For immediate release

The Federal Reserve Board today announced its approval of the notice filed by Commerce Bancorp, Inc., Cherry Hill, New Jersey, to acquire A.H. Williams & Co., Inc., Philadelphia, Pennsylvania, and thereby engage in a variety of securities-related activities, including engaging to a limited extent in underwriting and dealing in certain bank-ineligible securities. Attached is the Board's Order relating to this action.

Commerce Bancorp, Inc. Cherry Hill, New Jersey Order Approving Notice to Engage in Nonbanking Activities

Commerce Bancorp, Inc. ("Commerce"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), has requested the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.24 of the Board's Regulation Y (12 C.F.R. 225.24) to acquire A.H. Williams & Co., Inc., Philadelphia, Pennsylvania ("Company"), and thereby engage de novo in the following activities:1 Underwriting and dealing in, to a limited extent, certain municipal revenue bonds (including certain unrated municipal revenue bonds and private ownership industrial development bonds issued for traditional government services), 1-4 family mortgage-related securities, consumer receivable-related securities, and commercial paper (collectively, "bank-ineligible securities"); Providing services that are usual in connection with making, acquiring, brokering, or servicing loans or other extensions of credit, pursuant to section 225.28(b)(1) of Regulation Y (12 C.F.R. 225.28(b)(1)); Leasing personal or real property or acting as agent, broker, or adviser in leasing such property, pursuant to section 225.28(b)(3) of Regulation Y (12 C.F.R. 225.28(b)(3)); Providing financial and investment advisory services, pursuant to section 225.28(b)(6) of Regulation Y (12 C.F.R. 225.28(b)(6)); Providing securities brokerage, private placement, and riskless principal services, pursuant to section 225.28(b)(7) of Regulation Y (12 C.F.R. 225.28(b)(7)); Underwriting and dealing in government obligations and money market instruments in which state member banks may underwrite and deal under 12 U.S.C. §§ 335 and 24(7) ("bank-eligible securities") and engaging in investing and trading activities as a principal, pursuant to section 225.28(b)(8)(i) and (ii) of Regulation Y (12 C.F.R. 225.28(b)(8)(i) and (ii)); and Providing management consulting and employee benefits counseling services, pursuant to section 225.28(b)(9) of Regulation Y (12 C.F.R. 225.28(b)(9)). Notice of the proposal, affording interested persons an opportunity to submit comments, has been published (63 Federal Register 4267 (1998)). The time for filing comments has expired, and the Board has considered the notice and all comments received in light of the factors set forth in section 4(c)(8) of the BHC Act. Commerce, with total consolidated assets of approximately $4 billion, operates subsidiary banks in New Jersey and Pennsylvania.2 Company is and, following consummation of the proposal, will continue to be registered as a broker-dealer with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. § 78a et seq.) ("1934 Act"), and is a member of the National Association of Securities Dealers, Inc. ("NASD"). Accordingly, Company is and will remain subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the 1934 Act, the SEC, and the NASD. Underwriting and Dealing Activities The Board has determined -- subject to the framework of prudential limitations to address the potential for conflicts of interests, unsound banking practices, or other adverse effects -- that underwriting and dealing in bank-ineligible securities are so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.3 The Board also has determined that conduct of these activities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. § 377), provided that the company engaged in underwriting and dealing activities derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities over a two-year period.4 Commerce has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities subject to the Board's 25-percent revenue limit.5 As a condition of this order, Commerce also would be required to conduct its bank-ineligible securities activities subject to the Operating Standards for section 20 subsidiaries.6 Other Activities Approved by Regulation The Board previously has determined by regulation that activities related to extending credit; leasing personal or real property; financial and investment advisory activities; securities brokerage, riskless principal, and private placement services; underwriting and dealing in bank-eligible securities; investment and trading as a principal; and management consulting are closely related to banking within the meaning of section 4(c)(8) of the BHC Act.7 Commerce has committed that it will conduct each of these activities in accordance with the BHC Act, Regulation Y, and the relevant Board interpretations and orders. Proper Incident to Banking Standard In order to approve the proposal, the Board also must determine that the proposed activities are a proper incident to banking, that is, that the proposed transaction "can reasonably be expected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices."8 As part of its evaluation of these factors, the Board considers the financial condition and managerial resources of the notificant and its subsidiaries and the effect the transaction would have on such resources.9 The Board has carefully examined the financial resources, management expertise, and risk management policies of Commerce and its subsidiaries. Based on all the facts of record, the Board concludes that financial and managerial considerations are consistent with approval. The Board has carefully considered the competitive effects of the proposal. To the extent that Commerce and Company offer different types of products and services, the proposal would result in no loss of competition. In those markets in which Commerce's and Company's products and services overlap, such as municipal finance underwriting, there are numerous existing and potential competitors. Consummation of the proposal, therefore, would have a de minimis effect on competition in the market for these services, and the Board has concluded that the proposal would not result in any significantly adverse competitive effects in any relevant market. The Board expects that the proposal would provide added convenience and efficiency to customers of Commerce and Company by expanding the range of products and services available to states and municipalities in the region Company would serve. As noted above, Commerce has committed that Company will conduct its bank-ineligible securities underwriting and dealing activities in accordance with the prudential framework described above. Under the framework and conditions described in this order, the Board concludes that the acquisition of Company by Commerce and the conduct by Commerce of the proposed limited bank-ineligible securities underwriting and dealing activities is not likely to result in significantly adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices that would outweigh the public benefits of the proposal. Similarly, the Board finds no evidence that Company's riskless principal, private placement, and other nonbanking activities -- conducted under the framework and conditions established in this order and Regulation Y -- would likely result in any significantly adverse effects that would outweigh the public benefits of the proposal. Accordingly, the Board has determined that performance of the proposed activities by Commerce is a proper incident to banking for purposes of section 4(c)(8) of the BHC Act. Conclusion On the basis of all the facts of record, the Board has determined that the notice should be, and hereby is, approved, subject to all the terms and conditions described in this order. The Board's approval of the proposal extends only to activities conducted within the limitations of this order, including the Board's reservation of authority to establish additional limitations to ensure that Commerce's activities are consistent with safety and soundness, avoidance of conflicts of interests, and other relevant considerations under the BHC Act. Underwriting and dealing in any manner other than as approved in this order is not within the scope of the Board's approval and is not authorized for Commerce. The Board's determination is subject to all the terms and conditions set forth in Regulation Y, including those in sections 225.7 and 225.25(c) of Regulation Y (12 C.F.R. 225.7 and 225.25(c)), and to the Board's authority to require such modification or termination of the activities of a bank holding company or any of its subsidiaries as the Board finds necessary to ensure compliance with, and to prevent evasion of, the provisions of the BHC Act and the Board's regulations and orders issued thereunder. The Board's decision is specifically conditioned on compliance with all the commitments made in connection with this notice, including the commitments discussed in this order, and the conditions set forth in this order and the above-noted Board regulations and orders. These commitments and conditions are deemed to be conditions imposed in writing by the Board in connection with its findings and decisions, and, as such, may be enforced in proceedings under applicable law. The proposal shall not be consummated later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Philadelphia, acting pursuant to delegated authority.

By order of the Board of Governors,10 effective March 23, 1998. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Footnotes 1 After consummation of the proposal, Commerce would change the name of Company to Commerce Capital Markets, Inc. 2 Asset data are as of December 31, 1997. 3 See Citicorp, et al., 73 Federal Reserve Bulletin 473 (1987), aff'd sub nom. Securities Industry Ass'n v. Board of Governors of the Federal Reserve System, 839 F.2d 47 (2d Cir. 1988), cert. denied, 486 U.S. 1059 (1988); as modified by Review of Restrictions on Director, Officer and Employee Interlocks, Cross-Marketing Activities, and the Purchase and Sale of Financial Assets between a Section 20 Subsidiary and an Affiliated Bank or Thrift, 61 Federal Register 57,679 (1996), and Amendments to Restrictions in the Board's Section 20 Orders, 62 Federal Register 45,295 (1997) (collectively, "Section 20 Orders"). 4 Compliance with the revenue limitation shall be calculated in accordance with the method stated in the Section 20 Orders, as modified by the Order Approving Modifications to the Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989), and 10 Percent Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 48,953 (1996), and Revenue Limit on Bank-Ineligible Activities of Subsidiaries of Bank Holding Companies Engaged in Underwriting and Dealing in Securities, 61 Federal Register 68,750 (1996) (collectively, "Modification Orders"). 5 Company may provide services that are necessary incidents to the proposed underwriting and dealing activities. Unless Commerce receives specific approval under section 4(c)(8) of the BHC Act to conduct the activities independently, Company must treat any revenues from the incidental activities as ineligible revenues subject to the Board's revenue limitation. 6 12 C.F.R. 225.200. Company proposes to complete the underwriting of five issues of securities that are not within the scope of activities for which Commerce is seeking approval. Company agreed to perform these five underwritings prior to agreeing to be acquired under the proposal, and the underwriting of all these securities is expected to be completed within 120 days after consummation of the proposal. Company may complete these underwritings and must treat all revenue derived from any of these underwritings that are completed after consummation of the proposal as bank-ineligible revenue subject to the Board's revenue limitations. 7 See 12 C.F.R. 225.28(b)(1), (3), (6), (7), (8)(i) and (ii), and (9). 8 See 12 U.S.C. § 1843(c)(8). 9 See 12 C.F.R. 225.26. 10 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, Meyer, and Ferguson. Absent and not voting: Governor Gramlich.

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1998 Orders on banking applications