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 June 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                                 22,592,854
         (Title of Class)                    (No. of Shares Outstanding
                                                    as of  8/07/98)

<PAGE>
                     COMMERCE BANCORP, INC. AND SUBSIDIARIES



                                      INDEX

                                                                            Page


PART I.           FINANCIAL INFORMATION

Item 1.           Financial Statements

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

                  Consolidated  Statements  of Income  (unaudited)  
                           Three months ended June 30, 1998 and 
                           June 30, 1997, and six months ended June
                           30, 1998 and June 30, 1997

                  Consolidated Statements of Cash Flows  (unaudited)  
                           Six months ended June 30, 1998 and
                           June 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 4.           Submission of Matters to a Vote of Security Holders

Item 5.           Other Information

Item 6.           Exhibits and Reports on Form 8-K


                                       1
<PAGE>
                     Commerce Bancorp, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                                   (unaudited)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
                                                                                  June 30,       December 31,
                                                                                 ----------------------------
                 (dollars in thousands)                                             1998            1997
-------------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>             <C>
Assets           Cash and due from banks                                            $223,172        $167,900
                 Federal funds sold                                                        0               0
                                                                                 ----------------------------
                                Cash and cash equivalents                            223,172         167,900
                 Mortgages held for sale                                               3,348           7,260
                 Trading securities                                                   35,098           7,911
                 Securities available for sale                                     1,304,742       1,315,120
                 Securities held to maturity                                       1,039,730         874,032
                  (market value 1998-$1,037,962; 1997-$869,815)
                 Loans                                                             1,661,607       1,411,289
                              Less allowance for loan losses                          23,331          21,261
                                                                                 ----------------------------
                                                                                   1,638,276       1,390,028
                 Bank premises and equipment, net                                    127,031         111,759
                 Other assets                                                         78,300          64,957
                                                                                 ----------------------------
                                                                                  $4,449,697      $3,938,967
                                                                                 ============================

Liabilities      Deposits:
                              Demand:
                                Interest-bearing                                  $1,225,937      $1,111,302
                                Noninterest-bearing                                  874,714         762,843
                              Savings                                                833,697         705,906
                              Time                                                   928,242         789,353
                                                                                 ----------------------------
                                Total deposits                                     3,862,590       3,369,404

                 Other borrowed money                                                189,519         223,300
                 Other liabilities                                                    33,270          12,695
                 Obligation to Employee Stock Ownership Plan (ESOP)                    1,795           2,308
                 Trust Capital Securities - Commerce Capital Trust I                  57,500          57,500
                 Long-term debt                                                       23,000          23,000
                                                                                 ----------------------------
                                                                                   4,167,674       3,688,207

Stockholders'    Common stock, 22,629,161 shares issued (21,500,804 shares in 1997)   28,325          25,309
Equity           Series C preferred stock, 417,000 shares in 1997                                      7,506
                 Capital in excess of par or stated value                            213,915         167,529
                 Retained earnings                                                    36,528          50,592
                 Accumulated other comprehensive income                                6,674           3,756
                                                                                 ----------------------------
                                                                                     285,442         254,692
                 Less commitment to ESOP                                               1,795           2,308
                 Less treasury stock, at cost, 100,159 shares in 1998
                              (100,159 in 1997)                                        1,624           1,624
                                                                                 ----------------------------
                                Total stockholders' equity                           282,023         250,760
                                                                                 ----------------------------

                                                                                  $4,449,697      $3,938,967
                                                                                 ============================
</TABLE>
See accompanying notes

                                       2
<PAGE>
                     Commerce Bancorp, Inc. and Subsidiaries
                        Consolidated Statements of Income
                                   (unaudited)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                              Three Months Ended                Six Months Ended
                                                                    June 30,                         June 30,
                                                            ------------------------         ------------------------
             (dollars in thousands, except per share amounts)  1998         1997                1998         1997
---------------------------------------------------------------------------------------------------------------------
<S>                                                            <C>          <C>                 <C>          <C>
Interest     Interest and fees on loans                        $34,061      $29,819             $65,202      $57,932
income       Interest on investments                            37,349       29,010              73,745       55,824
             Other interest                                        144          319                 498          731
                                                            ------------------------         ------------------------
                  Total interest income                         71,554       59,148             139,445      114,487
                                                            ------------------------         ------------------------

Interest     Interest on deposits:
expense         Demand                                           8,272        5,838              15,536       11,309
                Savings                                          4,431        4,108               8,845        7,878
                Time                                            13,225       10,926              25,895       21,592
                                                            ------------------------         ------------------------
                  Total interest on deposits                    25,928       20,872              50,276       40,779
             Interest on other borrowed money                      942        1,004               2,943        1,464
             Interest on long-term debt                          1,782          818               3,564        1,324
                                                            ------------------------         ------------------------
                  Total interest expense                        28,652       22,694              56,783       43,567
                                                            ------------------------         ------------------------

             Net interest income                                42,902       36,454              82,662       70,920
             Provision for loan losses                           1,569        1,326               2,779        2,952
                                                            ------------------------         ------------------------
             Net interest income after provision for
                loan losses                                     41,333       35,128              79,883       67,968

Noninterest  Deposit charges and service fees                    8,415        6,463              16,498       12,661
income       Other operating income                             11,377        7,108              23,182       13,859
             Net investment securities gains                       920            0                 920            0
                                                            ------------------------         ------------------------
                  Total noninterest income                      20,712       13,571              40,600       26,520
                                                            ------------------------         ------------------------

Noninterest  Salaries                                           16,985       12,669              32,996       24,571
expense      Benefits                                            3,697        2,949               6,978        5,695
             Occupancy                                           3,726        3,260               7,648        6,594
             Furniture and equipment                             5,620        4,440              10,986        8,481
             Office                                              4,210        3,305               8,316        6,394
             Audit and regulatory fees and assessments             494          379                 996          754
             Marketing                                           1,717        1,421               3,565        2,660
             Other real estate (net)                               405          492                 825          961
             Other                                               6,460        4,192              11,699        8,203
                                                            ------------------------         ------------------------
                  Total noninterest expenses                    43,314       33,107              84,009       64,313
                                                            ------------------------         ------------------------

             Income before income taxes                         18,731       15,592              36,474       30,175
             Provision for federal and state income taxes        6,584        5,558              12,880       10,707
                                                            ------------------------         ------------------------
             Net income                                         12,147       10,034              23,594       19,468

             Dividends on preferred stocks                                      140                              281
                                                            ========================         ========================
             Net income applicable to common stock             $12,147       $9,894             $23,594      $19,187
                                                            ========================         ========================

             Net income per common and common equivalent share:
                Basic                                            $0.54        $0.47               $1.06        $0.92
                                                            ------------------------         ------------------------
                Diluted                                          $0.51        $0.44               $1.00        $0.86
                                                            ------------------------         ------------------------
             Average common and common equivalent shares outstanding:
                Basic                                           22,508       20,992              22,260       20,929
                                                            ------------------------         ------------------------
                Diluted                                         23,690       22,482              23,574       22,422
                                                            ------------------------         ------------------------
             Cash dividends declared, common stock               $0.19        $0.15               $0.38        $0.30
                                                            ========================         ========================
</TABLE>
See accompanying notes

                                       3
<PAGE>
                     Commerce Bancorp, Inc. And Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                                  Six Months Ended
                                                                                                       June 30,
                                                                                             -------------------------
                        (dollars in thousands)                                                    1998          1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                                              <C>           <C>
Operating activities    Net income                                                               $23,594       19,468
                        Adjustments to reconcile net income to net cash
                           provided by operating activities:
                              Provision for loan losses                                            2,779        2,952
                              Provision for depreciation, amortization and accretion              11,079        8,124
                              Gains on securities available for sale                                (920)
                              Proceeds from sales of mortgages held for sale                      21,373       10,598
                              Originations of mortgages held for sale                            (17,461)     (11,959)
                              Net loan (chargeoffs)                                                 (709)        (556)
                              Net increase in trading securities                                 (27,187)     (10,350)
                              Increase in other assets                                           (15,334)     (11,145)
                              Increase in other liabilities                                       20,575        3,542
                        ----------------------------------------------------------------------------------------------
                                          Net cash provided by operating activities               17,789       10,674

Investing activities    Proceeds from the sales of securities available for sale                 264,306
                        Proceeds from the maturity of securities available for sale              136,369       60,692
                        Proceeds from the maturity of securities held to maturity                103,311       53,481
                        Purchase of securities available for sale                               (385,823)    (151,963)
                        Purchase of securities held to maturity                                 (270,638)    (234,236)
                        Net increase in loans                                                   (256,580)    (101,598)
                        Proceeds from sales of loans                                               6,262        6,569
                        Purchases of premises and equipment                                      (23,367)     (12,141)
                        ----------------------------------------------------------------------------------------------
                                          Net cash used by investing activies                   (426,160)    (379,196)

Financing activities    Net increase in demand and savings deposits                              354,297      216,506
                        Net increase in time deposits                                            138,889       51,103
                        Net decrease in other borrowed money                                     (33,781)      20,000
                        Dividends paid                                                            (8,228)      (5,730)
                        Proceeds from issuance of Trust Capital Securities                                     57,500
                        Issuance of common stock                                                   8,257
                        Proceeds from issuance of common stock under
                             dividend reinvestment and other stock plans                           4,209        3,103
                        Other                                                                                   1,144
                        ----------------------------------------------------------------------------------------------
                                          Net cash provided by financing activities              463,643      343,626

                        Increase (decrease) in cash and cash equivalents                          55,272      (24,896)
                        Cash and cash equivalents at beginning of year                           167,900      208,833
                        ----------------------------------------------------------------------------------------------
                        Cash and cash equivalents at end of period                              $223,172     $183,937
                        ----------------------------------------------------------------------------------------------

                        Supplemental disclosures of cash flow information:  Cash
                          paid during the period for:
                            Interest                                                             $54,996      $44,088
                            Income taxes                                                          13,789       11,547
                          Other noncash activities:
                            Transfer of securities to securities available for sale                            83,773
                        ----------------------------------------------------------------------------------------------
</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 for the period ended
         December 31, 1997. The results for the three months ended June 30, 1998
         and the six months ended June 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 $1,795,000 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 second 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
         $11.7 million and $17.8 million, respectively. For the six months ended
         June 30, 1998 and 1997,  total  comprehensive  income was $26.5 million
         and $18.7 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        Six Months Ended
                                                     June 30                 June 30
                                                1998         1997        1998       1997
<S>                                            <C>         <C>         <C>         <C>
     Basic:
     Net income                                $12,147     $10,034     $23,594     $19,468
     Preferred stock dividends                                 140                     281
                                               -------     -------     -------     -------

     Net income applicable to common stock     $12,147      $9,894     $23,594     $19,187
                                               =======     =======     =======     =======

     Average common shares outstanding          22,508      20,992      22,260      20,929
                                               =======     =======     =======     =======

     Net income per common share - basic         $0.54       $0.47       $1.06       $0.92
                                               =======     =======     =======     =======

                                       7
<PAGE>
     Diluted:
     Net income                                   $12,147     $10,034     $23,594     $19,468
     Additional ESOP contribution under the
              if-converted method                                  12                      23
                                                  -------     -------     -------     -------
     Net income applicable to common stock
              on a diluted basis                  $12,147     $10,022     $23,594     $19,445
                                                  =======     =======     =======     =======

     Average common shares outstanding             22,508      20,992      22,260      20,929
     Additional shares considered in diluted
              computation assuming:
                Exercise of stock options           1,182         843       1,103         846
                Conversion of preferred stock                     647         211         647
                                                  -------     -------     -------     -------

     Average common shares outstanding
              on a diluted basis                   23,690      22,482      23,574      22,422
                                                  =======     =======     =======     =======

     Net income per common share - diluted          $0.51       $0.44       $1.00       $0.86
                                                  =======     =======     =======     =======
</TABLE>

H.       Subsequent Event

                  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 $192
         million in assets and $180 million in deposits, serves Monmouth County,
         New Jersey through the operation of seven branch  offices.  The Company
         will  issue   approximately   1.3  million   shares  to  complete   the
         acquisition,  which is expected to close in the fourth quarter of 1998.
         The transaction will be accounted for as a pooling of interests.

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

          Assets                      $4,104,000
          Deposits                     3,521,000
          Stockholders' equity           263,000
          Net interest income            156,000
          Net income                      42,000

                  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 June 30, 1998,  stockholders' equity totaled $282.0 million
         or 6.34% 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 June 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>
June 30, 1998
Company
   Risk based capital ratios:
     Tier 1                                   $327,788           14.83%     $88,414           4.00%    $132,621            6.00%
     Total capital                             374,119           16.93      176,828           8.00      221,035           10.00
   Leverage ratio                              327,788            7.68      128,115           3.00      213,525            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $185,102           12.86%     $57,569           4.00%     $86,353            6.00%
     Total capital                             200,314           13.92      115,137           8.00      143,922           10.00
   Leverage ratio                              185,102            6.50       85,464           3.00      142,441            5.00

June 30, 1997
Company
   Risk based capital ratios:
     Tier 1                                   $280,148           15.58%     $71,914           4.00%    $107,872            6.00%
     Total capital                             323,519           17.99      143,829           8.00      179,786           10.00
   Leverage ratio                              280,148            8.14      103,237           3.00      172,062            5.00

Commerce NJ Risk based capital ratios:
     Tier 1                                   $152,428           12.70%     $48,020           4.00%     $72,030            6.00%
     Total capital                             165,604           13.79       96,040           8.00      120,051           10.00
   Leverage ratio                              152,428            6.74       67,878           3.00      113,130            5.00
</TABLE>

                                       9
<PAGE>
                At June 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 as
         of June  30,  1998,  that the  Company  and its  subsidiaries  meet all
         capital adequacy requirements to which they are subject.

         Deposits

                  Total deposits at June 30, 1998 were $3.86 billion,  up $675.3
         million,  or 21% over total deposits of $3.19 billion at June 30, 1997,
         and up by $493.2  million,  or 15% from year-end  1997.  Deposit growth
         during the first six 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 15.8% at June 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  June  30,  1998,  the  Company's  income  simulation  model
         indicates  net income  would  decrease  by 2.74% and 8.06% 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 2.85% and 2.81% 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 June 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 June 30,  1998,  short-term
         borrowings aggregated $189.5 million and had an average rate of 6.38%.

         Interest Earning Assets

                  For the six month period ended June 30, 1998, interest earning
         assets  increased  $428.9  million from $3.62 billion to $4.04 billion.
         This  increase was  primarily  in  investment  securities  and the loan
         portfolio as described below.

         Loans

                  During the first six months of 1998,  loans  increased  $250.3
         million from $1.41 billion to $1.66  billion.  At June 30, 1998,  loans
         represented 43% of total deposits and 37% of total assets. All segments
         of the loan  portfolio  experienced  growth in the first six  months of
         1998,  including  loans secured by commercial  real estate  properties,
         commercial loans, and consumer loans.

                                       11
<PAGE>
         Investments

                In total, for the first six months of 1998, securities increased
         $182.5 million from $2.20 billion to $2.38 billion.  Deposit growth and
         other funding  sources were used to increase the  Company's  investment
         portfolio.  The available for sale portfolio decreased $10.4 million to
         $1.30 billion from $1.32 billion at December 31, 1997,  the  securities
         held to maturity portfolio increased $165.7 million to $1.04 billion at
         June 30, 1998 from $874.0  million at year-end  1997, and the portfolio
         of trading  securities  increased  $27.2  million from year-end 1997 to
         $35.1 million at June 30, 1998.  At June 30, 1998,  the average life of
         the investment  portfolio was approximately 5.0 years, and the duration
         was  approximately  3.9  years.  At June  30,  1998,  total  securities
         represented 53% of total assets.

         Net Income

                Net income for the second quarter of 1998 was $12.1 million,  an
         increase of $2.1 million or 21% over the $10.0 million recorded for the
         second quarter of 1997. Net income for the first six months of 1998 was
         $23.6  million,  an  increase  of $4.1  million  or 21% over the  $19.5
         million recorded in the first six months of 1997. On a per share basis,
         diluted  net income  for the  second  quarter of 1998 and the first six
         months of 1998 were $0.51 and $1.00 per common share  compared to $0.44
         and $0.86 per common share for the respective 1997 periods.

                Return on average  assets  (ROA) and  return on  average  equity
         (ROE)  for  the  second   quarter  of  1998  were  1.13%  and   17.58%,
         respectively,  compared to 1.17% and 19.15%, respectively, for the same
         1997  period.  ROA and ROE for the first six  months of 1998 were 1.14%
         and 17.57%, respectively, compared to 1.17% and 18.71% a year ago.

          Net Interest Income

                Net interest income totaled $42.9 million for the second quarter
         of 1998,  an increase of $6.4 million or 18% from $36.5  million in the
         second quarter of 1997. Net interest income for the first six months of
         1998 totaled $82.7 million,  up $11.7 million or 17% from the first six
         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 $20.7 million for the second quarter
         of 1998,  an increase of $7.1 million or 53% from $13.6  million in the
         second  quarter of 1997.  The increase  was due  primarily to increased
         other  operating  income,  which rose $4.3 million over the prior year,
         including  increased  revenues  of  $1.8  million  from  both  Commerce
         National Insurance Services,  Inc. (Commerce Insurance),  the Company's
         insurance brokerage subsidiary,  and CCMI. In addition, deposit charges
         and service fees increased $2.0 million from the second quarter of 1997
         primarily due to higher transaction  volumes,  and the Company recorded
         $920 thousand in net investment  securities gains in the second quarter
         of 1998.

                For the first six  months of 1998,  noninterest  income  totaled
        $40.6 million, an increase of $14.1 million or 53% from $26.5 million in
        the first six months of 1997.  Other operating  income rose $9.3 million
        over the first six months of 1997,  including increased revenues of $3.3

                                       12
<PAGE>

         million   from   Commerce   Insurance   and  $4.4  million  from  CCMI,
         respectively.  Deposit  charges and service fees rose $3.8 million over
         the prior year  primarily due to higher  transaction  volumes,  and the
         Company  recorded $920 thousand in net investment  securities  gains in
         1998.

         Noninterest Expense

                  For the second quarter of 1998,  noninterest  expense  totaled
         $43.3 million, an increase of $10.2 million or 31% 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 69 at
         June  30,  1997 to 76 at June  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 $2.3  million  over the  second  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 six months of 1998,  noninterest  expense  totaled  $84.0
         million,  an increase of $19.7 million or 31% over $64.3 million in the
         first six 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 $3.5 million over
         the first six 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
         67.99% for the first six months of 1998 as  compared  to 65.02% 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 June 30, 1998 were $13.3  million,  or 0.30% of
         total  assets  compared  to $17.4  million or 0.44% of total  assets at
         December  31, 1997 and $17.3  million or 0.48% of total  assets at June
         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 June 30,  1998 were $7.6  million or 0.46% of total loans
         compared to $11.6  million or 0.82% of total loans at December 31, 1997
         and $10.3 million or 0.76% of total loans at June 30, 1997. At June 30,
         1998,  loans  past  due 90 days or more  and  still  accruing  interest
         amounted to $259  thousand  compared to $226  thousand at December  31,
         1997 and $458 thousand at June 30, 1997. Additional loans considered as
         potential   problem  loans  by  the  Company's   internal  loan  review
         department  ($12.3  million at June 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 June 30, 1998 totaled $5.6 million
         compared to $5.8  million at December 31, 1997 and $7.0 million at June
         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 June 30, 1998, December 31, 1997, and June 30, 1997.

         Year 2000

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

                                       14
<PAGE>
The following summary presents  information  regarding  non-performing loans and
assets as of June 30, 1998 and the preceding four quarters:  (dollar  amounts in
thousands)
<TABLE>
<CAPTION>
                                              June 30      March 31,   December 31, September 30,  June 30,
                                                1998         1998         1997         1997         1997
                                              -------      -------      -------      -------      -------
<S>                                            <C>          <C>          <C>          <C>          <C>
Non-accrual loans:
  Commercial                                   $1,070       $1,764       $1,816       $1,920       $1,057
  Consumer                                        835          944          703          893        1,254
  Real Estate:
    Construction                                  394          393        1,345        2,006        2,155
    Mortgage                                    5,215        7,742        7,706        7,533        5,818
                                              -------      -------      -------      -------      -------
      Total non-accrual loans                   7,514       10,843       11,570       12,352       10,284
                                              -------      -------      -------      -------      -------

Restructured loans
  Commercial                                       18           19           19           20           20
  Consumer
  Real Estate:
    Construction
    Mortgage                                      109          114
                                              -------      -------      -------      -------      -------
      Total restructured loans                    127          133           19           20           20
                                              -------      -------      -------      -------      -------

  Total non-performing loans                    7,641       10,976       11,589       12,372       10,304
                                              -------      -------      -------      -------      -------

Other real estate                               5,649        6,029        5,845        6,673        7,035
                                              -------      -------      -------      -------      -------

Total non-performing assets                    13,290       17,005       17,434       19,045       17,339
                                              -------      -------      -------      -------      -------

Loans past due 90 days or more
  and still accruing                              259          308          226          423          458
                                              -------      -------      -------      -------      -------

Total non-performing assets and
  loans past due 90 days or more              $13,549      $17,313      $17,660      $19,468      $17,797
                                              =======      =======      =======      =======      =======

Total non-performing loans as a
  percentage of total period-end
  loans                                          0.46%        0.75%        0.82%        0.89%        0.76%

Total non-performing assets as a
  percentage of total period-end assets          0.30%        0.41%        0.44%        0.50%        0.48%

Total non-performing assets and loans
  past due 90 days or more as a
  percentage of total period-end assets          0.30%        0.42%        0.45%        0.51%        0.49%

Allowance for loan losses as a
  percentage of total non-performing
  loans                                           305%         200%         183%         169%         198%

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

Total non-performing assets and loans
  past due 90 days or more as a
  percentage of stockholders' equity and
  allowance for loan losses                         4%           6%           6%           8%           7%
</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
                                                              Six Months Ended                Ended
                                                        ------------------------------
                                                         06/30/98          06/30/97         12/31/97
                                                        ------------     -------------     ------------
<S>                                                      <C>               <C>              <C>
            Balance at beginning of period                  $21,261           $17,975          $17,975
            Provisions charged to operating expenses          2,779             2,952            4,668
                                                        ------------     -------------     ------------
                                                             24,040            20,927           22,643
            Recoveries on loans charged-off:
              Commercial                                        165               104              348
              Consumer                                          182               134              406
              Real estate                                        14                42              144
                                                        ------------     -------------     ------------
            Total recoveries                                    361               280              898

            Loans charged-off:
              Commercial                                       (191)             (369)            (964)
              Consumer                                         (633)             (432)          (1,170)
              Real estate                                      (246)              (35)            (146)
                                                        ------------     -------------     ------------
            Total charged-off                                (1,070)             (836)          (2,280)
                                                        ------------     -------------     ------------
            Net charge-offs                                    (709)             (556)          (1,382)
                                                        ------------     -------------     ------------

            Balance at end of period                        $23,331           $20,371          $21,261
                                                        ============     =============     ============


            Net charge-offs as a percentage of
            average loans outstanding                          0.09%             0.08%            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 4.           Submission of Matters to a Vote of Securities Holders

                  The Annual Meeting of the  Registrant's  Shareholders was held
                  on June 29, 1998. The only items of business acted upon at the
                  Annual  Meeting were (i) the election of 12 directors  for one
                  year terms;  and (ii) approval of the Commerce  Bancorp,  Inc.
                  1998 Stock Option Plan for Non-Employee Directors.  The number
                  of votes cast for, against, or withheld, as well as the number
                  of abstentions and broker non-votes was as follows:

                  (i)     Election of directors:

                  Name of                                 (Withhold Authority)
                  Nominee                          For           Against
                  -----------                    ------           ------
                  Vernon W. Hill II            15,617,255         94,973
                  C. Edward Jordan, Jr         15,618,944         93,284
                  David Baird, IV              15,629,483         82,745
                  Robert C. Beck               15,617,390         94,838
                  Jack R Bershad               15,565,736        146,492
                  Joseph M. Buckelew           15,611,321        100,907
                  Steven M. Lewis              15,621,542         90,686
                  Morton N. Kerr               15,607,084        105,269
                  Daniel J. Ragone             15,620,651         91,577
                  Joseph T. Tarquini, Jr       15,629,786         82,442
                  Frank C. Videon, Sr          15,619,321         92,907
                  William A. Schwartz, Jr      15,629,750         82,478

                  (ii) Approval of the Commerce Bancorp,  Inc. 1998 Stock Option
                  Plan for Non-Employee Directors:

                                                                      Broker
                         For           Against        Abstain        Non-Vote

                     13,949,042       1,247,049       190,849        325,288

Item 5.           Other Information

                  Pursuant to recent amendments to the proxy rules under the
                  Securities Exchange Act of 1934, as amended, the Company's
                  stockholders are notified that the deadline for providing the
                  Company timely notice of any stockholder proposal to be
                  submitted outside of the Rule 14a-8 process for consideration
                  at the Company's 1999 Annual Meeting of Stockholders (the
                  "Annual Meeting") will be April 3, 1999. As to all such
                  matters which the Company does not have notice on or prior to
                  April 3, 1999, discretionary authority shall be granted to the
                  designated persons in the proxy solicited on behalf of the
                  Company's Board of Directors in the Company's proxy statement
                  for the Annual Meeting.

                  Proposals from stockholders intended to be presented at the
                  1999 Annual Meeting within the Rule 14a-8 process must still
                  be received by the Company for inclusion in the Company's
                  proxy statement by February 1, 1999.

Item 6.           Exhibits and Reports on Form 8-K


                  No reports on Form 8-K were  filed  during the second  quarter
                  ended June 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)










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