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, 1996
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 11,417,950
(Title of Class) (No. of Shares Outstanding
as of 08/09/96)
Series C ESOP Cumulative Con-
vertible Preferred Stock 417,000
(Title of Class) (No. of Shares Outstanding
as of 08/09/96)
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<PAGE>
COMMERCE BANCORP, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
June 30, 1996 and December 31, 1995
Consolidated Statements of Income (unaudited)
Three months ended June 30, 1996 and
June 30, 1995 and six months ended June 30, 1996
and June 30, 1995
Consolidated Statements of Cash Flows (unaudited)
Six months ended June 30, 1996 and
June 30, 1995
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
(dollars in thousands) 1996 1995
<S> <C> <C>
Assets
Cash and due from banks $ 143,810 $ 147,465
Federal funds sold 0 29,550
---------- ----------
Cash and cash equivalents 143,810 177,015
Mortgages held for sale 3,504 5,442
Trading securities 11,606 8,843
Securities available for sale 653,871 520,314
Securities held to maturity:
U.S. Government agency mortgage-backed obligations 614,844 653,412
Obligations of state and political subdivisions 12,549 12,289
Other securities 17,148 17,001
---------- ----------
Total securities held to maturity
(market value 1996-$613,298; 1995-$671,539) 644,541 682,702
Loans 1,031,501 907,515
Less allowance for loan losses 13,674 13,320
---------- ----------
1,017,827 894,195
Bank premises and equipment, net 80,827 74,289
Other assets 52,386 53,094
---------- ----------
$2,608,372 $2,415,894
========== ==========
Liabilities
Deposits:
Demand:
Interest-bearing $ 697,000 $ 657,568
Noninterest-bearing 477,512 439,609
Savings 516,408 485,522
Time 662,508 642,399
---------- ----------
Total deposits 2,353,428 2,225,098
Other borrowed money 61,800
Other liabilities 3,622 1,417
Obligation to Employee Stock Ownership Plan (ESOP) 3,846 4,359
Long-term debt 23,000 23,000
---------- ----------
2,445,696 2,253,874
Stockholders' Equity
Common stock, 11,466,903 shares issued (11,337,719 shares in 1995) 17,916 16,880
Series C preferred stock, 417,000 shares authorized, issued and outstanding
(liquidating preference: $18.00 per share totaling $7,506)
7,506 7,506
Capital in excess of par or stated value 125,311 112,894
Retained earnings 17,413 30,723
---------- ----------
168,146 168,003
Less commitment to ESOP 3,846 4,359
Less treasury stock, at cost, 100,159 common shares
in 1996 (100,159 in 1995) 1,624 1,624
---------- ----------
Total stockholders' equity 162,676 162,020
---------- ----------
$2,608,372 $2,415,894
========== ==========
</TABLE>
3
<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) 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $22,298 $19,670 $43,483 $38,349
Interest on investments 20,769 20,783 40,203 41,865
Other interest 344 1,141 1,595 1,797
------- ------- ------- -------
Total interest income 43,411 41,594 85,281 82,011
------- ------- ------- -------
Interest expense
Interest on deposits:
Demand 4,377 3,878 8,399 7,286
Savings 2,837 2,795 5,519 5,481
Time 8,556 8,627 18,072 15,537
------- ------- ------- -------
Total interest on deposits 15,770 15,300 31,990 28,304
Interest on other borrowed money 612 2,132 643 6,159
Interest on long-term debt 506 506 1,012 1,012
------- ------- ------- -------
Total interest expense 16,888 17,938 33,645 35,475
------- ------- ------- -------
Net interest income 26,523 23,656 51,636 46,536
Provision for loan losses 674 388 1,348 1,245
------- ------- ------- -------
Net interest income after provision for loan losses 25,849 23,268 50,288 45,291
Noninterest income
Deposit charges and service fees 4,963 3,778 9,676 7,462
Other operating income 1,708 1,019 2,933 1,928
Net investment securities gains 0 18 517 18
------- ------- ------- -------
Total noninterest income 6,671 4,815 13,126 9,408
------- ------- ------- -------
Noninterest expense
Salaries 7,791 6,347 14,990 12,599
Benefits 1,824 1,789 3,733 3,648
Occupancy 2,562 1,997 5,179 3,937
Furniture and equipment 3,112 2,409 5,941 4,555
Office 2,355 1,710 4,486 3,343
Audit and regulatory fees and assessments 428 1,240 810 2,481
Marketing 1,062 669 2,018 1,326
Other real estate (net) 450 593 900 1,291
Other 2,670 2,157 5,322 4,110
------- ------- ------- -------
Total noninterest expenses 22,254 18,911 43,379 37,290
------- ------- ------- -------
Income before income taxes 10,266 9,172 20,035 17,409
Provision for federal and state income taxes 3,670 3,356 7,178 6,350
------- ------- ------- -------
Net income 6,596 5,816 12,857 11,059
Dividends on preferred stocks 140 140 281 281
------- ------- ------- -------
Net income applicable to common stock $ 6,456 $ 5,676 $12,576 $10,778
======= ======= ======= =======
Net income per common and common equivalent share:
Primary $ 0.55 $ 0.50 $ 1.07 $ 0.99
------- ------- ------- -------
Fully diluted $ 0.53 $ 0.48 $ 1.04 $ 0.95
------- ------- ------- -------
Average common and common equivalent shares outstanding:
Primary 11,767 11,392 11,722 10,940
------- ------- ------- -------
Fully diluted 12,387 12,036 12,364 11,593
------- ------- ------- -------
Cash dividends declared, common stock $ 0.18 $ 0.15 $ 0.34 $ 0.30
======= ======= ======= =======
</TABLE>
4
<PAGE>
Commerce Bancorp, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
(dollars in thousands) 1996 1995
<S> <C> <C>
Operating activities
Net income $ 12,857 $ 11,059
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 1,348 1,245
Provision for depreciation, amortization and accretion 7,820 6,333
Gains on sales of securities available for sale (517)
Proceeds from sales of mortgages held for sale 13,442 7,291
Originations of mortgages held for sale (11,504) (8,140)
Net loan (chargeoffs) (994) (197)
Net increase in trading securities (2,763) (13,813)
Decrease (increase) in other assets 6,428 (816)
Increase (decrease) in other liabilities 2,205 (3,111)
--------- ---------
Net cash provided (used) by operating activities 28,322 (149)
Investing activities
Proceeds from the sales of securities available for sale 40,052
Proceeds from the maturity of securities available for sale 21,562 8,056
Proceeds from the maturity of securities held to maturity 42,729 35,028
Purchase of securities available for sale (212,679) (312)
Purchase of securities held to maturity (5,983) (3,741)
Net increase in loans (127,407) (51,029)
Proceeds from sales of loans 3,421 2,384
Purchases of premises and equipment (11,425) (10,294)
--------- ---------
Net cash (used) by investing activities (249,730) (19,908)
Financing activities
Net increase in demand and savings deposits 108,221 101,866
Net increase in time deposits 20,109 220,868
Net increase (decrease) in other borrowed money 61,800 (278,789)
Issuance of common stock 25,774
Dividends paid (4,159) (3,376)
Proceeds from issuance of common stock under
dividend reinvestment and other stock plans 2,134 1,190
Purchase of treasury stock (352)
Other 98 98
--------- ---------
Net cash provided by financing activities 188,203 67,279
(Decrease) increase in cash and cash equivalents (33,205) 47,222
Cash and cash equivalents at beginning of year 177,015 129,447
--------- ---------
Cash and cash equivalents at end of period $ 143,810 $ 176,669
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 32,927 $ 35,475
Income taxes 7,466 7,088
--------- ---------
</TABLE>
5
<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. 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, 1995. The results for the
three months ended June 30, 1996 and for the six months ended June 30, 1996
are not necessarily indicative of the results that may be expected for the
year ended December 31, 1996.
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. and
Commerce Bank/Shore, N.A. 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.
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 $3,846,000 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.
As the Company makes annual contributions to the ESOP, these contributions,
plus dividends from the Company's Series C Preferred Stock held by the
ESOP, will be used to repay the loan.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Capital Resources
At June 30, 1996, stockholders' equity totaled $162.7 million or 6.24%
of total assets, compared to $162.0 million or 6.71% of total assets at
December 31, 1995.
The table below presents a comparison of the Company's and each of its
three bank subsidiaries risk-based capital ratios and leverage ratios to
the minimum regulatory requirements for the periods indicated.
<TABLE>
<CAPTION>
Capital
Excess
Minimum as of
June 30, June 30, Regulatory June 30,
1996 1995 Requirements 1996
(in thousands)
<S> <C> <C> <C> <C>
Company
Risk based capital ratios:
Tier 1 12.57% 12.62% 4.00% $113,590
Total capital 15.34 15.77 8.00 97,240
Leverage ratio 6.55 6.17 3.00-5.00 90,260(1)
Commerce NJ
Risk based capital ratios:
Tier 1 13.78% 14.45% 4.00% $100,990
Total capital 14.87 15.59 8.00 70,900
Leverage ratio 7.21 6.99 3.00-5.00 83,050(1)
Commerce PA
Risk based capital ratios:
Tier 1 13.14% 12.24% 4.00% $13,560
Total capital 13.95 13.34 8.00 8,820
Leverage ratio 6.49 6.35 3.00-5.00 10,480(1)
Commerce Shore
Risk based capital ratios:
Tier 1 13.93% 12.39% 4.00% $14,730
Total capital 14.80 13.49 8.00 10,090
Leverage ratio 6.73 6.08 3.00-5.00 11,450(1)
<FN>
(1) Based on a minimum regulatory requirement of 3.00%
</FN>
</TABLE>
At June 30, 1996, 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
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<PAGE>
leverage capital ratio exceeding 5%, a Tier 1 risk-based capital ratio
exceeding 6%, and a total risk-based capital ratio exceeding 10%.
Deposits
Total deposits at June 30, 1996 were $2.35 billion, up $196.1 million,
or 9% over total deposits of $2.16 billion at June 30, 1995, and up by
$128.3 million, or 6% from year-end 1995. Deposit growth during the first
six months of 1996 was largely from core deposits, primarily demand and
savings accounts. In addition, the Company experienced "same-store core
deposit growth" of 10.5% at June 30, 1996 as compared to deposits a year
ago for those branches open for more than one year.
Interest Rate Sensitivity and Liquidity
An interest rate sensitive asset or liability is one that, within a
defined time period, either matures or experiences an interest rate change
in line with general market interest rates. The objective of interest rate
risk management is to monitor and manage the sensitivity of net interest
income to changing interest rates and other factors in order to meet the
Company's overall financial goals.
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 Asset/Liability Committee (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, 1996, the Company's income simulation model indicates an
acceptable level of interest rate risk.
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, or the use of risk management strategies such
as interest rate swaps and caps. In order to reduce the potential impact
from a dramatic increase in interest rates, the Company entered into
interest-rate cap agreements during the first quarter of 1995. The strike
price of the agreements exceeds current market interest rates. The
agreements are for a notional amount of $200 million for a period of two
years.
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
8
<PAGE>
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 increase in rates. The Company's ALCO policy indicates that the
level of interest rate risk is unacceptable if the immediate 200 basis
point increase would result in the loss of 70% or more of the excess of
market value over book value in the current rate scenario. At June 30,
1996, 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 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 of securities
sold under agreement to repurchase. During the first six months of 1996,
these borrowings were used as an additional source of funding for the
investment portfolio and to fund loan growth. At June 30, 1996, short-term
borrowings aggregated $61.8 million and had an average rate of 5.55%.
Interest Earning Assets
For the six month period ended June 30, 1996, interest earning assets
increased $190.7 million from $2.15 billion to $2.35 billion. This increase
was primarily in investment securities and the loan portfolio as described
below.
Loans
During the first six months of 1996, loans increased $124.0 million
from $907.5 million to $1.03 billion. At June 30, 1996, loans represented
44% of total deposits and 40% of total assets.
The increase in the loan portfolio was due primarily to loans secured
by 1-4 family residential properties (including home equity loans) and
loans secured by commercial real estate properties.
Investments
In total, for the first six months of 1996, securities increased $98.2
million from $1.21 billion to $1.31 billion. Deposit growth and other
funding sources were used to increase the Company's available for sale
portfolio, which rose $133.6 million to $653.9 million from $520.3 million
at year-end 1995. Securities held to maturity decreased from $682.7 million
to $644.5 million reflecting payments on the existing portfolio. At June
30, 1996, the average life of the investment portfolio was approximately
6.1 years, and the duration was approximately 4.4 years.
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<PAGE>
Short-term investments (Federal funds sold) decreased $29.6 million to
zero. At June 30, 1996, total securities and Federal funds sold aggregated
$1.31 billion and represented 50% of total assets.
Net Income
Net income for the second quarter of 1996 was $6.6 million, an
increase of $780 thousand over the $5.8 million recorded for the second
quarter of 1995. Net income for the first six months of 1996 was $12.9
million, an increase of $1.8 million over the $11.1 million recorded in the
first six months of 1995. These increases were due to increases in net
interest income and noninterest income, which offset slightly higher loan
loss provisions and increased overhead expenses. On a per share basis,
fully-diluted net income for the second quarter of 1996 and for the first
six months of 1996 were $.53 and $1.04 per common share compared to $.48
and $.95 per common share for the respective 1995 periods.
Return on average assets (ROA) and return on average equity (ROE) for
the second quarter of 1996 were 1.04% and 16.63%, respectively, compared to
.99% and 16.05%, respectively, for the same 1995 period. ROA and ROE for
the first six months of 1996 were 1.03% and 15.98%, respectively, compared
to .95% and 16.30% a year ago.
Net Interest Income
Net interest income totaled $26.5 million for the second quarter of
1996, an increase of $2.9 million or 12% from $23.7 million in the second
quarter of 1995. Net interest income for the first six months of 1996
totaled $51.6 million, up $5.1 million or 11% from the first six months of
1995. The improvement in net interest income for both reporting periods was
due primarily to volume increases in the loan portfolio.
Noninterest Income
Noninterest income totaled $6.7 million for the second quarter of
1996, an increase of $1.9 million or 39% from $4.8 million in the second
quarter of 1995. The increase was due primarily to increased deposit
charges and service fees, which rose $1.2 million over the prior year. For
the first six months of 1996, noninterest income totaled $13.1 million, an
increase of $3.7 million or 40% from $9.4 million in the first six months
of 1995. The increase was due primarily to increased deposit charges and
service fees, which rose $2.2 million over the prior year, and net
investment securities gains of $517 thousand.
Noninterest Expense
For the second quarter of 1996, noninterest expense totaled $22.3
million, an increase of $3.3 million or 18% over the same period in 1995.
Contributing to this rise was the increase in the number of branches from
46 at June 30, 1995 to 55 at June 30, 1996. As a result of the addition of
these offices, staff, facilities, marketing, and related expenses rose
accordingly. Audit and regulatory fees and assessments decreased by $812
thousand due to reductions in Federal deposit insurance rates enacted as of
June 1, 1995 and January 1, 1996. Other noninterest expenses rose $513
thousand over the
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<PAGE>
second quarter of 1995, due primarily to higher banking service charges and
increased provisions for non-credit-related losses.
For the first six months of 1996, noninterest expense totaled $43.4
million, an increase of $6.1 million, or 16%, over $37.3 million in the
first six months of 1995. Contributing to this increase was new branch
activity as noted above.
One key measure used to monitor progress in controlling overhead
expenses is the ratio of noninterest expenses to average assets. For the
first six months of 1996, this ratio equaled 3.48% versus 3.21% for the
comparable 1995 period. The operating efficiency ratio (noninterest
expenses, less other real estate expenses, divided by net interest income
plus noninterest income excluding non-recurring gains) was 66.12% for the
first six months of 1996 as compared to 64.37% for the same 1995 period.
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, 1996 were $16.3 million, or .63% of total assets
compared to $19.1 million or .79% of total assets at December 31, 1995 and
$18.8 million or .79% of total assets at June 30, 1995.
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, 1996 were $8.6 million or .83% of total loans compared to $8.5
million or .94% of total loans at December 31, 1995 and $10.2 million or
1.20% of total loans at June 30, 1995. At June 30, 1996, loans past due 90
days or more and still accruing interest amounted to $427 thousand compared
to $126 thousand at December 31, 1995 and $86 thousand at June 30, 1995.
Additional loans considered as potential problem loans by the Company's
internal loan review department ($9.1 million at June 30, 1996, $7.2
million at December 31, 1995 and $7.8 million at June 30, 1995) have been
evaluated as to risk exposure in determining the adequacy of the allowance
for loan losses.
Other real estate (ORE) at June 30, 1996 totaled $7.7 million compared
to $10.6 million at December 31, 1995 and $8.6 million at June 30, 1995.
These properties have been written down to the lower of cost or fair value
less disposition costs.
On pages 13 and 14 are tabular presentation showing detailed
information about the Company's non-performing loans and assets and an
analysis of the Company's allowance for loan losses and other related data
for June 30, 1996, December 31, 1995, and June 30, 1995.
Pending Acquisitions
On July 31, 1996, the Company reached agreements in principle to
acquire two insurance brokerage firms: Keystone National Companies, Inc.,
Cherry Hill, NJ and Buckelew & Associates, Toms River, NJ. The acquisitions
will be completed by the issuance of common stock of the Company totaling
approximately 550,000 shares. The acquisitions are intended to be tax-free
reorganizations under appropriate provisions of the United States Internal
Revenue Code and will be accounted for by the Company under the
pooling-of-interests method. Subject to the execution of definitive
agreements and required governmental approvals, the acquisitions are
expected to close on or about September 30, 1996.
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<PAGE>
The effect of these acquisitions on the Company's total consolidated
assets, stockholders' equity, and net income is not expected to be
material.
Listing Application
The Company has been cleared to file a listing application with the
New York Stock Exchange ("NYSE") to list the Company's common stock. It is
anticipated that trading on the NYSE will commence on or about September 9,
1996 under the symbol "CBH."
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<PAGE>
The following summary presents information regarding non-performing loans and
assets as of June 30, 1996 and the preceding four quarters: (dollar amounts in
thousands)
<TABLE>
<CAPTION>
June 30, March 31, Dec. 31, Sept. 30, June 30,
1996 1996 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Non-accrual loans:
Commercial $ 1,000 $ 701 $ 629 $ 658 $ 897
Consumer 827 794 853 1,186 1,063
Real Estate:
Construction 1,687 1,787 1,787 911 911
Mortgage 5,015 5,054 4,708 4,441 7,003
------- ------- ------- ------- -------
Total non-accrual loans 8,529 8,336 7,977 7,196 9,874
------- ------- ------- ------- -------
Restructured loans
Commercial 22 144 161 173 140
Consumer 59 60 60 69 70
Real Estate:
Construction
Mortgage 84 301 301 85
------- ------- ------- ------- -------
Total restructured loans 81 288 522 543 295
------- ------- ------- ------- -------
Total non-performing loans 8,610 8,624 8,499 7,739 10,169
------- ------- ------- ------- -------
Other real estate 7,721 8,241 10,561 10,120 8,591
------- ------- ------- ------- -------
Total non-performing assets $16,331 $16,865 $19,060 $17,859 $18,760
------- ------- ------- ------- -------
Loans past due 90 days or more
and still accruing 427 163 126 77 86
------- ------- ------- ------- -------
Total non-performing assets and
loans past due 90 days or more $16,758 $17,028 $19,186 $17,936 $18,846
======= ======= ======= ======= =======
Total non-performing loans as a
percentage of total period-end
loans 0.83% 0.92% 0.94% 0.89% 1.20%
Total non-performing assets as a
percentage of total period-end assets 0.63% 0.68% 0.79% 0.74% 0.79%
Total non-performing assets and loans
past due 90 days or more as a
percentage of total period-end assets 0.64% 0.69% 0.79% 0.75% 0.80%
Allowance for loan losses as a
percentage of total non-performing
loans 159% 156% 157% 168% 129%
Allowance for loan losses as a percentage
of total period-end loans 1.33% 1.43% 1.47% 1.50% 1.54%
Total non-performing assets and loans
past due 90 days or more as a
percentage of stockholders' equity and
allowance for loan losses 10% 10% 11% 11% 12%
</TABLE>
13
<PAGE>
The following table presents, for the periods indicated, an analysis of the
allowance for loan losses and other related data: (dollar amounts in thousands)
<TABLE>
<CAPTION>
Year
Six Months Ended Ended
06/30/96 06/30/95 12/31/95
<S> <C> <C> <C>
Balance at beginning of period $13,320 $12,036 $12,036
Provisions charged to operating expenses 1,348 1,245 2,215
------- ------- -------
14,668 13,281 14,251
Recoveries on loans charged-off:
Commercial 65 71 154
Consumer 51 112 144
Real estate 72 266 292
------- ------- -------
Total recoveries 188 449 590
Loans charged-off:
Commercial (161) (366) (595)
Consumer (317) (207) (580)
Real estate (704) (73) (346)
------- ------- -------
Total charged-off (1,182) (646) (1,521)
------- ------- -------
Net charge-offs (994) (197) (931)
------- ------- -------
Balance at end of period $13,674 $13,084 $13,320
======= ======= =======
Net charge-offs as a percentage of
average loans outstanding 0.21% 0.05% 0.11%
</TABLE>
14
<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
18, 1996. The only item of business acted upon at the Annual Meeting was
the election of nine directors for one year terms. The number of votes cast
for and against as to each nominee for director was as follows:
Name of
Nominee For Against
Vernon W. Hill, II 10,118,905 92,033
C. Edward Jordan, Jr. 10,120,279 90,689
David Baird, IV 10,128,224 82,714
Robert C. Beck 10,014,851 196,087
Jack R Bershad 10,007,443 203,495
Morton N. Kerr 10,112,780 98,158
Steven M. Lewis 10,129,155 81,783
Daniel J. Ragone 10,121,224 89,714
Joseph T. Tarquini, Jr. 10,129,410 81,528
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Net Income Per Share
No reports on Form 8-K were filed during the second quarter ended June
30, 1996.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMERCE BANCORP, INC.
(Registrant)
August 14, 1996 By: /s/ C. EDWARD JORDAN, JR.
(Date) -----------------------------------
C. EDWARD JORDAN, JR.
EXECUTIVE VICE PRESIDENT
(PRINCIPAL FINANCIAL OFFICER)
16
Exhibit No. 11.1
Commerce Bancorp, Inc. and Subsidiaries
Computation of Net Income Per Share
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
<S> <C> <C> <C> <C>
Primary Net Income Per Share 1996 1995 1996 1995
Adjustment of income:
Net income $ 6,596 $ 5,816 $12,857 $11,059
Preferred stock dividends 140 140 281 281
------- ------- ------- -------
Adjusted net income applicable to
common stock $ 6,456 $ 5,676 $12,576 $10,778
======= ======= ======= =======
Average shares of common stock and
equivalents outstanding:
Average common shares outstanding 11,346 11,129 11,315 10,682
Common stock equivalents - dilutive options 421 263 407 258
------- ------- ------- -------
Average shares of common stock and
equivalents outstanding 11,767 11,392 11,722 10,940
======= ======= ======= =======
Net income per share of common stock $ 0.55 $ 0.50 $ 1.07 $ 0.99
======= ======= ======= =======
Fully Diluted Net Income Per Share
Net income applicable to common stock
on a fully diluted basis $ 6,596 $ 5,816 $12,857 $11,059
Less: additional ESOP contribution
under the if-converted method 25 33 51 66
------- ------- ------- -------
Adjusted net income applicable to
common stock on a fully diluted basis $ 6,571 $ 5,783 $12,806 $10,993
======= ======= ======= =======
Average number of shares outstanding on
a fully diluted basis:
Average common shares outstanding 11,346 11,129 11,315 10,682
Additional shares considered in fully
diluted computation assuming:
Exercise of stock options 454 320 462 324
Conversion of preferred stock 587 587 587 587
------- ------- ------- -------
Average number of shares outstanding
on a fully diluted basis 12,387 12,036 12,364 11,593
======= ======= ======= =======
Fully diluted net income per share of
common stock $ 0.53 $ 0.48 $ 1.04 $ 0.95
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 143,810
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 11,606
<INVESTMENTS-HELD-FOR-SALE> 653,871
<INVESTMENTS-CARRYING> 644,541
<INVESTMENTS-MARKET> 613,298
<LOANS> 1,031,501
<ALLOWANCE> 13,674
<TOTAL-ASSETS> 2,608,372
<DEPOSITS> 2,353,428
<SHORT-TERM> 61,800
<LIABILITIES-OTHER> 3,622
<LONG-TERM> 26,846
0
7,506
<COMMON> 17,916
<OTHER-SE> 137,254
<TOTAL-LIABILITIES-AND-EQUITY> 2,608,372
<INTEREST-LOAN> 43,483
<INTEREST-INVEST> 40,203
<INTEREST-OTHER> 1,595
<INTEREST-TOTAL> 85,281
<INTEREST-DEPOSIT> 31,990
<INTEREST-EXPENSE> 33,645
<INTEREST-INCOME-NET> 51,636
<LOAN-LOSSES> 1,348
<SECURITIES-GAINS> 517
<EXPENSE-OTHER> 43,379
<INCOME-PRETAX> 20,035
<INCOME-PRE-EXTRAORDINARY> 20,035
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,857
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.04
<YIELD-ACTUAL> 4.71
<LOANS-NON> 8,529
<LOANS-PAST> 427
<LOANS-TROUBLED> 81
<LOANS-PROBLEM> 9,137
<ALLOWANCE-OPEN> 13,320
<CHARGE-OFFS> 1,182
<RECOVERIES> 188
<ALLOWANCE-CLOSE> 13,674
<ALLOWANCE-DOMESTIC> 13,674
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
