When a growth story is hot, the fundamentals don't matter . until they matter. Thus far, investors in New Jersey-based Commerce Bancorp (NYSE:CBH) have been willing to overlook high expenses and poor asset returns in favor of strong income growth and high stock returns.

Once again, growth in the second quarter was exceptional for a bank. Net interest income grew 18%, non-interest income grew 25%, and total revenue grew 20% from the year-ago level. Expenses took a bit from margins, though, and net income and EPS growth came in at 20% and 15%, respectively -- below the company's own targeted rates.

There's no doubt that there's growth almost everywhere you look with this story. Core deposits were up 28% and "same store" deposit growth in sites open two years or more was 19%. Better still, Commerce refuses to chase high-cost deposits by raising its rates just to attract more business.

Similarly, loan growth experienced an exceptional 29% spike, with strength in both commercial loans and non-residential consumer loans. Of course, there was no real area of weakness, so strength is certainly a relative term.

Now for the bad news. Net interest margin compressed again, dropping to 3.93% from 4.29% a year ago and 4.04% a quarter ago. Once again, the return on assets was pathetic -- coming in at 0.97 from 1.03 a year ago. Return on equity also dropped from 19.9 to 17.7 for the quarter. Last but not least, the efficiency ratio dropped by close to 2 percentage points on a year-over-year basis.

It's certainly fair to point out that high costs (and a relatively poor efficiency ratio) are often a by-product of the sort of aggressive expansion plan that Commerce has in place. This bank is just getting into the Washington, D.C., market, and another metropolitan target will be unveiled in the next quarter. (My guess? Boston.)

What worries me about this stock, frankly, is how investors want to believe that the regular rules don't apply here. Commerce certainly deserves a break on ROA and efficiency, given its present torrid growth, but it's entirely fair to question just how large of a break it should get. As many other high-growth/fast-expansion stories have taught us all, sooner or later high expenses come home to roost. And if this bank can't leverage better efficiencies from its branches, there will be trouble down the road.

For now, this is an aggressive and sometimes controversial growth story. So long as net income growth holds up, the market will likely continue to look past high expenses. As long as investors are aware of and comfortable with that situation, this could continue to be an impressive growth story.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).