8-K

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) July 19, 2005

Pennsylvania Commerce Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania	000-50961	25-1834776
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

100 Senate Avenue, Camp Hill, Pennsylvania	17011
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (717) 975-5630

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On July 19, 2005, Pennsylvania Commerce Bancorp, Inc. issued a press release reporting financial results for its second quarter of 2005. A copy of the press release is attached as Exhibit 99.1 to this report.

On July 19, 2005, the Registrant also made certain supplemental information available. A copy of the supplemental information is attached as Exhibit 99.2 to this report.

Item 9.01. Financial Statements and Exhibits

Exhibit No.

99.1Press Release, dated July 19, 2005

99.2Supplemental Information

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 hereunto duly authorized.

	Pennsylvania Commerce Bancorp, Inc.
	(Registrant)
Date: July 19, 2005	/s/ Gary L. Nalbandian
	Gary L. Nalbandian,
	Chairman and President
	/s/ Mark A. Zody
	Mark A. Zody,
	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.	DESCRIPTION
99.1	Press Release of Pennsylvania Commerce Bancorp, Inc. dated July 19, 2005.
99.2	Supplemental Information

EX-99.1

  

CONTACTS

Gary L. Nalbandian	Mark A. Zody
Chairman/President	Chief Financial Officer

(717) 975-5630

PENNSYLVANIA COMMERCE BANCORP EARNINGS UP 17%

DEPOSITS INCREASE 26%

July 19, 2005 - Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc. (NASDAQ National Market Symbol: COBH), parent company of Commerce Bank/Harrisburg, N.A., reported record earnings and increased deposits, assets and loans for the second quarter of 2005, announced Gary L. Nalbandian, Chairman of the bank holding company.

SECOND QUARTER FINANCIAL HIGHLIGHTS

JUNE 30, 2005

				%
				Increase(1)
* Total Assets:	$	1.45	Billion		22	%
* Total Deposits:	$	1.23	Billion		26	%
* Total Loans (net):	$	714	Million		21	%
* Total Revenues:	$	16.6	Million		15	%
* Net Income:	$	2.6	Million		17	%
* Diluted Net Income Per Share:	$	0.40			(7	)%

 (1) Compared to Second Quarter Ended June 30, 2004

In commenting on the Company’s financial results, Chairman Nalbandian noted the following financial highlights:

Ø   Net income increased 17% for the second quarter of 2005 to $2.6 million.

Ø   Total revenues grew by 15% over the same period in 2004, despite margin compression to 3.88% caused by the flattening yield curve.

Ø   Earnings per share were $0.40 for the second quarter, down slightly from the same period one-year ago due to a 26% increase in the number of total shares outstanding as a result of our public stock offering in the fourth quarter of 2004.

Ø   Core deposits grew $247 million, or 27%, over the previous 12-month period.

Ø   Demand deposits increased 29% over the past 12 months.

Ø   Deposit service charges and fees grew 20% year over year.

Ø   Net loans grew $126 million, or 21%, over the second quarter one year ago.

Ø   Book value per share increased 41% over the past year to $15.12.

Income Statement

	Three Months Ended							Six Months Ended
	June 30,							June 30,
					%							%
	2005		2004		Increase			2005		2004		Increase
	(dollars in thousands, except per share data)
Total Revenues:	$	16,561	$	14,357		15	%	$	31,925	$	27,911		14	%
Total Expenses:		12,129		10,449		16			23,276		20,566		13
Net Income:		2,555		2,181		17	%		5,016		4,109		22	%
Diluted Net Income Per Share:	$	0.40	$	0.43		(7	)%	$	0.79	$	0.81		(2	)%

2

Balance Sheet

	6/30/2005		6/30/2004		% Increase
	(dollars in thousands)
Total Assets:	$	1,450,759	$	1,184,870		22	%
Total Loans (net):		713,979		588,398		21
Core Deposits:		1,158,679		911,838		27
Total Deposits:		1,229,461		978,258		26

Shareholder Returns

	As of June 30, 2005
	Commerce	S & P Index
1 Year	35%	6%
5 Years	29%	-2%
10 Years	26%	10%

Total Deposits

The Company’s deposit growth continues with total deposits at June 30, 2005 reaching $1.23 billion, a $251 million, or 26%, increase over total deposits of $978 million one year ago.

	6/30/2005		6/30/2004		$ Increase		% Increase
	(dollars in thousands)
Core Deposits:	$	1,158,679	$	911,838	$	246,841		27	%
Total Deposits:	$	1,229,461	$	978,258	$	251,203		26	%

3

Core Deposits

Core deposit growth by type of account is as follows:

					2nd Qtr 2005			Annual
	6/30/2005		6/30/2004		Cost of Funds			Growth %
	(dollars in thousands)
Demand	$	234,309	$	182,282		0.00	%		29	%
Interest Bearing Demand		417,874		288,485		1.99			45
Savings		327,389		270,382		1.37			21
Subtotal		979,572		741,149		1.35	%		32	%
Time		179,107		170,689		2.87			5
Total Core Deposits	$	1,158,679	$	911,838		1.40	%		27	%

Core deposits, excluding time deposits, grew 32% for the prior 12 months.

Net Income and Net Income Per Share

Net income totaled $2.6 million for the second quarter of 2005, up $374,000, or 17%, over net income of $2.2 million as reported for the second quarter of 2004.

Net income per share on a fully diluted basis for the second quarter was $0.40, vs. $0.43 recorded for the same period a year ago. Net income per share for the second quarter of 2005 reflects the impact of an additional 920,000 shares (adjusted for a two-for-one stock split) issued during the fourth quarter of 2004 through a public stock offering and an additional 200,000 shares (adjusted for the two-for-one stock split) issued at the end of the third quarter 2004 through a private placement.

	Three Months Ended							Six Months Ended
	June 30,							June 30,
					%							%
	2005		2004		Increase			2005		2004		Increase
	(dollars in thousands, except per share data)
Net Income:	$	2,555	$	2,181		17	%	$	5,016	$	4,109		22	%
Diluted Net Income
Per Share:	$	0.40	$	0.43		(7	)%	$	0.79	$	0.81		(2	)%

For the first six months of 2005, net income totaled $5.0 million, up $907,000, or 22%, over net income of $4.1 million for the first six months of 2004. On a diluted per share basis, net income for the first six months of 2005 was $0.79 compared to $0.81 for the first six months of 2004. Net income per share for the first six months was also impacted by the additional shares outstanding as described above.

4

Total Revenues

	Three Months Ended							Six Months Ended
	June 30							June 30
	2005		2004		% Increase			2005		2004		% Increase
	(dollars in thousands)							(dollars in thousands)
Total Revenues:	$	16,561	$	14,357		15	%	$	31,925	$	27,911		14	%

Total revenues (net interest income plus non-interest income) for the second quarter increased $2.2 million to $16.6 million, a 15% increase over the second quarter of 2004. Total revenues for the first six months of 2005 increased by $4.0 million, or 14%, over the same period in 2004.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter 2005 of $12.9 million represented a 10% increase over the $11.6 million recorded a year ago. For the first six months of 2005, net interest income totaled $25.0 million, up $2.4 million, or 11%, over the $22.6 million recorded in the first six months of 2004. The Company’s low-cost core deposit growth fueled volume increases in the level of interest earning assets, which resulted in the increase in net interest income.

The net interest margin for the second quarter of 2005 was 3.88% compared to 4.35% for the second quarter 2004. The net interest margin for the first six months of 2005 was 3.97%, compared to 4.38% for the first six months of 2004. The decrease is primarily the result of the flattening yield curve, which has occurred during the fourth quarter 2004 and first half of 2005.

Net Interest Income and Rate/Volume Analysis

As shown below, the increase in net interest income 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
June		Volume		Rate			Total	%
2005 vs. 2004		Increase		Change			Increase	Increase
		(dollars in thousands)
Quarter	$	2,542	$	(1,328	)	$	1,214	10	%
First Six Months	$	4,960	$	(2,556	)	$	2,404	11	%

5

Non-Interest Income

Non-interest income for the second quarter of 2005 increased to $3.7 million from $2.7 million a year ago, a 36% increase. Non-interest income for the first six months of 2005 was $6.9 million, a 30% increase over the $5.3 million earned in the first six months of 2004. The growth in non-interest income for the second quarter was reflected in increased deposit charges and service fees and other operating income as more fully depicted below:

	Three Months Ended							Six Months Ended
	June 30,							June 30,
					%							%
	2005		2004		Increase			2005		2004		Increase
	(dollars in thousands)
Deposit Charges
& Service Fees	$	3,018	$	2,517		20	%	$	5,713	$	4,758		20	%
Other Income		502		199		152			1,013		544		86
Subtotal	$	3,520	$	2,716		30		$	6,726	$	5,302		27
Net Investment Securities Gains		186		0					186		0
Total Non-Interest Income	$	3,706	$	2,716		36	%	$	6,912	$	5,302		30	%

Non-Interest Expenses

Non-interest expenses for the second quarter of 2005 were $12.1 million, up 16% from $10.4 million a year ago. Non-interest expenses for the first six months of 2005 were $23.3 million, up 13% from $20.6 million a year ago. The increases in non-interest expenses for both the quarter and the first half of 2005 were widespread across all categories and include the impact of new store growth during the fourth quarter of 2004 as well as the second quarter of 2005.

Lending

Loans increased $126 million, or 21%, to $714 million from $588 million a year ago, and the growth was represented across all loan categories.

The composition of the Company’s loan portfolio is as follows:

							Loan Composition
	6/30/2005			% of Total			6/30/2004			% of Total			$ Increase			% Increase
	(dollars in thousands)
Commercial	$	204,813			28	%	$	158,364			27	%	$	46,449			29	%
Consumer		131,290			18			88,443			15			42,847			48
Commercial Real Estate		298,373			42			264,511			44			33,862			13
Residential		88,077			12			84,099			14			3,978			5
Gross Loans		722,553			100	%		595,417			100	%		127,136			21	%
Less: Reserves		(8,573	)					(7,019	)					(1,554	)
Net Loans	$	713,980					$	588,398					$	125,582			21	%

6

Asset Quality

Asset quality continues to be strong as non-performing assets at June 30, 2005 totaled $1.6 million, or 0.11%, of total assets, versus $1.3 million, or 0.11%, of total assets one year ago.

The Company’s asset quality results are highlighted below:

	Six Months Ended
	6/30/2005			6/30/2004
Non-Performing Assets/Assets		0.11	%		0.11	%
Net Loan Charge-Offs		0.06	%		0.04	%
Loan Loss Reserve/Gross Loans		1.19	%		1.18	%
Non-Performing Loan Coverage		655	%		855	%
Non-Performing Assets/Capital
and Reserves		2	%		2	%

Investments

The Company’s investment portfolio increased by 21%, to $607 million from $504 million one year ago, with 60% of this total in the available for sale portfolio and 40% in the held to maturity portfolio. The investment portfolio, consisting mainly of high quality U.S. Government agency and mortgage-backed obligations, has a weighted average yield of 5.05% and a current duration of 3.7 years as of June 30, 2005.

Capital

Stockholders’ equity at June 30, 2005 totaled $91 million, an increase of $40 million, or 79%, over stockholders’ equity of $51 million at June 30, 2004. Return on average stockholders’ equity (ROE) for the second quarter and six months ending June 30, 2005 and 2004 is shown in the table below:

Return on Equity
Three Months Ended June 30,		Six Months Ended June 30,
2005	2004	2005	2004
11.47%	17.14%	11.58%	15.99%

ROE for the second quarter and first six months of 2005 reflects the impact of the additional capital raised by the Company during the fourth quarter of 2004.

The Company’s capital ratios at June 30, 2005 were as follows:

		Regulatory Guidelines
	Commerce	“Well Capitalized”
Leverage Ratio	7.34%	5.00%
Tier 1	10.86	6.00
Total Capital	11.75	10.00

7

New Stores and Expansion Plans

Ø   On April 30, 2005, the Company opened its 25^th store, located on Mt. Zion Road in York County.

Ø   On July 30, 2005, the Company will open its 26^th store, located on West Cumberland Street in Lebanon County.

Ø   On August 13, 2005, the Company will open its 27^th store, located on State Hill Road in Wyomissing, Berks County.

Ø   Commerce serves customers in Cumberland, Dauphin, Lebanon, York, and Berks counties.

Ø   The Company plans to expand into the Lancaster County market in 2006.

Ø   Pennsylvania Commerce Bancorp is an independent member of the “Commerce Bank Network,” a network of banks established by Commerce Bancorp, Inc. (NYSE: CBH) based in Cherry Hill, N.J.

8

FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION

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 rate, 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); the impact of the rapid growth of the Company; the Company’s dependence on Commerce Bancorp, Inc. to provide various services to the Company; changes in the Company’s allowance for loan losses; effect of terrorists attacks and threats of actual war; 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 statements, whether written or oral, that may be made from time to time by or on behalf of the Company.

8

EX-99.2

Pennsylvania Commerce Bancorp, Inc.
Selected Consolidated Financial Data
(Unaudited)
	At or for the									At or for the
	Three Months Ended									Six Months Ended
	June 30,									June 30,
							%									%
(in thousands, except per share amounts)	2005			2004			Change			2005			2004			Change
Income Statement Data:
Net interest income	$	12,855		$	11,641			10	%	$	25,013		$	22,609			11	%
Provision for loan losses		625			675			(7	)%		1,170			1,250			(6	)%
Noninterest income		3,706			2,716			36	%		6,912			5,302			30	%
Noninterest operating expenses		12,129			10,449			16	%		23,276			20,566			13	%
Net income		2,555			2,181			+17	%		5,016			4,109			+22	%
Per Common Share Data:
Net income: Basic	$	0.43		$	0.47			(9	)%	$	0.84		$	0.88			(5	)%
Net income: Diluted		0.40			0.43			(7	)%		0.79			0.81			(2	)%
Book Value										$	15.12		$	10.76			+41	%
Weighted average shares outstanding:
Basic		5,940			4,627						5,921			4,615
Diluted		6,351			5,044						6,330			5,034
Balance Sheet Data:
Total assets										$	1,450,759		$	1,184,870			22	%
Loans (net)											713,979			588,398			+21	%
Allowance for loan losses											8,573			7,019			22	%
Investment Securities											607,032			503,742			21	%
Total deposits											1,229,461			978,258			26	%
Core deposits											1,158,679			911,838			+27	%
Stockholders' equity											91,051			51,006			+79	%
Capital:
Stockholders' equity to total assets											6.28	%		4.30	%
Leverage Ratio											7.34			5.80
Risk based capital ratios:
Tier 1											10.86	%		8.72	%
Total Capital											11.75			9.63
Performance Ratios:
Cost of funds		1.94	%		1.19	%					1.83	%		1.19	%
Deposit Cost of Funds		1.57			0.91						1.52			0.92
Net interest margin		3.88			4.35						3.97			4.38
Return on average assets		0.72			0.76						0.75			0.74
Return on average total stockholders' equity		11.47			17.14						11.58			15.99
Asset Quality:
Net charge-offs to average loans outstanding											0.06	%		0.04	%
Nonperforming loans to total period-end loans											0.18			0.14
Nonperforming assets to total period-end assets											0.11			0.11
Allowance for loan losses to total period-end loans											1.19			1.18
Allowance for loan losses to nonperforming loans											655	%		855	%

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
	Quarter ended,
	June 2005							March 2005							June 2004
	Average				Average			Average				Average			Average				Average
	Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate
(dollars in thousands)
Earning Assets
Investment securities
Taxable	$	609,060	$	7,587		4.98	%	$	526,341	$	6,591		5.01	%	$	505,413	$	6,248		4.94	%
Tax-exempt		7,113		107		6.02			6,440		105		6.52			6,840		100		5.85
Total securities		616,173		7,694		4.99			532,781		6,696		5.03			512,253		6,348		4.95
Federal funds sold		0		0					270		2		2.66			0		0
Loans receivable
Mortgage and construction		384,180		6,368		6.65			368,689		6,032		6.64			330,853		5,251		6.38
Commercial loans and lines of credit		193,509		3,241		6.72			172,078		2,696		6.35			142,191		2,025		5.73
Consumer		127,515		1,909		6.00			118,824		1,679		5.73			84,155		1,137		5.43
Tax-exempt		7,186		82		4.58			6,607		75		4.60			6,077		73		4.83
Total loans receivable		712,390		11,600		6.53			666,198		10,482		6.38			563,276		8,486		6.06
Total earning assets	$	1,328,563	$	19,294		5.82	%	$	1,199,249	$	17,180		5.77	%	$	1,075,529	$	14,834		5.54	%
Sources of Funds
Interest-bearing deposits
Regular savings	$	317,020	$	1,080		1.37	%	$	302,987	$	915		1.22	%	$	264,660	$	592		0.90	%
Interest checking and money market		458,575		2,587		2.26			418,702		2,029		1.97			301,937		685		0.91
Time deposits		177,065		1,267		2.87			174,653		1,165		2.71			166,741		975		2.35
Public funds time		34,732		261		3.01			35,189		211		2.43			47,992		194		1.63
Total interest-bearing deposits		987,392		5,195		2.11			931,531		4,320		1.88			781,330		2,446		1.26
Short-term borrowings		112,766		889		3.16			51,740		348		2.69			126,184		392		1.25
Junior subordinated debt		13,600		355		10.44			13,600		354		10.43			13,600		355		10.44
Total interest-bearing liabilities		1,113,758		6,439		2.32			996,871		5,022		2.04			921,114		3,193		1.39
Noninterest-bearing funds (net)		214,805							202,378							154,415
Total sources to fund earning assets	$	1,328,563		6,439		1.94		$	1,199,249	$	5,022		1.70		$	1,075,529		3,193		1.19
Net interest income and margin			$	12,855		3.88	%			$	12,158		4.07	%			$	11,641		4.35	%
Other Balances
Cash and due from banks	$	41,959						$	37,513						$	33,941
Other assets		55,719							50,459							48,322
Total assets		1,426,241							1,287,221							1,157,792
Demand deposits (noninterest-bearing)		218,107							200,418							180,734
Other liabilities		5,064							4,571							4,779
Stockholders' equity		89,312							85,361							51,165