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 March 31, 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 #0-12069


                                COMMERCE BANCORP
                                [GRAPHIC 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                                   77,915,974
--------------------------------------------------------------------------------
    (Title of Class)                          (No. of Shares Outstanding
                                                  as of May 3, 2004)




<PAGE>

                     COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                       Page
PART I.       FINANCIAL INFORMATION
<S>          <C>                                                                                     <C>
Item 1.       Financial Statements

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

              Consolidated Statements of Income (unaudited)
              Three months ended March 31, 2004 and
              March 31, 2003.............................................................................2

              Consolidated Statements of Cash Flows (unaudited)
              Three months ended March 31, 2004 and
              March 31, 2003.............................................................................3

              Consolidated Statement of Changes in Stockholders' Equity (unaudited)
              Three months ended March 31, 2004..........................................................4

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

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operation.........................................................9

Item 3.       Quantitative and Qualitative Disclosures About Market Risk................................20

Item 4.       Controls and Procedures...................................................................20

PART II.      OTHER INFORMATION

Item 2.       Purchases of Certain Equity Securities by the Issuer and Others...........................21

Item 6.       Exhibits and Reports on Form 8-K..........................................................21


</TABLE>



<PAGE>


<TABLE>
<CAPTION>
                                      COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                            CONSOLIDATED BALANCE SHEETS
                                                    (unaudited)

                  ------------------------------------------------------------------------------------------------
                                                                                   March 31,       December 31,
                                                                                 ---------------------------------
                  (dollars in thousands)                                             2004              2003
                  ------------------------------------------------------------------------------------------------
<S>                                                                                 <C>              <C>
Assets            Cash and due from banks                                           $  971,897     $    910,092
                  Federal funds sold                                                    56,000
                                                                                 --------------   --------------
                       Cash and cash equivalents                                     1,027,897          910,092
                  Loans held for sale                                                   34,934           42,769
                  Trading securities                                                   234,359          170,458
                  Securities available for sale                                     11,972,943       10,650,655
                  Securities held to maturity                                        2,871,593        2,490,484
                      (market value 03/04-$2,884,803; 12/03-$2,467,192)
                  Loans                                                              7,788,139        7,440,576
                       Less allowance for loan losses                                  117,329          112,057
                                                                                 --------------   --------------
                                                                                     7,670,810        7,328,519
                  Bank premises and equipment, net                                     856,634          811,451
                  Other assets                                                         286,081          307,752
                                                                                 --------------   --------------
                                                                                  $ 24,955,251     $ 22,712,180
                                                                                 ==============   ==============

Liabilities       Deposits:
                       Demand:
                         Noninterest-bearing                                       $ 5,092,813     $  4,574,714
                         Interest-bearing                                            9,313,838        8,574,297
                       Savings                                                       4,995,245        4,222,282
                       Time                                                          3,480,782        3,330,107
                                                                                 --------------   --------------
                           Total deposits                                           22,882,678       20,701,400
                  Other borrowed money                                                 137,978          311,510
                  Other liabilities                                                    282,039          221,982
                  Long-term debt                                                       200,000          200,000
                                                                                 --------------   --------------
                                                                                    23,502,695       21,434,892

Stockholders'     Common stock, 78,120,321shares
Equity                 issued (76,869,415 shares in 2003)                               78,120           76,869
                  Capital in excess of par value                                       912,905          866,095
                  Retained earnings                                                    394,794          347,365
                  Accumulated other comprehensive income (loss)                         78,076           (3,702)
                                                                                 --------------   --------------
                                                                                     1,463,895        1,286,627

                  Less treasury stock, at cost, 397,859 shares
                        issued (363,076 shares in 2003)                                 11,339            9,339
                                                                                 --------------   --------------
                           Total stockholders' equity                                1,452,556        1,277,288
                                                                                 --------------   --------------

                                                                                  $ 24,955,251     $ 22,712,180
                                                                                 ==============   ==============


</TABLE>


                             See accompanying notes.



                                                         1

<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)                  2004             2003
                  -----------------------------------------------------------------------------------------------
<S>                                                                                 <C>               <C>
Interest          Interest and fees on loans                                        $ 108,213         $ 93,121
income            Interest on investments                                             163,499          113,661
                  Other interest                                                          340               79
                                                                                --------------   --------------
                           Total interest income                                      272,052          206,861
                                                                                --------------   --------------

Interest          Interest on deposits:
expense                Demand                                                          15,943           12,397
                       Savings                                                          7,786            6,355
                       Time                                                            14,643           16,846
                                                                                --------------   --------------
                           Total interest on deposits                                  38,372           35,598
                  Interest on other borrowed money                                        448              914
                  Interest on long-term debt                                            3,020            3,020
                                                                                --------------   --------------
                           Total interest expense                                      41,840           39,532
                                                                                --------------   --------------

                  Net interest income                                                 230,212          167,329
                  Provision for loan losses                                             9,500            6,900
                                                                                --------------   --------------
                  Net interest income after provision for loan losses                 220,712          160,429

Noninterest       Deposit charges and service fees                                     45,481           34,842
income            Other operating income                                               40,327           41,360
                  Net investment securities gains (losses)                                424            (136)
                                                                                --------------   --------------
                           Total noninterest income                                    86,232           76,066
                                                                                --------------   --------------

Noninterest       Salaries and benefits                                                97,340           82,082
expense           Occupancy                                                            28,110           20,488
                  Furniture and equipment                                              24,179           21,226
                  Office                                                               10,920            9,186
                  Marketing                                                             8,696            5,276
                  Other                                                                43,005           33,863
                                                                                --------------   --------------
                           Total noninterest expenses                                 212,250          172,121
                                                                                --------------   --------------

                  Income before income taxes                                           94,694           64,374
                  Provision for federal and state income taxes                         32,719           21,484
                                                                                --------------   --------------
                  Net income                                                          $61,975         $ 42,890
                                                                                ==============   ==============

                  Net income per common and common equivalent share:
                       Basic                                                          $  0.80         $   0.63
                       Diluted                                                        $  0.75         $   0.60
                  Average common and common equivalent shares outstanding:
                       Basic                                                           77,164           68,318
                       Diluted                                                         85,532           71,785
                  Cash dividends, common stock                                        $  0.19         $   0.17

</TABLE>


                             See accompanying notes.



                                                         2

<PAGE>

                                        COMMERCE BANCORP, INC. AND SUBSIDIARIES
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                      (unaudited)
<TABLE>
<CAPTION>
                  ----------------------------------------------------------------------------------------------------
                                                                                                 Three Months Ended
                                                                                                     March 31,
                                                                                       -------------------------------
                  (dollars in thousands)                                                       2004             2003
                  ----------------------------------------------------------------------------------------------------
<S>                                                                                        <C>             <C>
Operating         Net income                                                               $  61,975       $   42,890
activities        Adjustments to reconcile net income to net cash
                     provided by operating activities:
                       Provision for loan losses                                               9,500            6,900
                       Provision for depreciation, amortization and accretion                 27,294           27,459
                         (Gain) loss on sales of securities available for sale                  (424)             136
                       Proceeds from sales of loans held for sale                            146,528          421,783
                       Originations of loans held for sale                                  (152,154)        (380,093)
                       Net (increase) decrease in trading securities                         (63,901)         120,848
                       Increase in other assets, net                                         (25,765)         (31,746)
                       Increase (decrease) in other liabilities                               62,857          (42,450)
                  ----------------------------------------------------------------------------------------------------
                             Net cash provided by operating activities                        65,910          165,727

Investing         Proceeds from the sales of securities available for sale                 1,561,581          752,240
activities        Proceeds from the maturity of securities available for sale                758,400        1,087,641
                  Proceeds from the maturity of securities held to maturity                  167,248          135,436
                  Purchase of securities available for sale                               (3,519,396)      (2,929,021)
                  Purchase of securities held to maturity                                   (548,888)        (299,839)
                  Net increase in loans                                                     (383,423)        (222,739)
                  Proceeds from sales of loans                                                45,093           48,999
                  Capital expenditures                                                       (65,181)         (70,165)
                  ----------------------------------------------------------------------------------------------------
                             Net cash used by investing activities                        (1,984,566)      (1,497,448)

Financing         Net increase in demand and savings deposits                              2,030,603        1,315,649
activities        Net increase in time deposits                                              150,675          367,411
                  Net decrease in other borrowed money                                      (173,532)        (282,019)
                  Dividends paid                                                            (14,547)          (11,213)
                  Proceeds from issuance of common stock under
                     dividend reinvestment and other stock plans                              45,261           25,588
                  Other                                                                       (1,999)          (1,308)
                  ----------------------------------------------------------------------------------------------------
                             Net cash provided by financing activities                     2,036,461        1,414,108

                  Increase in cash and cash equivalents                                      117,805           82,387
                  Cash and cash equivalents at beginning of year                             910,092          811,434
                  ----------------------------------------------------------------------------------------------------
                  Cash and cash equivalents at end of period                             $ 1,027,897       $  893,821
                  ====================================================================================================


                  Supplemental  disclosures of cash flow information:  Cash paid
                     during the period for:
                       Interest                                                            $  40,935       $   39,586
                       Income taxes                                                            5,402
                  ----------------------------------------------------------------------------------------------------
                             See accompanying notes.

</TABLE>


                                                           3

<PAGE>

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

Three months ended March 31, 2004
(in thousands)
---------------------------------------------------------------------------------------------------------------------------------
                                                                  Capital in                          Accumulated
                                                                  Excess of                              Other
                                                        Common      Par or      Retained   Treasury  Comprehensive
                                                         Stock   Stated Value   Earnings     Stock       Income         Total
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>         <C>        <C>            <C>        <C>
Balances at December 31, 2003                           $76,869     $866,095    $347,365   $ (9,339)      $ (3,702)  $1,277,288
Net income                                                                        61,975                                 61,975
   Other comprehensive income, net of tax
     Unrealized gain on securities (pre-tax $96,281)                                                        60,467       60,467
     Reclassification adjustment (pre-tax $32,786)                                                          21,311       21,311
                                                                                                                    -------------
   Other comprehensive income                                                                                            81,778
Total comprehensive income                                                                                              143,753
Cash dividends paid                                                              (14,547)                               (14,547)
Shares issued under dividend reinvestment
   and compensation and benefit plans (1,251 shares)      1,251       44,010                                             45,261
Other                                                                  2,800           1     (2,000)                        801
---------------------------------------------------------------------------------------------------------------------------------
Balances at March 31, 2004                              $78,120     $912,905    $394,794   $(11,339)       $78,076   $1,452,556
=================================================================================================================================

</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 accounting principles generally
accepted in the United  States have been  condensed or omitted  pursuant to such
rules and regulations.  These consolidated financial statements were compiled 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  months  ended March 31, 2004 are not  necessarily  indicative  of the
results that may be expected for the year ended 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. The net proceeds of this offering were used
for general corporate purposes,  including the redemption of the Company's $57.5
million of 8.75% Trust  Capital  Securities on July 1, 2002 and the repayment of
the Company's $23.0 million of 8 3/8% subordinated notes on May 20, 2002.

C.   Bank Premises and Equipment

In  accordance  with  accounting  principles  generally  accepted  in the United
States,  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 March 31,
2004 and December 31, 2003,  Bank  premises and  equipment in progress was $96.9
million and $87.2 million, respectively.

D.   Commitments

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.






                                       5
<PAGE>

E.   Comprehensive Income

Total  comprehensive  income,  which for the  Company  included  net  income and
changes in  unrealized  gains and  losses on the  Company's  available  for sale
securities,  amounted to $143.8 million and $22.5 million, respectively, for the
three months ended March 31, 2004 and 2003.

F.   New Accounting Standards

In January 2003, the FASB issued FASB  Interpretation No. 46,  "Consolidation of
Variable  Interest  Entities"  (FIN 46). In December 2003, the FASB deferred the
implementation  date of FIN 46 to periods  ending  after  March 15, 2004 for all
variable interest entities with the exception of special-purpose entities, which
were  subject to  adoption in periods  ending  after  December  15,  2003.  This
interpretation  provides  guidance on how to identify a variable interest entity
(VIE) and determine when the assets, liabilities,  noncontrolling interests, and
results of operations  of a VIE need to be included in a company's  consolidated
financial  statements.  The adoption of FIN 46 did not have a material impact on
the Company's financial condition or operating results.

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 FIN 46. At March 31,  2004,  the  Company's
investment in these entities totaled $38.8 million.

G.   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>
  ------------------------------------------------------------------------------------
                                                             Three Months Ended
                                                                  March 31,
  ------------------------------------------------------------------------------------
                                                          2004                2003
  ------------------------------------------------------------------------------------
<S>                                                      <C>                 <C>
  Reported net income                                    $61,975             $42,890
  Less:  Stock option compensation expense
     determined under fair value method, net of tax       (3,420)             (2,380)
                                                         -------             -------
  Pro forma net income, basic                            $58,555             $40,510
  Add:  Interest expense on Convertible Trust
     Capital Securities, net of tax                        1,963
                                                         -------
  Pro forma net income, diluted                          $60,518             $40,510

  Reported net income per share:
     Basic                                               $  0.80             $  0.63
     Diluted                                                0.75                0.60

  Pro forma net income per share:
     Basic                                               $  0.76             $  0.59
     Diluted                                                0.71                0.57
  ------------------------------------------------------------------------------------
</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% to 3.00%, dividend yields
of 1.33% to  1.50%,  volatility  factors  of the  expected  market  price of the
Company's  common stock of .255 to .304 and weighted  average  expected lives of
the options of 5.27 and 5.22 years.




                                       6
<PAGE>

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.

H.   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.

Selected segment information is as follows (in thousands):

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
                                                 Three Months Ended                       Three Months Ended
                                                   March 31, 2004                           March 31, 2003
                                        Community      Parent/                   Community      Parent/
                                          Banks         Other        Total         Banks         Other        Total
-------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>          <C>           <C>           <C>          <C>
Net interest income                   $     231,836 $     (1,624)$   230,212   $     168,229 $       (900)$   167,329
Provision for loan losses                     9,500            -       9,500           6,900            -       6,900
                                      -----------------------------------------------------------------------------------
Net interest income after provision         222,336       (1,624)    220,712         161,329         (900)    160,429
Noninterest income                           58,133       28,099      86,232          49,995       26,071      76,066
Noninterest expense                         189,353       22,897     212,250         149,450       22,671     172,121
                                      -----------------------------------------------------------------------------------
Income before income taxes                   91,116        3,578      94,694          61,874        2,500      64,374
Income tax expense                           31,207        1,512      32,719          20,975          509      21,484
                                      -----------------------------------------------------------------------------------
Net income                            $      59,909 $      2,066 $    61,975   $      40,899 $      1,991 $    42,890
                                      ===================================================================================

Average assets (in millions)          $      21,416 $      2,076 $    23,492   $      14,993 $      1,839 $    16,832
                                      ===================================================================================
</TABLE>











                                       7
<PAGE>


I.   Net income Per Share

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

<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                               March 31,
                                                                -----------------------------------------
                                                                      2004                   2003
                                                                ------------------    -------------------
<S>                                                                     <C>                   <C>
Basic:
Net income available to common shareholders - basic                     $61,975               $42,890
                                                                ==================    ===================

Average common shares outstanding                                        77,164                68,318
                                                                ==================    ===================

Net income per common share - basic                                     $  0.80               $  0.63
                                                                ==================    ===================

Diluted:
Net income                                                              $61,975               $42,890
Add interest expense on Convertible Trust Capital Securities,
   net of tax                                                             1,963
                                                                ------------------    -------------------
Net income available to common shareholders - diluted                   $63,938               $42,890
                                                                ==================    ===================

Average common shares outstanding                                        77,164                68,318
Additional shares considered in diluted computation assuming:
   Exercise of stock options                                              4,577                 3,467
   Conversion of Convertible Trust Capital Securities                     3,791
                                                                ------------------    -------------------

Average common shares outstanding - diluted                              85,532                71,785
                                                                ==================    ===================

Net income per common share - diluted                                   $  0.75               $  0.60
                                                                ==================    ===================
</TABLE>




















                                       8
<PAGE>

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

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

During the first quarter 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%.  Total  assets grew to $25.0  billion,  an
increase of 40% over March 31, 2003,  while total  deposits grew 41%. Net income
increased 44% to $62.0 million and diluted net income per share increased 25% to
$.75 during the first  quarter of 2004 as compared to the first quarter of 2003.
The net income per share  calculation for the first quarter of 2004 includes 5.0
million shares issued in connection with the Company's  September 2003 secondary
offering and an additional  3.8 million  shares  assuming the  conversion of the
Company's  Convertible Trust Capital Securities,  neither of which were included
in the calculation for the first quarter of 2003.

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
current  quarter,  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 March 31, 2004,  stockholders'  equity totaled $1.5 billion or 5.82% 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 the Commerce Bancorp and Commerce N.A.'s risk-based and
leverage ratios at March 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                             Per Regulatory Guidelines
                                                                 ---------------------------------------------------
                                               Actual                    Minimum              "Well Capitalized"
                                         Amount      Ratio         Amount      Ratio          Amount      Ratio
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>         <C>            <C>       <C>             <C>
March 31, 2004:
---------------
Commerce Bancorp
     Risk based capital ratios:
       Tier 1                           $1,564,769       12.70%     $493,027        4.00%      $739,540        6.00%
       Total capital                     1,682,098       13.65       986,053        8.00      1,232,567       10.00
     Leverage ratio                      1,564,769        6.68       937,630        4.00      1,172,037        5.00
Commerce N.A.
     Risk based capital ratios:
       Tier 1                             $808,896       10.73%     $301,573        4.00%      $452,360        6.00%
       Total capital                       887,959       11.78       603,146        8.00        753,933       10.00
     Leverage ratio                        808,896        6.03       536,607        4.00        670,759        5.00

</TABLE>












                                       9
<PAGE>

<TABLE>
<CAPTION>
                                                                             Per Regulatory Guidelines
                                                                 ---------------------------------------------------
                                         Actual                          Minimum              "Well Capitalized"
                                         Amount      Ratio         Amount      Ratio          Amount      Ratio
--------------------------------------------------------------------------------------------------------------------
<S>                                      <C>             <C>         <C>            <C>         <C>           <C>
March 31, 2003:
---------------
Commerce Bancorp
     Risk based capital ratios:
       Tier 1                           $1,050,051       11.25%     $373,411        4.00%      $560,117        6.00%
       Total capital                     1,144,782       12.26       746,823        8.00        933,529       10.00
     Leverage ratio                      1,050,051        6.28       668,655        4.00        835,819        5.00
Commerce N.A.
     Risk based capital ratios:
       Tier 1                             $567,037        9.83%     $230,644        4.00%      $345,966        6.00%
       Total capital                       630,037       10.93       461,288        8.00        576,610       10.00
     Leverage ratio                        567,037        5.53       410,116        4.00        512,645        5.00
</TABLE>


At March 31, 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 March 31, 2004, the Company
and its subsidiaries  meet all capital  adequacy  requirements to which they are
subject.  As a result of the  issuance of FIN 46, the Federal  Reserve  Board is
evaluating whether  deconsolidation of Commerce Capital Trust II will affect the
qualification of the Convertible Trust Capital Securities as Tier 1 capital.  On
May 6, 2004 the Federal Reserve Board issued a proposed ruling that would retain
trust  preferred  securities  in the Tier 1 capital of bank  holding  companies,
subject to certain  limitations.  Based on the proposed ruling,  the Convertible
Trust Capital Securities will retain the qualification as Tier 1 capital.  If it
is determined that the Convertible Trust Capital Securities no longer qualify as
Tier 1 capital, the Company will remain "well capitalized."

Deposits
--------

Total deposits at March 31, 2004 were $22.9 billion,  up $6.7 billion,  or 41.4%
over total  deposits of $16.2 billion at March 31, 2003, and up by $2.2 billion,
or 10.6% from  year-end  2003.  Deposit  growth during the first three months of
2004 included core deposit  growth in all  categories as well as growth from the
public sector.  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
24% at March 31, 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 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.




                                       10
<PAGE>


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 two year time
frame.  Net  income  in the flat rate  scenario  is  projected  to  increase  by
approximately  25% per year.  The  following  table  illustrates  the  impact on
projected  net  income  at March  31,  2004 and 2003 of a plus 200 and minus 100
basis point change in interest rates.

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

    March 31, 2004:
       Twelve Months                            0.98%             (7.81)%
       Twenty Four Months                      10.22%             (7.15)%

    March 31, 2003:
       Twelve Months                            7.78%             (2.35)%
       Twenty Four Months                      13.83%             (4.65)%


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 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 (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 March 31,  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  completed and
updated  comprehensive  core  deposit  studies  in order to assign  its own core
deposit  premiums as  permitted by the  Company's  regulatory  authorities.  The
studies have consistently  confirmed  management's  assertion that the Company's
core  deposits  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 March
31, 2004, the average life of the Company's deposits was 13.5 years. Thus, these
core deposit balances provide an internal hedge to market value  fluctuations in
the Company's fixed rate assets.





                                       11
<PAGE>


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 March 31,  2004 (in
millions, except for per share amounts):

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

     Plus 200 basis point           $4,934                $63.17

     Current Rate                   $4,918                $62.96

     Minus 100 basis point          $3,890                $49.80


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,  FHLB advances, or the sale of its
available for sale investment portfolio. As of March 31, 2004 the Company had in
excess of $11.5  billion  in  immediately  available  liquidity  which  includes
securities  that could be sold or used for  collateralized  borrowings,  cash on
hand, and borrowing capacities under existing lines of credit.  During the first
three  months  of  2004,  deposit  growth  was 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.  During the first three  months of 2004,  the
Company reduced its short-term borrowings, primarily through increased deposits.
At March 31, 2004,  short-term  borrowings  aggregated $138.0 million and had an
average rate of 0.76%, 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 $3.1 billion for the first three months of 2004.
This  significant  cash flow  provides  the Company  with  ongoing  reinvestment
opportunities  as interest rates change.  For the three month period ended March
31, 2004,  interest  earning assets increased $2.2 billion from $20.8 billion to
$23.0 billion. This increase was primarily in investment securities and the loan
portfolio as described below.









                                       12
<PAGE>

Loans
-----

During the first three months of 2004,  loans increased $347.6 million from $7.4
billion to $7.8 billion.  All segments of the loan portfolio  experienced growth
in the first three months of 2004,  including  loans secured by commercial  real
estate properties, commercial loans, and consumer loans.

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

                                           March 31,        December 31,
                                       ---------------------------------------
                                             2004                2003
                                       ---------------------------------------
                                                   (in thousands)
Commercial:
   Term                                      $1,071,736           $ 1,027,526
   Line of credit                               960,080               959,158
   Demand                                         1,080                 1,077
                                       ----------------- ---------------------
                                              2,032,896             1,987,761

Owner-occupied                                1,710,098             1,619,079
                                       ----------------- ---------------------
                                              3,742,994             3,606,840

Consumer:
   Mortgages (1-4 family residential)           984,415               918,686
   Installment                                  135,406               138,437
   Home equity                                1,485,055             1,405,795
   Credit lines                                  59,081                60,579
                                       ----------------- ---------------------
                                              2,663,957             2,523,497
Real estate:
   Investor developer                         1,236,862             1,167,672
   Construction                                 144,326               142,567
                                       ----------------- ---------------------
                                              1,381,188             1,310,239
                                       ----------------- ---------------------
     Total loans                             $7,788,139           $ 7,440,576
                                       ================= =====================



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

In total, for the first three months of 2004,  securities increased $1.8 billion
from $13.3 billion to $15.1 billion.  The available for sale portfolio increased
$1.3 billion to $12.0  billion at March 31, 2004 from $10.7  billion at December
31, 2003, and the securities held to maturity portfolio increased $381.1 million
to $2.9  billion at March 31,  2004 from $2.5  billion  at  year-end  2003.  The
portfolio of trading  securities  increased  $63.9 million from year-end 2003 to
$234.4 million at March 31, 2004.

The portfolio is comprised  primarily of high quality US  Government  agency and
mortgage-backed  obligations.  During  the first  quarter of 2004,  the  Company
continued its ongoing  review and  repositioning  of the portfolio to adjust for
current and anticipated interest rate and yield curve levels. This repositioning
of the  portfolio  involved  sales of  approximately  $1.6 billion for the first
quarter. This repositioning helped reduce the duration of the total portfolio to
2.74 years at March 31, 2004 from 3.93 years at December 31, 2003.  The duration
of the available for sale  portfolio was reduced to 2.55 years at March 31, 2004
from 3.78 years at December 31, 2003. The yield on the total portfolio decreased
slightly  from  4.86% at  December  31,  2003 to 4.81% at March  31,  2004.



                                       13
<PAGE>


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.

<TABLE>
<CAPTION>
                                                              March 31,      December 31,
                                                           ---------------------------------
                                                                2004             2003
                                                           ---------------------------------
                                                                (dollars in thousands)
<S>                                                            <C>              <C>
U.S. Government agency and mortgage backed obligations         $11,736,718      $10,511,545
Obligations of state and political subdivisions                     33,415           30,927
Other                                                              202,810          108,183
                                                           ---------------------------------
     Securities available for sale                             $11,972,943      $10,650,655
                                                           =================================


U.S. Government agency and mortgage backed obligations          $2,545,263       $2,193,577
Obligations of state and political subdivisions                    252,081          227,199
Other                                                               74,249           69,708
                                                           ---------------------------------
     Securities held to maturity                                $2,871,593       $2,490,484
                                                           =================================
</TABLE>

Detailed below is information  regarding the composition and  characteristics of
the Company's investment  portfolio,  excluding trading securities,  as of March
31, 2004.

<TABLE>
<CAPTION>
                                                            Average       Average        Average        Average
           Product Description               Amount          Yield       Book Price      Duration        Life
-------------------------------------------------------------------------------------------------------------------
                                         (in millions)                                         (in years)
<S>                                          <C>                 <C>        <C>             <C>            <C>
Mortgage-backed Securities:
    Federal Agencies Pass Through
     Certificates (AAA Rated)                $ 4,412             5.04%      $101.2          2.87           3.44

    Collateralized Mortgage
     Obligations (AAA Rated)                   9,161             4.80        101.0          2.46           2.89

U.S. Government agencies/Other                 1,271             4.00         99.6          4.57           5.43
                                         ---------------  ------------ --------------- ------------- --------------

                  Total                     $ 14,844             4.81%      $101.0          2.74           3.25
                                         ===============  ============ =============== ============= ==============
</TABLE>

The Company's  mortgage-backed  securities (MBS) portfolio  comprises 91% 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.

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

Net income for the first quarter of 2004 was $62.0 million, an increase of $19.1
million or 44.5% over the $42.9 million  recorded for the first quarter of 2003.
On a per share basis, diluted net income for the first quarter of 2004 was $0.75
per common  share  compared to $0.60 per common  share for the first  quarter of
2003. Net income per share in the first quarter of 2004 reflects the addition of
5.0 million shares from the 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 first
quarter  of 2004 were  1.06% and  17.91%,  respectively,  compared  to 1.02% and
17.94%, respectively, for the same 2003 period.





                                       14
<PAGE>

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

Net interest  income  totaled  $230.2  million for the first quarter of 2004, an
increase of $62.9  million or 37.6% from $167.3  million in the first quarter of
2003.  The increase in net interest  income was due  primarily to the  Company's
continued ability to grow deposits and its loan and investment portfolios.

As shown below,  the increase in net interest  income on a tax equivalent  basis
was due to volume increases in the Company's  earning assets,  which were fueled
by the Company's continued growth of low-cost core deposits (in millions).

<TABLE>
<CAPTION>
                                                              Net Interest Income
                                      ---------------------------------------------------------------------

                   Quarter Ended           Volume            Rate             Total               %
                     March 31             Increase          Change           Increase          Increase
             ----------------------------------------------------------------------------------------------
<S>                <C>                     <C>              <C>              <C>                  <C>
                   2004 vs. 2003            $69.7            ($6.4)           $ 63.3               37 %
</TABLE>


The net interest  margin for the first quarter of 2004 was 4.39%,  down 20 basis
points from the margin for the first quarter of 2003 and up 12 basis points from
the margin for the fourth  quarter of 2003.  The  increase  in the net  interest
margin over the fourth  quarter of 2003 was due  primarily to an increase in the
yield on interest earning assets of 10 basis points.

The following  table sets forth balance sheet items on a daily average basis for
the three months ended March 31, 2004,  December 31, 2003 and March 31, 2003 and
presents the daily average interest earned on assets and paid on liabilities for
such periods.







                                       15
<PAGE>


<TABLE>
<CAPTION>
                                                    Average Balances and Net Interest Income

                              -----------------------------------------------------------------------------------------------------
                                          March 2004                       December 2003                     March 2003
                              ----------------------------------  ------------------------------- ---------------------------------
                                Average                 Average     Average              Average     Average              Average
(dollars in thousands)          Balance      Interest    Rate       Balance    Interest   Rate       Balance     Interest   Rate
                              ----------------------------------  ------------------------------- ---------------------------------
Earning Assets
-------------------------
Investment securities
<S>                            <C>            <C>          <C>     <C>         <C>          <C>     <C>           <C>         <C>
   Taxable                     $13,295,903    $ 159,648    4.83%   $12,743,163 $148,537     4.62%   $  8,681,675  $109,916    5.13%
   Tax-exempt                      256,628        3,860    6.05        242,901    3,829     6.25         140,307     2,545    7.36
   Trading                         161,701        2,065    5.14        190,658    1,917     3.99         270,299     3,215    4.82
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
Total investment securities     13,714,232      165,573    4.86     13,176,722  154,283     4.65       9,092,281   115,676    5.16
Federal funds sold                 144,297          340    0.95         20,435       50     0.97          27,154        80    1.19
Loans
   Commercial mortgages          2,793,159       42,782    6.16      2,655,510   41,172     6.15       2,177,008    35,125    6.54
   Commercial                    1,878,353       24,535    5.25      1,760,615   23,285     5.25       1,495,312    20,943    5.68
   Consumer                      2,603,037       36,936    5.71      2,444,764   35,773     5.81       2,075,983    33,719    6.59
   Tax-exempt                      337,313        6,092    7.26        283,291    5,497     7.70         258,614     5,129    8.04
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
Total loans                      7,611,862      110,345    5.83      7,144,180  105,727     5.87       6,006,917    94,916    6.41
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
Total earning assets           $21,470,391    $ 276,258    5.17%   $20,341,337 $260,060     5.07%   $ 15,126,352  $210,672    5.65%
                              ============                        ============                    ==============
Sources of Funds
-------------------------
Interest-bearing liabilities

   Regular savings              $4,492,847      $ 7,786    0.70%    $4,251,627  $ 7,597     0.71%    $ 3,021,219 $   6,355    0.85%
   N.O.W. accounts                 607,603        1,052    0.70        546,350      937     0.68         403,415       813    0.82
   Money market plus             8,378,467       14,891    0.71      7,684,235   13,326     0.69       5,472,788    11,584    0.86
   Time deposits                 2,430,589       11,323    1.87      2,403,680   12,049     1.99       2,148,534    13,731    2.59
   Public funds                    968,513        3,320    1.38        923,561    3,151     1.35         793,437     3,115    1.59
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
     Total deposits             16,878,019       38,372    0.91     15,809,453   37,060     0.93      11,839,393    35,598    1.22

   Other borrowed money            174,746          448    1.03        411,079      921     0.89         272,304       914    1.36
   Long-term debt                  200,000        3,020    6.07        200,000    3,020     5.99         200,000     3,020    6.12
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
Total deposits and
interest-bearing
   liabilities                  17,252,765       41,840    0.98     16,420,532   41,001     0.99      12,311,697    39,532    1.30
Noninterest-bearing funds (net)  4,217,626                           3,920,805                         2,814,655
                              ------------  -----------  -------  ------------  -------   ------- --------------  --------   -----
Total sources to fund earning
   assets                      $21,470,391       41,840    0.78    $20,341,337   41,001     0.80    $ 15,126,352    39,532    1.06
                              ============  -----------  -------  ============  -------   ------- ==============  --------   -----
Net interest income and
   margin tax-equivalent basis                 $234,418    4.39%               $219,059     4.27%                 $171,140    4.59%
                                            ===========  =======               ========   =======                =========   ======
Other Balances
-------------------------
Cash and due from banks         $1,007,182                           $ 905,464                        $  865,209
Other assets                     1,129,880                           1,101,329                           933,321
Total assets                    23,491,544                          22,241,356                        16,831,542
Total deposits                  21,478,730                          20,171,403                        15,033,367
Demand deposits (noninterest-
     bearing)                    4,600,711                           4,361,950                         3,193,974
Other liabilities                  253,890                             232,037                           369,691
Stockholders' equity             1,384,178                           1,226,837                           956,180

</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.







                                       16
<PAGE>

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

Noninterest  income  totaled  $86.2  million for the first  quarter of 2004,  an
increase of $10.1  million or 13.3% from $76.1  million in the first  quarter of
2003.  The increase was primarily due to increased  deposit  charges and service
fees,  which rose $10.6 million over the first quarter of 2003  primarily due to
higher transaction  volumes. The decrease in loan brokerage fees of $4.9 million
resulted from a decline in mortgage refinancing activity.

                                                  Three Months Ended
(dollars in thousands)                       March 31, 2004  March 31, 2003
                                            -------------------------------
Deposit charges & service fees                    $45,481       $34,842
Other operating income:
     Insurance                                     18,336        16,055
     Capital markets                                9,727        10,003
     Loan brokerage fees                            3,053         7,923
     Other                                          9,211         7,379
                                            -------------------------------
   Total other                                     40,327        41,360
Net investment securities gains/(losses)              424         (136)
                                            -------------------------------
Total non-interest income                         $86,232       $76,066
                                            ===============================

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

For the first quarter of 2004,  noninterest  expense totaled $212.3 million,  an
increase of $40.1 million or 23.3% over the same period in 2003. Contributing to
this  increase was new branch  activity  over the past twelve  months,  with the
number of  branches  increasing  from 226 at March 31,  2003 to 278 at March 31,
2004.  With the addition of these new offices,  staff,  facilities,  and related
expenses rose accordingly. Other noninterest expenses rose $9.1 million over the
first  quarter of 2003.  This  increase  resulted  primarily  from  higher  bank
card-related  service charges,  increased  business  development  expenses,  and
increased provisions for non-credit-related losses.

The Company  experienced  positive operating  leverage in the first quarter,  as
year over year revenue  growth of 30% exceeded  non-interest  expense  growth of
23%.  Non-interest  expense  growth  during  the  first  quarter  of 2004 was 3%
compared to the fourth quarter of 2003.  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 growth in  non-interest  expenses  in these
markets is expected to decline throughout 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 67.12% for the first three  months of 2004 as compared
to 70.58% for the same 2003 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, 2004 were $32.4 million,  or 0.13% of total assets compared to $23.6 million
or 0.10% of total  assets at  December  31,  2003 and $22.5  million or 0.13% of
total assets at March 31, 2003.

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, 2004
were $30.5 million or 0.39% of total loans compared to $21.7 million or 0.29% of
total  loans at December  31, 2003 and $19.0  million or 0.32% of total loans at
March 31,  2003.  At March 31,  2004,  loans  past due 90 days or more and still
accruing  interest  amounted  to $696  thousand  compared  to $538  thousand  at
December  31,  2003 and  $376  thousand  at March  31,  2003.  Additional  loans
considered  as potential  problem  loans by the  Company's  internal loan review
department  ($35.8  million at March 31,  2004) have been  evaluated  as to risk
exposure in determining the adequacy of the allowance for loan losses.




                                       17
<PAGE>

The following summary presents  information  regarding  non-performing loans and
assets as of March 31, 2004 and the preceding four quarters  (dollar  amounts in
thousands).

<TABLE>
<CAPTION>
                                              March 31,     December 31,  September 30,    June 30,      March 31,
                                                 2004           2003          2003           2003           2003
                                           ---------------------------------------------------------------------------
<S>                                              <C>             <C>           <C>            <C>            <C>
Non-accrual loans:
   Commercial                                    $19,701         $ 6,867       $ 7,295        $ 7,049        $ 4,874
   Consumer                                        9,984           9,242         8,295          9,517          9,860
   Real estate:
     Construction                                                    138
     Mortgage                                        810           5,494         7,502          5,970          4,249
                                           ---------------------------------------------------------------------------
         Total non-accrual loans                  30,495          21,741        23,092         22,536         18,983
                                           ---------------------------------------------------------------------------

Restructured loans:
   Commercial                                          1               1             2              3              4
   Consumer
   Real estate:
     Construction
     Mortgage
                                           ---------------------------------------------------------------------------
         Total restructured loans                      1               1             2              3              4
                                           ---------------------------------------------------------------------------

Total non-performing loans                        30,496          21,742        23,094         22,539         18,987
                                           ---------------------------------------------------------------------------

Other real estate                                  1,890           1,831         1,670          1,540          3,553
                                           ---------------------------------------------------------------------------

Total non-performing assets                       32,386          23,573        24,764         24,079         22,540
                                           ---------------------------------------------------------------------------

Loans past due 90 days or more
   and still accruing                                696             538           649            434            376
                                           ---------------------------------------------------------------------------

Total non-performing assets and
   loans past due 90 days or more                $33,082         $24,111       $25,413        $24,513        $22,916
                                           ===========================================================================

Total non-performing loans as a
   percentage of total period-end loans            0.39%           0.29%         0.34%          0.35%          0.32%

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

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

Allowance for loan losses as a percentage
   of total non-performing loans                    385%            515%          449%           441%          499 %

Allowance for loan losses as a percentage
   of total period-end loans                       1.51%           1.51%         1.52%          1.56%          1.58%

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>




                                       18
<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>
                                                               Three Months Ended                  Year Ended
                                                          ------------------------------         ---------------
                                                            March 31,       March 31,             December 31,
                                                              2004            2003                    2003
                                                          --------------  --------------         ---------------
<S>                                                            <C>              <C>                     <C>
Balance at beginning of period                                 $112,057         $90,733                 $90,733
Provisions charged to operating expenses                          9,500           6,900                  31,850
                                                          --------------  --------------         ---------------
                                                                121,557          97,633                 122,583

Recoveries on loans charged-off:
     Commercial                                                     156             204                     669
     Consumer                                                       270             131                     584
     Real estate                                                     47                                      11
                                                          --------------  --------------         ---------------
Total recoveries                                                    473             335                   1,264

Loans charged-off:
     Commercial                                                  (2,293)         (1,868)                 (5,601)
     Consumer                                                      (772)         (1,365)                 (5,950)
     Real estate                                                 (1,636)             (4)                   (239)
                                                          --------------  --------------         ---------------
Total charge-offs                                                (4,701)         (3,237)                (11,790)
                                                          --------------  --------------         ---------------
Net charge-offs                                                  (4,228)         (2,902)                (10,526)
                                                          --------------  --------------         ---------------

Balance at end of period                                       $117,329         $94,731                $112,057
                                                          ==============  ==============         ===============

Net charge-offs as a percentage of
average loans outstanding                                          0.22%           0.19%                   0.16%

Net Reserve Additions                                           $ 5,272         $ 3,998                 $21,324
</TABLE>



The Company  considers the allowance for loan losses of $117.3 million  adequate
to cover probable  losses  inherent in the loan portfolio at March 31, 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 nonaccrual 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.

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





                                       19
<PAGE>

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 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
its periodic reports are being prepared.

In accordance with SEC  requirements,  the CEO and CFO note that, since the date
of the Controls Evaluation to the date of this Quarterly Report, there have been
no  significant  changes in  Internal  Controls or in other  factors  that could
significantly  affect Internal  Controls,  including any corrective actions with
regard to significant deficiencies and material weaknesses.






                                       20
<PAGE>

PART II. OTHER INFORMATION

Item 2.  Purchases of Certain Equity Securities by the Issuer and Others
         ---------------------------------------------------------------


<TABLE>
<CAPTION>
                                            (a)                 (b)                  (c)                      (d)

                                                                               Total Number of
               Period                                                        Shares Purchased as     Maximum Number of
                                      Total Number of                         Part of Publicly      Shares that May Yet
                                           Shares         Average Price      Announced Plans or     Be Purchased Under
                                       Purchased (1)      Paid per Share          Programs         the Plans or Programs
                                      ----------------- ------------------- ---------------------- ----------------------
<S>                                     <C>                <C>
January 1 to January 31, 2004              34,783             $57.50
February 1 to February 29, 2004
March 1 to March 31, 2004
                                      ----------------- ------------------- ---------------------- ----------------------
Total                                      34,783             $57.50
                                      ----------------- ------------------- ---------------------- ----------------------
<FN>

(1)  Purchases  were made by the Company for the payment of income  taxes on the exercise of stock options by an executive officer.
</FN>
</TABLE>

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

Exhibits

Exhibit 3.1       Restated  Certificate  of  Incorporation  of the  Company,  as
                  amended  (incorporated  by reference from the Company's Annual
                  Report on Form 10-K for the  fiscal  year ended  December  31,
                  2002).

Exhibit 3.2       By-laws of the Company, as amended  (incorporated by reference
                  from the  Company's  Annual Report on Form 10-K for the fiscal
                  year ended December 31, 2002).

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.

Reports on Form 8-K
-------------------

On January 15,  2004,  we filed a Current  Report on Form 8-K which  included as
exhibits a press  release,  issued by us on January  15,  2004,  announcing  our
results for the fourth quarter of 2004 and certain supplemental information.

On March 3, 2004, we filed a Current Report on Form 8-K, which included  certain
questions and answers regarding corporate information.





                                       21
<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 10, 2004                             /s/ DOUGLAS J. PAULS
--------------------                   --------------------------------
      (Date)                                  DOUGLAS J. PAULS
                                         SENIOR VICE PRESIDENT AND
                                           CHIEF FINANCIAL OFFICER
                                (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)






                                       22
<PAGE>