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) April 18, 2006 (April 18, 2006)

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.)

3801 Paxton Street, Harrisburg, Pennsylvania	17111
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (717) 303-3000

100 Senate Avenue, Camp Hill, Pennsylvania, 17011

(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 April 18, 2006, Pennsylvania Commerce Bancorp, Inc. issued a press release reporting financial results for its first quarter of 2006. A copy of the press release is attached as Exhibit 99.1 to this report.

On April 18, 2006, 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 April 18, 2006

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: April 18, 2006	/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
	April 18, 2006
99.2	Supplemental Information

EX-99.1

CONTACTS

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

(717) 303-3000

PENNSYLVANIA COMMERCE BANCORP

DEPOSITS INCREASE 23%, LOANS UP 28%

April 18, 2006 - Camp Hill, PA - Pennsylvania Commerce Bancorp, Inc. (NASDAQ National Market Symbol: COBH), parent company of Commerce Bank/Harrisburg, N.A., reported increased assets, deposits, and loans for the first quarter of 2006, announced Gary L. Nalbandian, Chairman of the bank holding company.

FIRST QUARTER FINANCIAL HIGHLIGHTS
March 31, 2006
				%
				Change(1)
* Total Assets:	$	1.75	Billion	27%
* Total Deposits:	$	1.45	Billion	23%
* Total Loans (net):	$	869	Million	28%
* Total Revenues:	$	17.5	Million	14%
* Net Income:	$	2.0	Million	(17)%
* Diluted Net Income Per Share:	$	0.32		(18)%
(1) Compared to First Quarter Ended March 31, 2005

Chairman’s Statement

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

Ø   Total assets increased to $1.75 billion, up 27%.

Ø   Core deposits grew $259 million, or 23%, over the previous 12-month period.

Ø   Net loans grew $187 million, or 28%, over the first quarter one year ago.

Ø   Total revenues grew 14% for the quarter to $17.5 million.

Ø   Net interest income grew 9% over the first quarter last year, despite the continued flat yield curve interest rate environment.

Ø   Deposit charges and service fees grew 38% for the first quarter.

Ø   Comparable store core deposits for stores open two years or more grew 15%.

Ø   Net income was $2.0 million and diluted earnings per share were $0.32 for the first quarter of 2006.

Ø   In late March, the Company completed the relocation of its executive, lending, training, and back office departments to Commerce Center, its new Headquarters, Operations and Training Facility located at Techport Center in Dauphin County, Pennsylvania.

Ø   Commerce produced the following shareholder returns:

	As of March 31, 2006
	Commerce	S & P Index
1 Year	1%	12%
5 Years	13%	4%
10 Years	21%	9%

2

Income Statement

	Three Months Ended
	March 31
	2006		2005		% Increase
	(dollars in thousands, except per share data)
Total Revenues:	$	17,455	$	15,364		14	%
Total Expenses:		13,925		11,147		25
Net Income:		2,037		2,461		(17	)
Diluted Net Income Per Share:	$	0.32	$	0.39		(18	)%

Balance Sheet

	03/31/06		03/31/05		% Increase
	(dollars in thousands)
Total Assets:	$	1,752,757	$	1,377,180		27	%
Total Loans (net):		868,534		681,075		28
Core Deposits:		1,391,329		1,132,183		23
Total Deposits:		1,448,126		1,172,923		23

Deposits

The Company’s deposit growth continues with total deposits at March 31, 2006 reaching $1.45 billion, a $275 million, or 23%, increase over total deposits of $1.17 billion one year ago. Core deposits grew by $259 million, or 23%, over the previous 12 months.

	03/31/06		03/31/05		$ Increase		% Increase
	(dollars in thousands)
Core Deposits:	$	1,391,329	$	1,132,183	$	259,146		23%
Total Deposits:		1,448,126		1,172,923		275,203		23%

3

Core Deposits

Core deposit growth by type of account is as follows:

					1st Qtr 2006			Annual
	03/31/06		3/31/05		Cost of Funds			Growth %
	(dollars in thousands)
Demand Non-Interest	$	276,808	$	216,587		0.00	%		28	%
Demand Interest		530,158		421,683		3.27	%		26	%
Savings		387,759		319,081		2.03	%		22	%
Subtotal		1,194,725		957,351		2.18	%		25	%
Time		196,604		174,832		3.54	%		12	%
Total Core Deposits	$	1,391,329	$	1,132,183		2.38	%		23	%

Core deposits, excluding time deposits, grew 25% for the quarter ended March 31, 2006.

Net Income and Net Income Per Share

Net income totaled $2.0 million for the first quarter of 2006 as compared to net income of $2.5 million for the first quarter of 2005. Net income per fully diluted share for the first quarter was $0.32, vs. $0.39 recorded for the same period a year ago.

	Three Months Ended
	March 31
	2006		2005		% Increase
	(dollars in thousands, except per share data)
Net Income:	$	2,037	$	2,461		(17	)%
Diluted Net Income
Per Share:	$	0.32	$	0.39		(18	)%

Total Revenues

	Three Months Ended
	March 31
	2006		2005		% Increase
	(dollars in thousands)
Total Revenues:	$	17,455	$	15,364		14	%

Total revenues (net interest income plus non-interest income) for the first quarter increased $2.1 million to $17.5 million, a 14% increase over the first quarter of 2005. The growth in total revenue resulted from a 9% increase in net interest income and a 33% increase in non-interest income.

4

Net Interest Income and Net Interest Margin

Net interest income for the first quarter 2006 of $13.2 million represented a 9% increase over the $12.2 million recorded a year ago despite the impact of the continued flat yield curve interest rate environment. The Company’s 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 first quarter of 2006 was 3.39% compared to 4.11% for the first quarter of 2005. The decrease in net interest margin is the result of the continued increase in short-term rates as initiated by the Federal Reserve Board and the continued flat yield curve. Net interest income, on a tax equivalent basis, totaled $13.3 million in the first quarter of 2006, an increase of $1.1 million, or 9%, over the first quarter one year ago.

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 core deposits. The Company continues to grow core deposits, which has produced growth in net interest income, despite net interest margin compression brought on by the flat yield curve.

	Net Interest Income
Quarter Ended	Volume		Rate			Total		%
March 31	Increase		Change			Increase		Increase
	(dollars in thousands)
2006 vs. 2005	$	2,262	$	(1,223	)	$	1,039		9	%

The per share impact of the negative rate change was $0.13 for the first quarter of 2006.

Non-Interest Income

Non-interest income for the first quarter of 2006 increased to $4.3 million from $3.2 million a year ago, a 33% increase. The growth in non-interest income for the first quarter was reflected in increased deposit charges and service fees as depicted below:

	Three Months Ended
	March 31
	2006		2005		% Increase
	(dollars in thousands)
Deposit Charges
& Service Fees	$	3,721	$	2,695		38	%
Other Income		537		511		5	%
Total Non-Interest Income	$	4,258	$	3,206		33	%

Non-Interest Expenses

Non-interest expenses for the first quarter of 2006 were $13.9 million, up 25% from $11.1 million a year ago. The increases in non-interest expenses for the quarter were widespread across all categories, reflecting the Company’s continued store expansion program. On a linked quarter basis, non-interest expenses were up $135,000, or 1%.

5

Lending

Loans increased $187 million, or 28%, to $869 million from $681 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
	03/31/06			% of Total			03/31/05			% of Total			$ Increase			% Increase
	(dollars in thousands)
Commercial	$	259,800			30	%	$	187,049			27	%	$	72,751			39	%
Consumer		156,360			18			115,429			17			40,931			35	%
Commercial Real Estate		365,474			42			299,192			43			66,282			22	%
Residential		96,556			10			87,757			13			8,799			10	%
Gross Loans		878,190			100	%		689,427			100	%		188,763			27	%
Less: Reserves		(9,656	)					(8,352	)					(1,304	)
Net Loans	$	868,534					$	681,075					$	187,459			28	%

Asset Quality

Non-performing assets and loans past due 90 days at March 31, 2006 totaled $3.6 million, or 0.20%, of total assets, versus $1.9 million, or 0.14%, of total assets one year ago. Net charge-offs as a percentage of average loans outstanding for the first quarter were 0.01%, the same for the first three months of last year.

The Company’s asset quality results are highlighted below:

	Three Months Ended
	03/31/06	03/31/05
Non-Performing Assets/Assets	0.20%	0.14%
Net Loan Charge-Offs	0.01%	0.01%
Loan Loss Reserve/Gross Loans	1.10%	1.21%
Non-Performing Loan Coverage	304%	549%
Non-Performing Assets/Capital
and Reserves	3%	2%

Investments

The Company’s investment portfolio increased by 24%, to $733 million from $590 million one year ago, with 57% of total securities in the available for sale portfolio and 43% 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 5.27%, a weighted average life of 5.5 years and a current duration of 4.3 years as of March 31, 2006.

6

Capital

Stockholders’ equity at March 31, 2006 totaled $92.7 million, an increase of $6.9 million, or 8%, over stockholders’ equity of $85.8 million at March 31, 2005. Return on average stockholders’ equity (ROE) for the first quarter ending March 31, 2006 is shown in the table below:

Return on Equity
Three Months Ended
03/31/06	03/31/05
8.92%	11.69%

The Company’s capital ratios at March 31, 2006 were as follows:

	Commerce			Regulatory Guidelines “Well Capitalized”
Leverage Ratio		6.59	%		5.00	%
Tier 1		9.35	%		6.00
Total Capital		10.15	%		10.00

New Stores and Expansion Plans

Ø   On March 27, 2006, the Company opened Commerce Center on Paxton Street in Dauphin County, which serves as our new Headquarters, Operations and Training Facility.

Ø   The Company plans to open 4 new stores in 2006 including our initial entry into the Lancaster County market.

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

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.

7

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

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
	Quarter ended,
	March 2006							December 2005							March 2005
	Average				Average			Average				Average			Average				Average
	Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate
(dollars in thousands)
Earning Assets
Investment securities
Taxable	$	722,354	$	9,351		5.18	%	$	720,099	$	9,096		5.05	%	$	526,941	$	6,591		5.00	%
Tax-exempt		2,617		44		6.73			2,616		48		7.34			6,440		160		9.94
Total securities		724,971		9,395		5.18			722,715		9,144		5.06			533,381		6,751		5.06
Federal funds sold		0		0		0.00			0		0		0.00			270		2		2.66
Loans receivable
Mortgage and construction		441,473		7,580		6.96			419,512		7,225		6.83			368,689		6,032		6.64
Commercial loans and lines of credit		237,415		4,582		7.83			213,487		4,016		7.46			172,078		2,696		6.35
Consumer		159,029		2,548		6.50			150,459		2,399		6.33			118,824		1,679		5.73
Tax-exempt		18,845		300		6.37			13,691		235		6.87			6,607		114		6.90
Total loans receivable		856,762		15,010		7.10			797,149		13,875		7.06			666,198		10,521		6.40
Total earning assets	$	1,581,733	$	24,405		6.22	%	$	1,519,864	$	23,019		6.11	%	$	1,199,849	$	17,274		5.81	%
Sources of Funds
Interest-bearing deposits
Regular savings	$	349,993	$	1,748		2.03	%	$	349,729	$	1,669		1.89	%	$	302,987	$	915		1.22	%
Interest checking and money market		548,444		4,498		3.33			548,212		4,132		2.99			418,702		2,029		1.97
Time deposits		196,183		1,712		3.54			186,364		1,539		3.28			174,646		1,165		2.71
Public funds time		37,536		371		4.01			38,623		358		3.68			35,196		211		2.43
Total interest-bearing deposits		1,132,156		8,329		2.98			1,122,928		7,698		2.72			931,531		4,320		1.88
Short-term borrowings		209,011		2,408		4.61			163,410		1,723		4.13			51,740		348		2.69
Junior subordinated debt		13,600		354		10.43			13,600		355		10.44			13,600		354		10.43
Total interest-bearing liabilities		1,354,767		11,091		3.31			1,299,938		9,776		2.98			996,871		5,022		2.04
Noninterest-bearing funds (net)		226,966							219,926							202,978
Total sources to fund earning assets	$	1,581,733	$	11,091		2.83		$	1,519,864	$	9,776		2.55		$	1,199,849	$	5,022		1.70
Net interest income and margin
on a tax-equivalent basis			$	13,314		3.39	%			$	13,243		3.51	%			$	12,252		4.11	%
Tax-exempt adjustment				117							96							94
Net interest income and margin			$	13,197		3.35	%			$	13,147		3.45	%			$	12,158		4.07	%

 

9 

EX-99.2

Exhibit 99.2

Pennsylvania Commerce Bancorp, Inc.

Selected Consolidated Financial Data

(Unaudited)

	At or for the
	Three Months Ended
	March 31,
(in thousands, except per share amounts)	2006			2005			% Change
Income Statement Data:
Net interest income	$	13,197		$	12,158			9	%
Provision for loan losses		475			545			(13	)%
Noninterest income		4,258			3,206			33	%
Total Revenues		17,455			15,364			14	%
Noninterest operating expenses		13,925			11,147			25	%
Net income		2,037			2,461			(17	)%
Per Common Share Data:
Net income: Basic	$	0.33		$	0.41			(20	)%
Net income: Diluted		0.32			0.39			(18	)%
Book Value	$	15.09		$	14.31		+	5	%
Weighted average shares outstanding:
Basic		6,054			5,902
Diluted		6,376			6,319
Balance Sheet Data:
Total assets	$	1,752,757		$	1,377,180			27	%
Loans (net)		868,534			681,075		+	28	%
Allowance for loan losses		9,656			8,352			16	%
Investment Securities		733,185			589,533			24	%
Total deposits		1,448,126			1,172,923			23	%
Core deposits		1,391,329			1,132,183		+	23	%
Stockholders' equity		92,658			85,790			8	%
Capital:
Stockholders' equity to total assets		5.29	%		6.23	%
Leverage Ratio		6.59			7.88
Risk based capital ratios:
Tier 1		9.35			11.19
Total Capital		10.15			12.12
Performance Ratios:
Cost of funds		2.84	%		1.70	%
Deposit Cost of Funds		2.14			1.46
Net interest margin		3.39			4.11
Return on average assets		0.49			0.78
Return on average total stockholders' equity		8.92			11.69
Asset Quality:
Net charge-offs to average loans outstanding		0.01	%		0.01	%
Nonperforming assets to total period-end assets		0.20			0.14
Allowance for loan losses to total period-end loans		1.10			1.21
Allowance for loan losses to nonperforming loans		304			549
Nonperforming assets to capital and reserves		3	%		2	%