SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q/A
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
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 15,704,561
(Title of Class) (No. of Shares Outstanding
as of 5/08/97)
Series C ESOP Cumulative Con-
vertible Preferred Stock 417,000
(Title of Class) (No. of Shares Outstanding
as of 5/08/97)
<PAGE>
COMMERCE BANCORP, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
March 31, 1997 and December 31, 1996
Consolidated Statements of Income (unaudited)
Three months ended March 31, 1997 and
March 31, 1996
Consolidated Statements of Cash Flows (unaudited)
Three months ended March 31, 1997 and
March 31, 1996
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 Security Holders
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
(dollars in thousands) 1997 1996
<S> <C> <C>
Assets Cash and due from banks $181,918 $181,858
Federal funds sold 25,650 26,975
---------- ----------
Cash and cash equivalents 207,568 208,833
Mortgages held for sale 1,818 1,314
Trading securities 8,165 15,327
Securities available for sale 812,418 767,487
Securities held to maturity:
U.S. Government agency and mortgage-backed obligations 823,524 797,045
Obligations of state and political subdivisions 22,638 22,674
Other securities 17,970 17,793
---------- ----------
Total securities held to maturity
(market value 1997-$828,344; 1996-$815,888) 864,132 837,512
Loans 1,305,779 1,266,855
Less allowance for loan losses 19,544 17,975
---------- ----------
1,286,235 1,248,880
Bank premises and equipment, net 95,692 94,339
Other assets 69,270 58,460
---------- ----------
$3,345,298 $3,232,152
========== ==========
Liabilities Deposits:
Demand:
Interest-bearing $956,632 $884,310
Noninterest-bearing 635,976 626,664
Savings 657,827 638,660
Time 822,024 770,036
---------- ----------
Total deposits 3,072,459 2,919,670
Other borrowed money 25,000 70,000
Other liabilities 17,441 12,185
Obligation to Employee Stock Ownership Plan (ESOP) 3,077 3,333
Long-term debt 23,000 23,000
---------- ----------
3,140,977 3,028,188
Stockholders' Common stock, 15,721,180 shares issued (15,689,167 shares in 1996) 24,564 23,546
Equity Series C preferred stock, 417,000 shares authorized, issued
and outstanding (liquidating preference:
$18.00 per share totaling $7,506) 7,506 7,506
Series A preferred stock 30
Capital in excess of par or stated value 166,965 144,551
Retained earnings 11,057 36,086
---------- ----------
210,092 211,719
Less commitment to ESOP 4,147 4,403
Less treasury stock, at cost, 100,159 shares
in 1997 (267,378 in 1996) 1,624 3,352
---------- ----------
Total stockholders' equity 204,321 203,964
---------- ----------
$3,345,298 $3,232,152
========== ==========
</TABLE>
1
<PAGE>
Commerce Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(dollars in thousands, except per share amounts) 1997 1996
<S> <C> <C>
Interest Interest and fees on loans $28,113 $24,406
income Interest on investments 26,814 21,682
Other interest 412 1,201
------ ------
Total interest income 55,339 47,289
------ ------
Interest Interest on deposits:
expense Demand 5,471 4,446
Savings 3,770 3,013
Time 10,666 10,320
------ ------
Total interest on deposits 19,907 17,779
Interest on other borrowed money 460 31
Interest on long-term debt 506 506
------ ------
Total interest expense 20,873 18,316
------ ------
Net interest income 34,466 28,973
Provision for loan losses 1,626 794
------ ------
Net interest income after provision for loan losses 32,840 28,179
Noninterest Deposit charges and service fees 6,198 5,036
income Other operating income 6,751 1,438
Net investment securities gains 0 771
------ ------
Total noninterest income 12,949 7,245
------ ------
Noninterest Salaries 11,902 8,379
expense Benefits 2,746 2,260
Occupancy 3,334 3,008
Furniture and equipment 4,041 3,095
Office 3,089 2,367
Audit and regulatory fees and assessments 375 423
Marketing 1,239 1,103
Other real estate (net) 469 505
Other 4,011 3,183
------ ------
Total noninterest expenses 31,206 24,323
------ ------
Income before income taxes 14,583 11,101
Provision for federal and state income taxes 5,149 3,940
------ ------
Net income 9,434 7,161
Dividends on preferred stocks 141 281
====== ======
Net income applicable to common stock $9,293 $6,880
====== ======
Net income per common and common equivalent share:
Primary $0.57 $0.49
------ ------
Fully diluted $0.56 $0.45
------ ------
Average common and common equivalent shares outstanding:
Primary 16,292 14,016
------ ------
Fully diluted 16,908 15,365
------ ------
Cash dividends declared, common stock $0.20 $0.16
====== ======
</TABLE>
2
<PAGE>
Commerce Bancorp, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
(dollars in thousands) 1997 1996
<S> <C> <C>
Operating activities Net income $9,434 7,161
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 1,626 794
Provision for depreciation, amortization and accretion 4,113 4,121
Gains on sales of securities available for sale (771)
Proceeds from sales of mortgages held for sale 3,492 2,105
Originations of mortgages held for sale (3,996) (3,378)
Net loan (chargeoffs) (57) (552)
Net (increase)decrease in trading securities 7,162 3,693
(Increase) decrease in other assets (5,739) 7,428
Increase in other liabilities 5,212 7,377
-------- --------
Net cash provided by operating activities 21,247 27,978
Investing activities Proceeds from the sales of securities available for sale 0 28,942
Proceeds from the maturity of securities available for sale 44,655 24,309
Proceeds from the maturity of securities held to maturity 24,461 18,807
Purchase of securities available for sale (20,336) (124,589)
Purchase of securities held to maturity (135,039) (16,525)
Net increase in loans (41,637) (42,755)
Proceeds from sales of loans 2,713 1,791
Purchases of premises and equipment (4,561) (3,240)
-------- --------
Net cash used by investing activities (129,744) (113,260)
Financing activities Net increase in demand and savings deposits 100,801 22,051
Net increase in time deposits 51,988 39,092
Net (decrease) in other borrowed money (45,000)
Dividends paid (2,612) (2,268)
Proceeds from issuance of common stock under
dividend reinvestment and other stock plans 1,837 1,304
Other 217 19
-------- --------
Net cash provided by financing activities 107,231 60,198
Decrease in cash and cash equivalents (1,265) (25,084)
Cash and cash equivalents at beginning of year 208,833 209,857
-------- --------
Cash and cash equivalents at end of period $207,568 $184,773
-------- --------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $19,877 $18,444
Income taxes 535 131
Other noncash activities
Transfer of securities to securities available for sale $82,933 $0
</TABLE>
3
<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. The accompanying
financial statements include the consolidated accounts of the former
Independence Bancorp, Bergen County, New Jersey, for all periods
presented. Independence Bancorp was merged into Commerce Bancorp, Inc.
on January 21, 1997 and its wholly-owned subsidiary bank, Independence
Bank of New Jersey, was thereafter renamed Commerce Bank/North. The
transaction was accounted for as a pooling of interests. Certain
amounts in prior periods have been reclassified for comparative
purposes. No restructuring charges were recorded in connection with
this acquisition.
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, 1996. The results for the three months ended March 31,
1997 are not necessarily indicative of the results that may be expected
for the year ended December 31, 1997.
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., and Commerce
Bank/North. 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 $3,077,000 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.
4
<PAGE>
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.
In addition, Commerce NJ has a loan outstanding to
the Employee Stock Ownership Plan of the former Independence Bancorp
("Independence ESOP") totaling $1,070,000 at March 31, 1997. This
amount has been recorded as a deduction from stockholders' equity. The
loan was paid off in May, 1997. The Independence ESOP has applied to
the Internal Revenue Service for a ruling with regard to its
termination.
D. Recent Accounting Statement
In February, 1997, the Financial Accounting Standards
Board issued Statement No. 128, "Earnings per Share," which is required
to be adopted on December 31, 1997. At that time, the Company will be
required to change the method currently used to compute earnings per
share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of stock
options will be excluded. The impact is expected to result in an
increase in primary earnings per share for the quarters ended March 31,
1997 and March 31, 1996 of $.03 and $.02 per share, respectively. The
impact of Statement 128 on the calulation of fully diluted earnings per
share for these quarters is not expected to be material.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Capital Resources
At March 31, 1997, stockholders' equity totaled $204.3 million
or 6.11% of total assets, compared to $204.0 million or 6.31% of total
assets at December 31, 1996.
The table below presents the Company's and Commerce NJ's
risk-based and leverage ratios at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
Per Regulatory Guidelines
Actual Minimum "Well Capitalized"
Amount Ratio Amount Ratio Amount Ratio
March 31, 1997
Company
Risk based capital ratios:
<S> <C> <C> <C> <C> <C> <C>
Tier 1 $212,974 12.65% $67,369 4.00% $101,054 6.00%
Total capital 255,518 15.17 134,739 8.00 168,424 10.00
Leverage ratio 212,974 6.58 97,133 3.00 161,888 5.00
Commerce NJ
Risk based capital ratios:
Tier 1 $149,347 13.44% $44,463 4.00% $66,694 6.00%
Total capital 161,923 14.57 88,926 8.00 111,157 10.00
Leverage ratio 149,347 7.01 63,918 3.00 106,530 5.00
March 31, 1996
Company
Risk based capital ratios:
Tier 1 $179,162 12.65% $56,646 4.00% $84,969 6.00%
Total capital 218,418 15.42 113,292 8.00 141,615 10.00
Leverage ratio 179,162 6.47 83,020 3.00 138,367 5.00
Commerce NJ
Risk based capital ratios:
Tier 1 $138,680 14.45% $38,396 4.00% $57,593 6.00%
Total capital 149,701 15.60 76,791 8.00 95,989 10.00
Leverage ratio 138,680 7.35 56,572 3.00 94,287 5.00
</TABLE>
At March 31, 1997, the Company's consolidated capital levels and
each of the Company's bank subsidiaries met the regulatory definition
of a "well capitalized" financial institution, i.e., a leverage capital
ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6%, and
a total risk-based capital ratio exceeding 10%. Management believes as
of March 31, 1997, that the Company and its subsidiaries meet all
capital adequacy requirements to which they are subject.
6
<PAGE>
Deposits
Total deposits at March 31, 1997 were $3.07 billion, up $482.1
million, or 19% over total deposits of $2.59 billion at March 31, 1996,
and up by $152.8 million, or 5% from year-end 1996. Deposit growth
during the first three months of 1997 was largely from core deposits in
all categories. In addition, the Company experienced "same-store core
deposit growth" of 11.2% at March 31, 1997 as compared to deposits a
year ago.
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 March 31, 1997, 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, 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 70% or
7
<PAGE>
more of the excess of market value over book value in the current rate
scenario. At March 31, 1997, 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 three
months of 1997, these borrowings were used as an additional source of
funding for the investment portfolio and to fund loan growth. At March
31, 1997, short-term borrowings aggregated $25.0 million, as compared
to $70.0 million at December 31, 1996, and had an average rate of
5.77%.
Interest Earning Assets
For the three month period ended March 31, 1997, interest
earning assets increased $102.5 million from $2.92 billion to $3.02
billion. This increase was primarily in investment securities and the
loan portfolio as described below.
Loans
During the first three months of 1997, loans increased $39.0
million from $1.27 billion to $1.31 billion. At March 31, 1997, loans
represented 42% of total deposits and 39% 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 three months of 1997, securities
increased $64.4 million from $1.62 billion to $1.68 billion. Deposit
growth and other funding sources were used to increase the Company's
investment portfolio. The available for sale portfolio rose $44.9
million to $812.4 million from $767.5 million at year-end 1996, and the
securities held to maturity portfolio increased $26.6 million to $864.1
million from $837.5 million. At March 31, 1997, the average life of the
investment portfolio was approximately 6.2 years, and the duration was
approximately 4.5 years.
Short-term investments (Federal funds sold) decreased $1.3
million from $27.0 million at year-end 1996 to $25.7 million at March
31, 1997. At March 31, 1997, total securities and Federal funds sold
aggregated $1.71 billion and represented 51% of total assets.
In connection with the acquisition of Independence Bancorp,
management reclassified $83.8 million of investment securities from
held to maturity to available for sale during the first quarter.
Unrealized losses on those securities transferred were $840 thousand.
8
<PAGE>
Net Income
Net income for the first quarter of 1997 was $9.4 million, an
increase of $2.2 million over the $7.2 million recorded for the first
quarter of 1996. On a per share basis, fully diluted net income for the
first quarter of 1997 was $.56 per common share compared to $.45 per
common share for the first quarter of 1996.
Return on average assets (ROA) and return on average equity
(ROE) for the first quarter of 1997 were 1.17% and 18.26%,
respectively, compared to 1.03% and 15.83%, respectively, for the same
1996 period.
Net Interest Income
Net interest income totaled $34.5 million for the first quarter
of 1997, an increase of $5.5 million or 19% from $29.0 million in the
first quarter of 1996. The improvement in net interest income was due
primarily to volume increases in the loan and investment portfolios.
Noninterest Income
Noninterest income totaled $12.9 million for the first quarter
of 1997, an increase of $5.7 million or 79% from $7.2 million in the
first quarter of 1996. The increase was due primarily to increased
other operating income, which rose $5.3 million over the prior year,
including $4.7 million of revenues from Commerce National Insurance
Services, Inc. (Commerce Insurance), the insurance brokerage subsidiary
formed in the fourth quarter of 1996. In addition, deposit charges and
service fees increased $1.2 million from the first quarter of 1996 due
to higher transaction volumes. These increases offset a decrease in net
investment securities gains of $771 thousand from the first quarter of
1996.
Noninterest Expense
For the first quarter of 1997, noninterest expense totaled
$31.2 million, an increase of $6.9 million or 28% over the same period
in 1996. Contributing to this increase was new branch activity over the
past twelve months, with the number of branches increasing from 59 at
March 31, 1996 to 68 at March 31, 1997, and the formation of Commerce
Insurance in the fourth quarter of 1996. With the addition of these new
offices and the insurance business, staff, facilities, marketing, and
related expenses rose accordingly. Other noninterest expenses rose $831
thousand over the first quarter of 1996. This increase resulted
primarily from expenses associated with the acquisition of Independence
Bancorp and increased provisions for non-credit-related losses.
The Company's operating efficiency ratio (noninterest
expenses, less other real estate, divided by net interest income plus
noninterest income excluding non-recurring gains) was 64.83% for the
first three months of 1997 as compared to 67.19% for the same 1996
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 March 31, 1997 were $18.8 million, or
9
<PAGE>
.56% of total assets compared to $19.5 million or .60% of total assets
at December 31, 1996 and $19.9 million or .71% of total assets at March
31, 1996.
Total non-performing loans (non-accrual loans and restructured
loans, excluding loans past due 90 days or more and still accruing
interest) at March 31, 1997 were $10.7 million or .82% of total loans
compared to $11.2 million or .89% of total loans at December 31, 1996
and $10.2 million or .93% of total loans at March 31, 1996. At March
31, 1997, loans past due 90 days or more and still accruing interest
amounted to $300 thousand compared to $259 thousand at December 31,
1996 and $693 thousand at March 31, 1996. Additional loans considered
as potential problem loans by the Company's internal loan review
department ($13.8 million at March 31, 1997) have been evaluated as to
risk exposure in determining the adequacy of the allowance for loan
losses.
Other real estate (ORE) at March 31, 1997 totaled $8.0 million
compared to $8.3 million at December 31, 1996 and $9.7 million at March
31, 1996. These properties have been written down to the lower of cost
or fair value less disposition costs.
On pages 11 and 12 are tabular presentation showing detailed
information about the Company's non-performing loans and assets and an
analysis of the Company's allowance for loan losses and other related
data for March 31, 1997, December 31, 1996, and March 31, 1996.
10
<PAGE>
The following summary presents information regarding non-performing loans
and assets as of March 31, 1997 and the preceding four quarters: (dollar
amounts in thousands)
<TABLE>
<CAPTION>
March 31, Dec. 31, Sept. 30, June 30, March 31,
1997 1996 1996 1996 1996
<S> <C> <C> <C> <C> <C>
Non-accrual loans:
Commercial $1,349 $1,595 $1,293 $1,230 $1,436
Consumer 1,109 956 1,247 1,093 1,063
Real Estate:
Construction 2,155 2,156 2,196 1,687 1,787
Mortgage 6,074 6,005 6,032 6,931 5,611
------- ------- ------- ------- -------
Total non-accrual loans 10,687 10,712 10,768 10,941 9,897
------- ------- ------- ------- -------
Restructured loans
Commercial 21 21 21 22 144
Consumer 29 29 59 60
Real Estate:
Construction
Mortgage 481 500 84
------- ------- ------- ------- -------
Total restructured loans 21 531 550 81 288
------- ------- ------- ------- -------
Total non-performing loans 10,708 11,243 11,318 11,022 10,185
------- ------- ------- ------- -------
Other real estate 8,042 8,252 8,323 8,606 9,694
------- ------- ------- ------- -------
Total non-performing assets 18,750 19,495 19,641 19,628 19,879
------- ------- ------- ------- -------
Loans past due 90 days or more
and still accruing 300 259 632 923 693
------- ------- ------- ------- -------
Total non-performing assets and
loans past due 90 days or more $19,050 $19,754 $20,273 $20,551 $20,572
======= ======= ======= ======= =======
Total non-performing loans as a
percentage of total period-end
loans 0.82% 0.89% 0.92% 0.93% 0.93%
Total non-performing assets as a
percentage of total period-end assets 0.56% 0.60% 0.64% 0.66% 0.71%
Total non-performing assets and loans
past due 90 days or more as a
percentage of total period-end assets 0.57% 0.61% 0.66% 0.69% 0.73%
Allowance for loan losses as a
percentage of total non-performing
loans 183% 160% 149% 150% 160%
Allowance for loan losses as a percentage
of total period-end loans 1.50% 1.42% 1.38% 1.39% 1.49%
Total non-performing assets and loans
past due 90 days or more as a
percentage of stockholders' equity and
allowance for loan losses 9% 9% 10% 10% 11%
</TABLE>
11
<PAGE>
The following table presents, for the periods indicated, an analysis of
the allowance for loan losses and other related data: (dollar amounts in
thousands)
<TABLE>
<CAPTION>
Year
Three Months Ended Ended
03/31/97 03/31/96 12/31/96
<S> <C> <C> <C>
Balance at beginning of period $17,975 $16,014 $16,014
Provisions charged to operating expenses 1,626 794 4,857
-------- -------- --------
19,601 16,808 20,871
Recoveries on loans charged-off:
Commercial 53 66 286
Consumer 72 94 274
Real estate 18 8 95
-------- -------- --------
Total recoveries 143 168 655
Loans charged-off:
Commercial (42) (186) (1,202)
Consumer (158) (169) (1,046)
Real estate 0 (365) (1,303)
-------- -------- --------
Total charged-off (200) (720) (3,551)
-------- -------- --------
Net charge-offs (57) (552) (2,896)
-------- -------- --------
Balance at end of period $19,544 $16,256 $17,975
======== ======== ========
Net charge-offs as a percentage of
average loans outstanding 0.02% 0.21% 0.25%
</TABLE>
12
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
A Special Meeting of the Registrants's Shareholders was held
on January 8, 1997. The only item of business acted upon at the Special Meeting
was a proposal to approve the issuance of shares of the Registrant's common
stock in connection with the merger of Independence Bancorp with and into the
Registrant. The number of votes cast for and against the proposal was as
follows:
For Against Abstain Broker-Non-Votes
7,345,964 891,638 50,617 0
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Net Income Per Share
A Current Report on Form 8-K , dated January 28,
1997, relating to the consummation of the acquisition
of Independence Bancorp, Inc. was filed on February
4, 1997.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMERCE BANCORP, INC.
(Registrant)
May 14,1997
(Date) C. EDWARD JORDAN, JR.
EXECUTIVE VICE PRESIDENT
(PRINCIPAL FINANCIAL OFFICER)
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
March 31,
Primary Net Income Per Share 1997 1996
Adjustment of income:
<S> <C> <C>
Net income $9,434 $7,161
Preferred stock dividends 141 281
------- -------
Adjusted net income applicable to
common stock $9,293 $6,880
======= =======
Average shares of common stock and equivalents outstanding:
Average common shares outstanding 15,562 13,150
Common stock equivalents - dilutive rights 398
Common stock equivalents - dilutive options 730 68
------- -------
Average shares of common stock and
equivalents outstanding 16,292 14,016
======= =======
Net income per share of common stock $0.57 $0.49
======= =======
Fully Diluted Net Income Per Share
Net income applicable to common stock
on a fully diluted basis $9,434 $7,161
Less: additional ESOP contribution
under the if-converted method 11 25
------- -------
Adjusted net income applicable to
common stock on a fully diluted basis $9,423 $7,136
======= =======
Average number of shares outstanding on a fully diluted basis:
Average common shares outstanding 15,562 13,150
Additional shares considered in fully
diluted computation assuming:
Exercise of rights 398
Exercise of stock options 730 468
Conversion of preferred stock 616 1,349
------- -------
Average number of shares outstanding
on a fully diluted basis 16,908 15,365
======= =======
Fully diluted net income per share of
common stock $0.56 $0.45
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 181,918
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 25,650
<TRADING-ASSETS> 8,165
<INVESTMENTS-HELD-FOR-SALE> 812,418
<INVESTMENTS-CARRYING> 864,132
<INVESTMENTS-MARKET> 828,344
<LOANS> 1,305,779
<ALLOWANCE> 19,544
<TOTAL-ASSETS> 3,345,298
<DEPOSITS> 3,072,459
<SHORT-TERM> 0
<LIABILITIES-OTHER> 17,441
<LONG-TERM> 26,077
<COMMON> 24,564
0
7,506
<OTHER-SE> 172,251
<TOTAL-LIABILITIES-AND-EQUITY> 3,345,298
<INTEREST-LOAN> 28,113
<INTEREST-INVEST> 26,814
<INTEREST-OTHER> 412
<INTEREST-TOTAL> 55,339
<INTEREST-DEPOSIT> 19,907
<INTEREST-EXPENSE> 20,873
<INTEREST-INCOME-NET> 34,466
<LOAN-LOSSES> 1,626
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 31,206
<INCOME-PRETAX> 14,583
<INCOME-PRE-EXTRAORDINARY> 14,583
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,434
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.56
<YIELD-ACTUAL> 4.78
<LOANS-NON> 10,687
<LOANS-PAST> 300
<LOANS-TROUBLED> 21
<LOANS-PROBLEM> 13,839
<ALLOWANCE-OPEN> 17,975
<CHARGE-OFFS> 200
<RECOVERIES> 143
<ALLOWANCE-CLOSE> 19,544
<ALLOWANCE-DOMESTIC> 19,544
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
