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 quarter ended March 31, 1998

                                       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 #0-12874


                             COMMERCE BANCORP, INC.
             (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)


                                 (609) 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  _______

<PAGE>
                      APPLICABLE ONLY TO CORPORATE ISSUERS:


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




         Common Stock                                    18,011,327
         (Title of Class)                       (No. of Shares Outstanding
                                                       as of  5/08/98)
<PAGE>
                     COMMERCE BANCORP, INC. AND SUBSIDIARIES

                                      INDEX

                                                                            Page


PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Consolidated Balance Sheets (unaudited)
                           March 31, 1998 and December 31, 1997

                  Consolidated  Statements  of Income  (unaudited) 
                           Three months ended March 31, 1998 and 
                           March 31, 1997

                  Consolidated Statements of Cash Flows (unaudited) 
                           Three months ended March 31, 1998 and 
                           March 31, 1997

                  Notes to Consolidated Financial Statements (unaudited)

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

Item 3.           Quantitative and Qualitative Disclosures About Market Risk

PART II.          OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K

                                       1
<PAGE>
                         PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements

                     Commerce Bancorp, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                                   (unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
                                                                                       March 31,      December 31,
                                                                                   ------------------------------
                 (dollars in thousands)                                                  1998             1997
-----------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>              <C>     
Assets           Cash and due from banks                                               $180,406         $167,900
                 Federal funds sold                                                      10,900                
                                                                                   ------------------------------
                                Cash and cash equivalents                               191,306          167,900
                 Mortgages held for sale                                                 13,489            7,260
                 Trading securities                                                       9,798            7,911
                 Securities available for sale                                        1,289,115        1,315,120
                 Securities held to maturity                                          1,028,760          874,032
                  (market value 1998-$1,026,745; 1997-$869,815)
                 Loans                                                                1,468,800        1,411,289
                              Less allowance for loan losses                             21,976           21,261
                                                                                   ------------------------------
                                                                                      1,446,824        1,390,028
                 Bank premises and equipment, net                                       116,020          111,759
                 Other assets                                                            63,358           64,957
                                                                                   ------------------------------
                                                                                     $4,158,670       $3,938,967
                                                                                   ==============================

Liabilities      Deposits:
                              Demand:
                                Interest-bearing                                     $1,178,372       $1,111,302
                                Noninterest-bearing                                     778,895          762,843
                              Savings                                                   751,192          705,906
                              Time                                                    1,042,986          789,353
                                                                                   ------------------------------
                                Total deposits                                        3,751,445        3,369,404

                 Other borrowed money                                                    25,000          223,300
                 Other liabilities                                                       27,218           12,695
                 Obligation to Employee Stock Ownership Plan (ESOP)                       2,051            2,308
                 Trust Capital Securities - Commerce Capital Trust I                     57,500           57,500
                 Long-term debt                                                          23,000           23,000
                                                                                   ------------------------------
                                                                                      3,886,214        3,688,207

Stockholders'    Common stock, 18,068,447 shares issued (16,999,824 shares in 1997)      28,232           25,309
Equity           Series C preferred stock, 417,000 shares in 1997                                          7,506
                 Capital in excess of par or stated value                               212,139          167,529
                 Retained earnings                                                       28,695           50,592
                 Accumulated other comprehensive income                                   7,065            3,756
                                                                                   ------------------------------
                                                                                        276,131          254,692
                 Less commitment to ESOP                                                  2,051            2,308
                 Less treasury stock, at cost, 100,159 shares in 1998
                              (100,159 in 1997)                                           1,624            1,624
                                                                                   ------------------------------
                                Total stockholders' equity                              272,456          250,760
                                                                                   ------------------------------
                                                                                     $4,158,670       $3,938,967
                                                                                   ==============================

</TABLE>

                            See accompanying notes.

                                       2
<PAGE>
                     Commerce Bancorp, Inc. and Subsidiaries
                        Consolidated Statements of Income
                                   (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                                                   Three Months Ended
                                                                        March 31,
                                                              ------------------------
             (dollars in thousands, except per share amounts)       1998         1997
--------------------------------------------------------------------------------------
<S>                                                               <C>          <C>    
Interest     Interest and fees on loans                           $31,141      $28,113
income       Interest on investments                               36,396       26,814
             Other interest                                           354          412
                                                              ------------------------
                  Total interest income                            67,891       55,339
                                                              ------------------------

Interest     Interest on deposits:
expense         Demand                                              7,264        5,471
                Savings                                             4,414        3,770
                Time                                               12,670       10,666
                                                              ------------------------
                  Total interest on deposits                       24,348       19,907
             Interest on other borrowed money                       2,001          460
             Interest on long-term debt                             1,782          506
                                                              ------------------------
                  Total interest expense                           28,131       20,873
                                                              ------------------------

             Net interest income                                   39,760       34,466
             Provision for loan losses                              1,210        1,626
                                                              ------------------------
             Net interest income after provision for loan losses   38,550       32,840

Noninterest  Deposit charges and service fees                       8,083        6,198
income       Other operating income                                11,805        6,751
             Net investment securities gains                          
                                                              ------------------------
                  Total noninterest income                         19,888       12,949
                                                              ------------------------

Noninterest  Salaries                                              16,011       11,902
expense      Benefits                                               3,281        2,746
             Occupancy                                              3,922        3,334
             Furniture and equipment                                5,366        4,041
             Office                                                 4,106        3,089
             Audit and regulatory fees and assessments                502          375
             Marketing                                              1,848        1,239
             Other real estate (net)                                  420          469
             Other                                                  5,239        4,011
                                                              ------------------------
                  Total noninterest expenses                       40,695       31,206
                                                              ------------------------

             Income before income taxes                            17,743       14,583
             Provision for federal and state income taxes           6,296        5,149
                                                              ------------------------
             Net income                                            11,447        9,434

             Dividends on preferred stocks                                         141
                                                              ========================
             Net income applicable to common stock                $11,447       $9,293
                                                              ========================

             Net income per common and common equivalent share:
                Basic                                               $0.65        $0.57
                                                              ------------------------
                Diluted                                             $0.61        $0.53
                                                              ------------------------
             Average common and common equivalent shares outstanding:
                Basic                                              17,509       16,363
                                                              ------------------------
                Diluted                                            18,750       17,684
                                                              ------------------------
             Cash dividends declared, common stock                  $0.24        $0.19
                                                              ========================
</TABLE>
                            See accompanying notes.

                                       3
<PAGE>

                     Commerce Bancorp, Inc. And Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                                                               <C>             <C>  
----------------------------------------------------------------------------------------------------------------------------
                                                                                                   Three Months Ended
                                                                                                        March 31,
                                                                                              --------------------------
                        (dollars in thousands)                                                     1998            1997
----------------------------------------------------------------------------------------------------------------------------
Operating activities    Net income                                                                $11,447         9,434
                        Adjustments to reconcile net income to net cash
                           provided by operating activities:
                              Provision for loan losses                                             1,210         1,626
                              Provision for depreciation, amortization and accretion                5,221         4,113
                              Proceeds from sales of mortgages held for sale                        7,702         3,492
                              Originations of mortgages held for sale                             (13,931)       (3,996)
                              Net loan (chargeoffs)                                                  (495)          (57)
                              Net (increase) decrease in trading securities                        (1,887)        7,162
                              Decrease in other assets                                               (446)       (5,739)
                              Increase in other liabilities                                        14,523         5,212
                        ----------------------------------------------------------------------------------------------------
                                               Net cash provided by operating activities           23,345        21,247

Investing activities    Proceeds from the sales of securities available for sale                  102,174
                        Proceeds from the maturity of securities available for sale                61,621        44,655
                        Proceeds from the maturity of securities held to maturity                  43,739        24,461
                        Purchase of securities available for sale                                (133,028)      (20,336)
                        Purchase of securities held to maturity                                  (199,105)     (135,039)
                        Net increase in loans                                                     (59,871)      (41,637)
                        Proceeds from sales of loans                                                2,360         2,713
                        Purchases of premises and equipment                                        (8,251)       (4,561)
                        ----------------------------------------------------------------------------------------------------
                                               Net cash used by investing activities             (190,361)     (129,744)

Financing activities    Net increase in demand and savings deposits                               128,408       100,801
                        Net increase in time deposits                                             253,633        51,988
                        Net decrease in other borrowed money                                     (198,300)      (45,000)
                        Dividends paid                                                             (3,914)       (2,612)
                        Issuance of common stock                                                    8,257
                        Proceeds from issuance of common stock under
                             dividend reinvestment and other stock plans                            2,290         1,837
                        Other                                                                          49           218
                        ----------------------------------------------------------------------------------------------------
                                               Net cash provided  by financing activities         190,423       107,232

                        Increase (decrease) in cash and cash equivalents                           23,406        (1,265)
                        Cash and cash equivalents at beginning of year                            167,900       208,833
                        ----------------------------------------------------------------------------------------------------
                        Cash and cash equivalents at end of period                               $191,306      $207,568
                        ----------------------------------------------------------------------------------------------------

                        Supplemental disclosures of cash flow information:  Cash
                          paid during the period for:
                            Interest                                                              $26,286       $19,877
                            Income taxes                                                              125           535
                          Other noncash activities:
                            Transfer of securities to securities available for sale                              82,933
                        ----------------------------------------------------------------------------------------------------
</TABLE>
                            See accompanying notes.

                                       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 generally accepted  accounting  principles have been
         condensed  or  omitted  pursuant  to such  rules and  regulations.  The
         accompanying  condensed  consolidated  financial statements reflect all
         adjustments  which are, in the opinion of  management,  necessary  to a
         fair statement of the results for the interim periods  presented.  Such
         adjustments are of a normal recurring nature.  Certain amounts in prior
         periods have been reclassified for comparative purposes.

                  These condensed  consolidated  financial  statements should be
         read in conjunction with the audited financial statements and the notes
         thereto included in the registrant's Annual Report for the period ended
         December  31,  1997.  The results for the three  months ended March 31,
         1998 are not necessarily indicative of the results that may be expected
         for the year ended December 31, 1998.

                  The consolidated  financial statements include the accounts of
         Commerce  Bancorp,  Inc.  (the  Company)  and all of its  subsidiaries,
         including    Commerce    Bank,    N.A.    (Commerce    NJ),    Commerce
         Bank/Pennsylvania,    N.A.,   Commerce   Bank/Shore,   N.A.,   Commerce
         Bank/North,  Commerce  Capital Trust I, and Commerce  Capital  Markets,
         Inc.  (CCMI).   All  material   intercompany   transactions  have  been
         eliminated.

B.       Commitments

                  In  the  normal   course  of   business,   there  are  various
         outstanding commitments to extend credit, such as letters of credit and
         unadvanced   loan   commitments,   which  are  not   reflected  in  the
         accompanying  consolidated  financial  statements.  Management does not
         anticipate any material losses as a result of these transactions.

                                       5
<PAGE>

C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee

                  The Company has  guaranteed a debt  obligation of its Employee
         Stock Ownership Plan (ESOP) which originated at $7,500,000 and has been
         reduced to $2,051,000 through principal  reductions.  Accordingly,  the
         loan amount is reflected in the Company's consolidated balance sheet as
         a  liability  and  an  equal  amount,  representing  deferred  employee
         benefits,  has been recorded as a deduction from stockholders'  equity.
         The ESOP  obtained  the loan in 1990 to  acquire a new class of Company
         Cumulative  Convertible Preferred Stock (Series C) at a price of $18.00
         per share. The loan was refinanced in 1994, and is payable in quarterly
         installments  with the final  payment due January  28,  2000.  The loan
         bears  interest at a variable  rate,  although the rate can be fixed at
         future repricing dates in accordance with the loan agreement. Effective
         March 1,  1998,  the  Trustees  of the ESOP  exercised  their  right to
         convert all 417,000 shares of the Series C stock into 646,904 shares of
         the Company's  common stock,  a portion of which is pledged as security
         for the loan.  As the Company makes annual  contributions  to the ESOP,
         these  contributions,  plus dividends  from the Company's  common stock
         held by the ESOP, will be used to repay the loan.

D.       Recent Accounting Statements

                  As  of  January  1,  1998,  the  Company   adopted   Financial
         Accounting  Standards Board Statement No. 130 "Reporting  Comprehensive
         Income" (FAS 130).  FAS 130  establishes  new  standards  for reporting
         comprehensive  income,  which  includes  net  income as well as certain
         other items which result in a change to equity during the period. Prior
         period  financial  statements have been  reclassified to conform to the
         requirements  of FAS 130.  The adoption of FAS 130 had no impact on the
         Company's financial position or results of operations. During the first
         quarter of 1998 and 1997,  total  comprehensive  income,  which for the
         Company  included  net  income and  unrealized  gains and losses on the
         Company's available for sale securities,  amounted to $14.8 million and
         $701 thousand, respectively.

                  In June, 1997, the Financial Accounting Standards Board issued
         Statement No. 131  "Disclosures  About  Segments of an  Enterprise  and
         Related   Information"  (FAS  131).  FAS  131  requires  disclosure  of
         financial and descriptive  information about an enterprise's  operating
         segments that meet certain quantitative  thresholds.  This statement is
         effective for fiscal years  beginning  after  December 15, 1997, but is
         not required to be applied for interim reporting in the initial year of
         application.  The Company is currently evaluating the impact of FAS 131
         on the disclosures included in its annual financial statements.

E.       Trust Capital Securities

                  On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
         Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
         formed  Delaware  business  trust  subsidiary  of the Company.  The net
         proceeds of the offering will be used for general  corporate  purposes,
         which may  include  contributions  to  subsidiary  banks to fund  their
         operations, the financing of one or more future acquisitions, repayment
         of indebtedness of the Company or of its subsidiary banks,  investments
         in or extensions of credit to its  subsidiaries,  or the  repurchase of
         shares of the Company's  outstanding common stock. All $57.5 million of
         the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
         capital purposes.

                                       6
<PAGE>

F.       Commerce Capital Markets, Inc.

                  In the  first  quarter  of 1998,  the  Company  completed  the
         acquisition  of A. H. Williams & Co.  (Williams),  Philadelphia,  PA, a
         public finance  investment  firm,  and combined  Williams with Commerce
         Capital,  the bank  securities  dealer division of Commerce NJ, to form
         Commerce Capital Markets,  Inc., a wholly-owned  nonbank  subsidiary of
         the Company engaging in certain securities  activities  permitted under
         Section 20 of the Glass-Steagall  Act. The acquisition was completed by
         the  issuance  of common  stock of the Company  totaling  approximately
         316,000  shares.  The  transaction  was  accounted  for as a pooling of
         interests.  However,  financial  statements of the periods prior to the
         acquisition have not been restated,  as the changes,  in the aggregate,
         would be immaterial.

G.       Earnings Per Share

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

                                                        Three Months Ended
                                                             March 31
                                                         1998        1997
                                                       -------     -------

          Basic:
          Net income                                   $11,447      $9,434
          Preferred stock dividends                                    141
                                                       -------     -------
          Net income applicable to common stock        $11,447      $9,293
                                                       =======     =======

          Average common shares outstanding             17,509      16,363
                                                       =======     =======

          Net income per common share - basic            $0.65       $0.57
                                                       =======     =======

          Diluted:
          Net income                                   $11,447      $9,434
          Additional ESOP contribution under the
                   if-converted method                                  11
                                                       -------     -------
          Net income applicable to common stock
                   on a diluted basis                  $11,447      $9,423
                                                       =======     =======

          Average common shares outstanding             17,509      16,363
          Additional shares considered in diluted
                   computation assuming:
                     Exercise of stock options             817         674
                     Conversion of preferred stock         424         647
                                                       -------     -------
          Average common shares outstanding
                   on a diluted basis                   18,750      17,684
                                                       =======     =======

          Net income per common share - diluted          $0.61       $0.53
                                                       =======     =======

                                       7
<PAGE>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
         of Operation

         Capital Resources

                  At March 31, 1998, stockholders' equity totaled $272.5 million
         or 6.55% of total assets,  compared to $250.8 million or 6.37% of total
         assets at December 31, 1997.

                  On June 9, 1997,  the Company  issued  $57.5  million of 8.75%
         Trust  Capital  Securities  through  Commerce  Capital Trust I, a newly
         formed  Delaware  business  trust  subsidiary  of the Company.  The net
         proceeds of the offering will be used for general  corporate  purposes,
         which may  include  contributions  to  subsidiary  banks to fund  their
         operations, the financing of one or more future acquisitions, repayment
         of indebtedness of the Company or of its subsidiary banks,  investments
         in or extensions of credit to its  subsidiaries,  or the  repurchase of
         shares of the Company's  outstanding common stock. All $57.5 million of
         the Trust Capital  Securities  qualify as Tier 1 capital for regulatory
         capital purposes.

                  The table below  presents  the  Company's  and  Commerce  NJ's
         risk-based and leverage ratios at March 31, 1998 and 1997:

<TABLE>
<CAPTION>
<S>                                            <C>               <C>        <C>               <C>       <C>               <C>  
                                                                                       Per Regulatory Guidelines
                                                        Actual                     Minimum                "Well Capitalized"
                                               Amount           Ratio       Amount           Ratio      Amount            Ratio

March 31, 1998
Company
   Risk based capital ratios:
     Tier 1                                   $317,704           15.87%     $80,086           4.00%    $120,129            6.00%
     Total capital                             358,080           17.88      160,172           8.00      200,215           10.00
   Leverage ratio                              317,704            7.86      121,280           3.00      202,133            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $177,218           13.08%     $54,185           4.00%     $81,278            6.00%
     Total capital                             191,617           14.15      108,371           8.00      135,464           10.00
   Leverage ratio                              177,218            6.50       81,760           3.00      136,267            5.00

March 31, 1997
Company
   Risk based capital ratios:
     Tier 1                                   $212,974           12.65%     $67,369           4.00%    $101,054            6.00%
     Total capital                             255,518           15.17      134,739           8.00      168,424           10.00
   Leverage ratio                              212,974            6.58       97,133           3.00      161,888            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $149,347           13.44%     $44,463           4.00%     $66,694            6.00%
     Total capital                             161,923           14.57       88,926           8.00      111,157           10.00
   Leverage ratio                              149,347            7.01       63,918           3.00      106,530            5.00
</TABLE>

                                       8
<PAGE>
                At March 31, 1998, 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 as
         of March 31,  1998,  that the  Company  and its  subsidiaries  meet all
         capital adequacy requirements to which they are subject.

         Deposits

                  Total deposits at March 31, 1998 were $3.75 billion, up $679.0
         million, or 22% over total deposits of $3.07 billion at March 31, 1997,
         and up by $382.0  million,  or 11% from year-end  1997.  Deposit growth
         during the first three months of 1998 included  core deposit  growth in
         all  categories as well as growth from the public  sector.  The Company
         experienced "same-store core deposit growth" of 13.1% at March 31, 1998
         as  compared to  deposits a year ago for those  branches  open for more
         than two years.

         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
         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 not
         only the potential of all assets and  liabilities to mature or reprice,
         but also the probability  that they will do so. 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 200 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 15% of net income in the flat
         rate  scenario  in the first year and within 30% over the two year time
         frame.  At March  31,  1998,  the  Company's  income  simulation  model
         indicates  net income  would  decrease  by 1.31% and 4.03% in the first
         year and over a two year time frame,  respectively,  if rates decreased
         as described  above.  The model projects that net income would decrease
         by 6.69% and 9.25% in the  first  year and over a two year time  frame,
         respectively,  if rates  increased  as  described  above.  All of these
         forecasts are within an acceptable  level of interest rate risk per the
         policies established by ALCO.

                                       9
<PAGE>

                  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 sale of a portion of
         its available for sale portfolio, the use of risk management strategies
         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. 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 200 basis
         point change in rates.  The Company's  ALCO policy  indicates  that the
         level of interest rate risk is  unacceptable if the immediate 200 basis
         point  change  would result in the loss of 60% or more of the excess of
         market value over book value in the current rate scenario. At March 31,
         1998, the market value of equity model indicates an acceptable level of
         interest rate risk.

                  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.

         Short-Term Borrowings

                  Short-term  borrowings,   or  other  borrowed  money,  consist
         primarily of securities sold under  agreements to repurchase.  In 1997,
         short-term  borrowings  were used to meet  short  term  funding  needs.
         During  the first  three  months  of 1998,  the  Company  significantly
         reduced  its  short-term   borrowings,   primarily   through  increased
         deposits.  At March 31, 1998,  short-term  borrowings  aggregated $25.0
         million and had an average rate of 5.78%.

         Interest Earning Assets

                  For the three  month  period  ended March 31,  1998,  interest
         earning  assets  increased  $205.3  million from $3.62 billion to $3.82
         billion.  This increase was primarily in investment  securities and the
         loan portfolio as described below.

         Loans

                  During the first three months of 1998,  loans  increased $57.5
         million from $1.41 billion to $1.47 billion.  At March 31, 1998,  loans
         represented 39% of total deposits and 35% of total assets. The increase
         in the loan  portfolio was due primarily to loans secured by commercial
         real estate properties.

                                       10
<PAGE>
         Investments

                In  total,  for the  first  three  months  of  1998,  securities
         increased  $130.6 million from $2.20 billion to $2.33 billion.  Deposit
         growth and other  funding  sources were used to increase the  Company's
         investment portfolio.  The available for sale portfolio decreased $26.0
         million to $1.29 billion from $1.32  billion at December 31, 1997,  and
         the securities held to maturity  portfolio  increased $154.7 million to
         $1.03 billion at March 31, 1998 from $874.0  million at year-end  1997.
         At March 31, 1998,  the average life of the  investment  portfolio  was
         approximately  5.5 years, and the duration was approximately 4.2 years.
         At March 31, 1998, total securities represented 56% of total assets.

         Net Income

                Net income for the first quarter of 1998 was $11.4  million,  an
         increase of $2.0 million or 21% over the $9.4 million  recorded for the
         first quarter of 1997. On a per share basis, diluted net income for the
         first quarter of 1998 was $.61 per common  share,  up 15% over the $.53
         per common share for the respective 1997 period.

                Return on average  assets  (ROA) and  return on  average  equity
         (ROE)  for  the  first   quarter  of  1998  were   1.13%  and   17.29%,
         respectively,  compared to 1.17% and 18.26%, respectively, for the same
         1997 period.

          Net Interest Income

                Net interest  income totaled $39.8 million for the first quarter
         of 1998,  an increase of $5.3 million or 15% from $34.5  million in the
         first quarter of 1997. The  improvement in net interest  income was due
         primarily to volume increases in the loan and investment portfolios.

         Noninterest Income

                Noninterest  income  totaled $19.9 million for the first quarter
         of 1998,  an increase of $6.9 million or 54% from $12.9  million in the
         first  quarter of 1997.  The  increase  was due  primarily to increased
         other  operating  income,  which rose $5.1 million over the prior year,
         including  increased  revenues of $1.5  million and $2.6  million  from
         Commerce National  Insurance  Services,  Inc., the Company's  insurance
         brokerage  subsidiary,  and CCMI,  respectively.  In addition,  deposit
         charges and service fees  increased $1.9 million from the first quarter
         of 1997 primarily due to higher transaction volumes.

         Noninterest Expense

                For the first quarter of 1998, noninterest expense totaled $40.7
         million,  an  increase  of $9.5  million or 30% over the same period in
         1997.  Contributing  to this increase was new branch  activity over the
         past twelve months,  with the number of branches  increasing from 68 at
         March 31, 1997 to 76 at March 31,  1998,  and the  formation of CCMI in
         the first  quarter of 1998.  With the addition of these new offices and
         CCMI,  staff,   facilities,   marketing,   and  related  expenses  rose
         accordingly.  Other  noninterest  expenses  rose $1.2  million over the
         first quarter of 1997.  This increase  resulted  primarily  from higher
         bank  card-related  service  charges,  increased  business  development
         expenses, and higher legal fees.

                                       11
<PAGE>

                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 67.52% for the
         first  three  months of 1998 as  compared  to 64.83%  for the same 1997
         period.  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 March 31, 1998 were $17.0  million,  or 0.41% of
         total  assets  compared  to $17.4  million or 0.44% of total  assets at
         December  31, 1997 and $18.8  million or 0.56% of total assets at March
         31, 1997.

                  Total non-performing loans (non-accrual loans and restructured
         loans,  excluding  loans  past due 90 days or more and  still  accruing
         interest) at March 31, 1998 were $11.0  million or 0.75% of total loans
         compared to $11.6  million or 0.82% of total loans at December 31, 1997
         and $10.7  million or 0.82% of total loans at March 31, 1997.  At March
         31, 1998,  loans past due 90 days or more and still  accruing  interest
         amounted to $308  thousand  compared to $226  thousand at December  31,
         1997 and $300 thousand at March 31, 1997.  Additional  loans considered
         as  potential  problem  loans by the  Company's  internal  loan  review
         department  ($12.2 million at March 31, 1998) have been evaluated as to
         risk  exposure in  determining  the adequacy of the  allowance for loan
         losses.

                  Other real estate (ORE) at March 31, 1998 totaled $6.0 million
         compared to $5.8 million at December 31, 1997 and $8.0 million at March
         31, 1997.  These properties have been written down to the lower of cost
         or fair value less disposition costs.

                  On pages 13 and 14 are tabular  presentation  showing detailed
         information about the Company's  non-performing loans and assets and an
         analysis of the  Company's  allowance for loan losses and other related
         data for March 31, 1998, December 31, 1997, and March 31, 1997.

         Year 2000

                  The  Company  began the  process  of  preparing  its  computer
         systems  and  applications  for the  Year  2000 in  1996.  The  process
         includes   directing  its  external  service   providers  to  take  the
         appropriate  action to ensure  Year 2000  compliance,  as well as, to a
         lesser  extent,  modifying or replacing  certain  hardware and software
         maintained by the Company.  The Company  expects to have  substantially
         all of the  necessary  changes  in place  before  the end of 1998,  and
         believes  it is taking the  appropriate  steps to address all Year 2000
         issues.  The  Company  estimates  the  total  cost  of  the  Year  2000
         compliance  process,  including internal and external personnel and any
         required  hardware  and  software  modifications,  will not exceed $1.0
         million.

                                       12
<PAGE>

The following summary presents  information  regarding  non-performing loans and
assets as of March 31, 1998 and the preceding four quarters:  (dollar amounts in
thousands)

<TABLE>
<CAPTION>
                                              March 31,   December 31, September 30,  June 30,    March 31,
                                                1998         1997          1997        1997         1997
Non-accrual loans:
<S>                                            <C>          <C>          <C>          <C>          <C>   
  Commercial                                   $1,764       $1,816       $1,920       $1,057       $1,349
  Consumer                                        944          703          893        1,254        1,109
  Real Estate:
    Construction                                  393        1,345        2,006        2,155        2,155
    Mortgage                                    7,742        7,706        7,533        5,818        6,074
                                              -------      -------      -------      -------      -------
      Total non-accrual loans                  10,843       11,570       12,352       10,284       10,687
                                              -------      -------      -------      -------      -------

Restructured loans
  Commercial                                       19           19           20           20           21
  Consumer
  Real Estate:
    Construction
    Mortgage                                      114
                                              -------      -------      -------      -------      -------
      Total restructured loans                    133           19           20           20           21
                                              -------      -------      -------      -------      -------

  Total non-performing loans                   10,976       11,589       12,372       10,304       10,708
                                              -------      -------      -------      -------      -------

Other real estate                               6,029        5,845        6,673        7,035        8,042
                                              -------      -------      -------      -------      -------

Total non-performing assets                    17,005       17,434       19,045       17,339       18,750
                                              -------      -------      -------      -------      -------

Loans past due 90 days or more
  and still accruing                              308          226          423          458          300
                                              -------      -------      -------      -------      -------

Total non-performing assets and
  loans past due 90 days or more              $17,313      $17,660      $19,468      $17,797      $19,050
                                              =======      =======      =======      =======      =======

Total non-performing loans as a
  percentage of total period-end
  loans                                          0.75%        0.82%        0.89%        0.76%        0.82%

Total non-performing assets as a
  percentage of total period-end assets          0.41%        0.44%        0.50%        0.48%        0.56%

Total non-performing assets and loans
  past due 90 days or more as a
  percentage of total period-end assets          0.42%        0.45%        0.51%        0.49%        0.57%

Allowance for loan losses as a
  percentage of total non-performing
  loans                                           200%         183%         169%         198%         183%

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

Total non-performing assets and loans
  past due 90 days or more as a
  percentage of stockholders' equity and
  allowance for loan losses                         6%           6%           8%           7%           9%
</TABLE>

                                       13
<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>
                                                                                              Year
                                                               Three Months Ended             Ended
                                                        ------------------------------
                                                         03/31/98          03/31/97         12/31/97
                                                        ------------     -------------     ------------
<S>                                                     <C>               <C>              <C>    
            Balance at beginning of period                  $21,261           $17,975          $17,975
            Provisions charged to operating expenses          1,210             1,626            4,668
                                                        ------------     -------------     ------------
                                                             22,471            19,601           22,643
            Recoveries on loans charged-off:
              Commercial                                         45                53              348
              Consumer                                           94                72              406
              Real estate                                         9                18              144
                                                        ------------     -------------     ------------
            Total recoveries                                    148               143              898

            Loans charged-off:
              Commercial                                       (189)              (42)            (964)
              Consumer                                         (271)             (158)          (1,170)
              Real estate                                      (183)                0             (146)
                                                        ------------     -------------     ------------
            Total charged-off                                  (643)             (200)          (2,280)
                                                        ------------     -------------     ------------
            Net charge-offs                                    (495)              (57)          (1,382)
                                                        ------------     -------------     ------------

            Balance at end of period                        $21,976           $19,544          $21,261
                                                        ============     =============     ============

            Net charge-offs as a percentage of
            average loans outstanding                          0.14%             0.02%            0.10%
</TABLE>

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.

                                       14
<PAGE>

                           PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K


         No reports on Form 8-K were filed during the first quarter ended March
         31, 1998.

                                       15
<PAGE>

                                   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)




 May 14, 1998
  (Date)                                           C. EDWARD JORDAN, JR.
                                                 EXECUTIVE VICE PRESIDENT
                                               (PRINCIPAL FINANCIAL OFFICER)


                                       16