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) January 27, 2009 (January 27, 2009)

Pennsylvania Commerce Bancorp, Inc.

(Exact name of registrant as specified in its charter)

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

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

Registrant’s telephone number, including area code 800-653-6104

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 January 27, 2009, Pennsylvania Commerce Bancorp, Inc. issued a press release reporting financial results for its fourth quarter and twelve months ended December 31, 2008.  A copy of the press release is attached as Exhibit 99.1 to this report.

On January 27, 2009, 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 January 27, 2009

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: January 27, 2009	/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
	January 27, 2009
99.2	Supplemental Information

EX-99.1

CONTACTS

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

(717) 412-6301

PENNSYLVANIA COMMERCE BANCORP

REPORTS RECORD NET INCOME FOR 2008 AND EPS UP 84%;

 LOANS INCREASE 24%

January 27, 2009 – Harrisburg, PA – Pennsylvania Commerce Bancorp, Inc. (NASDAQ Global Select Market Symbol: COBH), parent company of Commerce Bank/Harrisburg, reported increased total assets, loans, deposits and revenues for the fourth quarter of 2008 as well as record net income and earnings per share for the year ended December 31, 2008 announced Gary L. Nalbandian, Chairman, President and CEO.

2008 Financial Highlights (dollars in millions, except per share data)
	Year Ended							Quarter Ended
	12/31/08		12/31/07		% Increase			12/31/08		12/31/07		% Increase
Total assets	$	2,140.5	$	1,979.0		8	%
Total deposits		1,634.0		1,560.9		5	%
Total loans (net)		1,423.1		1,146.6		24	%
Total revenues	$	104.1	$	82.3		27	%	$	28.0	$	23.0		22	%
Net income		12.9		7.0		84	%		2.8		2.5		12	%
Diluted net income per share	$	1.97	$	1.07		84	%	$	0.42	$	0.38		11	%

Chairman’s Statement

In commenting on the Company’s financial results, Chairman Nalbandian stated “2008 was the most successful year in the history of Pennsylvania Commerce Bancorp, despite very difficult financial conditions.”

Our focus on community banking produced an 84% increase in net income, driven by a 16% increase in core commercial and consumer deposits and a 24% increase in loans as we continued to support the credit needs of our communities.  We were also able to increase our allowance for loan losses by $6.0 million, or 56%, in 2008. We did not participate in sub prime lending and our overall asset quality remains sound despite the distressed economic conditions.

2008 was also our last year under the Commerce Bank network as we embark on an exciting new plan to expand into the metro Philadelphia market. In 2009 Commerce Bank/Harrisburg will become  as we acquire Republic First Bancorp and rebrand as Metro Bank. The new company will have $3.2 billion in assets and 45 offices in Pennsylvania and New Jersey.  We will in 2009 begin an exciting new expansion of stores, based on our successful service and convenience model as we create:  “America’s Next Great Bank”, with unlimited potential.

Mr. Nalbandian also noted the following highlights from the fourth quarter and year ended December 31, 2008:

Ø   Net income was $2.8 million for the fourth quarter, up $289,000, or 12%, over the fourth quarter one year ago. Net income for the year ended December 31, 2008 totaled $12.9 million, up $5.9 million, or 84%, over the year ended December 31, 2007.

Ø   Diluted net income per share was $0.42 for the quarter, up $0.04, or 11%, over the fourth quarter of 2007.  Diluted net income per share for the year ended December 31, 2008 was $1.97, up $0.90, or 84%, over the prior year, despite increasing our allowance for loan losses by $6.0 million, or 56%.

Ø   Total revenues grew $5.0 million, or 22%, for the fourth quarter of 2008 over the same quarter one year ago.  Total revenues for the year ended December 31, 2008 were $104.1 million, up $21.8 million, or 27% over the previous year.

Ø   Net interest income for the quarter increased $4.6 million, or 27%, over the same period in 2007.  Net interest income for 2008 totaled $78.7 million, an increase of $19.2 million, or 32%.

Ø   Deposit charges and service fees grew 16% in 2008 over one year ago.

Ø   The Company’s net interest margin for the fourth quarter improved 60 basis points over the same quarter one year ago to 4.20%.  Net interest margin for the year 2008 improved 79 basis points from 3.30% to 4.09%.

Ø   In this extremely difficult credit environment, net loans grew $276.4 million, or 24%, for 2008 to a total of $1.42 billion.

Ø   Core deposits, excluding government deposits, increased 16% to $1.31 billion.

Ø   Total assets reached $2.1 billion, up 8% over the past twelve months.

Ø   Stockholders’ equity increased $2.1 million, or 2%, to $114.5 million compared to December 31, 2007.

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Ø   Return on average stockholders’ equity improved to 11.42% for the year 2008 vs. 6.59% for 2007.

Ø   Both the Company and its subsidiary bank continue to be “well-capitalized” institutions under various regulatory capital guidelines as required by federal banking agencies.

Ø   On November 7, 2008, the Company entered into an Agreement and Plan of Merger with Republic First Bancorp, Inc. (NASDAQ Market Symbol: FRBK) located in Philadelphia, PA.  The merger is expected to close in early April 2009 and the combined company will have total assets of approximately $3.2 billion.

Ø   Effective with the merger, the company’s stock will trade on the NASDAQ Global Select Market under the ticker symbol METR.

Ø   On December 30, 2008, the Company entered into a Transition Agreement with TD Bank, N.A. and Commerce Bancorp, LLC (formerly Commerce Bancorp, Inc.) which terminates the Network Agreement and Master Services Agreement between the Company and TD Bank for data processing, item processing, branding and other ancillary services.  If all services are transitioned away from TD Bank by July 15, 2009, Commerce Bank/Harrisburg will receive a fee of $6 million from TD Bank which will substantially defray the costs of such transition.

Ø   On November 10, 2008, the Company entered into a services agreement with Fiserv Solutions, Inc. to provide various services including: core system hosting, item processing, deposit and loan processing, electronic banking, data warehousing and other banking functions.

Income Statement

	Three months ended December 31,							Year ended December 31,
(dollars in thousands, except per share data)	2008		2007		% Change			2008		2007		% Change
Total revenues	$	27,965	$	22,952		22	%	$	104,138	$	82,315		27	%
Total operating expenses		20,570		19,171		7	%		77,909		70,807		10	%
Net income		2,756		2,467		12	%		12,901		7,001		84	%
Diluted net income per share	$	0.42	$	0.38		11	%	$	1.97	$	1.07		84	%

Total revenues (net interest income plus noninterest income) for the fourth quarter increased $5.0 million to $28.0 million, up 22% over the fourth quarter of 2007. Total revenues for the year 2008 increased by $21.8 million, or 27%, over total revenues in 2007.

Net income totaled $2.8 million for the fourth quarter of 2008, an increase of $289,000, or 12%, over net income of $2.5 million for the fourth quarter of 2007. Net income per fully diluted share for the quarter was $0.42, an 11% increase over the $0.38 recorded for the same period a year ago.

Net income for the year ended December 31, 2008 grew $5.9 million, or 84%, over the net income recorded in 2007.  Net income per fully diluted share totaled $1.97 for the year 2008, up $0.90, or 84%, over last year.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2008 totaled $21.4 million, an increase of $4.6 million, or 27%, over the $16.8 million recorded a year ago.  This increase was a result of continued strong loan growth combined with significant improvement in the Company’s net interest margin.  For the year ended December

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31, 2008, net interest income totaled $78.7 million, up $19.2 million, or 32%, over the $59.5 million recorded last year.

The net interest margin for the fourth quarter of 2008 was 4.20%, up 60 basis points over the fourth quarter of 2007. The improvement in net interest margin is the result of continued strong loan growth combined with a marked reduction in the Company’s deposit and total cost of funds.

Net interest income, on a tax equivalent basis, totaled $22.0 million in the fourth quarter of 2008, an increase of $4.8 million, or 28%, over the fourth quarter one year ago. Net interest margin on a fully-taxable equivalent basis was 4.31%.  Fully taxable net interest income for the year ended December 31, 2008 was $80.6 million, up $20.0 million, or 33%, as compared to last year.  Net interest margin on a fully taxable basis for the year 2008 was 4.19%, up 82 basis points over 2007.

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, as well as noticeable improvement in the net interest margin.

(dollars in thousands)	Net Interest Income
2008 vs. 2007	Volume Increase	Rate Change	Total Increase	% Increase
Fourth Quarter	$   1,995	$     2,828	$    4,823	28%
Year	6,139	13,835	19,974	33%

Noninterest Income

Noninterest income for the fourth quarter of 2008 totaled $6.6 million, up $450,000, or 7%, over $6.1 million a year ago.  The growth in noninterest income for the quarter was reflected in increased deposit charges and service fees as depicted on the table below:

	Three months ended December 31,							Year ended December 31,
(dollars in thousands)	2008		2007		% Change			2008			2007		% Change
Deposit charges and service fees	$	5,994	$	5,711		5	%	$	23,929		$	20,688		16	%
Other income		588		421		40			1,661			1,964		(15	)
Subtotal		6,582		6,132		7			25,590			22,652		13
Net investment securities gains (losses)		-		-					(157	)		171
Total noninterest income	$	6,582	$	6,132		7	%	$	25,433		$	22,823		11	%

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Non-interest Expenses

Non-interest expenses for the fourth quarter of 2008 were $20.6 million, up 7%, over $19.2 million one year ago.  The breakdown of non-interest expenses for the three months and year ended December 31, 2008 and 2007, respectively, are shown in the following table:

	Three months ended December 31,							Year ended December 31,
(dollars in thousands)	2008		2007		% Change			2008		2007		% Change
Salaries and employee benefits	$	10,355	$	8,953		16	%	$	38,085	$	34,495		10	%
Occupancy and equipment		3,060		3,129		(2	)		12,394		11,635		7
Advertising and marketing		429		867		(51	)		2,747		3,334		(18	)
Data Processing		1,897		1,708		11			7,234		6,501		11
Regulatory assessments and costs		554		1,561		(65	)		2,834		3,062		(7	)
Core System/Network Conversion		935		-		-			935		-		-
Merger/Acquisition Costs		491		-		-			491		-		-
Other expenses		2,849		2,953		(4	)		13,189		11,780		12
Total non-interest expenses	$	20,570	$	19,171		7	%	$	77,909	$	70,807		10	%

Included in non-interest expenses for the fourth quarter of 2008 was $935,000 related to negotiating, planning and training for the conversion of core processing, item processing and network infrastructure services from our current service provider, TD Bank, to our new service provider, Fiserv Solutions, Inc.  This conversion is planned for mid-2009.  Also included in non-interest expenses for the quarter was $491,000 associated with the Company’s pending acquisition of Republic First Bancorp, Inc. which is expected to close early in the second quarter of 2009. Of particular note is that regulatory assessment costs were down $1.0 million, or 65%, for the fourth quarter of 2008 from the level incurred for the same period one year ago.

Non-interest expenses for the year ended December 31, 2008 totaled $77.9 million, up $7.1 million, or 10%, over the $70.8 million recorded during the year 2007.

Balance Sheet

	December 31,
(dollars in thousands)	2008		2007		%  Change
Total assets	$	2,140,527	$	1,979,011		8	%
Total loans (net)		1,423,064		1,146,629		24	%
Total deposits		1,633,985		1,560,896		5	%
Total core deposits		1,625,092		1,548,611		5	%

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Lending

Total gross loans increased $282.4 million, or 24%, to $1.4 billion from $1.2 billion one year ago, with the growth represented across all loan categories. The composition of the Company’s loan portfolio is as follows:

(dollars in thousands)	12/31/08		% of Total			12/31/07		% of Total			$  Increase		% Increase
Commercial	$	445,197		31	%	$	361,374		31	%	$	83,823		23	%
Owner occupied		269,280		19			254,138		22			15,142		6
Total commercial		714,477		50			615,512		53			98,965		16
Consumer/residential		329,403		23			301,667		26			27,736		9
Commercial real estate		395,903		27			240,192		21			155,711		65
Gross loans	$	1,439,783		100	%	$	1,157,371		100	%	$	282,412		24	%

Asset Quality

The Company’s asset quality ratios are highlighted below:

	Quarter Ended
	December 31,  2008			September 30,  2008			December 31,  2007
Non-performing assets/total assets		1.30	%		0.57	%		0.17	%
Net loan charge-offs/average total loans		0.04	%		0.00	%		0.02	%
Loan loss reserve/gross loans		1.16	%		1.00	%		0.93	%
Non-performing loan coverage		62	%		119	%		366	%
Non-performing assets/capital and reserves		21	%		10	%		3	%

Non-performing assets and loans past due 90 days at December 31, 2008 totaled $27.9 million, or 1.30%, of total assets, as compared to $12.2 million, or 0.57% of total assets, at September 30, 2008 and $3.4 million, or 0.17%, of total assets one year ago. The increase in non-performing assets from September 30, 2008 is primarily associated with two credits which total approximately $13.5 million. These loans have a specific reserve associated with them of $2.2 million as of December 31, 2008.  The Company’s fourth quarter provision for loan losses totaled $3.4 million as compared to $245,000 recorded in the fourth quarter of 2007.  For the year ended December 31, 2008, the loan loss provision totaled $7.5 million vs. $1.8 million for the year 2007.  The increase in the provision for loan losses for both the quarter and for the year, over the respective prior year periods, is a result of the Company’s strong loan growth of $276 million over the past twelve months, as well as the increase in the level of non-performing loans from December 31, 2007 to December 31, 2008. The allowance for loan losses totaled $16.7 million as of December 31, 2008 and represented 1.16% of gross loans outstanding other than the two troubled commercial real estate loans mentioned above, our asset quality remains sound.

Total net charge-offs for the fourth quarter were $569,000 vs. $176,000 for the fourth quarter of 2007.  Total net charge-offs for the year 2008 were $1.5 million vs. $705,000 for the year 2007.

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Core Deposits

Change in core deposits by type of account is as follows:

	December 31,
(dollars in thousands)	2008		2007		% Change			4th Qtr 2008 Cost of Funds
Demand non-interest-bearing	$	280,556	$	271,894		3	%		0.00	%
Demand interest-bearing		732,235		747,549		(2	)		1.19
Savings		391,612		375,710		4			0.83
Subtotal		1,404,403		1,395,153		1			0.86
Time		220,689		153,458		44			3.25
Total core deposits	$	1,625,092	$	1,548,611		5	%		1.15	%

Change in core deposits by type of customer is as follows:

	December 31,		% of			December 31,		% of			%
(dollars in thousands)	2008		Total			2007		Total			Change
Consumer	$	729,187		45	%	$	586,100		38	%		24	%
Commercial		584,166		36			544,442		35			7
Government		311,739		19			418,069		27			(25	)
Total	$	1,625,092		100	%	$	1,548,611		100	%		5	%

Consumer and commercial core deposits grew by $182.8 million, or 16%  in 2008 over 2007.

Investments

At December 31, 2008, the Company’s investment portfolio totaled $494.2 million. Detailed below is information regarding the composition and characteristics of the Company’s investment portfolio at December 31, 2008.

Product Description	Available for Sale			Held to Maturity			Total
(in thousands)
Mortgage-backed securities:
Federal government agencies pass through certificates	$	63,772		$	71,576		$	135,348
Collateralized mortgage obligations (government                    agency or investment grade rated)		272,882			40,896			313,778
U.S. Government agencies/other		5,002			40,115			45,117
Total	$	341,656		$	152,587		$	494,243
Duration (in years)		4.0			3.4			3.8
Average life (in years)		4.9			4.1			4.7
Quarterly average yield		4.73	%		5.10	%		4.84	%

At December 31, 2008, the after tax depreciation of the Company’s available for sale portfolio was $17.3 million as compared to $14.3 million at September 30, 2008 and vs. $3.9 million at December 31, 2007.  The market for certain securities held in the Company’s available-for-sale portfolio remained volatile during the third and fourth quarters of 2008 due to extraordinary economic and market dislocations.  As a result of this volatility, the market prices for many types of securities at December 31, 2008 were lower than at September 30,

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2008 due to the distressed market conditions.  Management has reviewed such securities for continued and constant receipt of scheduled principal and interest payments, the performance of the underlying collateral, the financial condition and near-term prospects for the issuers as well as credit-rating adjustments.  Based upon this review, management does not believe any individual unrealized loss as of December 31, 2008 represents other-than-temporary impairment.  In management’s opinion, unrealized losses on these securities are primarily the result of changes in the liquidity levels in the market in addition to changes in general market interest rates and due to material changes in the credit characteristics of the investment securities portfolio.  In addition, at December 31, 2008, management had the positive intent and ability to hold these securities to market price recovery or maturity.

The Company did not own any common stock or preferred stock of either FNMA (“Fannie Mae”) or FHLMC (“Freddie Mac”) and as a result did not have exposure to loss in its investment portfolio as a result of the federal government’s takeover of these two organizations.  The Company also does not own corporate debt of any of the investment banking firms.

Capital

Stockholders’ equity at December 31, 2008 totaled $114.5 million, an increase of $2.1 million, or 2%, over stockholders’ equity of $112.3 million at December 31, 2007.  Excluding the effect of the unrealized loss (net of taxes) on securities in the available for sale portfolio, core stockholders’ equity increased by $15.6 million, or 13%, in 2008 over 2007. Return on average stockholders’ equity (ROE) for the fourth quarter and for the year ended December 31, 2008 and 2007 are shown below:

Return on Equity
Three Months Ended December 31,		Year Ended December 31,
2008	2007	2008	2007
9.76%	8.83%	11.42%	6.59%

The Company’s capital ratios at December 31, 2008 were as follows:

	Commerce			Regulatory Guidelines “Well Capitalized”
Leverage Ratio		7.52	%		5.00	%
Tier 1		9.66			6.00
Total Capital		10.68			10.00

Stockholder Returns

	As of December 31, 2008
	Commerce	NASDAQ Bank Index	S & P 500 Index	Russell 2000 Financial Services Index
1 Year	(4)%	(21)%	(37)%	(25)%
5 Years	2 %	(4)%	(2)%	(2)%
10 Years	10%	4%	(1)%	5%

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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 (including the annual report on Form 10-K and the exhibits thereto), 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 discussed in the Company’s Form 10-K, could cause the Company’s financial performance to differ materially from that expressed or implied in such forward-looking statements:

·   the Company’s dependence on Toronto Dominion Bank (and Commerce Bank, N.A.) to provide various services to the Company and the costs associated with securing alternate providers of such services;

·   the impact on the Company of the planned merger with Republic First Bancorp, Inc.;

·   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;

·   inflation;

·   the impact of the extraordinary economic and market dislocations on the fair value market prices of investment securities;

·   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);

·   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 cautions that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the Company’s actual results, performance, or achievements to differ materially from the future results, performance, or achievements the Company has anticipated in such forward-looking statements. You should note that many factors, some of which are discussed in this Press Release, could affect the Company’s future financial results and could cause those results to differ materially from those expressed or implied in the Company’s forward-looking statements contained or incorporated by reference in this document. 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. For information on subsequent events, refer to the Company’s filings with the SEC.

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EX-99.2

Pennsylvania Commerce Bancorp, Inc.
Selected Consolidated Financial Data
(Unaudited)
	At or for the									At or for the
	Three Months Ended									Year Ended
	December 31,									December 31,
							%									%
(in  thousands,  except  per  share  amounts)	2008			2007			Change			2008			2007			Change
Income Statement Data:
Net interest income	$	21,383		$	16,820			27	%	$	78,705		$	59,492			32	%
Provision for loan losses		3,400			245			1288			7,475			1,762			324
Noninterest income		6,582			6,132			7			25,433			22,823			11
Total revenues		27,965			22,952			22			104,138			82,315			27
Noninterest operating expenses		20,570			19,171			7			77,909			70,807			10
Net income		2,756			2,467			12			12,901			7,001			84
Per Common Share Data:
Net  income:  Basic	$	0.43		$	0.39			10	%	$	2.02		$	1.11			82	%
Net  income:  Diluted		0.42			0.38			11			1.97			1.07			84
Weighted average shares outstanding:
Basic		6,397			6,299						6,356			6,237
Diluted		6,546			6,517						6,520			6,462
Balance Sheet Data:
Total assets										$	2,140,527		$	1,979,011			8	%
Loans (net)											1,423,064			1,146,629			24
Allowance for loan losses											16,719			10,742			56
Investment securities											494,243			644,633			(23	)
Total deposits											1,633,985			1,560,896			5
Core deposits											1,625,092			1,548,611			5
Stockholders' equity											114,470			112,335			2
Capital:
Stockholders' equity to total assets											5.35	%		5.68	%
Leverage ratio											7.52			7.26
Risk based capital ratios:
Tier 1											9.66			10.03
Total Capital											10.68			10.78
Performance Ratios:
Cost of funds		1.28	%		2.80	%					1.70	%		3.16	%
Deposit cost of funds		0.92			2.02						1.17			2.37
Net interest margin		4.20			3.60						4.09			3.30
Return on average assets		0.52			0.49						0.64			0.36
Return on average total stockholders' equity		9.76			8.83						11.42			6.59
Asset Quality:
Net charge-offs to average loans outstanding											0.11	%		0.07	%
Nonperforming assets to total period-end assets											1.30			0.17
Allowance for loan losses to total period-end loans											1.16			0.93
Allowance for loan losses to nonperforming loans											62			366
Nonperforming assets to capital and reserves											21	%		3	%

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income

(unaudited)

	Quarter ending,
	December 2008							September 2008							December 2007
	Average				Average			Average				Average			Average				Average
	Balance		Interest		Rate			Balance		Interest		Rate			Balance		Interest		Rate
(dollars in thousands)
Earning Assets
Investment securities:
Taxable	$	546,047	$	6,467		4.74	%	$	567,050	$	6,898		4.87	%	$	704,586	$	9,419		5.35	%
Tax-exempt		1,622		25		6.17			1,622		25		6.17			1,621		25		6.17
Total securities		547,669		6,492		4.74			568,672		6,923		4.87			706,207		9,444		5.35
Loans receivable:
Mortgage and construction		723,049		11,153		6.05			685,816		11,063		6.33			551,255		10,088		7.19
Commercial loans and lines of credit		373,748		5,268		5.52			347,373		5,309		5.98			314,229		6,006		7.48
Consumer		265,847		3,909		5.85			249,658		3,807		6.07			219,970		3,764		6.79
Tax-exempt		99,502		1,617		6.50			87,694		1,442		6.58			52,612		897		6.82
Total loans receivable		1,462,146		21,947		5.91			1,370,541		21,621		6.21			1,138,066		20,755		7.17
Total earning assets	$	2,009,815	$	28,439		5.59	%	$	1,939,213	$	28,544		5.82	%	$	1,844,273	$	30,199		6.47	%
Sources of Funds
Interest-bearing deposits:
Regular savings	$	363,773	$	761		0.83	%	$	355,971	$	999		1.12	%	$	366,190	$	1,876		2.03	%
Interest checking and money market		753,670		2,249		1.19			756,066		3,003		1.58			769,826		5,657		2.92
Time deposits		193,063		1,575		3.25			191,451		1,582		3.29			160,271		1,662		4.11
Public funds time		8,830		72		3.24			9,158		75		3.26			14,167		173		4.84
Total interest-bearing deposits		1,319,336		4,657		1.40			1,312,646		5,659		1.72			1,310,454		9,368		2.84
Short-term borrowings		325,477		603		0.72			268,202		1,497		2.18			210,947		2,475		4.59
Other borrowed money		50,000		561		4.39			50,000		561		4.39			50,000		561		4.39
Junior subordinated debt		29,400		661		8.99			29,400		661		8.99			29,400		661		8.99
Total interest-bearing liabilities		1,724,213		6,482		1.49			1,660,248		8,378		2.00			1,600,801		13,065		3.23
Noninterest-bearing funds (net)		285,602							278,965							243,472
Total sources to fund earning assets	$	2,009,815	$	6,482		1.28	%	$	1,939,213	$	8,378		1.71	%	$	1,844,273	$	13,065		2.80	%
Net interest income and margin on a tax-equivalent basis			$	21,957		4.31	%			$	20,166		4.11	%			$	17,134		3.67	%
Tax-exempt adjustment				574							514							314
Net interest income and margin			$	21,383		4.20	%			$	19,652		4.00	%			$	16,820		3.60	%
Other Balances:
Cash and due from banks	$	42,237						$	45,820						$	52,086
Other assets		70,996							78,488							90,652
Total assets		2,123,048							2,063,521							1,987,011
Demand deposits (noninterest-bearing)		272,871							277,592							266,407
Other liabilities		13,581							11,528							8,918
Stockholders' equity		112,383							114,153							110,885

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income

(unaudited)

	Year-to-date,
	December 2008							December 2007
	Average				Average			Average				Average
	Balance		Interest		Rate			Balance		Interest		Rate
(dollars in thousands)
Earning Assets
Investment securities:
Taxable	$	575,402	$	28,401		4.94	%	$	694,575	$	37,060		5.34	%
Tax-exempt		1,622		101		6.23			1,620		99		6.11
Total securities		577,024		28,502		4.94			696,195		37,159		5.34
Loans receivable:
Mortgage and construction		652,907		42,457		6.41			525,063		38,287		7.21
Commercial loans and lines of credit		349,590		21,814		6.14			307,540		24,425		7.83
Consumer		244,625		14,976		6.12			206,459		14,040		6.80
Tax-exempt		79,124		5,272		6.66			46,840		3,196		6.82
Total loans receivable		1,326,246		84,519		6.30			1,085,902		79,948		7.29
Total earning assets	$	1,903,270	$	113,021		5.89	%	$	1,782,097	$	117,107		6.53	%
Sources of Funds
Interest-bearing deposits:
Regular savings	$	351,291	$	3,849		1.10	%	$	373,209	$	8,997		2.41	%
Interest checking and money market		727,783		11,160		1.53			712,418		24,738		3.47
Time deposits		187,467		6,595		3.52			181,080		7,604		4.20
Public funds time		16,338		607		3.72			17,464		858		4.91
Total interest-bearing deposits		1,282,879		22,211		1.73			1,284,171		42,197		3.29
Short-term borrowings		265,518		5,349		1.98			208,112		10,804		5.12
Other borrowed money		50,000		2,230		4.39			19,110		849		4.38
Junior subordinated debt		29,400		2,645		9.00			29,400		2,645		9.00
Total interest-bearing liabilities		1,627,797		32,435		1.98			1,540,793		56,495		3.66
Noninterest-bearing funds (net)		275,473							241,304
Total sources to fund earning assets	$	1,903,270	$	32,435		1.70	%	$	1,782,097	$	56,495		3.16	%
Net interest income and margin on a tax-equivalent basis			$	80,586		4.19	%			$	60,612		3.37	%
Tax-exempt adjustment				1,881							1,120
Net interest income and margin			$	78,705		4.09	%			$	59,492		3.30	%
Other Balances:
Cash and due from banks	$	44,699						$	51,874
Other assets		80,605							90,437
Total assets		2,028,574							1,924,408
Demand deposits (noninterest-bearing)		276,120							269,353
Other liabilities		11,687							8,035
Stockholders' equity		112,970							106,227

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
	12/31/2008			12/31/2007			12/31/2008			12/31/2007
(dollar amounts in thousands)	Three Months Ended						Year Ended
Balance at beginning of period	$	13,888		$	10,673		$	10,742		$	9,685
Provisions charged to operating expense		3,400			245			7,475			1,762
		17,288			10,918			18,217			11,447
Recoveries on loans charged-off:
Commercial		13			7			145			11
Consumer		1			30			25			53
Real estate		0			0			0			8
Total recoveries		14			37			170			72
Loans charged-off:
Commercial		(542	)		(165	)		(1,426	)		(634	)
Consumer		(41	)		0			(173	)		(69	)
Real estate		0			(48	)		(69	)		(74	)
Total charged-off		(583	)		(213	)		(1,668	)		(777	)
Net charge-offs		(569	)		(176	)		(1,498	)		(705	)
Balance at end of period	$	16,719		$	10,742		$	16,719		$	10,742
Net charge-offs as a percentage of
average loans outstanding		0.04	%		0.02	%		0.11	%		0.07	%
Allowance for loan losses as a percentage of
period-end loans		1.16	%		0.93	%		1.16	%		0.93	%

Pennsylvania Commerce Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets
(unaudited)
The following table presents information regarding nonperforming loans and assets as of December 31, 2008 and for the preceding four quarters
(dollar amounts in thousands).
	December 31,			September 30,			June 30,			March 31,			December 31,
	2008			2008			2008			2008			2007
Nonaccrual loans:
Commercial	$	6,863		$	7,083		$	2,577		$	1,158		$	534
Consumer		492			164			125			120			57
Real Estate:
Construction		7,646			731			735			284			385
Real Estate		12,121			3,657			3,433			2,183			1,959
Total nonaccrual loans		27,122			11,635			6,870			3,745			2,935
Loans past due 90 days or more
and still accruing		0			33			6,036			15			0
Renegotiated loans		0			0			0			0			0
Total nonperforming loans		27,122			11,668			12,906			3,760			2,935
Foreclosed real estate		743			535			421			588			489
Total nonperforming assets	$	27,865		$	12,203		$	13,327		$	4,348		$	3,424
Nonperforming loans to total loans		1.88	%		0.84	%		0.98	%		0.31	%		0.25	%
Nonperforming assets to total assets		1.30	%		0.57	%		0.65	%		0.22	%		0.17	%
Nonperforming loan coverage		62	%		119	%		95	%		309	%		366	%
Allowance for loan losses as a percentage
of total period-end loans		1.16	%		1.00	%		0.93	%		0.96	%		0.93	%
Nonperforming assets / capital plus allowance for loan losses		21	%		10	%		11	%		4	%		3	%