UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 2, 2003
--------------
Commerce Bancorp, Inc.
----------------------
(Exact name of registrant as specified in its charter)
New Jersey 0-12609 22-2433468
--------------------------------------------------------------------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
Commerce Atrium, 1701 Route 70 East, Cherry Hill, NJ 08034-5400
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 856-751-9000
------------
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
The following information is included in this document as a result of the
Company's desire to comply with its policy regarding public disclosure of
corporate information. The Company may or may not continue to provide similar
information in the future using this format.
Forward-looking Statements and Associated Risk Factors
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.
1. Q. The First Call E.P.S. consensus projection for the first quarter of
2004 is $.73 and the E.P.S. consensus projection for 2004 is $3.12. Do
you expect to meet or exceed these consensus projections?
A. Yes.
2. Q. What will the net interest margin be for the first quarter of this
year?
A. At an earnings conference call on January 15, 2004, we guided to a net
interest margin range of 4.35% to 4.40%. We now believe that we will
meet or exceed the high end of that range.
3. Q. Supposedly there is an industry-wide slowdown in deposit growth. What
is causing this slowdown and how is Commerce affected?
A. There may be a slowdown in deposits at other banks but as of the end
of February 2004, year-over-year deposits are up 44%.
4. Q. What is the mix of deposits between Metro New York and Metro
Philadelphia and where do you expect this mix to be in later years?
A. At year-end 2003, the mix was approximately 50% - 50%. Five years from
now we expect this mix to be approximately 60% for Metro New York,
approximately 30% for Metro Philadelphia, and approximately 10% in
other markets.
5. Q. What is your expansion plan for this year and are you on track to meet
your plan?
A. We plan to open 50 branches this year of which approximately 40 will
be in Metropolitan New York and 10 will be in Metropolitan
Philadelphia. So far this year, we have opened six offices and we are
on track to meet our plan.
6. Q. When do you expect to start your expansion in the Washington-Baltimore
market?
A. We plan to open 10-15 offices in Northern Virginia and Washington,
D.C. in early 2005.
7. Q. What is the present mark-to-market on your available for sale
investment portfolio?
A. At the close of business, February 27, 2004, with the 10-year Treasury
Note yield at 3.97%, our available for sale investment portfolio had a
pre-tax gain of approximately $50 million.
8. Q. How does the shape of the yield curve affect your profitability?
A. The Company has demonstrated its ability over the years to maintain a
stable, high net interest margin and consistent profitability in
various yield curve scenarios.
The Company's profitability benefits from a normal to steep yield
curve. Profitability is most challenged by a flat yield curve in a low
rate environment.
9. Q. Your expense growth slowed for each of the last two quarters. Do you
expect this to continue for the first quarter of this year?
A. We intend to fully invest in our business model to the extent that our
revenue growth allows. We do have the ability to control certain areas
of discretionary spending as demonstrated in the third and fourth
quarters of 2003 when we experienced pressure on the net interest
margin. One important factor which influences growth is the start-up
expenditures for entering a new major market such as New York City.
Those start-up expenses have been digested and we do not anticipate
that the start-up costs for entering the Washington-Baltimore market
will be of that magnitude.
We expect expenses to grow slower than revenues during the first
quarter of 2004.
10. Q. Could you enlighten us as to the terms and conditions of your
Convertible Trust Preferred issue?
A. In March 2002, the Company issued $200 million of 5.95% Convertible
Trust Capital Securities. The conversion price of the securities is
$52.75. Holders of the Convertible Trust Capital Securities may
convert each security into 0.9478 shares of Company common stock if
the closing sales price of the Company's common stock for at least 20
trading days in a period of 30 consecutive trading days ending on the
last trading day of any calendar quarter, beginning with the quarter
ending June 30, 2002, is more than 110% of the Convertible Trust
Capital Securities conversion price.
The Company may force conversion of the Convertible Trust Capital
Securities if, at any time on or after March 11, 2005, the closing
price of Commerce Bancorp common stock for 20 trading days in a period
of 30 consecutive trading days exceeds 120% of the prevailing
conversion price of the Convertible Trust Capital Securities: ($52.75
X 1.20 = $63.30).
The Convertible Trust Capital Securities would become convertible on
April 1, 2004 if the closing price of our common stock is $58.03
($52.75 X 1.10) or higher for at least 20 of the last 30 trading days
in the quarter ending March 31st.
If this condition is met, the Company would apply the if-converted
method in calculating diluted net income per share for the first
quarter and all subsequent quarters that the Convertible Trust Capital
Securities are outstanding. Under the if-converted calculation for
diluted net income per share, the interest expense, net of tax, from
the Convertible Trust Capital Securities would be added to the
numerator, and approximately 3.8 million shares would be added to the
denominator.
In stating that we expect to meet or exceed the First Call consensus
for the first quarter and the year 2004, we have assumed that we will
be applying the if-converted method in calculating our diluted EPS.
11. Q. What is the status of the SEC inquiry regarding your bond underwriting
business?
A. We have cooperated fully with the SEC and we have not been requested
to supply any additional information for several months. It is the
policy of the SEC not to comment on the status or favorable conclusion
of such matters.
SIGNATURE
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 hereunto duly authorized.
Date: March 2, 2003 COMMERCE BANCORP, INC.
By: /s/ DOUGLAS J. PAULS
-------------------------
Douglas J. Pauls
Senior Vice President and Chief
Financial Officer