UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    Form 10-Q

(X)  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 For the quarterly period ended September 30, 2004

                                       OR

( )  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE  ACT OF 1934 For the  transition  period  from  ______________  to
     ______________

                            Commission File #1-12069

                                COMMERCE BANCORP

                                 [LOGO OMITTED]


             (Exact name of registrant as specified in its charter)

           New Jersey                                       22-2433468
--------------------------------------------------------------------------------
 (State or other jurisdiction of                   (IRS Employer Identification
 incorporation or organization)                               Number)


     Commerce Atrium, 1701 Route 70 East, Cherry Hill, New Jersey 08034-5400
--------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

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

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

                        Yes X                                No __
                           --

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

     Common Stock                                 79,334,532
--------------------------------------------------------------------------------
   (Title of Class)                        (No. of Shares Outstanding
                                             as of November 1, 2004)


<PAGE>
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<CAPTION>


<S>                     <C> <C>               <C> <C>                                                   <C>

                     COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                      INDEX

                                                                                                       Page
PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

              Consolidated Balance Sheets (unaudited)
              September 30, 2004 and December 31, 2003...................................................1

              Consolidated Statements of Income (unaudited) Three months ended
              September 30, 2004 and September 30, 2003 and
              nine months ended September 30, 2004 and September 30, 2003................................2

              Consolidated Statements of Cash Flows (unaudited)
              Nine months ended September 30, 2004 and September 30, 2003................................3

              Consolidated Statement of Changes in Stockholders' Equity (unaudited)
              Nine months ended September 30, 2004.......................................................4

              Notes to Consolidated Financial Statements (unaudited).....................................5

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operation........................................................10

Item 3.       Quantitative and Qualitative Disclosures about Market Risk................................22

Item 4.       Controls and Procedures...................................................................22

PART II.      OTHER INFORMATION

Item 1.       Legal Proceedings.........................................................................23

Item 6.       Exhibits..................................................................................23


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<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                <C>             <C>

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements

                                                        COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                                              CONSOLIDATED BALANCE SHEETS
                                                                     (unaudited)

                  ------------------------------------------------------------------------------------------------
                                                                                  September 30,    December 31,
                                                                                 ---------------------------------
                  (dollars in thousands)                                              2004             2003
                  ------------------------------------------------------------------------------------------------
Assets            Cash and due from banks                                          $  1,069,318    $    910,092
                  Federal funds sold                                                    255,000
                                                                                 ---------------  --------------
                       Cash and cash equivalents                                      1,324,318         910,092
                  Loans held for sale                                                    36,740          42,769
                  Trading securities                                                    245,258         170,458
                  Securities available for sale                                      12,692,985      10,650,655
                  Securities held to maturity                                         4,080,134       2,490,484
                      (market value 09/04-$4,069,903; 12/03-$2,467,192)
                  Loans                                                               8,910,967       7,440,576
                       Less allowance for loan losses                                   131,529         112,057
                                                                                 ---------------  --------------
                                                                                      8,779,438       7,328,519
                  Bank premises and equipment, net                                      963,459         811,451
                  Other assets                                                          309,149         307,752
                                                                                 ---------------  --------------
                                                                                   $ 28,431,481    $ 22,712,180
                                                                                 ===============  ==============

Liabilities       Deposits:
                       Demand:
                         Noninterest-bearing                                       $  6,047,322    $  4,574,714
                         Interest-bearing                                            10,886,783       8,574,297
                       Savings                                                        6,104,644       4,222,282
                       Time                                                           3,202,883       3,330,107
                                                                                 ---------------  --------------
                           Total deposits                                            26,241,632      20,701,400
                  Other borrowed money                                                  165,853         311,510
                  Other liabilities                                                     274,377         221,982
                  Long-term debt                                                        200,000         200,000
                                                                                 ---------------  --------------
                                                                                     26,881,862      21,434,892

Stockholders'     Common stock, 79,435,506 shares
Equity                 issued (76,869,415 shares at December 31, 2003)                   79,436          76,869
                  Capital in excess of par value                                        967,296         866,095
                  Retained earnings                                                     501,477         347,365
                  Accumulated other comprehensive income (loss)                          12,748          (3,702)
                                                                                 ---------------  --------------
                                                                                      1,560,957       1,286,627

                  Less treasury stock, at cost, 397,805 shares
                        (363,076 shares at December 31, 2003)                            11,338           9,339
                                                                                 ---------------  --------------
                           Total stockholders' equity                                 1,549,619       1,277,288
                                                                                 ---------------  --------------

                                                                                   $ 28,431,481    $ 22,712,180
                                                                                 ===============  ==============
                             See accompanying notes.



</TABLE>


                                       1
<PAGE>

<TABLE>
<CAPTION>

<S>                                                              <C>            <C>            <C>           <C>

                                                 COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                                    CONSOLIDATED STATEMENTS OF INCOME
                                                               (unaudited)

              ---------------------------------------------------------------------------------------------------------
                                                                 Three Months Ended             Nine Months Ended
                                                                    September 30,                 September 30,
                                                             ----------------------------------------------------------
       (dollars in thousands, except per share  amounts)           2004           2003           2004           2003
              ---------------------------------------------------------------------------------------------------------
Interest      Interest and fees on loans                         $124,698       $ 98,889       $346,858      $ 287,558
income        Interest on investments                             195,968        134,984        537,396        371,743
              Other interest                                          148             28            642            205
                                                             -------------   ------------   ------------   ------------
                       Total interest income                      320,814        233,901        884,896        659,506
                                                             -------------   ------------   ------------   ------------

Interest      Interest on deposits:
expense            Demand                                          24,539         12,090         59,211         36,448
                   Savings                                         12,408          6,890         30,410         19,999
                   Time                                            14,210         16,682         43,117         50,915
                                                             -------------   ------------   ------------   ------------
                       Total interest on deposits                  51,157         35,662        132,738        107,362
              Interest on other borrowed money                      2,255          1,110          3,755          2,342
              Interest on long-term debt                            3,020          3,020          9,060          9,060
                                                             -------------   ------------   ------------   ------------
                       Total interest expense                      56,432         39,792        145,553        118,764
                                                             -------------   ------------   ------------   ------------

              Net interest income                                 264,382        194,109        739,343        540,742
              Provision for loan losses                            10,750          7,250         30,998         21,050
                                                             -------------   ------------   ------------   ------------
              Net interest income after provision for
                   loan losses                                    253,632        186,859        708,345        519,692

Noninterest   Deposit charges and service fees                     57,081         41,500        155,279        115,107
income        Other operating income                               42,089         41,976        121,339        126,724
              Net investment securities gains                         943          1,682          2,002          2,763
                                                             -------------   ------------   ------------   ------------
                       Total noninterest income                   100,113         85,158        278,620        244,594
                                                             -------------   ------------   ------------   ------------

Noninterest   Salaries and benefits                               114,467         92,732        315,917        261,152
expense       Occupancy                                            31,689         24,760         87,748         67,943
              Furniture and equipment                              27,987         21,770         79,167         63,552
              Office                                               11,082          9,906         32,922         28,325
              Marketing                                             8,994          9,412         26,968         23,886
              Other                                                52,943         38,732        142,945        112,253
                                                             -------------   ------------   ------------   ------------
                       Total noninterest expenses                 247,162        197,312        685,667        557,111
                                                             -------------   ------------   ------------   ------------

              Income before income taxes                          106,583         74,705        301,298        207,175
              Provision for federal and state income taxes         36,493         25,231        102,998         69,494
                                                             -------------   ------------   ------------   ------------
              Net income                                         $ 70,090       $ 49,474       $198,300      $ 137,681
                                                             =============   ============   ============   ============

              Net  income per common and common equivalent share:
                       Basic                                      $  0.89        $  0.70        $  2.54        $  1.98

                       Diluted                                    $  0.84        $  0.67        $  2.38        $  1.90
              Average common and common equivalent
                   shares outstanding:
                       Basic                                       78,625         70,787         77,925         69,442
                       Diluted                                     86,045         73,926         85,932         72,614
              Cash dividends, common stock                        $  0.19        $  0.17        $  0.57        $  0.50


                             See accompanying notes.


</TABLE>

                                       2
<PAGE>



<TABLE>
<CAPTION>


<S>                                                                                      <C>                <C>

                                                        COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     (unaudited)

                  ----------------------------------------------------------------------------------------------------
                                                                                             Nine Months Ended
                                                                                               September 30,
                                                                                       -------------------------------
                  (dollars in thousands)                                                       2004             2003
                  ----------------------------------------------------------------------------------------------------
Operating         Net income                                                             $   198,300        $ 137,681
activities        Adjustments to reconcile net income to net cash
                     provided by operating activities:
                       Provision for loan losses                                              30,998           21,050
                       Provision for depreciation, amortization and accretion                 97,203           97,667
                       Gain on sales of securities available for sale                         (2,002)          (2,763)
                       Proceeds from sales of loans held for sale                            567,653        1,276,649
                       Originations of loans held for sale                                  (561,624)      (1,274,325)
                       Net (increase) decrease in trading securities                         (74,800)         106,046
                       Increase in other assets, net                                         (11,605)         (18,725)
                       Increase (decrease) in other liabilities                               55,195          (56,632)
                  ----------------------------------------------------------------------------------------------------
                             Net cash provided by operating activities                       299,318          286,648

Investing         Proceeds from the sales of securities available for sale                 1,917,794        3,407,875
activities        Proceeds from the maturity of securities available for sale              3,044,415        4,094,192
                  Proceeds from the maturity of securities held to maturity                  644,684          498,010
                  Purchase of securities available for sale                               (7,005,159)     (10,279,232)
                  Purchase of securities held to maturity                                 (2,237,022)      (1,837,448)
                  Net increase in loans                                                   (1,481,917)      (1,009,670)
                  Capital expenditures                                                      (217,244)        (222,539)
                  ----------------------------------------------------------------------------------------------------
                             Net cash used by investing activities                        (5,334,449)      (5,348,812)

Financing         Net increase in demand and savings deposits                              5,667,456        4,381,561
activities        Net (decrease) increase in time deposits                                  (127,224)         624,695
                  Net decrease in other borrowed money                                      (145,657)        (235,792)
                  Issuance of common stock                                                         -          208,825
                  Dividends paid                                                             (44,187)         (34,063)
                  Proceeds from issuance of common stock under
                     dividend reinvestment and other stock plans                             100,954           82,506
                  Other                                                                       (1,985)          (1,306)
                  ----------------------------------------------------------------------------------------------------
                             Net cash provided by financing activities                     5,449,357        5,026,426

                  Increase (decrease) in cash and cash equivalents                           414,226          (35,738)
                  Cash and cash equivalents at beginning of year                             910,092          811,434
                  ----------------------------------------------------------------------------------------------------
                  Cash and cash equivalents at end of period                             $ 1,324,318        $ 775,696
                  ====================================================================================================

                  Supplemental disclosures of cash flow information:
                    Cash paid during the period for:
                       Interest                                                          $   145,550        $ 119,894
                       Income taxes                                                           93,432           45,693



                             See accompanying notes.

</TABLE>


                                       3
<PAGE>


<TABLE>
<CAPTION>

<S>                  <C> <C>                          <C>         <C>         <C>        <C>              <C>        <C>


                                                   COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                                  (unaudited)

Nine months ended September 30, 2004
(in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
                                                               Capital in                            Accumulated
                                                               Excess of                                Other
                                                     Common       Par        Retained   Treasury    Comprehensive
                                                      Stock      Value       Earnings     Stock     Income (Loss)      Total
-----------------------------------------------------------------------------------------------------------------------------------

Balances at December 31, 2003                         $76,869     $866,095    $347,365   $ (9,339)        $ (3,702)  $1,277,288
Net income                                                                     198,300                                  198,300
   Other comprehensive income (loss), net of tax
     Unrealized loss on securities (pre-tax $9,591)                                                         (6,823)      (6,823)
     Reclassification adjustment (pre-tax $35,804)                                                          23,273       23,273
                                                                                                                    ---------------
   Other comprehensive income                                                                                            16,450
                                                                                                                    ---------------
Total comprehensive income                                                                                              214,750
Cash dividends paid                                                            (44,187)                                 (44,187)
Shares issued under dividend reinvestment
   and compensation and benefit plans (2,567 shares)    2,567       98,387                                              100,954
Other                                                                2,814          (1)    (1,999)                          814
-----------------------------------------------------------------------------------------------------------------------------------
Balances at September 30, 2004                        $79,436     $967,296    $501,477   $(11,338)     $    12,748   $1,549,619
===================================================================================================================================


                             See accompanying notes.

</TABLE>




                                       4
<PAGE>


                     COMMERCE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

A.   Consolidated Financial Statements

The consolidated financial statements included herein have been prepared without
audit  pursuant to the rules and  regulations  of the  Securities  and  Exchange
Commission.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared  in  accordance  with  U.S.  generally  accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations. These consolidated financial statements were prepared in accordance
with  the  accounting  policies  set  forth  in note 1  (Significant  Accounting
Policies)  of the Notes to  Consolidated  Financial  Statements  included in the
Company's  Annual Report on Form 10-K for the year ended  December 31, 2003. The
accompanying consolidated financial statements reflect all adjustments that are,
in the  opinion of  management,  necessary  to reflect a fair  statement  of the
results for the interim  periods  presented.  Such  adjustments  are of a normal
recurring nature.

These consolidated  financial  statements should be read in conjunction with the
audited financial  statements and the notes thereto included in the registrant's
Annual Report on Form 10-K for the year ended December 31, 2003. The results for
the  three  and  nine  months  ended  September  30,  2004  are not  necessarily
indicative of the results that may be expected for the year ending  December 31,
2004.

The consolidated  financial statements include the accounts of Commerce Bancorp,
Inc. and its consolidated  subsidiaries.  All material intercompany transactions
have been eliminated. Certain amounts from prior years have been reclassified to
conform with 2004 presentation.

B.   Long Term Debt

On April 1,  2004,  the  Company's  $200.0  million of 5.95%  Convertible  Trust
Capital  Securities,  recorded on the  consolidated  balance  sheet as long term
debt,  became  convertible  at the  option of the  holder.  The  holders  of the
Convertible  Trust  Capital  Securities  may convert each  security  into 0.9478
shares of Company  common stock.  The Company has calculated the effect of these
securities  on diluted  net income per share by using the  if-converted  method.
Under the if-converted  method,  the related interest charges on the Convertible
Trust Capital Securities, adjusted for income taxes, have been added back to the
numerator and the common shares to be issued upon  conversion have been added to
the denominator.

The Convertible  Trust Capital  Securities were issued on March 11, 2002 through
Commerce  Capital Trust II, a Delaware  Business Trust.  The  Convertible  Trust
Capital Securities mature in 2032.

C.   Bank Premises and Equipment

In  accordance  with  U.S.  generally  accepted  accounting   principles,   when
capitalizing  costs for branch  construction,  the Company includes the costs of
purchasing  the  land,  developing  the  site,  constructing  the  building  (or
leasehold  improvements if the property is leased), and furniture,  fixtures and
equipment  necessary to equip the branch. All other pre-opening and post-opening
costs related to branches are expensed as incurred. As of September 30, 2004 and
December 31, 2003, Bank premises and equipment in progress was $91.1 million and
$87.2 million, respectively.

D.       Commitments and Other

In the normal course of business,  there are various outstanding  commitments to
extend  credit,  such as  letters  of credit and  unadvanced  loan  commitments.
Management  does  not  anticipate  any  material  losses  as a  result  of these
transactions.  In  accordance  with FASB  Interpretation  No.  45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others" (FIN 45),  the Company  defers the fees
associated   with  standby   letters  of  credit  and  records  them  in  "Other
liabilities" on the consolidated balance sheet. These fees are immaterial to the
Company's consolidated financial statements at September 30, 2004.




                                       5
<PAGE>


The Company makes investments  directly in low-income housing tax credit (LIHTC)
operating  partnerships,  private  venture  capital  funds  and  Small  Business
Investment  Companies  (SBIC).  The Company has determined these entities do not
meet the consolidation  criteria of FASB Interpretation No. 46R,  "Consolidation
of Variable Interest Entities" (FIN 46R). At September 30, 2004 and December 31,
2003, the Company's investment in these entities totaled $44.9 million and $30.1
million, respectively.

E.   Comprehensive Income (Loss)

Total comprehensive income (loss), which for the Company included net income and
changes in  unrealized  gains and  losses on the  Company's  available  for sale
securities, amounted to $204.8 million and $(3.5) million, respectively, for the
three  months  ended  September  30, 2004 and 2003.  For the nine  months  ended
September 30, 2004 and 2003, total  comprehensive  income was $214.8 million and
$60.6 million, respectively.

F.   New Accounting Standards

In September  2004,  the EITF reached a consensus on Issue 04-8,  "The Effect of
Contingently  Convertible  Debt on  Diluted  Earnings  per  Share."  Issue  04-8
addresses the effect of contingently  convertible debt  instruments  (Co-Cos) on
diluted EPS. The EITF defines Co-Cos as instruments  that are  convertible  into
common stock if one or more  specified  contingencies  occur and at least one of
the  contingencies  is based on the market price of the  Company's  common stock
(market  price  contingency).  Issue 04-8  requires  that  Co-Cos be included in
diluted earnings per share computations (if dilutive)  regardless of whether the
market price trigger has been met. This  consensus  must be applied by restating
all periods during which the Co-Co was outstanding. Issue 04-8 is expected to be
effective  for interim or annual  reporting  periods  ending after  December 15,
2004. The Company has determined that its Convertible  Trust Capital  Securities
meet the  contingency  requirements  of Issue 04-8 and plans to adopt Issue 04-8
when it is effective,  currently  anticipated  to be the fourth quarter of 2004.
The  adoption  will  require  the  Company  to  restate  its prior  diluted  EPS
calculations  using the  if-converted  method for the periods  since March 2002,
which is when  the  Convertible  Trust  Capital  Securities  were  issued.  When
adopted,  the if-converted  method will decrease previously reported diluted EPS
by $0.03 and $0.01 per share for the years ended 2003 and 2002, respectively.

In March 2004,  the EITF  reached a consensus  on Issue  03-1,  "The  Meaning of
Other-Than-Temporary  Impairment and its  Application  to Certain  Investments."
Issue 03-1 provides guidance that should be used to determine when an investment
is considered impaired, whether that impairment is other-than-temporary, and the
measurement  of  an  impairment  loss.  Issue  03-1  also  includes   accounting
considerations  subsequent to recognition of an other-than-temporary  impairment
and requires  certain  disclosures  about  unrealized  losses that have not been
recognized as  other-than-temporary  impairments.  In September  2004,  the FASB
deferred the  implementation  date of the provisions  that relate to measurement
and recognition of other-than-temporary impairments. The disclosure requirements
of Issue 03-1 were  effective  for fiscal years ending after  December 15, 2003.
The  Company  is  continuing  to  evaluate  the  impact of the  measurement  and
recognition  provisions  of Issue 03-1 but does not expect it to have a material
impact on the results of operations of the Company.

G.   Legal Proceedings

During  July and August  2004,  six class  action  complaints  were filed in the
United  States  District  Court for the  District  of New Jersey and the Eastern
District of Pennsylvania against the Company and certain Company (or subsidiary)
current and former officers and directors. All class action complaints have been
consolidated in the United States District Court for the District of New Jersey,
Camden  Division.  The  complaints,  which  contain  virtually  the same factual
allegations  and causes of  action,  allege  that the  defendants  violated  the
federal  securities  laws,  specifically  Sections  10  (b)  and  20  (a) of the
Securities  Exchange Act of 1934 and Rule 10b-5 of the  Securities  and Exchange
Commission.  The plaintiffs  seek  unspecified  damages on behalf of a purported
class of purchasers of the Company's  securities  during  various  periods.  The
Company believes these class action complaints are without merit. No accrual for
a loss contingency has been recorded, as the risk of loss is considered remote.




                                       6
<PAGE>


H.   Stock-Based Compensation

The  Company  follows  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees"  and  related   Interpretations   to  account  for  its   stock-based
compensation  plans.  If the Company had  accounted  for stock options under the
fair value provisions of FAS 123, "Accounting for Stock-Based Compensation", net
income and net income per share would have been as follows (in thousands, except
per share amounts):


<TABLE>
<CAPTION>

<S>                                                    <C>             <C>             <C>              <C>

-------------------------------------------------------------------------------------------------------------------
                                                        Three Months Ended                Nine Months Ended
                                                           September 30,                    September 30,
-------------------------------------------------------------------------------------------------------------------
                                                        2004             2003            2004             2003
-------------------------------------------------------------------------------------------------------------------

Reported net income                                    $  70,090       $  49,474       $   198,300      $   137,681
Less:  Stock option compensation expense
   determined under fair value method, net of tax         (3,090)         (2,684)           (9,600)          (7,297)
                                                       ---------       ---------       -----------      -----------
Pro forma net income, basic                            $  67,000       $  46,790       $   188,700      $   130,384
                                                                       ===========                      ===========
Add:  Interest expense on Convertible Trust
   Capital Securities, net of tax                          1,963                             5,889
                                                       -----------                     -----------
Pro forma net income, diluted                          $  68,963                         $ 194,589
                                                       ===========                     ===========

Reported net income per share:
   Basic                                               $    0.89       $    0.70       $       2.54      $     1.98
   Diluted                                             $    0.84       $    0.67       $       2.38      $     1.90

Pro forma net income per share:
   Basic                                               $    0.85       $    0.66       $       2.42      $     1.88
   Diluted                                             $    0.80       $    0.63       $       2.26      $     1.80
-------------------------------------------------------------------------------------------------------------------

</TABLE>



The fair value of options  granted in 2004 and 2003 was estimated at the date of
grant using a  Black-Scholes  option  pricing model with the following  weighted
average  assumptions:  risk-free  interest  rates of 3.09% and  3.00%,  dividend
yields of 1.33% and 1.50%,  volatility  factors of the expected  market price of
the Company's  common stock of .255 and .304 and weighted average expected lives
of the options of 5.27 and 5.22 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the Company's stock options have  characteristics  significantly  different from
those of traded options, and because changes in the subjective input assumptions
can materially  affect the fair value  estimate,  in management's  opinion,  the
existing models do not necessarily provide a reliable single measure of the fair
value of its stock options.



                                       7
<PAGE>



 I. Segment Information

The Company operates one reportable segment of business,  Community Banks, which
includes all of the Company's banking subsidiaries. Through its Community Banks,
the Company  provides a broad range of retail and commercial  banking  services,
and  corporate  trust  services.  Parent/Other  includes  the  holding  company,
Commerce Insurance Services, Inc. and Commerce Capital Markets, Inc.


<TABLE>
<CAPTION>

<S>                                   <C>           <C>          <C>           <C>           <C>          <C>

Selected segment information is as follows (in thousands):

-------------------------------------------------------------------------------------------------------------------------
                                                 Three Months Ended                       Three Months Ended
                                                 September 30, 2004                       September 30, 2003
-------------------------------------------------------------------------------------------------------------------------
                                        Community      Parent/                   Community      Parent/
                                          Banks         Other        Total         Banks         Other        Total
-------------------------------------------------------------------------------------------------------------------------
Net interest income                   $    266,351  $   (1,969)  $    264,382  $   195,715   $    (1,606) $   194,109
Provision for loan losses                   10,750                     10,750        7,250                      7,250
                                      -----------------------------------------------------------------------------------
Net interest income after provision        255,601      (1,969)       253,632      188,465        (1,606)     186,859
Noninterest income                          67,167      32,946        100,113       58,384        26,774       85,158
Noninterest expense                        221,704      25,458        247,162      175,547        21,765      197,312
                                      -----------------------------------------------------------------------------------
Income before income taxes                 101,064       5,519        106,583       71,302         3,403       74,705
Income tax expense                          34,472       2,021         36,493       24,068         1,163       25,231
                                      -----------------------------------------------------------------------------------
Net income                            $      66,592 $    3,498   $      70,090 $    47,234   $     2,240  $    49,474
                                      ===================================================================================

Average assets (in millions)          $      25,203 $    2,191   $      27,394 $    18,965   $     1,753  $    20,718
                                      ===================================================================================



-------------------------------------------------------------------------------------------------------------------------
                                                  Nine Months Ended                        Nine Months Ended
                                                 September 30, 2004                       September 30, 2003
-------------------------------------------------------------------------------------------------------------------------
                                        Community      Parent/                   Community      Parent/
                                          Banks         Other        Total         Banks         Other        Total
-------------------------------------------------------------------------------------------------------------------------
Net interest income                   $   744,572   $    (5,229) $   739,343   $   544,673   $    (3,931) $   540,742
Provision for loan losses                  30,998                     30,998        21,050                     21,050
                                      -----------------------------------------------------------------------------------
Net interest income after provision       713,574        (5,229)     708,345       523,623        (3,931)     519,692
Noninterest income                        192,136        86,484      278,620       164,388        80,206      244,594
Noninterest expense                       614,212        71,455      685,667       491,133        65,978      557,111
                                      -----------------------------------------------------------------------------------
Income before income taxes                291,498         9,800      301,298       196,878        10,297      207,175
Income tax expense                         99,596         3,402      102,998        66,360         3,134       69,494
                                      -----------------------------------------------------------------------------------
Net income                            $   191,902   $     6,398  $   198,300   $   130,518   $     7,163  $   137,681
                                      ===================================================================================

Average assets (in millions)          $    23,471   $     2,104  $    25,575   $    16,905   $     1,792  $    18,697
                                      ===================================================================================


</TABLE>


                                       8
<PAGE>

<TABLE>
<CAPTION>

<S>                                                              <C>         <C>         <C>         <C>

J.   Net Income Per Share

The calculation of net income per share follows (in thousands, except for per
share amounts):

-------------------------------------------------------------------------------------------------------------
                                                                 Three Months Ended        Nine Months Ended
                                                                    September 30,            September 30,
-------------------------------------------------------------------------------------------------------------
                                                                   2004        2003        2004        2003
-------------------------------------------------------------------------------------------------------------

Basic:
Net income available to common shareholders - basic              $ 70,090    $ 49,474    $198,300    $137,681
                                                                 ========    ========    ========    ========

Average common shares outstanding                                  78,625      70,787      77,925      69,442
                                                                 ========    ========    ========    ========

Net income per common share - basic                              $   0.89    $   0.70    $   2.54    $   1.98
                                                                 ========    ========    ========    ========


Diluted:
Net income                                                       $ 70,090    $ 49,474    $198,300    $137,681
Add interest expense on Convertible Trust Capital Securities,
   net of tax                                                       1,963                  5,889
                                                                 --------    --------    --------    --------
Net income available to common shareholders - diluted            $ 72,053    $ 49,474    $204,189    $137,681
                                                                 ========    ========    ========    ========


Average common shares outstanding                                  78,625      70,787      77,925      69,442
Additional shares considered in diluted computation assuming:
   Exercise of stock options                                        3,629       3,139       4,216       3,172
   Conversion of Convertible Trust Capital Securities               3,791                   3,791
                                                                 --------    --------    --------    --------
Average common shares outstanding - diluted                        86,045      73,926      85,932      72,614
                                                                 ========    ========    ========    ========

Net income per common share - diluted                            $   0.84    $   0.67    $   2.38    $   1.90
                                                                 ========    ========    ========    ========


</TABLE>



                                       9
<PAGE>


Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operation
--------------------------------------------------------------------------------

Executive Summary
-----------------

During the first nine months of 2004,  the Company  experienced  strong  deposit
growth and positive  operating  leverage as year over year revenue growth of 30%
exceeded non-interest expense growth of 23% during the same period. Total assets
grew to $28.4 billion,  an increase of 33% over September 30, 2003,  while total
deposits  grew 34%. Net income  increased 42% to $70.1 million and 44% to $198.3
million during the third quarter and first nine months of 2004, respectively, as
compared to the same periods in 2003.  Diluted net income per share increased by
25% to $.84 and $2.38  during the third  quarter  and first nine months of 2004,
respectively,  as compared to the same  periods in 2003  despite the addition of
5.0 million shares from the Company's  secondary  offering in September 2003 and
3.8 million  shares  assuming  conversion  of the  Company's  Convertible  Trust
Capital Securities.

The Company has  identified  two  critical  accounting  policies:  the  policies
related to the allowance for loan losses and capitalization of branch costs. The
foregoing critical accounting policies are more fully described in the Company's
annual  report on Form 10-K for the year ended  December  31,  2003.  During the
first nine months of 2004,  there were no material  changes to the  estimates or
methods by which  estimates  are derived with regard to the critical  accounting
policies.

Capital Resources
-----------------

At September  30, 2004,  stockholders'  equity  totaled $1.5 billion or 5.45% of
total assets,  compared to $1.3 billion or 5.62% of total assets at December 31,
2003.

The Company and its  subsidiaries  are subject to risk-based  capital  standards
issued by bank regulatory  authorities.  Under these  standards,  Tier 1 capital
includes  stockholders' equity, as adjusted for certain items. The Company makes
two  significant  adjustments  in  calculating  regulatory  capital.  The  first
adjustment  is  to  exclude  from  capital  the   unrealized   appreciation   or
depreciation  in  its  available  for  sale  securities  portfolio.  The  second
adjustment is to add to capital the Convertible Trust Capital Securities.  Total
capital is comprised of all the  components of Tier 1 capital plus the allowance
for loan losses.

The table below presents  Commerce  Bancorp and Commerce  N.A.'s  risk-based and
leverage ratios at September 30, 2004 and 2003:

<TABLE>
<CAPTION>

<S>         <C>                          <C>             <C>         <C>            <C>         <C>            <C>


                                                                              Per Regulatory Guidelines
                                                                  --------------------------------------------------
                                               Actual                    Minimum               "Well Capitalized"
                                          Amount      Ratio         Amount      Ratio          Amount      Ratio
--------------------------------------------------------------------------------------------------------------------

September 30, 2004:
Commerce Bancorp
     Risk based capital ratios:
       Tier 1                            $1,727,456      12.31%      $561,267       4.00%       $841,901       6.00%
       Total capital                      1,862,398      13.27      1,122,535       8.00       1,403,169      10.00
     Leverage ratio                       1,727,456       6.30      1,097,088       4.00       1,371,360       5.00
Commerce N.A.
     Risk based capital ratios:
       Tier 1                            $1,167,708      11.30%      $413,165       4.00%       $619,748       6.00%
       Total capital                      1,270,293      12.30        826,331       8.00       1,032,913      10.00
     Leverage ratio                       1,167,708       6.00        777,894       4.00         972,368       5.00

</TABLE>



                                       10
<PAGE>


<TABLE>
<CAPTION>

<S>         <C>                          <C>             <C>         <C>            <C>         <C>            <C>

                                                                              Per Regulatory Guidelines
                                                                  --------------------------------------------------
                                          Actual                         Minimum               "Well Capitalized"
                                          Amount      Ratio         Amount      Ratio          Amount      Ratio
--------------------------------------------------------------------------------------------------------------------

September 30, 2003:
Commerce Bancorp
     Risk based capital ratios:
       Tier 1                            $1,388,033      12.68%      $438,024       4.00%      $ 657,036       6.00%
       Total capital                      1,491,625      13.62        876,048       8.00       1,095,060      10.00
     Leverage ratio                       1,388,033       6.68        831,046       4.00       1,038,808       5.00
Commerce N.A.
     Risk based capital ratios:
       Tier 1                            $  895,416      11.36%      $315,315       4.00%      $ 472,973       6.00%
       Total capital                        974,047      12.36        630,630       8.00         788,288      10.00
     Leverage ratio                         895,416       6.13        583,857       4.00         729,822       5.00


</TABLE>


At September 30, 2004, the Company's consolidated capital levels and each of the
Company's  bank   subsidiaries   met  the  regulatory   definition  of  a  "well
capitalized" financial institution, i.e., a leverage capital ratio exceeding 5%,
a Tier 1 risk-based  capital ratio exceeding 6%, and a total risk-based  capital
ratio  exceeding  10%.  Management  believes that as of September 30, 2004,  the
Company and its  subsidiaries  meet all capital  adequacy  requirements to which
they are subject.

Deposits
--------

Total  deposits at September 30, 2004 were $ 26.2 billion,  up $6.7 billion,  or
34% over total  deposits of $19.5 billion at September 30, 2003,  and up by $5.5
billion,  or 27% from year-end 2003. Deposit growth during the first nine months
of 2004 included core deposit growth in both demand and savings  products offset
by a decrease in time deposits.  The Company  experienced core deposit growth in
all customer categories. The Company regards core deposits as all deposits other
than public certificates of deposit.  Core deposit growth by type of customer is
as follows (in millions):


<TABLE>
<CAPTION>

<S>                          <C>                  <C>        <C>                <C>          <C>

                        ----------------------------------------------------------------------------
                        September 30,           % of       September 30,      % of     Annual Growth
                              2004             Total          2003           Total          %
                        ----------------------------------------------------------------------------

     Consumer                $ 11,388             45%        $ 9,123           49%          25%

     Commercial                 8,989             36           6,610           36           36

     Government                 4,732             19           2,863           15           65
                        ----------------------------------------------------------------------------

           Total             $ 25,109            100%       $ 18,596          100%          35%
                        ----------------------------------------------------------------------------


</TABLE>


Same-store  core  deposit  growth is measured  as the year over year  percentage
increase in core  deposits  for  branches  open two years or more at the balance
sheet date.  The Company  experienced  same-store  core deposit growth of 21% at
September 30, 2004.

Interest Rate Sensitivity and Liquidity
---------------------------------------

The Company's risk of loss arising from adverse changes in the fair market value
of financial instruments, or market risk, is composed primarily of interest rate
risk.  The  primary  objective  of  the  Company's  asset/liability   management
activities  is to maximize net interest  income,  while  maintaining  acceptable
levels of interest rate risk. The Company's  Asset/Liability Committee (ALCO) is
responsible for  establishing  policies to limit exposure to interest rate risk,
and to


                                       11
<PAGE>


ensure procedures are established to monitor compliance with these policies. The
guidelines established by ALCO are reviewed by the Company's Board of Directors.

Management considers the simulation of net interest income in different interest
rate environments to be the best indicator of the Company's  interest rate risk.
Income simulation  analysis captures the potential and probability of all assets
and  liabilities  to mature or reprice.  Income  simulation  also attends to the
relative interest rate sensitivities of these items, and projects their behavior
over an extended period of time.  Finally,  income simulation permits management
to assess  the  probable  effects  on the  balance  sheet not only of changes in
interest rates, but also of proposed strategies for responding to them.

The Company's  income  simulation  model analyzes  interest rate  sensitivity by
projecting net income over the next 24 months in a flat rate scenario versus net
income in alternative  interest rate scenarios.  Management  continually reviews
and  refines  its  interest  rate risk  management  process in  response  to the
changing   economic   climate.   Currently,   the  Company's  model  projects  a
proportionate  plus 200 and minus 100 basis point  change  during the next year,
with rates remaining  constant in the second year. The Company's ALCO policy has
established that interest income  sensitivity  will be considered  acceptable if
net income in the above  interest  rate  scenario is within 10% of net income in
the flat rate  scenario  in the first year and  within 15% over the twenty  four
month time frame.  Net income in the flat rate scenario is projected to increase
by approximately  25% per year. The following table  illustrates the variance to
the projected  net income  growth rate at September 30, 2004 and 2003  resulting
from a plus 200 and minus 100 basis point change in interest rates.

       ---------------------------------------------------------------------
                                                Basis Point Change
       ---------------------------------------------------------------------
                                           Plus 200             Minus 100
       ---------------------------------------------------------------------

       September 30, 2004:
          Twelve Months                       1.21%             (6.34)%
          Twenty Four Months                  8.64%            (11.25)%

       September 30, 2003:
          Twelve Months                       8.16%               0.17%
          Twenty Four Months                 11.50%             (5.30)%


All of these net income  projections are within an acceptable  level of interest
rate risk pursuant to the policy established by ALCO.

In the event the Company's  interest rate risk models  indicate an  unacceptable
level of risk, the Company could undertake a number of actions that would reduce
this risk,  including the use of risk management  strategies and tools,  such as
interest  rate  swaps  and  caps  or  the  extension  of the  maturities  of its
short-term borrowings.

Management  also  monitors  interest  rate risk by  utilizing a market  value of
equity model (MVE).  The model assesses the impact of a change in interest rates
on the market value of all the Company's assets and liabilities,  as well as any
off balance sheet items.  The model calculates the market value of the Company's
assets and liabilities in excess of book value in the current rate scenario, and
then compares the excess of market value over book value given an immediate plus
200 and minus 100  basis  point  change in  rates.  The  Company's  ALCO  policy
indicates that the level of interest rate risk is  unacceptable if the immediate
plus 200 and minus 100 basis  point  change  would  result in the loss of 45% or
more of the excess of market value over book value in the current rate scenario.
At September 30, 2004, the market value of equity model  indicates an acceptable
level of interest rate risk.

The MVE reflects certain  estimates and assumptions  regarding the impact on the
market value of the Company's assets and liabilities given an immediate plus 200
or minus 100 basis point change in interest rates. One of the key assumptions is
the market value assigned to the Company's  core  deposits,  or the core deposit
premium.  Utilizing  an  independent  consultant,  the Company has  periodically
completed  and updated  comprehensive  studies of its core  deposit  transaction
accounts in order to assign its own core  deposit  premiums as  permitted by the
Company's  regulatory


                                       12
<PAGE>


authorities. The studies have consistently confirmed management's assertion that
the Company's core deposit  transaction  accounts have stable balances over long
periods of time, are generally insensitive to changes in interest rates and have
significantly  longer average lives and durations  than the Company's  loans and
investment securities.  At September 30, 2004, the average life of the Company's
core  deposit  transaction  accounts  was 14.1 years.  Thus,  these core deposit
balances provide an internal hedge to market value fluctuations in the Company's
fixed rate assets.

The MVE  analyzes  both sides of the  balance  sheet and,  as  indicated  below,
demonstrates  the inherent value of the Company's core deposits in a rising rate
environment.  As rates rise, the value of the Company's core deposits  increases
which  offsets the decrease in value of the  Company's  fixed rate  assets.  The
following table  summarizes the market value of equity at September 30, 2004 (in
millions, except for per share amounts):

       ------------------------------------------------------------------------
                                       Market Value
                                        Of Equity              Per Share
       ------------------------------------------------------------------------

       Plus 200 basis points              $5,359                $67.46

       Current Rate                       $5,305                $66.79

       Minus 100 basis points             $4,489                $56.51

Liquidity  involves the Company's ability to raise funds to support asset growth
or decrease assets to meet deposit  withdrawals  and other  borrowing  needs, to
maintain reserve requirements and to otherwise operate the Company on an ongoing
basis.  The  Company's  liquidity  needs  are  primarily  met by  growth in core
deposits,  its  cash  and  federal  funds  sold  position,  cash  flow  from its
amortizing  investment  and loan  portfolios,  as well as the use of  short-term
borrowings,  as  required.  If  necessary,  the Company has the ability to raise
liquidity through collateralized  borrowings or Federal Home Loan Bank advances.
As of  September  30,  2004  the  Company  had in  excess  of $12.7  billion  in
immediately  available liquidity which includes unpledged  securities that could
be used for collateralized  borrowings,  cash on hand, and borrowing  capacities
under  existing lines of credit.  During the first nine months of 2004,  deposit
growth,  short-term  borrowings and maturing investment  securities were used to
fund growth in the loan portfolio and purchase additional investment securities.

Short-Term Borrowings
---------------------

Short-term borrowings,  or other borrowed money, consist primarily of securities
sold under agreements to repurchase and overnight lines of credit,  and are used
to meet short-term funding needs. At September 30, 2004,  short-term  borrowings
totaled $165.9  million and had an average rate of 1.49%,  as compared to $311.5
million at an average rate of 0.77% at December 31, 2003.

Interest Earning Assets
-----------------------

The Company's cash flow from deposit  growth and repayments  from its investment
portfolio totaled  approximately $9.2 billion for the first nine months of 2004.
This  significant  cash flow  provides  the Company  with  ongoing  reinvestment
opportunities  as  interest  rates  change.  For the  nine  month  period  ended
September 30, 2004,  interest  earning assets  increased $5.4 billion from $20.8
billion to $26.2 billion.  This increase was primarily in investment  securities
and the loan portfolio as described below.

Loans
-----

During the first nine months of 2004,  loans  increased  $1.5  billion from $7.4
billion to $8.9 billion.  All segments of the loan portfolio  experienced growth
in the first nine months of 2004,  including  loans secured by  commercial  real
estate properties, commercial loans, and consumer loans.



                                       13
<PAGE>



The following table summarizes the loan portfolio of the Company by type of loan
as of the dates shown.

                                          September 30,            December 31,
                                         --------------------------------------
                                              2004                     2003
                                         --------------------------------------
                                                    (in thousands)
Commercial:
   Term                                      $ 1,184,854           $ 1,027,526
   Line of credit                              1,105,510               959,158
   Demand                                                                1,077
                                         ---------------- ---------------------
                                               2,290,364             1,987,761

Owner-occupied                                 1,913,351             1,619,079
                                         ---------------- ---------------------
                                               4,203,715             3,606,840

Consumer:
   Mortgages (1-4 family residential)          1,216,110               918,686
   Installment                                   136,538               138,437
   Home equity                                 1,712,733             1,405,795
   Credit lines                                   67,616                60,579
                                         ---------------- ---------------------
                                               3,132,997             2,523,497
Commercial real estate:
   Investor developer                          1,391,812             1,167,672
   Construction                                  182,443               142,567
                                         ---------------- ---------------------
                                               1,574,255             1,310,239
                                         ---------------- ---------------------
     Total loans                             $ 8,910,967           $ 7,440,576
                                         ================ =====================


Investments
-----------

In total, for the first nine months of 2004,  securities  increased $3.7 billion
from $13.3 billion to $17.0 billion.  The available for sale portfolio increased
$2.0  billion  to $12.7  billion at  September  30,  2004 from $10.7  billion at
December 31, 2003, and the securities held to maturity portfolio  increased $1.6
billion to $4.1  billion at  September  30,  2004 from $2.5  billion at year-end
2003. The portfolio of trading securities  increased $74.8 million from year-end
2003 to $245.3 million at September 30, 2004.

Detailed below is information  regarding the composition and  characteristics of
the  Company's  investment  portfolio,   excluding  trading  securities,  as  of
September 30, 2004.

<TABLE>
<CAPTION>

<S>                                          <C>               <C>        <C>              <C>            <C>


                                                            Average        Average        Average        Average
           Product Description               Amount          Yield        Book Price      Duration         Life
--------------------------------------------------------------------------------------------------------------------
                                         (in millions)                                          (in years)
Mortgage-backed Securities:
    Federal Agencies Pass Through
     Certificates (AAA Rated)                $ 4,032           5.01%      $101.20          3.67           4.52

    Collateralized Mortgage
     Obligations (AAA Rated)                  11,315           4.86        100.85          3.16           3.78

U.S. Government agencies/Other                 1,426           3.77        100.26          4.53           5.18
                                         ---------------  ------------- --------------- -------------  -------------

                  Total                      $16,773           4.81%      $100.89          3.40           4.07
                                         ===============  ============= =============== =============  =============

</TABLE>




                                       14
<PAGE>



The Company's  mortgage-backed  securities (MBS) portfolio  comprises 90% of the
total  investment  portfolio.  The MBS  portfolio  consists of Federal  Agencies
Pass-Through  Certificates and Collateralized Mortgage Obligations (CMO's) which
are  issued by  federal  agencies  and other  private  sponsors.  The  Company's
investment policy does not permit  investments in inverse  floaters,  IO's, PO's
and other similar issues.

The following table  summarizes the book value of securities  available for sale
and  securities  held to  maturity  by the  Company  as of the  dates  shown (in
thousands).


<TABLE>
<CAPTION>

<S>                                                <C>            <C>            <C>             <C>


                                                  -----------------------------------------------------------
                                                                      At September 30, 2004
                                                  -----------------------------------------------------------
                                                                        Gross          Gross
                                                     Amortized       Unrealized      Unrealized      Market
                                                        Cost            Gains          Losses         Value
                                                  -----------------------------------------------------------
U.S. Government agency and mortgage-backed
   obligations                                     $12,520,080    $    79,678    $   (68,842)    $12,530,916
Obligations of state and political subdivisions        104,623          1,098            (31)        105,690
Other                                                   47,977          8,402                         56,379
                                                   ---------------------------------------------------------
Securities available for sale                      $12,672,680    $    89,178    $   (68,873)    $12,692,985
                                                   ---------------------------------------------------------

U.S. Government agency and mortgage-backed
   obligations                                     $ 3,583,525    $    23,131    $   (25,930)    $ 3,580,726
Obligations of state and political subdivisions        400,145          1,558         (8,990)        392,713
Other                                                   96,464                                        96,464
                                                   ---------------------------------------------------------
Securities held to  maturity                       $ 4,080,134    $    24,689    $   (34,920)    $ 4,069,903
                                                   ---------------------------------------------------------




                                                  ----------------------------------------------------------
                                                                       At December 31, 2003
                                                  ----------------------------------------------------------
                                                                        Gross          Gross
                                                     Amortized       Unrealized      Unrealized      Market
                                                        Cost            Gains          Losses         Value
                                                  ----------------------------------------------------------
U.S. Government agency and mortgage-backed
   obligations                                     $10,528,396    $    82,057    $   (98,908)    $10,511,545
Obligations of state and political subdivisions         30,223            821           (117)         30,927
Other                                                   97,943         10,240                        108,183
                                                   ---------------------------------------------------------
Securities available for sale                      $10,656,562    $    93,118    $   (99,025)    $10,650,655
                                                   ---------------------------------------------------------

U.S. Government agency and mortgage-backed
   obligations                                     $ 2,193,577    $    15,209    $   (27,088)    $ 2,181,698
Obligations of state and political subdivisions        227,199             30        (11,443)        215,786
Other                                                   69,708                                        69,708
                                                   ---------------------------------------------------------
Securities held to  maturity                       $ 2,490,484    $    15,239    $   (38,531)    $ 2,467,192
                                                   ---------------------------------------------------------

</TABLE>


Gross gains and losses on securities  sold during the third quarter of 2004 were
$2.1 million and $1.1 million,  respectively. For the first nine months of 2004,
gross gains and losses on  securities  sold  amounted to $14.9 million and $12.9
million, respectively.

During the third quarter of 2004,  $71.2  million of securities  were sold which
had  unrealized  losses at December  31,  2003.  Gross gains and losses on these
securities  sold were $0 and $1.1 million,  respectively.  During the first nine
months of 2004, $1.2 billion of securities were sold which had unrealized losses
at December 31, 2003.  Gross gains and losses on these securities sold were $1.8
million and $12.8 million, respectively.

The  decrease in  long-term  interest  rates  during the third  quarter led to a
shortening of the duration of the available for sale  portfolio to 3.31 years at
September 30, 2004 from 4.07 years at June 30, 2004. The after-tax  appreciation
in the Company's available for sale portfolio was $12.7 million at September 30,
2004.


                                       15
<PAGE>


Net Income
----------

Net income for the third quarter of 2004 was $70.1 million, an increase of $20.6
million or 42% over the $49.5  million  recorded for the third  quarter of 2003.
Net income for the first nine months of 2004 totaled $198.3 million, an increase
of $60.6 million or 44% from $137.7 million in the first nine months of 2003. On
a per share  basis,  diluted  net  income for the third  quarter  and first nine
months of 2004 was $0.84 and $2.38 per common share  compared to $0.67 and $1.90
per  common  share for the same  periods  in 2003.  Net income per share for the
third quarter and first nine months of 2004 reflects the addition of 5.0 million
shares from the Company's  secondary  offering in September 2003 and 3.8 million
shares assuming conversion of the Convertible Trust Capital Securities.

Return on average  assets (ROA) and return on average equity (ROE) for the third
quarter  of 2004 were  1.02% and  18.97%,  respectively,  compared  to 0.96% and
21.17%,  respectively,  for the same 2003 period. ROA and ROE for the first nine
months  of 2004 were  1.03%  and  18.90%,  respectively,  compared  to 0.98% and
18.97%,  respectively,  for the same 2003 period.  The increase in ROA is due to
net income growth rates that have exceeded growth rates in average assets during
the three month and nine month periods  ended  September 30, 2004 as compared to
the same periods in 2003.  The decrease in ROE is due to average  equity  growth
rates that have exceeded net income rates growth during the three month and nine
month periods ended  September 30, 2004 as compared to the same periods in 2003.
As noted  above,  net income has grown 42% and 44% during the third  quarter and
first nine months of 2004,  respectively,  as compared to the same 2003 periods.
Average  assets and average  equity have grown 32% and 58%,  respectively,  from
September 30, 2003 to September 30, 2004.

Net Interest Income
-------------------

Net interest  income  totaled  $264.4  million for the third quarter of 2004, an
increase  of $70.3  million or 36% from $194.1  million in the third  quarter of
2003. Net interest  income for the first nine months of 2004 was $739.3 million,
up $198.6  million or 37% from $540.7 million for the first nine months of 2003.
The increases in net interest income for the third quarter and first nine months
of 2004 were due to the volume  increases in interest  earning assets  resulting
from the Company's strong, low-cost core deposit growth.

The increase in net interest income on a tax equivalent basis is shown below (in
thousands).

<TABLE>
<CAPTION>

<S>                          <C>           <C>              <C>               <C>                  <C>

                                                                Net Interest Income
                                         -------------------------------------------------------------------

                                             Volume            Rate            Total               %
                 2004 vs. 2003              Increase          Change          Increase          Increase
     -------------------------------------------------------------------------------------------------------

     Quarter Ended September 30            $ 71,018         $   (167)         $ 70,851             36%

     Nine Months Ended September 30        $213,027         $(12,976)         $200,051             36%

</TABLE>




The net interest margin for the third quarter of 2004 was 4.29%, consistent with
the margin for the second  quarter of 2004 and up 8 basis  points from the 4.21%
margin for the third quarter of 2003.

The following  table sets forth balance sheet items on a daily average basis for
the three months ended  September 30, 2004, June 30, 2004 and September 30, 2003
and presents the daily average interest earned on assets and paid on liabilities
for such periods.



                                       16
<PAGE>


<TABLE>
<CAPTION>

<S>                               <C>             <C>         <C>     <C>           <C>         <C>     <C>         <C>        <C>


                                                                Average Balances and Net Interest Income

                                 ---------------------------------------------------------------------------------------------------
                                          September 2004                        June 2004                      September 2003
                                 ----------------------------------  --------------------------------  -----------------------------
                                   Average                 Average     Average               Average     Average             Average
(dollars in thousands)             Balance      Interest    Rate       Balance     Interest   Rate       Balance   Interest    Rate
                                 ----------------------------------  --------------------------------  -----------------------------
Earning Assets
----------------------------------
Investment securities
   Taxable                        $15,741,541     $191,627    4.84%   $14,747,643   $173,678    4.74%   $11,605,502 $131,158   4.48%
   Tax-exempt                         385,814        5,126    5.29        290,200      4,465    6.19        229,566    3,771   6.52
   Trading                            159,954        1,552    3.86        174,578      2,075    4.78        155,541    2,115   5.40
                                 ------------- --------------------  --------------------------------  -----------------------------
Total investment securities        16,287,309      198,305    4.84     15,212,421    180,218    4.76     11,990,609  137,044   4.53
Federal funds sold                     40,413          148    1.46         62,357        154    0.99         10,641       28   1.04
Loans
   Commercial mortgages             3,189,126       48,881    6.10      3,021,768     45,333    6.03      2,520,594   39,189   6.17
   Commercial                       2,069,986       28,552    5.49      1,961,351     25,477    5.22      1,612,069   21,968   5.41
   Consumer                         3,024,776       43,287    5.69      2,767,826     39,079    5.68      2,262,426   34,309   6.02
   Tax-exempt                         337,374        6,121    7.22        335,505      6,243    7.48        271,436    5,266   7.70
                                 ------------- --------------------  --------------------------------  -----------------------------
Total loans                         8,621,262      126,841    5.85      8,086,450    116,132    5.78      6,666,525  100,732   5.99
                                 ------------- --------------------  --------------------------------  -----------------------------
Total earning assets              $24,948,984     $325,294    5.19%   $23,361,228   $296,504    5.10%   $18,667,775 $237,804   5.06%
                                 =============                       =============                     =============
Sources of Funds
----------------------------------
Interest-bearing liabilities
   Savings                         $5,715,755      $12,408    0.86%    $5,276,657    $10,216    0.78%    $3,938,114  $ 6,890   0.69%
   Interest bearing demand         10,270,059       24,539    0.95      9,643,771     18,729    0.78      7,293,024   12,090   0.66
   Time deposits                    2,409,160       11,046    1.82      2,507,526     11,378    1.82      2,470,306   13,848   2.22
   Public funds                       800,579        3,164    1.57        856,683      2,886    1.35        813,271    2,834   1.38
                                 ------------- --------------------  --------------------------------  -----------------------------
     Total deposits                19,195,553       51,157    1.06     18,284,637     43,209    0.95     14,514,715   35,662   0.97

   Other borrowed money               614,282        2,255    1.46        523,931      1,052    0.81        727,128    1,111   0.61
   Long-term debt                     200,000        3,020    6.01        200,000      3,020    6.07        200,000    3,020   5.99
                                 ------------- --------------------  --------------------------------  -----------------------------
Total deposits and
interest-bearing
   liabilities                     20,009,835       56,432    1.12     19,008,568     47,281    1.00     15,441,843   39,793   1.02
Noninterest-bearing funds (net)     4,939,149                           4,352,660                         3,225,932
                                 ============= --------------------  =============-------------------  =============----------------
Total sources to fund earning
assets                            $24,948,984       56,432    0.90    $23,361,228     47,281    0.81    $18,667,775   39,793   0.85
                                 ============= --------------------  =============-------------------  =============----------------

Net interest income and
   margin tax-equivalent basis                    $268,862    4.29%                 $249,223    4.29%               $198,011   4.21%
                                                ==========    =====               ==========    =====              ==========  =====
Other Balances
----------------------------------
Cash and due from banks            $1,145,324                          $1,163,942                         $ 971,495
Other assets                        1,430,576                           1,419,098                         1,180,451
Total assets                       27,393,847                          25,822,157                        20,717,697
Total deposits                     24,852,938                          23,541,453                        18,611,894
Demand deposits (noninterest-
     bearing)                       5,657,385                           5,256,816                         4,097,179
Other liabilities                     248,878                             222,779                           243,799
Stockholders' equity                1,477,749                           1,333,994                           934,876

</TABLE>


Notes

-    Weighted  average yields on tax-exempt  obligations have been computed on a
     tax-equivalent basis assuming a federal tax rate of 35%.
-    Non-accrual loans have been included in the average loan balance.
-    Investment securities includes investments available for sale.
-    Consumer loans include mortgage loans held for sale.


                                       17
<PAGE>


Noninterest Income
------------------

Noninterest  income  totaled  $100.1  million for the third  quarter of 2004, an
increase  of $14.9  million  or 18% from $85.2  million in the third  quarter of
2003.  Noninterest  income for the first nine months of 2004 increased to $278.6
million from $244.6  million in the first nine months of 2003,  a 14%  increase.
During the third quarter and first nine months of 2004, the increases of 18% and
14%, respectively,  were primarily due to increased deposit charges and services
fees,  which rose $15.6  million,  or 38%, and $40.2  million,  or 35%, over the
third quarter and first nine months of 2003, respectively.

The increases in deposit charges and services fees are primarily attributable to
the Company's 34% deposit growth rate during this same period.  These  increases
were offset by decreases in both Commerce Capital Markets,  Inc. (CCMI) revenues
and loan brokerage fees,  which decreased in total by $4.9 million,  or 30%, and
$17.0 million,  or 33%,  during the third quarter and first nine months of 2004,
respectively,  compared  to the same  periods  in  2003.  The  decrease  in loan
brokerage fees resulted from declines in mortgage  refinancing  activity  during
2004. The decrease in CCMI revenues is related in part to the Company's decision
to exit the negotiated public finance underwriting business, as discussed below.

<TABLE>
<CAPTION>

<S>                                            <C>        <C>              <C>      <C>          <C>               <C>


                                                    Three Months Ended                      Nine Months Ended
                                            ------------------------------------  --------------------------------------
                                             9/30/04     9/30/03    % Increase     9/30/04      9/30/03     % Increase
                                            ------------------------------------  --------------------------------------
                                                 (Dollars in thousands)                 (Dollars in thousands)

Deposit charges & service fees                 $57,081    $41,500          38%      $155,279     $115,107          35%
Other operating income:
   Insurance                                    19,178     17,623           9         56,084       50,868          10
   Capital Markets                               8,268      9,138         (10)        24,617       28,836         (15)
   Loan Brokerage Fees                           3,027      7,073         (57)         9,805       22,541         (57)
   Other                                        11,616      8,142          43         30,833       24,479          26
                                            ----------- ----------   ---------    -----------  -----------  ----------
     Total other                                42,089     41,976           -        121,339      126,724          (4)
Net investment securities gains                    943      1,682         (44)         2,002        2,763         (28)
                                            ----------- ----------   ---------    -----------  -----------  ----------
Total non-interest income                     $100,113    $85,158          18%      $278,620     $244,594          14%
                                            =========== ==========   =========    ===========  ===========  ==========

</TABLE>


The Company previously  announced during its second quarter earnings  conference
call on July  13,  2004,  that it was  exiting  the  negotiated  public  finance
underwriting business.  Negotiated public finance revenues represented less than
1% of the Company's  total revenues for the nine months ended September 30, 2004
and 2003.

Noninterest Expense
-------------------

For the third quarter of 2004,  noninterest  expense totaled $247.2 million,  an
increase  of $49.8  million or 25% over the same  period in 2003.  For the first
nine months of 2004,  noninterest expense totaled $685.7 million, an increase of
$128.6  million or 23% over  $557.1  million  for the first nine months of 2003.
Contributing  to this  increase  was new branch  activity  over the past  twelve
months, with the number of branches increasing from 257 at September 30, 2003 to
297 at  September  30,  2004.  With the  addition of these new  offices,  staff,
facilities,  and related expenses rose accordingly.  Other noninterest  expenses
rose $14.2 million during the third quarter of 2004 over the same period in 2003
and $30.7  million  during the first nine months of 2004 over the same period in
2003. These increases resulted  primarily from higher bank card-related  service
charges,  increased business development expenses,  increased  professional fees
and increased provisions for non-credit-related losses. For the quarter and nine
months ended September 30, 2004, provisions for  non-credit-related  losses were
$5.4 million and $15.3 million, respectively,  which represent increases of $1.9
million and $4.2  million,  respectively,  over the same  periods in 2003.  Such
growth in non-credit  related losses,  which include fraud and forgery losses on
deposit items, and other non-credit related items, is primarily  attributable to
the Company's growth in new branches and customer accounts.



                                       18
<PAGE>


During the third  quarter of 2004,  the  Company  exited the  negotiated  public
finance underwriting business. Exiting this business involved the elimination of
public finance banking  professionals and related support.  The Company recorded
non-recurring  expenses of $1.3 million,  primarily severance  payments,  in the
third quarter related to the exit of this line of business.

The Company  continued to experience  positive  operating  leverage in the third
quarter, as revenue growth of 31% exceeded  non-interest  expense growth of 25%.
One important factor influencing the growth in non-interest expenses is that the
Company absorbed  significant start-up expenses related to the New York City and
Long Island  markets in prior  years.  As a result,  the impact of the growth in
non-interest expenses in these markets is declining in 2004.

The Company's operating efficiency ratio (noninterest expenses,  less other real
estate expense, divided by net interest income plus noninterest income excluding
non-recurring gains) was 67.63% for the first nine months of 2004 as compared to
71.20% for the same 2003 period.  This  improvement in the operating  efficiency
ratio is due to the positive  operating  leverage  ratio  discussed  above.  The
Company's  efficiency  ratio remains  above its peer group  primarily due to its
aggressive growth expansion activities.

Loan and Asset Quality
----------------------

Total  non-performing  assets  (non-performing  loans  and  other  real  estate,
excluding  loans  past  due 90 days or more  and  still  accruing  interest)  at
September  30, 2004 were $38.3  million,  or 0.13% of total  assets  compared to
$23.6 million or 0.10% of total assets at December 31, 2003 and $24.8 million or
0.12% of total assets at September 30, 2003.

Total non-performing loans (non-accrual loans and restructured loans,  excluding
loans past due 90 days or more and still  accruing  interest) at  September  30,
2004 were $37.3  million or 0.42% of total loans  compared  to $21.7  million or
0.29% of total  loans at December  31, 2003 and $23.1  million or 0.34% of total
loans at September 30, 2003.  At September  30, 2004,  loans past due 90 days or
more and still  accruing  interest  amounted to $614  thousand  compared to $538
thousand  at  December  31,  2003 and  $649  thousand  at  September  30,  2003.
Additional loans considered as potential problem loans by the Company's internal
loan review department ($32.6 million at September 30, 2004) have been evaluated
as to risk  exposure  in  determining  the  adequacy of the  allowance  for loan
losses.

The increase in commercial non-accrual loans during the third quarter of 2004 is
the  result  of one large  credit  that was  moved to  non-accrual  in the third
quarter of 2004 and is in the process of collection. The increase is offset by a
reduction  in  consumer  non-accrual,  with three  credits  relating to the 2003
attempt  to  defraud  the  Company  and  other  financial   institutions   being
charged-off.  Additionally,  during the third quarter one commercial  credit was
restructured  and  re-classified  from Non-accrual  loans to Restructured  loans
(both  classifications are part of Total non-performing  loans). The increase in
commercial   non-performing   loans  has  led  to  the   overall   increase   in
non-performing  assets  noted  during  the  first  nine  months  of 2004.  Total
non-performing assets and loans past due 90 days or more increased from June 30,
2004 to September  30, 2004  primarily as a result of the increase in commercial
non-accrual loans as previously discussed.  Despite these increases, the overall
asset quality of the Company,  as measured in terms of non-performing  assets to
total assets, coverage ratios and non-performing assets to stockholders' equity,
remains strong.


                                       19
<PAGE>

<TABLE>
<CAPTION>
<S>                                              <C>             <C>           <C>           <C>            <C>

The following summary presents  information  regarding  non-performing loans and
assets as of September 30, 2004 and the preceding four quarters  (dollar amounts
in thousands).

                                               September 30,     June 30,      March 31,    December 31,  September 30,
                                                   2004           2004          2004           2003           2003
                                           ---------------------------------------------------------------------------
Non-accrual loans:
   Commercial                                    $22,647         $17,382       $19,701       $  6,867       $  7,295
   Consumer                                        9,784          11,675         9,984          9,242          8,295
   Commercial real estate:
     Construction                                                                                 138
     Mortgage                                      1,251             675           810          5,494          7,502
                                           ---------------------------------------------------------------------------
         Total non-accrual loans                  33,682          29,732        30,495         21,741         23,092
                                           ---------------------------------------------------------------------------

Restructured loans:
   Commercial                                      3,614               1             1              1              2
   Consumer
   Commercial real estate:
     Construction
     Mortgage
                                           ---------------------------------------------------------------------------
         Total restructured loans                  3,614               1             1              1              2
                                           ---------------------------------------------------------------------------

Total non-performing loans                        37,296          29,733        30,496         21,742         23,094
                                           ---------------------------------------------------------------------------

Other real estate                                    972             653         1,890          1,831          1,670
                                           ---------------------------------------------------------------------------

Total non-performing assets                       38,268          30,386        32,386         23,573         24,764
                                           ---------------------------------------------------------------------------

Loans past due 90 days or more
   and still accruing                                614             318           696            538            649
                                           ---------------------------------------------------------------------------

Total non-performing assets and
   loans past due 90 days or more                $38,882         $30,704       $33,082        $24,111        $25,413
                                           ===========================================================================

Total non-performing loans as a
   Percentage of total period-end loans            0.42%           0.36%         0.39%          0.29%          0.34%

Total non-performing assets as a
   Percentage of total period-end assets           0.13%           0.11%         0.13%          0.10%          0.12%

Total non-performing assets and loans
   past due 90 days or more as a
   Percentage of total period-end assets           0.14%           0.11%         0.13%          0.11%          0.12%

Allowance for loan losses as a percentage
   of total non-performing loans                    353%            419%          385%           515%           449%

Allowance for loan losses as a percentage
   of total period-end loans                       1.48%           1.50%         1.51%          1.51%          1.52%

Total non-performing assets and loans
   past due 90 days or more as a
   Percentage of stockholders' equity and
   Allowance for loan losses                          2%              2%            2%             2%             2%



</TABLE>



                                       20
<PAGE>


The following  table  presents,  for the periods  indicated,  an analysis of the
allowance for loan losses and other related data (dollar amounts in thousands).

<TABLE>
<CAPTION>

<S>                                          <C>             <C>            <C>             <C>             <C>


                                                                                                           Year
                                              Three Months Ended             Nine Months Ended             Ended
                                           09/30/04        09/30/03        09/30/04       09/30/03        12/31/03
                                          ------------    -----------    ------------   ------------    ------------
Balance at beginning of period               $124,688        $99,318        $112,057        $90,733         $90,733
Provisions charged to operating expenses       10,750          7,250          30,998         21,050          31,850
                                          ------------    -----------    ------------   ------------    ------------
                                              135,438        106,568         143,055        111,783         122,583

Recoveries on loans charged-off:
   Commercial                                     435            111             695            456             669
   Consumer                                       265            239             636            516             584
   Commercial real estate                           4              -              52              -              11
                                          ------------    -----------    ------------   ------------    ------------
Total recoveries                                  704            350           1,383            972           1,264

Loans charged-off:
   Commercial                                  (1,634)        (1,608)         (6,514)        (4,673)         (5,601)
   Consumer                                    (2,968)        (1,684)         (4,744)        (4,439)         (5,950)
   Commercial real estate                         (11)           (34)         (1,651)           (51)           (239)
                                          ------------    -----------    ------------   ------------    ------------
Total charge-offs                              (4,613)        (3,326)        (12,909)        (9,163)        (11,790)
                                          ------------    -----------    ------------   ------------    ------------
Net charge-offs                                (3,909)        (2,976)        (11,526)        (8,191)        (10,526)
                                          ------------    -----------    ------------   ------------    ------------

Balance at end of period                     $131,529       $103,592        $131,529       $103,592        $112,057
                                          ============    ===========    ============   ============    ============

Net charge-offs as a percentage of
   average loans outstanding                     0.18%          0.18%           0.19%          0.17%           0.16%

Net reserve additions                         $ 6,841        $ 4,274         $19,472        $12,859         $21,324

</TABLE>


The increases in commercial and commercial  real estate  charge-offs  during the
first nine months of 2004 are primarily  related to a large credit,  with both a
real estate as well as a commercial  component,  that  experienced  difficulties
during the first  quarter of 2004 and  another  non-accrual  commercial  credit.
Charge-offs relating to these credits were approximately $3.0 million.  Consumer
loan  charge-offs  increased  during  the  third  quarter  as a  result  of  the
previously  mentioned  charge-offs of three  non-accrual  loans. The net reserve
additions for the first nine months and third quarter of 2004 are  reflective of
the increases in non-performing  assets since December 31, 2003 and increases in
the overall loan portfolio.

The Company  considers the allowance for loan losses of $131.5 million  adequate
to cover probable  losses  inherent in the loan portfolio at September 30, 2004.
The Company's  determination of the level of the allowance for loan losses rests
upon various  judgments and  assumptions  surrounding  the risk  characteristics
included in the loan  portfolio.  Such risk  characteristics  include changes in
levels and trends of charge-offs,  delinquencies,  and non-accrual loans, trends
in volume and terms of loans,  changes in underwriting  standards and practices,
portfolio  mix,  tenure  of loan  officers  and  management,  entrance  into new
geographic  markets,  changes in credit  concentrations,  and national and local
economic trends and conditions,  and other relevant factors, all of which may be
susceptible to significant change.


                                       21
<PAGE>



Forward-Looking Statements
--------------------------

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 Form 10-Q), 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.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         ----------------------------------------------------------

See Item 2 -  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operation, Interest Rate Sensitivity and Liquidity.


Item 4.   Controls and Procedures
         ------------------------

Quarterly evaluation of the Company's Disclosure Controls and Internal Controls.
As of the end of the period  covered by this quarterly  report,  the Company has
evaluated  the  effectiveness  of the design and  operation  of its  "disclosure
controls and procedures"  ("Disclosure  Controls").  This evaluation  ("Controls
Evaluation")  was done  under  the  supervision  and with the  participation  of
management,  including the Chief  Executive  Officer ("CEO") and Chief Financial
Officer ("CFO").

Limitations  on  the  Effectiveness  of  Controls.   The  Company's  management,
including the CEO and CFO, does not expect that its  Disclosure  Controls or its
"internal controls and procedures for financial reporting" ("Internal Controls")
will  prevent  all error and all  fraud.  A control  system,  no matter how well
conceived and operated,  can provide only  reasonable,  not absolute,  assurance
that the  objectives  of the control  system are met.  Further,  the design of a
control  system must reflect the fact that there are resource  constraints,  and
the benefits of controls must be considered relative to their costs.  Because of
the inherent  limitations in all control systems,  no evaluation of controls can
provide  absolute  assurance that all control issues and instances of fraud,  if
any, within the Company have been detected.  These inherent  limitations include
the  realities  that  judgments  in  decision-making  can be  faulty,  and  that
breakdowns can occur because of simple error or mistake. Additionally,  controls
can be circumvented by the individual acts of some persons,  by collusion of two
or more people,  or by  management  override of the  control.  The design of any
system of  controls  also is based in part upon  certain  assumptions  about the
likelihood of future events,  and there can be no assurance that any design will
succeed in achieving  its stated goals under all  potential  future  conditions;
over time,  control may become


                                       22
<PAGE>


inadequate  because of changes in conditions,  or the degree of compliance  with
the policies or procedures may deteriorate.  Because of the inherent limitations
in a  cost-effective  control  system,  misstatements  due to error or fraud may
occur and not be detected.  The Company  conducts  periodic  evaluations  of its
internal controls to enhance, where necessary, its procedures and controls.

Conclusions.  Based upon the Controls Evaluation, the CEO and CFO have concluded
that,  subject to the  limitations  noted  above,  the  Disclosure  Controls are
effective in reaching a reasonable  level of assurance that management is timely
alerted to material  information  relating to the Company during the period when
the Company's periodic reports are being prepared.

During the quarter ended  September 30, 2004,  there has not occurred any change
in Internal  Controls that has  materially  affected or is reasonably  likely to
materially affect Internal Controls.


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
         -----------------

During  July and August  2004,  six class  action  complaints  were filed in the
United  States  District  Court for the  District  of New Jersey and the Eastern
District of Pennsylvania against the Company and certain Company (or subsidiary)
current and former officers and directors. All class action complaints have been
consolidated in the United States District Court for the District of New Jersey,
Camden  Division.  The  complaints,  which  contain  virtually  the same factual
allegations  and causes of  action,  allege  that the  defendants  violated  the
federal  securities  laws,  specifically  Sections  10  (b)  and  20  (a) of the
Securities  Exchange Act of 1934 and Rule 10b-5 of the  Securities  and Exchange
Commission.  The plaintiffs  seek  unspecified  damages on behalf of a purported
class of purchasers of the Company's  securities  during  various  periods.  The
Company believes these class action complaints are without merit. No accrual for
a loss contingency has been recorded, as the risk of loss is considered remote.


Item 6.  Exhibits
         --------

Exhibits
--------

Exhibit 31.1    Certification  of the Company's Chief Executive  Officer
                pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2    Certification  of the Company's Chief Financial  Officer
                pursuant to 18 U.S.C.  Section 1350, as adopted pursuant to
                Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32      Certification  of the Company's Chief Executive  Officer and
                Chief Financial  Officer  pursuant to 18 U.S.C.  Section 1350,
                as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.





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SIGNATURES
----------

Pursuant  to the  requirements  of the  Securities  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.
                                  --------------------------------------------
                                                  (Registrant)










     NOVEMBER 8, 2004                         /s/ DOUGLAS J. PAULS
----------------------------      --------------------------------------------
          (Date)                                DOUGLAS J. PAULS
                                           SENIOR VICE PRESIDENT AND
                                             CHIEF FINANCIAL OFFICER
                                  (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)




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