Commerce Bancorp Net Income Up 24%

CHERRY HILL, N.J., April 13 /PRNewswire-FirstCall/ -- Commerce Bancorp, Inc. reported record earnings and increased deposits, assets and loans for the first quarter of 2005, announced Vernon W. Hill, II, Chairman of the multi-bank holding company.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050112/PHW042LOGO ) FIRST QUARTER FINANCIAL HIGHLIGHTS ---------------------------------- March 31, 2005 % Increase -------- * Total Assets: $31.9 Billion 28% * Total Deposits: $29.5 Billion 29% * Total (Net) Loans: $9.8 Billion 28% * Total Revenues: $382.6 Million 21% * Net Income: $77.1 Million 24% ----- ---- * Net Income Per Share: $ .45 22% Chairman's Statement -------------------- Vernon W. Hill, II, Chairman, noted the following financial highlights: -- Net income increased 24% for the first quarter of 2005 to $77.1 million. -- Earnings per share rose 22% for the first quarter to $.45. -- Net interest income grew 21% during the first quarter despite margin compression to 4.04% caused by the flattening yield curve. -- Core deposits, excluding time deposits, grew 33% for the prior 12 months. -- Annualized deposit growth per store was $23 million. -- Comparable Store Core Deposit Growth: Two Year One Year --------- -------- Total 22% 29% Excluding Time Deposits 26% 33% -- Total loans reached $10.0 billion, reflecting growth of 28% over the past twelve months. -- The Company expects to meet or exceed the current First Call E.P.S. consensus projections of $.46 for the second quarter of 2005 and $1.90 for the year. Expansion ---------

The Company's long range plans call for increasing its number of stores by approximately 18% per year. In keeping with these plans, the Company's 2005 strategy is as follows:

-- 55-60 new stores. -- 35+ new stores in Metro New York, including its first 2-4 stores in Connecticut. -- The first 5-10 stores of its planned 200 new stores in the Metro Washington D.C. market. -- Expected openings in Manassas, Virginia and Connecticut Avenue in Washington, D.C. in June 2005.

Metro New York is now the Company's largest market with 178 stores and $16.0 billion in deposits.

Income Statement ---------------- Three Months Ended --------------------------------------------- 3/31/05 3/31/04 % Increase --------------------------------------------- (dollar in thousands, except per share data) Total Revenues: $382,590 $316,444 21% Total Expenses: 258,406 212,250 22 Net Income: 77,137 61,975 24 Net Income Per Share: $.45 $.37 22% ---- ----- --- Balance Sheet ------------- Linked Quarter -------------- 3/31/05 3/31/04 % 12/31/04 $ % Increase Increase Increase -------------------------------------------------------- (dollars in millions) Total Assets: $31,870 $24,955 28% $30,501 $1,369 4% Total Loans (Net): 9,837 7,671 28 9,319 518 6 Core Deposits: 28,058 21,706 29 26,657 1,401 5 Total Deposits: 29,488 22,883 29 27,659 1,829 7 Shareholder Returns ------------------- March 31, 2005 --------------------------- Commerce S & P Index -------- ----------- 1 Year -% 7% 5 Years 31% -3% 10 Years 31% 11% Growth Targets -------------- Last 5 Year Actual % Growth Targets Growth % First Quarter 2005 -------------- ----------- ------------------ Total Deposits: 25 % 38 % 29 % --- Two-Year Comp Store Deposits: 18 24 22 --- Total Revenue: 25 33 21 --- Net Income: 25 36 24 --- Earnings Per Share: 20 27 22 --- Total Deposits --------------

The Company's deposit growth continues with total deposits at March 31, 2005 of $29.5 billion, a $6.6 billion increase or 29% over total deposits of $22.9 billion a year ago, including growth of $1.8 billion in the first quarter.

3/31/05 3/31/04 $ Increase % Increase -------- ------- ---------- ---------- (dollars in millions) Core Deposits $28,058 $21,706 $6,352 29% --- Total Deposits $29,488 $22,883 $6,605 29% --- Regional Deposit Growth ----------------------- Deposit growth by region is as follows: Annual- ized # of $ % Growth/ Stores 3/31/05 3/31/04 Increase Increase Store ------ ------- ------- -------- -------- ------- (dollars in millions) Northern New Jersey 116 $9,404 $7,763 $1,641 21 % $17 New York City 37 3,980 2,283 1,697 74 50 Long Island/ NY State 25 2,609 1,570 1,039 66 51 --- ------- ------- ------ --- --- Metro New York 178 $15,993 $11,616 $4,377 38 % $28 ------- Metro Philadelphia 141 $13,495 11,267 2,228 20 16 --- ------- ------- ------ --- --- Total 319 $29,488 $22,883 $6,605 29 % $23 Comparable Store Core Deposit Growth ------------------------------------

Comparable store deposit growth is measured as the year-over-year percentage increase in core deposits for stores open two years or more at the balance sheet date. Additional information is provided below for stores opened one year or more at the balance sheet date.

At March 31, 2005 the Company had 62 stores in New York State. Of these stores, 19 are included in the comparable store growth for stores open 2 years or more and 44 are included in the comparable store growth for stores open one year or more at the balance sheet date.

Core Deposit Growth ------------------------------------------ Stores Open 2 Stores Open 1 Years or More Year or More -------------------- ------------------ # of Comp Store # of Comp Store Stores Increase Stores Increase ------ -------- ------ -------- Metro Philadelphia 120 21% 133 22% Northern New Jersey 87 21 101 25 New York City 11 39 27 62 Long Island/NY State 8 26 17 53 ----- ----- ----- ---- Total 226 22% 278 29% ---- ---- Excluding Time Deposits 26% 33% ---- ---- Core Deposits ------------- Core deposit growth by type of account is as follows: 1st Quarter Cost of Annual 3/31/05 3/31/04 Funds Growth % ------- ------- ----- -------- (dollars in millions) Demand $ 6,878 $ 5,093 .00% 35% Interest Bearing Demand 11,970 9,314 1.59 29 Savings 6,597 4,769 1.13 38 -------- -------- ------- ------ Subtotal 25,445 19,176 1.06% 33% ---- Time 2,613 2,530 2.17 3 Total Core Deposits: $28,058 $21,706 1.16% 29% -------- -------- ------ ---- Core deposit growth by type of customer is as follows: Annual 3/31/05 % Total 3/31/04 % Total Growth % ------- ------- ------- ------- -------- (dollars in millions) Consumer $12,681 45% $10,511 48% 21% Commercial 10,150 36 7,575 35 34 Government 5,227 19 3,620 17 44 -------- ------- --------- ------ ------ Total $28,058 100% $21,706 100% 29% -------- -------- ----

Core deposits, excluding government deposits, grew $4.7 billion or 26% over the year ago period.

Two year comp store growth by type of customer is as follows: Comp Store Excluding Growth % Time % -------- ------ Consumer 11% 15% Commercial 27 29 Government 44 45 ---- ---- 22% 26% ---- ---- Government Core Deposits ------------------------ Government core deposits by state are as follows: Annual # of Growth Relationships 3/31/05 Rate % Total ------------- ------- ---- ------- (dollars in millions) New Jersey 650 $3,142 35% 60% Pennsylvania 189 1,053 65 20 New York 113 1,032 56 20 ----- -------- ------ ------ Total 952 $5,227 44% 100% Net Income and Earnings Per Share ---------------------------------

Net income totaled $77.1 million for the first quarter of 2005, up $15.1 million or 24% over net income of $62.0 million for the first quarter of 2004.

On a diluted per share basis, net income for the first quarter was $.45 compared to $.37 for the first quarter of 2004, a 22% increase.

Three Months Ended ------------------ 3/31/05 3/31/04 % Increase ------- ------- ---------- (dollars in thousands, except per share data) Net Income $77,137 $61,975 24% ---- Earnings Per Share $.45 $.37 22% ---- Total Revenues -------------- Three Months Ended ------------------ 3/31/05 3/31/04 % Increase ------- ------- ---------- (dollars in thousands, except per share data) Total Revenues $382,590 $316,444 21% ---- Revenue Per Share $8.68 $7.40 17% ---- Net Interest Income and Net Interest Margin -------------------------------------------

Net interest income for the first quarter totaled $278.9 million, a 21% increase over the $230.2 million recorded a year ago. The increase in net interest income in the quarter was due to volume increases in interest earning assets resulting from the Company's strong, low-cost core deposit growth.

The net interest margin for the first quarter of 2005 was 4.04%, down 12 basis points from the fourth quarter of 2004, and down 35 basis points from the 4.39% margin for the first quarter of 2004.

On a tax equivalent basis, the Company recorded $283.0 million in net interest income in the first quarter of 2005, an increase of $48.6 million or 21% over the first quarter of 2004.

Net Interest Income and Rate/Volume Analysis --------------------------------------------

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

Net Interest Income --------------------------------------------- Quarter Ended Volume Rate Total % March 31 Increase Change Increase Increase -------- -------- ------ -------- -------- (dollars in thousands) 2005 vs. 2004 $70,578 ($21,987) $48,591 21% Non-Interest Income -------------------

Non-interest income for the first quarter of 2005 increased to $103.7 million from $86.2 million a year ago, a 20% increase, which was primarily attributable to the increase in deposit charges and service fees of 32%.

The growth in non-interest income for the first quarter is more fully depicted below:

Three Months Ended ------------------ 3/31/05 3/31/04 % Increase ------- ------- ---------- (dollars in thousands) Deposit Charges & Service Fees $59,964 $45,481 32% Other Operating Income: Commerce Insurance 19,789 18,336 8 Commerce Capital Markets 6,441 9,727 (34) Loan Brokerage Fees 2,759 3,053 (10) Other 13,628 9,211 48 ---------------------------------- Total Other Operating Income 42,617 40,327 6 Net Investment Securities Gains 1,108 424 161 ---------------------------------- Total Non-Interest Income $103,689 $86,232 20% ================================== Non-Interest Expenses ---------------------

Non-interest expenses for the first quarter of 2005 were $258.4 million, up 22% from $212.3 million a year ago. The increase in non-interest expenses for the first quarter was widespread throughout non-interest expense categories, reflecting the Company's store expansion program.

Lending -------

Loans increased 28% to $10.0 billion from the first quarter of 2004, and the growth was widespread throughout all loan categories.

The Company's primary strength is in building customer relationships and growing market share in deposits, loans, and related services. Consumer and small business loan growth is directly related to the Company's significant increase in store locations, market expansion and added lending personnel.

Geographically, loan growth has occurred in the following markets: Portfolio Geographical Growth ----------------------------- 3/31/05 3/31/04 Growth Rate % of Total -------- -------- ------------ Growth ----------- (dollars in millions) Metro Philadelphia $5,902 $4,709 25% 55% Northern New Jersey 2,840 2,331 22 23 New York/Long Island 1,234 748 65 22 ------- ------ ----- ----- Total: $9,976 $7,788 28% 100% Loan Composition ---------------- 3/31/05 % of Total 3/31/04 % of Total $ Increase % -------- --------- ------- ---------- -------- Increase -------- (dollars in millions) Commercial $2,598 26% $2,033 26% $565 28% Owner-Occupied 2,100 21% 1,710 22% 390 23% ------- ------ ------- ------ ----- ----- Total Commercial 4,698 47% 3,743 48% 955 26% Consumer 3,499 35% 2,664 34% 835 31% Commercial Real Estate 1,779 18% 1,381 18% 398 29% ------- ------ ------- ------ ------ Gross Loans $9,976 100% $7,788 100% $2,188 Less: Reserves (139) (117) (22) ------- ------- ------ Net Loans $9,837 $7,671 $2,166 28% Asset Quality ------------- Quarter Ended ------------- 3/31/05 12/31/04 3/31/04 -------- --------- -------- Non-Performing Assets/Assets .10% .11% .13% Net Loan Charge-Offs .11% .18% .22% Loan Loss Reserve/Gross Loans 1.40% 1.43% 1.51% Non-Performing Loan Coverage 435% 413% 385% Non-Performing Assets/Capital 2% 2% 2% and Reserves

Non-performing assets and loans past due 90 days at March 31, 2005 totaled $33.0 million or .10% of total assets, versus $33.1 million, or .13% of total assets a year ago.

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

At March 31, 2005, total investments increased to $19.2 billion. The available for sale and held to maturity portfolios totaled $7.9 billion and $11.3 billion, respectively.

Detailed below is information regarding the composition and characteristics of the Company's investment portfolio, excluding trading securities, as of March 31, 2005.

Product Description Available Held to ------------------- For Sale Maturity Total --------- ------------- ------- (in millions) Mortgage-backed Securities: Federal Agencies Pass Through $1,666 $2,491 $4,157 Certificates (AAA Rated) Collateralized Mortgage 5,887 7,811 13,698 Obligations (AAA Rated) Obligations of State and 398 991 1,389 Political Subdivisions/Other -------------------------------------- Total $7,951 $11,293 $19,244 -------------------------------------- Duration (in years) 3.02 4.17 3.69 Average Life (in years) 3.62 5.16 4.52 Quarterly Average Yield 4.90% 4.92% 4.91%

At March 31, the after tax depreciation of the Company's available for sale portfolio was $35.9 million.

Linked Quarter Comparison -------------------------

A comparison of financial results for the quarter ended March 31, 2005 to the previous quarter ended December 31, 2004 is as follows: (dollars in thousands, except per share data)

Three Months Ended Linked Quarter ------------------- --------------- 3/31/05 12/31/04 $ Change % Change ------- --------- ---------- -------- Total Assets $31,869,976 $30,501,645 $1,368,331 4% Total Loans (Net) 9,836,604 9,318,991 517,613 6 Core Deposits 28,058,156 26,656,530 1,401,626 5 Total Deposits 29,487,958 27,658,885 1,829,073 7 Total Revenues 382,590 374,893 7,697 2 Net Interest Income 278,901 278,442 459 - Non-Interest Income 103,689 96,451 7,238 8 Non-Interest Expense 258,406 253,111 5,295 2 Net Income 77,137 75,118 2,019 3 Net Income Per Share $.45 $.44 $.01 2 Capital Resources -----------------

Stockholders' equity at March 31, 2005 increased to $1.7 billion, a $253.4 million increase, or 17% over stockholders' equity of $1.5 billion at March 31, 2004.

Each outstanding share of the Company's $200 million, 5.95% Convertible Trust Preferred Securities is convertible into 1.8956 shares of the Company's common stock at the option of the holder.

The Company may call its $200 million, 5.95% Convertible Trust Preferred Securities, provided various terms and conditions are met, primarily related to the market price of the Company's common stock. The Company's common stock must trade at a price of $31.65 or higher for 20 trading days in a period of 30 consecutive trading days in order for the Company to force conversion.

Return on average stockholders equity (ROE) for the first quarter is shown in the table below:

Return on Equity ---------------- Three Months Ended ------------------ 3/31/05 3/31/04 -------- -------- 17.98% 17.91% The Company's capital ratios at March 31, 2005 were as follows: Regulatory Guidelines Commerce "Well Capitalized" -------- --------------------- Leverage Ratio 6.22% 5.00% Tier I 12.46% 6.00% Total Capital 13.39% 10.00% Retail Activities

"America's Most Convenient Bank" continued its unique retail focus by offering the best in community branch banking and on-line banking. The Company's continued deposit growth consists of growth in "same-store" (existing store) sales and increased deposits from newly opened stores.

"Same Store Sales" Comparable store deposits for stores open two years or more grew 22% (26% excluding time deposits). Comparable store deposits for stores open one year or more grew 29%. "New Stores" For 2005, the Company plans to open 55-60 stores including: 35+ in Metro New York 10+ in Metro Washington, D.C. 10 in Metro Philadelphia Forward-Looking Statements

The Company may from time to time make written or oral "forward-looking statements", including statements contained in the Company's filings with the Securities and Exchange Commission, in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond the Company's control). The words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", and similar expressions are intended to identify forward-looking statements. The following factors, among others, could cause the Company's financial performance to differ materially from that expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System (the "FRB"); inflation; interest rates, market and monetary fluctuations; the timely development of competitive new products and services by the Company and the acceptance of such products and services by customers; the willingness of customers to substitute competitors' products and services for the Company's products and services and vice versa; the impact of changes in financial services' laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; future acquisitions; the expense savings and revenue enhancements from acquisitions being less than expected; the growth and profitability of the Company's non-interest or fee income being less than expected; unanticipated regulatory or judicial proceedings; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

Commerce Bancorp, Inc. Selected Consolidated Financial Data (Unaudited) Three Months Ended March 31, ----------------------------------- % 2005 2004 Change ----------- ---------- -------- (dollars and shares in thousands) Income Statement Data: Net interest income $278,901 $230,212 21 % Provision for loan losses 6,250 9,500 (34) Noninterest income 103,689 86,232 20 Total revenues 382,590 316,444 + 21 ----------- -------- Noninterest expense 258,406 212,250 22 Net income 77,137 61,975 + 24 ----------- -------- Per Share Data: Net income - Basic $0.48 $0.40 20 % Net income - Diluted 0.45 0.37 + 22 ----------- -------- Book value - Basic $10.56 $9.34 13 % Book value - Diluted if converted 10.76 9.60 + 12 ----------- -------- Revenue per share - Diluted $8.68 $7.40 + 17 % ----------- -------- Weighted Average Shares Outstanding: Basic 160,798 154,328 Diluted 176,323 171,065 Balance Sheet Data: Total assets $31,869,976 $24,955,251 + 28 % Loans (net) 9,836,604 7,670,810 28 Allowance for loan losses 139,289 117,329 19 Securities available for sale 7,950,643 11,972,943 (34) Securities held to maturity 11,292,995 2,871,593 293 Total deposits 29,487,958 22,882,678 29 ----------- ---------- Core deposits 28,058,156 21,706,134 29 ----------- ---------- Convertible Trust Capital Securities - Commerce Capital Trust II 200,000 200,000 - Stockholders' equity 1,705,959 1,452,556 + 17 -------- Capital: Stockholders' equity to total assets 5.35 % 5.82 % ----------- Risk-based capital ratios: Tier I 12.46 12.70 Total capital 13.39 13.65 Leverage ratio 6.22 6.68 Performance Ratios: Cost of funds 1.31 % 0.78 % Net interest margin 4.04 4.39 Return on average assets 0.99 1.06 Return on average total stockholders' equity 17.98 17.91 The following summary presents information regarding non-performing loans and assets as of March 31, 2005 and the preceding four quarters (dollar amounts in thousands). March 31, Dec. 31, Sept. 30, June 30, March 31, 2005 2004 2004 2004 2004 --------- -------- --------- -------- --------- Non-accrual loans: Commercial $18,376 $17,874 $22,647 $17,382 $19,701 Consumer 8,723 10,138 9,784 11,675 9,984 Commercial real estate: Construction 178 - - - - Mortgage 1,290 1,317 1,251 675 810 --------- -------- --------- --------- --------- Total non-accrual loans 28,567 29,329 33,682 29,732 30,495 --------- -------- --------- --------- --------- Restructured loans: Commercial 3,422 3,518 3,614 1 1 Consumer - - - - - Commercial real estate: Construction - - - - - Mortgage - - - - - --------- -------- --------- --------- --------- Total restructured loans 3,422 3,518 3,614 1 1 --------- -------- --------- --------- --------- Total non-performing loans 31,989 32,847 37,296 29,733 30,496 --------- -------- --------- --------- --------- Other real estate 777 626 972 653 1,890 --------- -------- --------- --------- --------- Total non-performing assets 32,766 33,473 38,268 30,386 32,386 --------- -------- --------- --------- --------- Loans past due 90 days or more and still accruing 233 602 614 318 696 --------- -------- --------- --------- --------- Total non-performing assets and loans past due 90 days or more $32,999 $34,075 $38,882 $30,704 $33,082 ========= ======== ========= ========= ========= Total non-performing loans as a percentage of total period-end loans 0.32% 0.35% 0.42% 0.36% 0.39% Total non-performing assets as a percentage of total period-end assets 0.10% 0.11% 0.13% 0.11% 0.13% --------- Total non-performing assets and loans past due 90 days or more as a percentage of total period-end assets 0.10% 0.11% 0.14% 0.11% 0.13% Allowance for loan losses as a percentage of total non-performing loans 435% 413% 353% 419% 385% Allowance for loan losses as a percentage of total period-end loans 1.40% 1.43% 1.48% 1.50% 1.51% Total non-performing assets and loans past due 90 days or more as a percentage of stockholders' equity and allowance for loan losses 2% 2% 2% 2% 2%

The following table presents, for the periods indicated, an analysis of the allowance for loan losses and other related data: (dollar amounts in thousands)

Three Months Ended Year ---------------------- Ended 03/31/05 03/31/04 12/31/04 --------- --------- --------- Balance at beginning of period $135,620 $112,057 $112,057 Provisions charged to operating expenses 6,250 9,500 39,238 ---------- ---------- --------- 141,870 121,557 151,295 Recoveries on loans charged-off: Commercial 651 156 1,000 Consumer 833 270 1,123 Commercial real estate 50 47 52 ---------- ---------- --------- Total recoveries 1,534 473 2,175 Loans charged-off: Commercial (2,602) (2,323) (9,416) Consumer (1,487) (760) (6,733) Commercial real estate (26) (1,618) (1,701) ---------- ---------- --------- Total charge-offs (4,115) (4,701) (17,850) ---------- ---------- --------- Net charge-offs (2,581) (4,228) (15,675) ---------- ---------- --------- Balance at end of period $139,289 $117,329 $135,620 ========== ========== ========= Net charge-offs as a percentage of average loans outstanding 0.11 % 0.22 % 0.19 % Net Reserve Additions $3,669 $5,272 $23,563 ---------- ---------- --------- Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income (unaudited) March 2005 ---------------------------------- Average Average Balance Interest Rate ---------------------------------- (dollars in thousands) Earning Assets --------------------------------------- Investment securities Taxable $18,192,721 $221,886 4.95 % Tax-exempt 405,771 3,313 3.31 Trading 111,732 1,395 5.06 ------------ -------- ---- Total investment securities 18,710,224 226,594 4.91 Federal funds sold 50,311 316 2.55 Loans Commercial mortgages 3,527,626 55,095 6.33 Commercial 2,327,438 35,581 6.20 Consumer 3,423,574 49,974 5.92 Tax-exempt 391,510 7,028 7.28 ------------ -------- ---- Total loans 9,670,148 147,678 6.19 ------------ -------- ---- Total earning assets $28,430,683 $374,588 5.35 % ============ Sources of Funds ---------------------------------------- Interest-bearing liabilities Savings $6,558,587 $19,080 1.18 % Interest bearing demand 11,924,947 46,671 1.59 Time deposits 2,566,074 13,740 2.17 Public funds 781,282 4,658 2.42 ------------ -------- ---- Total deposits 21,830,890 84,149 1.56 Other borrowed money 703,223 4,410 2.54 Long-term debt 200,000 3,020 6.12 ------------ -------- ---- Total deposits and interest-bearing liabilities 22,734,113 91,579 1.63 Noninterest-bearing funds (net) 5,696,570 ------------ -------- ---- Total sources to fund earning assets $28,430,683 91,579 1.31 ============ -------- ---- Net interest income and margin tax-equivalent basis $283,009 4.04 % ======== ==== Other Balances ----------------------------------------- Cash and due from banks $1,180,375 Other assets 1,625,412 Total assets 31,096,724 Total deposits 28,220,513 ---------- Demand deposits (noninterest-bearing) 6,389,623 Other liabilities 256,677 Stockholders' equity 1,716,311 Allowance for loan losses 139,746 December 2004 --------------------------------- Average Average Balance Interest Rate --------------------------------- (dollars in thousands) Earning Assets --------------------------------------- Investment securities Taxable $17,294,817 $211,263 4.86 % Tax-exempt 457,654 5,628 4.89 Trading 180,711 2,898 6.38 ------------ -------- ---- Total investment securities 17,933,182 219,789 4.88 Federal funds sold 54,620 261 1.90 Loans Commercial mortgages 3,357,348 52,747 6.25 Commercial 2,186,627 31,852 5.80 Consumer 3,233,755 47,550 5.85 Tax-exempt 350,414 6,429 7.30 ------------ -------- ---- Total loans 9,128,144 138,578 6.04 ------------ -------- ---- Total earning assets $27,115,946 $358,628 5.26 % ============ Sources of Funds --------------------------------------- Interest-bearing liabilities Savings $6,289,379 $16,270 1.03 % Interest bearing demand 11,348,516 36,042 1.26 Time deposits 2,472,670 12,436 2.00 Public funds 888,209 4,255 1.91 ------------ -------- ---- Total deposits 20,998,774 69,003 1.31 Other borrowed money 545,073 2,930 2.14 Long-term debt 200,000 3,020 6.01 ------------ -------- ---- Total deposits and interest-bearing liabilities 21,743,847 74,953 1.37 Noninterest-bearing funds (net) 5,372,099 ------------ -------- ---- Total sources to fund earning assets $27,115,946 74,953 1.10 ============ -------- ---- Net interest income and margin tax-equivalent basis $283,675 4.16 % ======== ==== Other Balances --------------------------------------- Cash and due from banks $1,223,722 Other assets 1,522,258 Total assets 29,725,307 Total deposits 27,105,818 ---------- Demand deposits (noninterest-bearing) 6,107,044 Other liabilities 248,762 Stockholders' equity 1,625,654 Allowance for loan losses 136,619 March 2004 ------------------------------- Average Average Balance Interest Rate ------------------------------- (dollars in thousands) Earning Assets --------------------------------------- Investment securities Taxable $13,295,903 $159,648 4.83 % Tax-exempt 256,628 3,860 6.05 Trading 161,701 2,065 5.14 ------------ -------- ---- Total investment securities 13,714,232 165,573 4.86 Federal funds sold 144,297 340 0.95 Loans Commercial mortgages 2,793,159 42,782 6.16 Commercial 1,878,353 24,535 5.25 Consumer 2,603,037 36,936 5.71 Tax-exempt 337,313 6,092 7.26 ------------ -------- ---- Total loans 7,611,862 110,345 5.83 ------------ -------- ---- Total earning assets $21,470,391 $276,258 5.17 % ============ Sources of Funds --------------------------------------- Interest-bearing liabilities Savings $4,492,847 $7,786 0.70 % Interest bearing demand 8,986,070 15,943 0.71 Time deposits 2,430,589 11,323 1.87 Public funds 968,513 3,320 1.38 ------------ -------- ---- Total deposits 16,878,019 38,372 0.91 Other borrowed money 174,746 448 1.03 Long-term debt 200,000 3,020 6.07 ------------ -------- ---- Total deposits and interest-bearing liabilities 17,252,765 41,840 0.98 Noninterest-bearing funds (net) 4,217,626 ------------ -------- ---- Total sources to fund earning assets $21,470,391 41,840 0.78 ============ -------- ---- Net interest income and margin tax-equivalent basis $234,418 4.39 % ======== ==== Other Balances ----------------------------------------- Cash and due from banks $1,007,182 Other assets 1,129,880 Total assets 23,491,544 Total deposits 21,478,730 ---------- Demand deposits (noninterest-bearing) 4,600,711 Other liabilities 253,890 Stockholders' equity 1,384,178 Allowance for loan losses 115,909 Notes - Weighted average yields on tax-exempt obligations have been computed on a tax-equivalent basis assuming a federal tax rate of 35%. - Non-accrual loans have been included in the average loan balance. - Consumer loans include mortgage loans held for sale. Commerce Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (unaudited) (dollars in thousands) March 31, December 31, 2004 ---------------------------------------------- 2005 Actual $ Change % Change -------------------------------------------------------------------------- Assets Cash and due from banks $1,066,051 $1,050,806 $15,245 1 % Federal funds sold 10,000 0 10,000 0 --------------------------------------------- Cash and cash equivalents 1,076,051 1,050,806 25,245 2 Loans held for sale 64,087 44,072 20,015 45 Trading securities 206,113 169,103 37,010 22 Securities available for sale 7,950,643 8,044,150 (93,507) (1) Securities held to maturity 11,292,995 10,463,658 829,337 8 Loans 9,975,893 9,454,611 521,282 6 Less allowance for loan losses 139,289 135,620 3,669 3 --------------------------------------------- 9,836,604 9,318,991 517,613 6 Reserve % 1.40 % 1.43 % Bank premises and equipment, net 1,077,488 1,059,519 17,969 2 Other assets 365,995 351,346 14,649 4 ---------------------------------------------- Total assets $31,869,976 $30,501,645 $1,368,331 4 % ============================================== Liabilities Deposits: Demand: Noninterest- bearing $6,877,932 $6,406,614 $471,318 7 % Interest- bearing 12,402,424 11,604,066 798,358 7 Savings 6,811,580 6,490,263 321,317 5 Time 3,396,022 3,157,942 238,080 8 --------------------------------------------- Total deposits 29,487,958 27,658,885 1,829,073 7 Core deposits 28,058,156 26,656,530 1,401,626 5 Total other liabilities 676,059 1,177,055 (500,996) (43) --------------------------------------------- 30,164,017 28,835,940 1,328,077 5 Stockholders' Equity 1,705,959 1,665,705 40,254 2 ---------------------------------------------- Total liabilities and stockholders' equity $31,869,976 $30,501,645 $1,368,331 4 % ============================================== (dollars in thousands) March 31, 2004 --------------------------------------- Actual $ Change % Change ------------------------------------------------------------------- Assets Cash and due from banks $971,897 $94,154 10 % Federal funds sold 56,000 (46,000) (82) ------------------------------------- Cash and cash equivalents 1,027,897 48,154 5 Loans held for sale 34,934 29,153 83 Trading securities 234,359 (28,246) (12) Securities available for sale 11,972,943 (4,022,300) (34) Securities held to maturity 2,871,593 8,421,402 293 Loans 7,788,139 2,187,754 28 Less allowance for loan losses 117,329 21,960 19 ------------------------------------ 7,670,810 2,165,794 28 --- Reserve % 1.51 % Bank premises and equipment, net 856,634 220,854 26 Other assets 286,081 79,914 28 --------------------------------------- Total assets $24,955,251 $6,914,725 28 % ======================================= Liabilities Deposits: Demand: Noninterest- bearing $5,092,813 $1,785,119 35 % Interest- bearing 9,313,838 3,088,586 33 Savings 4,995,245 1,816,335 36 Time 3,480,782 (84,760) (2) -------------------------------------- Total deposits 22,882,678 6,605,280 29 Core deposits 21,706,134 6,352,022 29 --- Total other liabilities 620,017 56,042 9 -------------------------------------- 23,502,695 6,661,322 28 Stockholders' Equity 1,452,556 253,403 17 -------------------------------------- Total liabilities and stockholders' equity $24,955,251 $6,914,725 28 % ======================================== Commerce Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (unaudited) March 31, December 31, ------------------------- (dollars in thousands) 2005 2004 ------------------------------------------------------------------------- Assets Cash and due from banks $1,066,051 $1,050,806 Federal funds sold 10,000 0 ---------------------------- Cash and cash equivalents 1,076,051 1,050,806 Loans held for sale 64,087 44,072 Trading securities 206,113 169,103 Securities available for sale 7,950,643 8,044,150 Securities held to maturity 11,292,995 10,463,658 (market value 03/05- $11,114,510; 2004- $10,430,451) Loans 9,975,893 9,454,611 Less allowance for loan losses 139,289 135,620 ---------------------------- 9,836,604 9,318,991 Bank premises and equipment, net 1,077,488 1,059,519 Other assets 365,995 351,346 ---------------------------- Total assets $31,869,976 $30,501,645 ============================= Liabilities Deposits: Demand: Noninterest-bearing $6,877,932 $6,406,614 Interest-bearing 12,402,424 11,604,066 Savings 6,811,580 6,490,263 Time 3,396,022 3,157,942 ----------------------------- Total deposits 29,487,958 27,658,885 Other borrowed money 136,251 661,195 Other liabilities 339,808 315,860 Long-term debt 200,000 200,000 ----------------------------- 30,164,017 28,835,940 Stockholders' Common stock, 162,430,559 Equity shares issued (160,635,618 shares in 2004) 162,431 160,636 Capital in excess of par value 988,848 951,476 Retained earnings 603,338 543,978 Accumulated other comprehensive (loss) income (35,927) 20,953 --------------------------- 1,718,690 1,677,043 Less treasury stock, at cost, 838,758 shares (795,610 shares in 2004) 12,731 11,338 --------------------------- Total stockholders' equity 1,705,959 1,665,705 --------------------------- Total liabilities and stockholders' equity $31,869,976 $30,501,645 ============================= Commerce Bancorp, Inc. and Subsidiaries Computation of Net Income Per Share (dollars in thousands, except per share amounts) Three Months Ended March 31, --------------------------- 2005 2004 Basic: --------- --------- Net income applicable to common stock $77,137 $61,975 ========= ========= Average common shares outstanding 160,798 154,328 ========= ========= Net income per common share $0.48 $0.40 ========= ========= Diluted: Net income applicable to common stock on a diluted basis $77,137 $61,975 Interest expense on trust preferred securities 1,963 1,963 --------- --------- $79,100 $63,938 ========= ========= Average common shares outstanding 160,798 154,328 Additional shares considered in diluted computation assuming: Exercise of stock options 7,943 9,155 Conversion of trust preferred securities 7,582 7,582 --------- --------- Average common and common equivalent shares outstanding 176,323 171,065 ========= ========= Net income per common and common equivalent share $0.45 $0.37 ========= ========= Restated for the March 2005 stock split Commerce Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (unaudited) Three Months Ended March 31, (dollars in thousands, ---------------------------------- except per share amounts) 2005 2004 % Change ------------------------------------------------------------------------- Interest Interest and fees income on loans $145,218 $108,213 34 % Interest on investments 224,946 163,499 38 Other interest 316 340 (7) ---------------------------------- Total interest income 370,480 272,052 36 ---------------------------------- Interest Interest on deposits: expense Demand 46,671 15,943 193 Savings 19,080 7,786 145 Time 18,398 14,643 26 ---------------------------------- Total interest on deposits 84,149 38,372 119 Interest on other borrowed money 4,410 448 884 Interest on long-term debt 3,020 3,020 0 ---------------------------------- Total interest expense 91,579 41,840 119 ---------------------------------- Net interest income 278,901 230,212 21 Provision for loan losses 6,250 9,500 (34) ---------------------------------- Net interest income after provision for loan losses 272,651 220,712 24 Noninterest Deposit charges and income service fees 59,964 45,481 32 Other operating income 42,617 40,327 6 Net investment securities gains 1,108 424 161 ---------------------------------- Total noninterest income 103,689 86,232 20 ---------------------------------- Total Revenues 382,590 316,444 21 --- Noninterest Salaries and benefits 119,301 97,340 23 expense Occupancy 37,993 28,110 35 Furniture and equipment 28,926 24,179 20 Office 12,677 10,920 16 Marketing 5,801 8,696 (33) Other 53,708 43,005 25 ---------------------------------- Total noninterest expenses 258,406 212,250 22 ---------------------------------- Income before income taxes 117,934 94,694 25 Provision for federal and state income taxes 40,797 32,719 25 ---------------------------------- Net income $77,137 $61,975 24 % ================================== Net income per common and common equivalent share: Basic $0.48 $0.40 20 % ---------------------------------- Diluted $0.45 $0.37 22 ---------------------------------- Average common and common equivalent shares outstanding: Basic 160,798 154,328 4 ---------------------------------- Diluted 176,323 171,065 3 ---------------------------------- Cash dividends, common stock $0.11 $0.09 22 % ================================== Commerce Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (unaudited) Linked March 31, December 31, Quarter March 31, (dollars in ------------------------------------------------------- thousands) 2005 2004 % Change 2004 % Change -------------------------------------------------------------------------- Assets Cash and due from banks $1,066,051 $1,050,806 1 % $971,897 10 % Federal funds sold 10,000 0 0 56,000 (82) -------------------------------------------------------- Cash and cash equivalents 1,076,051 1,050,806 2 1,027,897 5 Loans held for sale 64,087 44,072 45 34,934 83 Trading securities 206,113 169,103 22 234,359 (12) Securities available for sale 7,950,643 8,044,150 (1) 11,972,943 (34) Securities held to maturity 11,292,995 10,463,658 8 2,871,593 293 Loans: Commercial real estate: Investor developer 1,553,908 1,455,891 7 1,236,862 26 Residential construction 225,239 206,924 9 144,326 56 -------------------------------------------------------- 1,779,147 1,662,815 7 1,381,188 29 Commercial loans: Term 1,376,663 1,283,476 7 1,071,736 28 Line of credit 1,221,096 1,168,542 4 960,080 27 Demand 0 0 0 1,080 (100) -------------------------------------------------------- 2,597,759 2,452,018 6 2,032,896 28 Owner-occupied 2,100,289 1,998,203 5 1,710,098 23 -------------------------------------------------------- 4,698,048 4,450,221 6 3,742,994 26 Consumer: Mortgages (1-4 family residential) 1,447,365 1,340,009 8 984,415 47 Installment 134,965 132,646 2 135,406 (0) Home equity 1,845,963 1,799,841 3 1,485,055 24 Credit lines 70,405 69,079 2 59,081 19 -------------------------------------------------------- 3,498,698 3,341,575 5 2,663,957 31 -------------------------------------------------------- Total loans 9,975,893 9,454,611 6 7,788,139 28 -------------------------------------------------------- Less allowance for loan losses 139,289 135,620 3 117,329 19 -------------------------------------------------------- 9,836,604 9,318,991 6 7,670,810 28 Bank premises and equipment, net 1,077,488 1,059,519 2 856,634 26 Other assets 365,995 351,346 4 286,081 28 -------------------------------------------------------- Total assets $31,869,976 $30,501,645 4 % $24,955,251 28 % ======================================================== Liabilities Deposits: Demand: Noninterest- bearing $6,877,932 $6,406,614 7 % $5,092,813 35 % Interest- bearing 12,402,424 11,604,066 7 9,313,838 33 Savings 6,811,580 6,490,263 5 4,995,245 36 Time 3,396,022 3,157,942 8 3,480,782 (2) -------------------------------------------------------- Total deposits 29,487,958 27,658,885 7 22,882,678 29 --- --- Other borrowed money 136,251 661,195 (79) 137,978 (1) Other liabilities 339,808 315,860 8 282,039 20 Long-term debt 200,000 200,000 0 200,000 0 -------------------------------------------------------- 30,164,017 28,835,940 5 23,502,695 28 Stockholders' Equity Common stock 162,431 160,636 1 156,241 4 Capital in excess of par value 988,848 951,476 4 834,784 18 Retained earnings 603,338 543,978 11 394,794 53 Accumulated other comprehensive (loss) income (35,927) 20,953 (271) 78,076 (146) -------------------------------------------------------- 1,718,690 1,677,043 2 1,463,895 17 Less treasury stock, at cost 12,731 11,338 12 11,339 12 -------------------------------------------------------- Total stockholders' equity 1,705,959 1,665,705 2 1,452,556 17 -------------------------------------------------------- Total liabilities and stockholders' equity $31,869,976 $30,501,645 4 % $24,955,251 28 % ======================================================== Commerce Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (unaudited) Three Months Ended (dollars in --------------------------------------------------- thousands, March 31, December 31, March 31, except per share --------------------------------------------------- amounts) 2005 2004 % Change 2004 % Change ------------------------------------------------------------------------- Interest income Interest and fees on loans $145,218 $136,328 7 % $108,213 34 % Interest on investments 224,946 216,806 4 163,499 38 Other interest 316 261 21 340 (7) ------------------------------ ------------------- Total interest income 370,480 353,395 5 272,052 36 ------------------------------ ------------------- Interest expense Interest on deposits: Demand 46,671 36,042 29 15,943 193 Savings 19,080 16,270 17 7,786 145 Time 18,398 16,691 10 14,643 26 ------------------------------ ------------------- Total interest on deposits 84,149 69,003 22 38,372 119 Interest on other borrowed money 4,410 2,930 51 448 884 Interest on long-term debt 3,020 3,020 0 3,020 0 ------------------------------ ------------------- Total interest expense 91,579 74,953 22 41,840 119 ------------------------------ ------------------- Net interest income 278,901 278,442 0 230,212 21 Provision for loan losses 6,250 8,240 (24) 9,500 (34) ------------------------------ ------------------- Net interest income after provision for loan losses 272,651 270,202 1 220,712 24 Noninterest income Deposit charges and service fees 59,964 62,847 (5) 45,481 32 Other operating income 42,617 32,967 29 40,327 6 Net investment securities gains 1,108 637 74 424 161 ------------------------------ ------------------- Total noninterest income 103,689 96,451 8 86,232 20 ------------------------------ ------------------- Total Revenues 382,590 374,893 2 316,444 21 --- ---- Noninterest expense Salaries and benefits 119,301 115,227 4 97,340 23 Occupancy 37,993 33,462 14 28,110 35 Furniture and equipment 28,926 30,075 (4) 24,179 20 Office 12,677 13,103 (3) 10,920 16 Marketing 5,801 9,268 (37) 8,696 (33) Other 53,708 51,976 3 43,005 25 ------------------------------ ------------------- Total noninterest expenses 258,406 253,111 2 212,250 22 ------------------------------ ------------------- Income before income taxes 117,934 113,542 4 94,694 25 Provision for federal and state income taxes 40,797 38,424 6 32,719 25 ------------------------------ ------------------- Net income $77,137 $75,118 3 % $61,975 24 % ============================== =================== Net income per common and common equivalent share: Basic $0.48 $0.47 2 % $0.40 20 % ------------------------------ ------------------- Diluted $0.45 $0.44 2 $0.37 22 ------------------------------ ------------------- Average common and common equivalent shares outstanding: Basic 160,798 158,930 1 154,328 4 ------------------------------ ------------------- Diluted 176,323 174,889 1 171,065 3 ------------------------------ ------------------- Cash dividends, common stock $0.11 $0.11 0 % $0.09 22 % ============================== =================== Return on average assets 0.99 % 1.01 % 1.06 % Return on average equity 17.98 18.48 17.91