SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    Form 10-Q


     (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                    For the quarter ended September 30, 1998

                                       OR

     ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                 For the transition period from ______ to ______


                            Commission File #0-12874


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


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


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


                                 (609) 751-9000
              (Registrant's telephone number, including area code)


         Indicate by check mark whether the registrant (1) has filed all reports
         required to be filed by Section 13 or 15(d) of the Securities  Exchange
         Act of 1934 during the preceding 12 months (or for such shorter  period
         that the  registrant was required to file such  report(s),  and (2) has
         been subject to such filing requirements for the past 90 days.

                    Yes           X                No  _________________
<PAGE>
                      APPLICABLE ONLY TO CORPORATE ISSUERS:


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




         Common Stock                                  22,894,982
         (Title of Class)                     (No. of Shares Outstanding
                                                   as of  11/05/98)


<PAGE>
                     COMMERCE BANCORP, INC. AND SUBSIDIARIES


                                      INDEX

                                                                            Page


PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

                  Consolidated Balance Sheets (unaudited)
                           September 30, 1998 and December 31, 1997

                  Consolidated  Statements  of Income  (unaudited)  Three months
                           ended  September 30, 1998 and September 30, 1997, and
                           nine months ended  September  30, 1998 and  September
                           30, 1997

                  Consolidated Statements of Cash Flows  (unaudited) Nine months
                           ended September 30, 1998 and September 30, 1997

                  Notes to Consolidated Financial Statements (unaudited)

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

Item 3.           Quantitative and Qualitative Disclosures About Market Risk

PART II.          OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K


                                      -1-
<PAGE>
                     Commerce Bancorp, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                                   (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
                                                                             September 30,  December 31,
                                                                             ---------------------------
                (dollars in thousands)                                          1998           1997
--------------------------------------------------------------------------------------------------------
<S>                                                                             <C>            <C>     
Assets          Cash and due from banks                                         $206,903       $167,900
                Federal funds sold                                                     0              0
                                                                             ---------------------------
                              Cash and cash equivalents                          206,903        167,900
                Mortgages held for sale                                              206          7,260
                Trading securities                                                53,792          7,911
                Securities available for sale                                  1,216,686      1,315,120
                Securities held to maturity                                    1,138,265        874,032
                  (market value 1998-$1,147,150; 1997-$869,815)
                Loans                                                          1,760,722      1,411,289
                            Less allowance for loan losses                        24,725         21,261
                                                                             ---------------------------
                                                                               1,735,997      1,390,028
                Bank premises and equipment, net                                 130,507        111,759
                Other assets                                                      97,538         64,957
                                                                             ---------------------------
                                                                              $4,579,894     $3,938,967
                                                                             ===========================

Liabilities     Deposits:
                            Demand:
                              Interest-bearing                                $1,373,414     $1,111,302
                              Noninterest-bearing                                878,355        762,843
                            Savings                                              834,180        705,906
                            Time                                               1,047,546        789,353
                                                                             ---------------------------
                              Total deposits                                   4,133,495      3,369,404

                Other borrowed money                                              31,750        223,300
                Other liabilities                                                 38,024         12,695
                Obligation to Employee Stock Ownership Plan (ESOP)                 1,538          2,308
                Trust Capital Securities - Commerce Capital Trust I               57,500         57,500
                Long-term debt                                                    23,000         23,000
                                                                             ---------------------------
                                                                               4,285,307      3,688,207

Stockholders'   Common stock, 22,906,654 shares issued 
Equity               (21,500,804 shares in 1997)                                  35,791         25,309
                Series C preferred stock, 417,000 shares in 1997                                  7,506
                Capital in excess of par or stated value                         209,511        167,529
                Retained earnings                                                 40,208         50,592
                Accumulated other comprehensive income                            12,239          3,756
                                                                             ---------------------------
                                                                                 297,749        254,692
                Less commitment to ESOP                                            1,538          2,308
                Less treasury stock, at cost, 100,159 shares in
                1998 and 1997                                                      1,624          1,624
                                                                             ---------------------------
                              Total stockholders' equity                         294,587        250,760
                                                                             ---------------------------

                                                                              $4,579,894     $3,938,967
                                                                             ===========================
</TABLE>

See accompanying notes

                                      -2-
<PAGE>

                     Commerce Bancorp, Inc. and Subsidiaries
                        Consolidated Statements of Income
                                   (unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended                Nine Months Ended
                                                                 September 30,                    September 30,
                                                            ------------------------         ------------------------
             (dollars in thousands, except per share amounts)  1998         1997                1998         1997
---------------------------------------------------------------------------------------------------------------------
<S>         <S>                                                <C>          <C>                <C>           <C>    
Interest     Interest and fees on loans                        $36,989      $30,798            $102,191      $88,730
income       Interest on investments                            36,080       33,086             109,825       88,910
             Other interest                                        764          431               1,262        1,162
                                                            ------------------------         ------------------------
                  Total interest income                         73,833       64,315             213,278      178,802
                                                            ------------------------         ------------------------

Interest     Interest on deposits:
expense         Demand                                           8,256        6,337              23,792       17,646
                Savings                                          4,680        4,247              13,525       12,125
                Time                                            13,997       12,636              39,892       34,228
                                                            ------------------------         ------------------------
                  Total interest on deposits                    26,933       23,220              77,209       63,999
             Interest on other borrowed money                      602        1,735               3,545        3,199
             Interest on long-term debt                          1,782        1,780               5,346        3,104
                                                            ------------------------         ------------------------
                  Total interest expense                        29,317       26,735              86,100       70,302
                                                            ------------------------         ------------------------

             Net interest income                                44,516       37,580             127,178      108,500
             Provision for loan losses                           1,669        1,142               4,448        4,094
                                                            ------------------------         ------------------------
             Net interest income after provision for 
             loan losses                                        42,847       36,438             122,730      104,406

Noninterest  Deposit charges and service fees                    8,472        6,977              24,970       19,638
income       Other operating income                             13,950        6,685              37,132       20,544
             Net investment securities gains                       991        1,717               1,911        1,717
                                                            ------------------------         ------------------------
                  Total noninterest income                      23,413       15,379              64,013       41,899
                                                            ------------------------         ------------------------

Noninterest  Salaries                                           18,908       13,673              51,904       38,244
expense      Benefits                                            4,146        3,205              11,124        8,900
             Occupancy                                           4,264        3,767              11,912       10,361
             Furniture and equipment                             5,754        4,714              16,740       13,195
             Office                                              4,534        3,732              12,850       10,126
             Audit and regulatory fees and assessments             570          428               1,566        1,182
             Marketing                                           1,933        1,315               5,498        3,975
             Other real estate (net)                               320          407               1,145        1,368
             Other                                               6,961        4,480              18,660       12,683
                                                            ------------------------         ------------------------
                  Total noninterest expenses                    47,390       35,721             131,399      100,034
                                                            ------------------------         ------------------------

             Income before income taxes                         18,870       16,096              55,344       46,271
             Provision for federal and state income taxes        6,311        5,719              19,191       16,426
                                                            ------------------------         ------------------------
             Net income                                         12,559       10,377              36,153       29,845

             Dividends on preferred stocks                                      141                              422
                                                            ========================         ========================
             Net income applicable to common stock             $12,559      $10,236             $36,153      $29,423
                                                            ========================         ========================

             Net income per common and common equivalent share:
                Basic                                            $0.55        $0.48               $1.61        $1.40
                                                            ------------------------         ------------------------
                Diluted                                          $0.53        $0.46               $1.53        $1.32
                                                            ------------------------         ------------------------
             Average common and common equivalent shares
             outstanding:
                Basic                                           22,689       21,105              22,405       20,988
                                                            ------------------------         ------------------------
                Diluted                                         23,737       22,643              23,644       22,507
                                                            ------------------------         ------------------------
             Cash dividends declared, common stock               $0.19        $0.15               $0.56        $0.46
                                                            ========================         ========================
See accompanying notes
</TABLE>

                                      -3-
<PAGE>
                     Commerce Bancorp, Inc. And Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
                                                                                                    Nine Months Ended
                                                                                                       September 30,
                                                                                              --------------------------
                        (dollars in thousands)                                                      1998          1997
------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                                                                       <C>            <C>   
Operating activities    Net income                                                                $36,153        29,845
                        Adjustments to reconcile net income to net cash
                           provided by operating activities:
                              Provision for loan losses                                             4,448         4,094
                              Provision for depreciation, amortization and accretion               17,357        12,719
                              Gains on securities available for sale                               (1,911)       (1,717)
                              Proceeds from sales of mortgages held for sale                       24,803        16,539
                              Originations of mortgages held for sale                             (17,749)      (19,150)
                              Net loan (chargeoffs)                                                  (984)       (1,135)
                              Net (increase) decrease in trading securities                       (45,881)        6,562
                              Increase in other assets                                            (37,882)       (8,958)
                              Increase in other liabilities                                        25,329         1,175
                        ------------------------------------------------------------------------------------------------
                                            Net cash provided by operating activities               3,683        39,974

Investing activities    Proceeds from the sales of securities available for sale                  319,936       134,141
                        Proceeds from the maturity of securities available for sale               313,587        92,816
                        Proceeds from the maturity of securities held to maturity                 162,477        91,055
                        Purchase of securities available for sale                                (521,574)     (589,643)
                        Purchase of securities held to maturity                                  (429,551)     (238,424)
                        Net increase in loans                                                    (356,956)     (132,974)
                        Proceeds from sales of loans                                                7,523         8,441
                        Purchases of premises and equipment                                       (31,085)      (20,161)
                        ------------------------------------------------------------------------------------------------
                                            Net cash used by investing activities                (535,643)     (654,749)

Financing activities    Net increase in demand and savings deposits                               505,898       282,660
                        Net increase in time deposits                                             258,193       122,884
                        Net (decrease) increase in other borrowed money                          (191,550)      116,711
                        Dividends paid                                                            (17,107)       (9,152)
                        Proceeds from issuance of Trust Capital Securities                                       57,500
                        Issuance of common stock                                                    8,492
                        Proceeds from issuance of common stock under
                             dividend reinvestment and other stock plans                            7,037         5,119
                        Other                                                                                     1,179
                        ------------------------------------------------------------------------------------------------
                                            Net cash provided by financing activities               570,963       576,901

                        Increase (decrease) in cash and cash equivalents                           39,003       (37,874)
                        Cash and cash equivalents at beginning of year                            167,900       208,833
                        ------------------------------------------------------------------------------------------------
                        Cash and cash equivalents at end of period                               $206,903      $170,959
                        ------------------------------------------------------------------------------------------------

                        Supplemental disclosures of cash flow information:  
                        Cash paid during the period for:
                            Interest                                                              $83,234       $70,336
                            Income taxes                                                           22,129        18,112
</TABLE>

See accompanying notes

                                      -4-
<PAGE>
                     COMMERCE BANCORP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

A.       Consolidated Financial Statements

                  The  consolidated  financial  statements  included herein have
         been prepared  without audit  pursuant to the rules and  regulations of
         the  Securities  and  Exchange  Commission.   Certain  information  and
         footnote disclosures normally included in financial statements prepared
         in accordance with generally accepted  accounting  principles have been
         condensed  or  omitted  pursuant  to such  rules and  regulations.  The
         accompanying  condensed  consolidated  financial statements reflect all
         adjustments  which are, in the opinion of  management,  necessary  to a
         fair statement of the results for the interim periods  presented.  Such
         adjustments are of a normal recurring nature.  Certain amounts in prior
         periods have been  reclassified  for comparative  purposes.  All common
         stock per share  information  has been  adjusted for the 5-for-4  stock
         split in the form of a 25% stock  dividend  declared on June 29,  1998,
         and payable July 24, 1998 to shareholders of record July 13, 1998.

                  These condensed  consolidated  financial  statements should be
         read in conjunction with the audited financial statements and the notes
         thereto  included in the  registrant's  Annual  Report on Form 10-K, as
         amended,  for the period ended  December 31, 1997.  The results for the
         three  months  ended  September  30,  1998  and the nine  months  ended
         September 30, 1998 are not  necessarily  indicative of the results that
         may be expected for the year ended December 31, 1998.

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

B.       Commitments

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

                                      -5-
<PAGE>


C.       Employee Stock Ownership Plan (ESOP) Debt Guarantee

                  The Company has  guaranteed a debt  obligation of its Employee
         Stock Ownership Plan (ESOP) which originated at $7,500,000 and has been
         reduced to $1,538,000 through principal  reductions.  Accordingly,  the
         loan amount is reflected in the Company's consolidated balance sheet as
         a  liability  and  an  equal  amount,  representing  deferred  employee
         benefits,  has been recorded as a deduction from stockholders'  equity.
         The ESOP  obtained  the loan in 1990 to  acquire a new class of Company
         Cumulative  Convertible Preferred Stock (Series C) at a price of $18.00
         per share. The loan was refinanced in 1994, and is payable in quarterly
         installments  with the final  payment due January  28,  2000.  The loan
         bears  interest at a variable  rate,  although the rate can be fixed at
         future repricing dates in accordance with the loan agreement. Effective
         March 1,  1998,  the  Trustees  of the ESOP  exercised  their  right to
         convert all 417,000 shares of the Series C stock into 808,630 shares of
         the Company's  common stock,  a portion of which is pledged as security
         for the loan.  As the Company makes annual  contributions  to the ESOP,
         these  contributions,  plus dividends  from the Company's  common stock
         held by the ESOP, will be used to repay the loan.

D.       Recent Accounting Statements

                  As  of  January  1,  1998,  the  Company   adopted   Financial
         Accounting   Standards  Board  (FASB)   Statement  No.  130  "Reporting
         Comprehensive  Income" (FAS 130). FAS 130 establishes new standards for
         reporting  comprehensive  income,  which includes net income as well as
         certain  other  items  which  result in a change to equity  during  the
         period.  Prior period  financial  statements have been  reclassified to
         conform to the  requirements of FAS 130. The adoption of FAS 130 had no
         impact on the Company's  financial  position or results of  operations.
         During the third quarter of 1998 and 1997, total comprehensive  income,
         which for the  Company  included  net income and  unrealized  gains and
         losses on the  Company's  available  for sale  securities,  amounted to
         $18.1  million  and $16.3  million,  respectively.  For the nine months
         ended September 30, 1998 and 1997, total comprehensive income was $44.6
         million and $34.9 million, respectively.

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

                  In June,  1998, the FASB issued  Statement No. 133 "Accounting
         for Derivative  Instruments and Hedging  Activities" (FAS 133). FAS 133
         is  required  to be adopted  in years  beginning  after June 15,  1999.
         Management  does not  anticipate  the  adoption  of FAS 133 will have a
         significant  effect  on  earnings  or  the  financial  position  of the
         Company.

                                      -6-
<PAGE>



E.       Trust Capital Securities

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

 F.      Commerce Capital Markets, Inc.

                  In the  first  quarter  of 1998,  the  Company  completed  the
         acquisition  of A. H. Williams & Co.  (Williams),  Philadelphia,  PA, a
         public finance  investment  firm,  and combined  Williams with Commerce
         Capital,  the bank  securities  dealer division of Commerce NJ, to form
         Commerce Capital Markets,  Inc., a wholly-owned  nonbank  subsidiary of
         the Company engaging in certain securities  activities  permitted under
         Section 20 of the Glass-Steagall  Act. The acquisition was completed by
         the  issuance  of common  stock of the Company  totaling  approximately
         395,000  shares.  The  transaction  was  accounted  for as a pooling of
         interests.  However,  financial  statements of the periods prior to the
         acquisition have not been restated,  as the changes,  in the aggregate,
         would be immaterial.

G.       Earnings Per Share

         The calculation of earnings per share follows (in thousands, except for
         per share amounts):
<TABLE>
<CAPTION>
                                          Three Months Ended       Nine months Ended
                                              September 30           September 30
                                            1998        1997        1998        1997
                                          -------     -------     -------     -------
<S>                                       <C>         <C>         <C>         <C>    
Basic:
Net income                                $12,559     $10,377     $36,153     $29,845
Preferred stock dividends                                 141                     422
                                          -------     -------     -------     -------
Net income applicable to common stock     $12,559     $10,236     $36,153     $29,423
                                          =======     =======     =======     =======

Average common shares outstanding          22,689      21,105      22,405      20,988
                                          =======     =======     =======     =======

Net income per common share - basic       $  0.55     $  0.48     $  1.61     $  1.40
                                          =======     =======     =======     =======

                                      -7-
<PAGE>



Diluted:
Net income                                   $12,559     $10,377     $36,153     $29,845
Additional ESOP contribution under the
         if-converted method                                  11                      34
                                             -------     -------     -------     -------
Net income applicable to common stock
         on a diluted basis                  $12,559     $10,366     $36,153     $29,811
                                             =======     =======     =======     =======

Average common shares outstanding             22,689      21,105      22,405      20,988
Additional shares considered in diluted
         computation assuming:
           Exercise of stock options           1,048         891       1,099         872
           Conversion of preferred stock                     647         140         647
                                             -------     -------     -------     -------
Average common shares outstanding
         on a diluted basis                   23,737      22,643      23,644      22,507
                                             =======     =======     =======     =======

Net income per common share - diluted        $  0.53     $  0.46     $  1.53     $  1.32
                                             =======     =======     =======     =======
</TABLE>

H.       Bank Acquisitions

         On August 12, 1998, the Company  reached an agreement to acquire Tinton
         Falls  State  Bank  through  the  acquisition  of its  parent  company,
         Community  First Banking  Company  (OTCBB Symbol:  CFST).  Tinton Falls
         State  Bank,  headquartered  in Tinton  Falls,  New  Jersey,  with $189
         million in assets and $174 million in deposits at  September  30, 1998,
         serves  Monmouth  County,  New Jersey  through the  operation  of seven
         branch offices. The Company will issue approximately 1.5 million shares
         to complete  the  acquisition,  which is expected to close in the first
         quarter of 1999. The transaction  will be accounted for as a pooling of
         interests.

         On  September  17,  1998,  the Company  reached an agreement to acquire
         Prestige  State Bank  through the  acquisition  of its parent  company,
         Prestige  Financial Corp. (NASDAQ Symbol:  PRFN).  Prestige State Bank,
         headquartered  in Raritan  Township,  New Jersey,  with $322 million in
         assets and $298  million in  deposits at  September  30,  1998,  serves
         Hunterdon County and portions of Warren County and Somerset County, New
         Jersey, through the operation of eight branch offices. The Company will
         issue  approximately  1.9 million  shares to complete the  acquisition,
         which  is  expected  to  close  in  the  first  quarter  of  1999.  The
         transaction will be accounted for as a pooling of interests.

         Unaudited pro forma  combined  financial  information  for the Company,
         Tinton  Falls State Bank,  and  Prestige  State Bank at or for the year
         ended December 31, 1997 includes the following (dollars in thousands):

                  Assets                             $4,388,000
                  Deposits                            3,784,000
                  Stockholders' equity                  282,000
                  Net interest income                   167,000
                  Net income                             45,000

         Diluted net income per common share will not differ materially from the
         $1.78 reported by the Company for 1997 after  adjusting for the 5-for-4
         stock  split in the form of a 25% stock  dividend  declared on June 29,
         1998.

                                      -8-
<PAGE>


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

         Capital Resources

                  At September 30, 1998,  stockholders'  equity  totaled  $294.6
         million or 6.43% of total assets,  compared to $250.8  million or 6.37%
         of total assets at December 31, 1997.

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

                  The table below  presents  the  Company's  and  Commerce  NJ's
         risk-based and leverage ratios at September 30, 1998 and 1997:

<TABLE>
<CAPTION>
                                                                                      Per Regulatory Guidelines
                                                      Actual                       Minimum                "Well Capitalized"
                                               Amount           Ratio       Amount          Ratio       Amount           Ratio
<S>                                            <C>               <C>        <C>               <C>       <C>               <C>  
September 30, 1998
Company
   Risk based capital ratios:
     Tier 1                                   $334,914           14.15%    $ 94,706           4.00%    $142,058            6.00%
     Total capital                             378,038           15.97      189,411           8.00      236,764           10.00
   Leverage ratio                              334,914            7.56      132,907           3.00      221,511            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $190,741           12.74%    $ 59,903           4.00%    $ 89,854            6.00%
     Total capital                             206,842           13.81      119,805           8.00      149,756           10.00
   Leverage ratio                              190,741            6.68       85,702           3.00      142,836            5.00

September 30, 1997
Company
   Risk based capital ratios:
     Tier 1                                   $289,539           15.47%    $ 74,860           4.00%    $112,290            6.00%
     Total capital                             333,473           17.82      149,720           8.00      187,150           10.00
   Leverage ratio                              289,539            7.72      112,554           3.00      187,589            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $156,643           12.60%    $ 49,723           4.00%    $ 74,584            6.00%
     Total capital                             170,294           13.70       99,445           8.00      124,307           10.00
   Leverage ratio                              156,643            6.29       74,742           3.00      124,570            5.00
</TABLE>

                                      -9-
<PAGE>

                At September 30, 1998, the Company's consolidated capital levels
         and  each  of  the  Company's  bank  subsidiaries  met  the  regulatory
         definition  of a "well  capitalized"  financial  institution,  i.e.,  a
         leverage capital ratio exceeding 5%, a Tier 1 risk-based  capital ratio
         exceeding  6%, and a total  risk-based  capital  ratio  exceeding  10%.
         Management  believes that as of September 30, 1998, the Company and its
         subsidiaries  meet all capital adequacy  requirements to which they are
         subject.

         Deposits

                  Total  deposits at September 30, 1998 were $4.13  billion,  up
         $808.3  million,  or 24%  over  total  deposits  of  $3.33  billion  at
         September  30, 1997,  and up by $764.1  million,  or 23% from  year-end
         1997. Deposit growth during the first nine months of 1998 included core
         deposit  growth in all  categories  as well as growth  from the  public
         sector.  The Company  experienced  "same-store  core deposit growth" of
         20.1% at  September  30,  1998 as  compared  to deposits a year ago for
         those branches open for more than two years.

         Interest Rate Sensitivity and Liquidity

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

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

                  The Company's income  simulation model analyzes  interest rate
         sensitivity  by projecting net income over the next 24 months in a flat
         rate scenario versus net income in alternative interest rate scenarios.
         Management  continually  reviews  and refines  its  interest  rate risk
         management  process  in  response  to the  changing  economic  climate.
         Currently, the Company's model projects a proportionate 200 basis point
         change  during the next  year,  with rates  remaining  constant  in the
         second year.  The Company's ALCO policy has  established  that interest
         income  sensitivity will be considered  acceptable if net income in the
         above  interest  rate  scenario is within 15% of net income in the flat
         rate  scenario  in the first year and within 30% over the two year time
         frame.  At September 30, 1998, the Company's  income  simulation  model
         indicates  net income  would  decrease by 2.40% and 10.05% in the first
         year and over a two year time frame,  respectively,  if rates decreased
         as described  above.  The model projects that net income would decrease
         by 6.13% and 5.98% in the  first  year and over a two year time  frame,
         respectively,  if rates increased as described  above. All of these net
         income projections are within an acceptable level of interest rate risk
         pursuant to the policy established by ALCO.

                                      -10-
<PAGE>

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

                  Management  also  monitors  interest  rate risk by utilizing a
         market value of equity model. The model assesses the impact of a change
         in interest  rates on the market value of all the Company's  assets and
         liabilities,  as  well  as any  off  balance  sheet  items.  The  model
         calculates the market value of the Company's  assets and liabilities in
         excess of book value in the current rate  scenario,  and then  compares
         the excess of market value over book value given an immediate 200 basis
         point change in rates.  The Company's  ALCO policy  indicates  that the
         level of interest rate risk is  unacceptable if the immediate 200 basis
         point  change  would result in the loss of 60% or more of the excess of
         market value over book value in the current rate scenario. At September
         30,  1998,  the market value of equity  model  indicates an  acceptable
         level of interest rate risk.

                  Liquidity  involves  the  Company's  ability to raise funds to
         support asset growth or decrease assets to meet deposit withdrawals and
         other  borrowing  needs,  to  maintain  reserve   requirements  and  to
         otherwise  operate  the  Company on an  ongoing  basis.  The  Company's
         liquidity needs are primarily met by growth in core deposits,  its cash
         and  federal  funds  sold  position,  cash  flow  from  its  amortizing
         investment  and  loan  portfolios,  as well  as the  use of  short-term
         borrowings, as required.

         Short-Term Borrowings

                  Short-term  borrowings,   or  other  borrowed  money,  consist
         primarily of securities  sold under  agreements to repurchase,  and are
         used  to  meet  short  term  funding  needs.  At  September  30,  1998,
         short-term  borrowings aggregated $31.8 million and had an average rate
         of 6.63%.

         Interest Earning Assets

                  For the nine month period ended  September 30, 1998,  interest
         earning  assets  increased  $554.1  million from $3.62 billion to $4.17
         billion.  This increase was primarily in investment  securities and the
         loan portfolio as described below.

         Loans

                  During the first nine months of 1998,  loans increased  $349.4
         million from $1.41  billion to $1.76  billion.  At September  30, 1998,
         loans  represented  43% of total deposits and 38% of total assets.  All
         segments  of the loan  portfolio  experienced  growth in the first nine
         months of 1998,  including  loans  secured by  commercial  real  estate
         properties, commercial loans, and consumer loans.

                                      -11-
<PAGE>

         Investments

                  In  total,  for the  first  nine  months  of 1998,  securities
         increased  $211.7 million from $2.20 billion to $2.41 billion.  Deposit
         growth and other  funding  sources were used to increase the  Company's
         investment portfolio.  The available for sale portfolio decreased $98.4
         million to $1.22 billion from $1.32  billion at December 31, 1997,  and
         the securities held to maturity  portfolio  increased $264.2 million to
         $1.14  billion at  September  30, 1998 from $874.0  million at year-end
         1997. The portfolio of trading securities  increased $45.9 million from
         year-end 1997 to $53.8 million at September 30, 1998,  primarily due to
         the formation of CCMI.  At September 30, 1998,  the average life of the
         investment  portfolio was approximately 5.1 years, and the duration was
         approximately  3.9 years.  At  September  30,  1998,  total  securities
         represented 53% of total assets.

         Net Income

                Net income for the third quarter of 1998 was $12.6  million,  an
         increase of $2.2 million or 21% over the $10.4 million recorded for the
         third quarter of 1997. Net income for the first nine months of 1998 was
         $36.2  million,  an  increase  of $6.3  million  or 21% over the  $29.8
         million  recorded  in the first  nine  months  of 1997.  On a per share
         basis,  diluted net income for the third  quarter of 1998 and the first
         nine months of 1998 were $0.53 and $1.53 per common  share  compared to
         $0.46 and $1.32 per common share for the respective 1997 periods.

                Return on average  assets  (ROA) and  return on  average  equity
         (ROE)  for  the  third   quarter  of  1998  were   1.13%  and   17.69%,
         respectively,  compared to 1.11% and 18.18%, respectively, for the same
         1997  period.  ROA and ROE for the first nine months of 1998 were 1.13%
         and 17.61%, respectively, compared to 1.14% and 18.51% a year ago.

          Net Interest Income

                Net interest  income totaled $44.5 million for the third quarter
         of 1998,  an increase of $6.9 million or 18% from $37.6  million in the
         third quarter of 1997. Net interest income for the first nine months of
         1998 totaled  $127.2  million,  up $18.7  million or 17% from the first
         nine months of 1997. The  improvement  in net interest  income for both
         periods  was  due  primarily  to  volume  increases  in  the  loan  and
         investment portfolios.

         Noninterest Income

                Noninterest  income  totaled $23.4 million for the third quarter
         of 1998,  an increase of $8.0 million or 52% from $15.4  million in the
         third  quarter of 1997.  The  increase  was due  primarily to increased
         other  operating  income,  which rose $7.3 million over the prior year,
         including  increased  revenues of $2.5 million from  Commerce  National
         Insurance Services, Inc. (Commerce Insurance),  the Company's insurance
         brokerage subsidiary,  and $3.5 million from CCMI. In addition, deposit
         charges and service fees  increased $1.5 million from the third quarter
         of 1997  primarily  due to  higher  transaction  volumes.  The  Company
         recorded $991 thousand in net investment  securities gains in the third
         quarter of 1998,  as compared to $1.7  million in the third  quarter of
         1997.

                For the first nine months of 1998,  noninterest  income  totaled
         $64.0  million,  an increase of $22.1 million or 53% from $41.9 million
         in the first nine months of 1997. Other operating

                                      -12-
<PAGE>

         income rose $16.6 million over the first nine months of 1997, including
         increased  revenues of $5.8 million from  Commerce  Insurance  and $7.9
         million from CCMI, respectively.  Deposit charges and service fees rose
         $5.3 million over the prior year  primarily  due to higher  transaction
         volumes,  and the  Company  recorded  $1.9  million  in net  investment
         securities  gains during the first nine months of 1998,  as compared to
         $1.7 million in the first nine months of 1997.

         Noninterest Expense

                  For the third  quarter of 1998,  noninterest  expense  totaled
         $47.4 million, an increase of $11.7 million or 33% over the same period
         in 1997. Contributing to this increase was new branch activity over the
         past twelve months,  with the number of branches  increasing from 70 at
         September  30, 1997 to 80 at  September  30,  1998,  the  expansion  of
         Commerce  Insurance,  and the formation of CCMI in the first quarter of
         1998.  With  the  addition  of  these  new  offices  and  CCMI,  staff,
         facilities,  marketing,  and related expenses rose  accordingly.  Other
         noninterest  expenses rose $2.5 million over the third quarter of 1997.
         This increase resulted primarily from higher bank card-related  service
         charges,   increased  business  development  expenses,   and  increased
         provisions for non-credit-related losses.

         For the first nine months of 1998,  noninterest  expense totaled $131.4
         million, an increase of $31.4 million or 31% over $100.0 million in the
         first nine months of 1997. Contributing to this increase was new branch
         activity,  the  expansion of Commerce  Insurance,  and the formation of
         CCMI as noted above. Other noninterest  expenses rose $6.0 million over
         the first nine months of 1997.  This increase  resulted  primarily from
         higher  bank   card-related   service   charges,   increased   business
         development  expenses,  higher legal fees, and increased provisions for
         non-credit-related losses.

                  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
         68.82% for the first nine  months of 1998 as compared to 66.36% for the
         same 1997 period. The Company's efficiency ratio remains above its peer
         group primarily due to its aggressive growth expansion activities.

         Loan and Asset Quality

                  Total non-performing  assets  (non-performing  loans and other
         real  estate,  excluding  loans  past  due 90 days or  more  and  still
         accruing  interest) at September 30, 1998 were $12.3 million,  or 0.27%
         of total assets  compared to $17.4  million or 0.44% of total assets at
         December  31,  1997 and  $19.0  million  or 0.50%  of total  assets  at
         September 30, 1997.

                  Total non-performing loans (non-accrual loans and restructured
         loans,  excluding  loans  past due 90 days or more and  still  accruing
         interest)  at  September  30, 1998 were $6.9  million or 0.39% of total
         loans compared to $11.6 million or 0.82% of total loans at December 31,
         1997 and $12.4  million or 0.89% of total loans at September  30, 1997.
         At  September  30,  1998,  loans  past  due 90 days or more  and  still
         accruing interest amounted to $1.1 million compared to $226 thousand at
         December 31, 1997 and $423 thousand at September  30, 1997.  Additional
         loans considered as potential  problem loans by the Company's  internal
         loan review  department ($13.2 million at September 30, 1998) have been
         evaluated  as to risk  exposure  in  determining  the  adequacy  of the
         allowance for loan losses.

                                      -13-
<PAGE>
                  Other real estate  (ORE) at  September  30, 1998  totaled $5.4
         million  compared to $5.8 million at December 31, 1997 and $6.7 million
         at September 30, 1997.  These  properties have been written down to the
         lower of cost or fair value less disposition costs.

                  On pages 15 and 16 are tabular  presentation  showing detailed
         information about the Company's  non-performing loans and assets and an
         analysis of the  Company's  allowance for loan losses and other related
         data for September 30, 1998, December 31, 1997, and September 30, 1997.

         Year 2000

                  The  Company  began the  process  of  preparing  its  computer
         systems  and  applications  for the  Year  2000 in  1996.  The  process
         involves   identifying  and  resolving  date  recognition  problems  in
         computer systems and software,  and to a lesser extent, other operating
         equipment,  that could be caused by the date change from  December  31,
         1999 to January 1, 2000.

                  The Company  has  completed  its  assessment  of all  business
         processes that could be affected by the Year 2000 issue.  Each business
         process assessment included a review of the information systems used in
         that process,  including  hardware and software,  involvement  of third
         parties,  and any  other  operating  equipment.  The  Company  licenses
         substantially  all software used in conducting  its business from third
         party vendors.  All vendors have been contacted regarding the Year 2000
         issue,  and the Company  continues to track the progress each vendor is
         making in reaching  Year 2000  compliance.  The Company is also working
         with  significant  customers and  counterparties  to monitor their Year
         2000  efforts.  The Company  expects to have  substantially  all of the
         necessary  changes in place and tested for all mission critical systems
         (those  systems  defined as absolutely  essential to the daily business
         operation of the Company) before the end of 1998. Additionally, changes
         for all remaining critical systems should be in place and tested by the
         end of the first quarter of 1999.

                  The  Company  believes it is taking the  appropriate  steps to
         address all Year 2000 issues.  Despite the Company's efforts to address
         the Year 2000  problem  and develop  contingency  plans in the event of
         Year  2000  failures,   including   non-compliance   by  third  parties
         (including  loan  customers),  there can be no assurance that Year 2000
         issues  (both  internal and  external)  will not  materially  adversely
         impact the Company's  financial  position,  results of  operations,  or
         relationships with customers, vendors, or others.

                  The  Company  estimates  the  total  cost  of  the  Year  2000
         compliance  process,  including internal and external personnel and any
         required  hardware  and  software  modifications,  will not exceed $1.0
         million.

         Forward-Looking Statements

                  The  discussion  regarding  the  Company's  interest rate risk
         position  in  the  section  entitled  "Interest  Rate  Sensitivity  and
         Liquidity" and the section entitled "Year 2000" contain statements that
         may be forward-looking (as defined in the Private Securities Litigation
         Reform Act of 1995). These forward looking statements involve risks and
         uncertainties, including changes in general economic conditions and the
         Company's  ability  (as well as third  party  ability)  to  effectively
         address  the Year  2000  issue.  Although  the  Company  believes  such
         forward-looking  statements are  reasonable,  actual results may differ
         materially  from  the  results   discussed  in  these   forward-looking
         statements.

                                      -14-
<PAGE>

The following summary presents  information  regarding  non-performing loans and
assets as of September 30, 1998 and the preceding four quarters: (dollar amounts
in thousands)
<TABLE>
<CAPTION>
                                           September 30,   June 30,    March 31,   December 31, September 30,
                                               1998          1998        1998          1997         1997
                                              -------      -------      -------      -------      -------
<S>                                           <C>          <C>          <C>          <C>          <C>    
Non-accrual loans:
   Commercial                                 $ 1,301      $ 1,070      $ 1,764      $ 1,816      $ 1,920
   Consumer                                       763          835          944          703          893
   Real estate:
      Construction                                393          394          393        1,345        2,006
      Mortgage                                  4,346        5,215        7,742        7,706        7,533
                                              -------      -------      -------      -------      -------
         Total non-accrual loans                6,803        7,514       10,843       11,570       12,352
                                              -------      -------      -------      -------      -------

Restructured loans:
   Commercial                                      17           18           19           19           20
   Consumer
   Real estate:
      Construction
      Mortgage                                    104          109          114
                                              -------      -------      -------      -------      -------
         Total restructured loans                 121          127          133           19           20
                                              -------      -------      -------      -------      -------

   Total non-performing loans                   6,924        7,641       10,976       11,589       12,372
                                              -------      -------      -------      -------      -------

Other real estate                               5,409        5,649        6,029        5,845        6,673
                                              -------      -------      -------      -------      -------

Total non-performing assets                    12,333       13,290       17,005       17,434       19,045
                                              -------      -------      -------      -------      -------

Loans past due 90 days or more
   and still accruing                           1,099          259          308          226          423
                                              -------      -------      -------      -------      -------

Total non-performing assets and
   loans past due 90 days or more             $13,432      $13,549      $17,313      $17,660      $19,468
                                              =======      =======      =======      =======      =======

Total non-performing loans as a
   percentage of total period-end
   loans                                         0.39%        0.46%        0.75%        0.82%        0.89%

Total non-performing assets as a
   percentage of total period-end assets         0.27%        0.30%        0.41%        0.44%        0.50%

Total non-performing assets and loans
   past due 90 days or more as a
   percentage of total period-end assets         0.29%        0.30%        0.42%        0.45%        0.51%

Allowance for loan losses as a
   percentage of total non-performing
   loans                                          357%         305%         200%         183%         169%

Allowance for loan losses as a percentage
   of total period-end loans                     1.40%        1.40%        1.50%        1.51%        1.50%

Total non-performing assets and loans
   past due 90 days or more as a
   percentage of stockholders' equity and
   allowance for loan losses                        4%           4%           6%           6%           8%
</TABLE>

                                      -15-
<PAGE>
The following  table  presents,  for the periods  indicated,  an analysis of the
allowance for loan losses and other related data: (dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                          Year
                                                       Nine Months Ended                  Ended
                                                  09/30/98          09/30/97            12/31/97
                                                 -----------       ------------        ------------
<S>                                                 <C>                <C>                 <C>    
Balance at beginning of period                      $21,261            $17,975             $17,975
Provisions charged to operating expenses              4,448              4,094               4,668
                                                 -----------       ------------        ------------
                                                     25,709             22,069              22,643

Recoveries on loans charged-off:
   Commercial                                           253                150                 348
   Consumer                                             223                267                 406
   Real estate                                           18                121                 144
                                                 -----------       ------------        ------------
Total recoveries                                        494                538                 898

Loans charged-off:
   Commercial                                          (280)              (783)               (964)
   Consumer                                            (901)              (846)             (1,170)
   Real estate                                         (297)               (44)               (146)
                                                 -----------       ------------        ------------
Total charge-offs                                    (1,478)            (1,673)             (2,280)
                                                 -----------       ------------        ------------
Net charge-offs                                        (984)            (1,135)             (1,382)
                                                 -----------       ------------        ------------

Balance at end of period                            $24,725            $20,934             $21,261
                                                 ===========       ============        ============

Net charge-offs as a percentage of
average loans outstanding                              0.08%              0.11%               0.10%
</TABLE>


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

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

                                      -16-
<PAGE>

                           PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K


         No  reports  on Form 8-K were  filed  during  the third  quarter  ended
September 30, 1998.








                                      -17-
<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)





November 13, 1998
  (Date)                                      C. EDWARD JORDAN, JR.
                                             EXECUTIVE VICE PRESIDENT
                                           (PRINCIPAL FINANCIAL OFFICER)



                                      -18