrisburg, Camp Hill, Pennsylvania (15.27% beneficial ownership).
The Commerce Network provides certain  marketing  support and technical  support
services to its members.

Competition

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

        In commercial  transactions,  Commerce  NJ's,  Commerce  PA's,  Commerce
Shore's,  Commerce North's,  Commerce  Central's,  and Commerce Delaware's legal
lending limit to a single borrower  (approximately $36.9 million,  $9.8 million,
$9.0 million, $7.7 million, $4.6 million, and $1.2 million,  respectively, as of
December  31,  1999)  enables  them to compete  effectively  for the business of
smaller  and  mid-sized  businesses.  However,  these legal  lending  limits are
considerably lower than that of various competing  institutions and thus may act
as a constraint on Commerce NJ's,  Commerce  PA's,  Commerce  Shore's,  Commerce
North's,  Commerce Central's, and Commerce Delaware's effectiveness in competing
for financing in excess of these limits.

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

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

Supervision and Regulation

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

                                                                              69

<PAGE>
   The Company

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

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

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

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

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

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

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

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

        A  discussion  of capital  guidelines  and  capital is  included  in the
section  entitled   "Stockholders'   Equity  and  Dividends"   contained  within
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations on page 35 of the Company's  Annual  Report to  Shareholders  for the
fiscal year ended  December 31, 1999,  which page of the Annual  Report  appears
elsewhere herein.

   Commerce NJ, Commerce PA, Commerce Shore,  Commerce North,  Commerce Central,
   and Commerce Delaware

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

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

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

70

<PAGE>

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

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

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

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

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

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

        Under the Interstate Act, the Federal  Deposit  Insurance Act is amended
to permit the responsible  Federal  regulatory agency to approve the acquisition
of a branch of an insured bank by an  out-of-state  bank or bank holding company
without the

                                                                              71
<PAGE>
acquisition of the entire bank or the  establishment  of a "de novo" branch only
if the law of the state in which  the  branch is  located  permits  out-of-state
banks to  acquire  a branch  of a bank  without  acquiring  the bank or  permits
out-of-state banks to establish "de novo" branches.  Pennsylvania and New Jersey
have each  passed  such a law.  However,  the New Jersey law does not  authorize
establishment  of  interstate  branches  other than by means of  acquiring  such
branches  from  another  institution.  Delaware  law does not permit  interstate
branching  either through the original  establishment of a branch in Delaware by
an  out-of-state  bank or  through  acquisition  of a branch in  Delaware  by an
out-of-state bank.

   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.

Recent Legislation

        On November 12, 1999 the  Gramm-Leach-Bliley Act (the "Act") became law,
repealing  the  1933  Glass-Steagall  Act's  separation  of the  commercial  and
investment  banking  industries.   The  Act  expands  the  range  of  nonbanking
activities  a bank  holding  company may engage in,  while  preserving  existing
authority for bank holding  companies to engage in  activities  that are closely
related  to  banking.  The new  legislation  creates a new  category  of holding
company called a "Financial Holding Company," a subset of bank holding companies
that  satisfy the  following  criteria:  (1) all of the  depository  institution
subsidiaries must be well capitalized and well managed;  (2) the holding company
must file with the Federal  Reserve Board a  declaration  that it elects to be a
financial  holding  company  to engage in  activities  that  would not have been
permissible  before  the  Act;  and  (3)  all  of  the  depository   institution
subsidiaries  must have a CRA  rating of  "satisfactory"  or  better.  Financial
holding  companies may engage in any activity that (i) is financial in nature or
incidental to such financial  activity or (ii) is  complementary  to a financial
activity  and does not pose a  substantial  risk to the safety and  soundness of
depository  institutions or the financial  system  generally.  The Act specifies
certain  activities  that are financial in nature.  These  activities  include -
acting as principal,  agent or broker for insurance; - underwriting,  dealing in
or making a market in  securities;  and -  providing  financial  and  investment
advice.  The  Federal  Reserve  Board and the  Secretary  of the  Treasury  have
authority to decide  whether other  activities  are also  financial in nature or
incidental to financial  activity,  taking into account  changes in  technology,
changes in the banking marketplace, competition for banking services and so on.

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

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

        The Act  has  only  recently  became  law.  Regulations  of the  banking
agencies  implementing  the  legislative  changes  can be  expected  in the near
future.  Except for the increase in competitive  pressures  faced by all banking
organizations  that is a likely  consequence  of the Act,  the  legislation  and
implementing  regulations  are likely to have a more  immediate  impact on large
regional and national institutions than on community-based  institutions engaged
principally in traditional banking  activities.  Because the legislation permits
bank holding companies to engage in activities  previously prohibited altogether
or severely  restricted  because of the risks they posed to the banking  system,
implementing   regulations  can  be  expected  to  impose  strict  and  detailed
prudential  safeguards on affiliations among banking and nonbanking companies in
a holding company  organization.  Additionally,  because the legislation  allows
various  affiliates  within a single  holding  company  organization  to serve a
broader array of customers'
72
<PAGE>
financial  goals,  including  their  banking,  insurance and  investment  goals,
implementing  regulations can be expected to impose strict safeguards on sharing
of customer information among affiliated entities within an organization.

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

National Monetary Policy

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

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

Legal Proceedings

        Other than routine  litigation  incidental to its business,  none of the
Company,  Commerce NJ,  Commerce PA, Commerce  Shore,  Commerce North,  Commerce
Central,  Commerce Delaware,  Commerce Capital Trust 1, Commerce  Insurance,  or
CCMI, or any of their  properties is subject to any material legal  proceedings,
nor are any such proceedings known to be contemplated.

Employee Stock Ownership Plan

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

        Generally,  each  participant  in the ESOP is  entitled  to  direct  the
trustees with respect to the voting rights,  if any, of the Qualifying  Employer
Securities  allocated to the  participant's  account.  The current  trustees are
Vernon W. Hill, II and C. Edward  Jordan,  Jr., the trustees under the Company's
former Stock Bonus Plan.

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

        As of December 31, 1999, the loan which the ESOP originally  obtained in
1990  from  another  financial   institution  was  paid  off,  and  all  of  the
approximately 923,000 shares of the Company's common stock held by the ESOP were
allocated to participant accounts.

                                                                              73
<PAGE>
                                   SIGNATURES

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

                                     Commerce Bancorp, Inc.

                                     By         /s/ VERNON W. HILL, II
                                         ---------------------------------------
                                                  Vernon W. Hill, II
Date: March 29, 2000                      Chairman of the Board and President

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

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

          Signature                         Title                       Date
          ---------                         -----                       ----

 /s/     VERNON W. HILL, II         Chairman of the Board         March 29, 2000
--------------------------------    and President
         Vernon W. Hill, II         (Principal Executive
                                    Officer)

 /s/    C. EDWARD JORDAN JR.        Executive Vice President      March 29, 2000
--------------------------------    and Director
        C. Edward Jordan Jr.

 /s/       ROBERT C. BECK           Secretary and Director        March 29, 2000
--------------------------------
           Robert C. Beck

 /s/       DAVID BAIRD, IV          Director                      March 29, 2000
--------------------------------
           David Baird, IV

 /s/       JACK R BERSHAD           Director                      March 29, 2000
--------------------------------
           Jack R Bershad

 /s/       MORTON N. KERR           Director                      March 29, 2000
--------------------------------
           Morton N. Kerr

 /s/       STEVEN M. LEWIS          Director                      March 29, 2000
--------------------------------
           Steven M. Lewis

 /s/      DANIEL J. RAGONE          Director                      March 29, 2000
--------------------------------
          Daniel J. Ragone

 /s/   WILLIAM A. SCHWARTZ JR.      Director                      March 29, 2000
--------------------------------
       William A. Schwartz Jr.

 /s/   JOSEPH T. TARQUINI JR.       Director                      March 29, 2000
--------------------------------
       Joseph T. Tarquini Jr.

 /s/       JOSEPH BUCKELEW          Director                      March 29, 2000
--------------------------------
           Joseph Buckelew

 /s/     FRANK C. VIDEON SR.        Director                      March 29, 2000
--------------------------------
         Frank C. Videon Sr.

74