<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COMMONWEALTH BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[COMMONWEALTH BANCORP LETTERHEAD]
June 28, 1996
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting
of Stockholders of Commonwealth Bancorp, Inc. The meeting will be held at The
People's Light & Theater Company, located at 39 Conestoga Road, Malvern,
Pennsylvania on Friday, July 19, 1996 at 10:00 a.m., Eastern Time. The matters
to be considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that your shares be voted at the Annual
Meeting regardless of the number you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today
and return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Commonwealth
Bancorp, Inc. is sincerely appreciated.
Sincerely,
Charles H. Meacham
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
COMMONWEALTH BANCORP, INC.
70 VALLEY STREAM PARKWAY
POST OFFICE BOX 2100
VALLEY FORGE, PENNSYLVANIA 19482
(610) 251-1600
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 19, 1996
-------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Annual Meeting") of Commonwealth Bancorp, Inc. (the "Company") will be held
at The People's Light & Theater Company, located at 39 Conestoga Road, Malvern,
Pennsylvania on Friday, July 19, 1996 at 10:00 a. m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect three (3) directors for a three-year term
and until their successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors
of Arthur Andersen LLP as the Company's independent auditors for the year
ending December 31, 1996; and
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof. Management is not aware of any
other such business.
The Board of Directors has fixed June 20, 1996 as the voting
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting and at any adjournment thereof. Only those
stockholders of record as of the close of business on that date will be
entitled to vote at the Annual Meeting or at any such adjournment.
By Order of the Board of Directors
LeRoy D. Todd, Jr.
Senior Vice President and Secretary
Valley Forge, Pennsylvania
June 28, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN
TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY
VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN
WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE> 4
COMMONWEALTH BANCORP, INC.
--------------
PROXY STATEMENT
--------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 19, 1996
This Proxy Statement is furnished to holders of common stock,
$.10 par value per share ("Common Stock"), of Commonwealth Bancorp, Inc. (the
"Company"), a Pennsylvania corporation which acquired all the outstanding stock
of Commonwealth Savings Bank (the "Bank") in connection with the conversion of
Commonwealth Mutual Holding Company and the reorganization of the Bank to the
stock holding company form of organization on June 14, 1996 (the "Conversion
and Reorganization"). Proxies are being solicited on behalf of the Board of
Directors of the Company to be used at the Annual Meeting of Stockholders
("Annual Meeting") to be held at The People's Light & Theater Company, located
at 39 Conestoga Road, Malvern, Pennsylvania on Friday, July 19, 1996 at 10:00
a.m., Eastern Time, and at any adjournment thereof for the purposes set forth
in the Notice of Annual Meeting of Stockholders. This Proxy Statement is first
being mailed to stockholders on or about June 28, 1996.
The proxy solicited hereby, if properly signed and returned to
the Company and not revoked prior to its use, will be voted in accordance with
the instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the matters described below and, upon the
transaction of such other business as may properly come before the meeting, in
accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it is
exercised by (i) filing with the Secretary of the Company written notice
thereof (LeRoy D. Todd, Jr., Senior Vice President and Secretary, Commonwealth
Bancorp, Inc., 70 Valley Stream Parkway, P.O. Box 2100, Valley Forge,
Pennsylvania 19482); (ii) submitting a duly-executed proxy bearing a later
date; or (iii) appearing at the Annual Meeting and giving the Secretary notice
of his or her intention to vote in person. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournment thereof and will not
be used for any other meeting.
<PAGE> 5
2
VOTING
Only stockholders of record of the Company at the close of
business on June 20, 1996 ("Voting Record Date") are entitled to notice of and
to vote at the Annual Meeting and at any adjournment thereof. On the Voting
Record Date, there were 17,952,693 shares of Common Stock issued and
outstanding and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the Annual Meeting.
The presence in person or by proxy of at least a majority of
the issued and outstanding shares of Common Stock entitled to vote is necessary
to constitute a quorum at the Annual Meeting. Directors will be elected by a
plurality of the votes cast at the Annual Meeting. The affirmative vote of a
majority of the total votes eligible to be cast at the Annual Meeting is
required for approval of the proposal to ratify the appointment of the
Company's independent auditors.
Abstentions will be counted for purposes of determining the
presence of a quorum at the Annual Meeting. Because of the required votes,
abstentions will have the same effect as a vote against the proposal to ratify
the appointment of the Company's independent auditors, but will not be counted
as votes cast for the election of directors and, thus, will have no effect on
the voting for the election of directors. Under rules of the New York Stock
Exchange, all of the proposals for consideration at the Annual Meeting are
considered "discretionary" items upon which brokerage firms may vote in their
discretion on behalf of their client if such clients have not furnished voting
instructions. Thus, there are no proposals to be considered at the Annual
Meeting which are considered "non-discretionary" and for which there will be
"broker non-votes."
<PAGE> 6
3
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the
Board of Directors of the Company shall be divided into three classes which are
as equal in number as possible, and that the members of each class are to be
elected for a term of three years and until their successors are elected and
qualified. One class of directors is to be elected annually and stockholders
are not permitted to cumulate their votes for the election of directors.
No nominee for director is related to any other director or
executive officer of the Company by blood, marriage or adoption, and all
nominees currently serve as directors of the Company.
Unless otherwise directed, each proxy executed and returned by
a stockholder will be voted for the election of the nominees for director
listed below. If any person named as nominee should be unable or unwilling to
stand for election at the time of the Annual Meeting, the proxies will nominate
and vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
<PAGE> 7
4
The following tables present information concerning the
nominees for director and each director whose term continues, including his
tenure as a director of the Company.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 1999
<TABLE>
<CAPTION>
Position with the Company and
Principal Occupation During the Director
Name Age Past Five Years Since(1)
---- --- --------------------------------- --------
<S> <C> <C> <C>
Joseph E. Colen, Jr. 57 Director; Chairman of 1983
Machined Metals
Co., Inc., President of
Jennings International
Co. and Oak-Corson
Realty Co.
Richard J. Conner 79 Director; Retired, previously 1980
President of Conner's Firestone
Service
Matthew T. Welde 69 Director; Retired, previously 1977
Chairman, President and Chief
Executive Officer of the Bank
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE NOMINEES FOR
DIRECTOR.
<PAGE> 8
5
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WITH TERMS EXPIRING IN 1997
<TABLE>
<CAPTION>
Position with the Company
and Principal Occupation
During Director
Name Age the Past Five Years Since (1)
---- --- --------------------------- --------
<S> <C> <C> <C>
Charles H. Meacham 50 Chairman, President and Chief Executive 1988
Officer of the Company and the Bank
Harry P. Mirabile 61 Director; Retired, previously 1990
Secretary and
Treasurer of Mirabile
Beverage Company
</TABLE>
DIRECTORS WITH TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
Position with the Company
and Principal Occupation Director
Name Age During the Past Five Years Since(1)
---- --- -------------------------- ---------
<S> <C> <C> <C>
George C. Beyer, Jr. 57 Director; President and 1990
Chief Executive Officer
of Valley Forge Financial
Group, Inc.
William B. Haines, Jr. 70 Director; Retired, 1980
previously President of
McFarland and Haines
Insurance Agency
Nicholas Sclufer 76 Director; Senior Partner 1970
of Penton Company
</TABLE>
(1) Includes service as a director of the Bank.
<PAGE> 9
6
STOCKHOLDER NOMINATIONS
Article III, Section 3.12 of the Company's Bylaws governs nominations
for election to the Board and requires all such nominations, other than those
made by the Board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made
pursuant to timely notice in writing to the Secretary of the Company. To be
timely, a stockholder's notice must be delivered to, or mailed and received at,
the principal executive offices of the Company not later than (i) with respect
to an election to be held at an annual meeting of stockholders, 90 days prior
to the anniversary date of the mailing of proxy materials by the Company for
the immediately preceding annual meeting or, in the case of the first annual
meeting after the Conversion and Reorganization, 90 days prior to the
anniversary date of the mailing of proxy materials by the Bank for the
immediately preceding annual meeting of the Bank prior to the Conversion and
Reorganization, and (ii) with respect to an election to be held at a special
meeting of stockholders for the election of directors, the close of business on
the tenth day following the date on which notice of such meeting is first given
to stockholders.
Each written notice of a stockholder nomination shall set forth: (a)
the name and address of the stockholder who intends to make the nomination and
of the person or persons to be nominated; (b) a representation that the
stockholder is a holder of record of stock of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (e) the consent of each nominee
to serve as a director of the Company if so elected. The presiding officer of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures. The Company did not receive any
nominations from stockholders for the Annual Meeting.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Regular meetings of the Board of Directors of the Company and the Bank
are typically held on a monthly basis and special meetings of the Board of
Directors are held from time-to-time as needed. There were 14 meetings of the
Board of Directors of the Bank held during 1995. No director attended fewer
than 75% of the total number of meetings of the Board of Directors held during
1995 and the total number of meetings held by all committees of the Board on
which the director served during such year.
The Board of Directors of the Company has not yet established any
committees, but intends to do so in the future. The Board of Directors of the
Bank has established various committees, including Executive and Audit
Committees.
<PAGE> 10
7
The Audit Committee reviews the records and affairs of the Bank to
determine its financial condition, reviews with management and the independent
auditors the systems of internal control, and monitors the Bank's adherence in
accounting and financial reporting to generally accepted accounting principles.
Currently, Messrs. Welde, Haines and Sclufer serve as members of this
committee. The Audit Committee met four times during 1995.
The Executive Committee is authorized to act with the same authority as
the Board of Directors between meetings of the Board, except that mortgage loan
approvals in excess of certain limits must be approved by the Board of
Directors. Currently, Messrs. Meacham, Welde, Colen and Conner serve as
members of this committee. The Executive Committee met one time during 1995.
To date, neither the Company nor the Bank has established a nominating
committee, the functions of which are performed by the entire Board of
Directors.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to the
executive of the Company and the Bank who are not directors.
<TABLE>
<CAPTION>
Name Age Positions(s)
---- --- -------------------------------------
<S> <C> <C>
Robert M. Lambert 57 Senior Vice President - Information
Services Division and Chief
Information Officer
LeRoy D. Todd, Jr. 65 Senior Vice President - Compliance and
Planning and Corporate Secretary
Patrick J. Ward 40 Senior Vice President - Finance
Division and Chief Financial Officer
William J. Monnich 46 Senior Vice President - Community
Banking Division
Peter A. Kehoe 43 Senior Vice President and President
of ComNet Mortgage Services Division
</TABLE>
<PAGE> 11
8
Set forth below is a brief description of the background of each
executive officer of the Company and the Bank who is not a director for at
least the last five years.
ROBERT M. LAMBERT. Mr. Lambert has served as the Senior Vice President
- - ISD Division and Chief Information Officer of the Bank since July 1986.
Prior to his joining the Bank he was a management consultant with Deloitte,
Haskins & Sells in Philadelphia, Pennsylvania.
LEROY D. TODD, JR. Mr. Todd has been with the Bank since 1983. He is
currently the Senior Vice President - Compliance and Planning and is also the
Corporate Secretary of the Bank.
PATRICK WARD. Mr. Ward has served as Senior Vice President - Finance
Division and Chief Financial Officer of the Bank since July 1992. Previously
he served as Controller and Vice President for the Wholesale Banking Group and
prior thereto the Retail Banking Group of Mellon Bank, Pittsburgh,
Pennsylvania.
WILLIAM J. MONNICH. Mr. Monnich has served as Senior Vice President -
Community Banking Division of the Bank since January 1995. Previously he
served as the Vice President of the Consumer Banking Department. Prior to
joining the Bank in September 1992, he was a Vice President at CoreStates Bank.
There, he held a variety of management positions in the international and
retail banking groups.
PETER A. KEHOE. Mr. Kehoe has served as President and Chief Executive
Officer of ComNet since February 1996. From 1990 until 1995 Mr. Kehoe served
as senior vice president, national production, for Comerica Mortgage, a wholly
owned subsidiary of Comerica, Inc., a bank holding company with operations in
Michigan, Illinois, Florida and Texas. Previously, he served as senior vice
president, production, for Traveler's Mortgage Services, Inc., located in
Cherry Hill, New Jersey, and as senior vice president, secondary marketing, for
Metmor Financial, located in Los Angeles, California.
<PAGE> 12
9
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) the only person or entity, including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), who or which was known to the Company to be the beneficial owner of more
than 5% of the issued and outstanding Common Stock on the Voting Record Date,
(ii) each director of the Company, (iii) certain executive officers of the
Company, and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group June 20, 1996(1)(2) Common Stock
-------------------- ------------------- ------------
<S> <C> <C>
Commonwealth Bancorp, Inc. 1,301,468(3) 7.2%
Employee Stock Ownership
Plan Trust
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
Directors:
Charles H. Meacham 201,907(4) 1.1
George C. Beyer, Jr. 95,539(5) *
Joseph E. Colen, Jr. 69,511(6)(7) *
Richard J. Conner 37,234(6)(8) *
William B. Haines, Jr. 30,532(6)(9) *
Harry P. Mirabile 74,571(6)(10) *
Nicholas Sclufer 82,617(6)(11) *
Matthew T. Welde 57,096(12) *
Executive Officers:
Robert M. Lambert 75,650(13) *
Patrick J. Ward 44,181(14) *
William J. Monnich 25,396(15) *
LeRoy D. Todd, Jr. 107,187(16) *
All directors and 901,421(17) 5.0
executive officers as a
group (13 persons)
- ----------------
</TABLE>
* Represents less than 1% of the outstanding Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange
<PAGE> 13
10
Act, shares of Common Stock are deemed to be beneficially owned by a
person if he or she directly or indirectly has or shares (i) voting
power, which includes the power to vote or to direct the voting of the
shares, or (ii) investment power, which includes the power to dispose
or to direct the disposition of the shares. Unless otherwise
indicated, the named beneficial owner has sole voting and dispositive
power with respect to the shares.
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60
days of the Voting Record Date pursuant to the exercise of outstanding
stock options. Shares of Common Stock which are subject to stock
options are deemed to be outstanding for the purpose of computing the
percentage of outstanding Common Stock owned by such person or group
but not deemed outstanding for the purpose of computing the percentage
of Common Stock owned by any other person or group.
(3) The Commonwealth Bancorp, Inc. Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Commonwealth Bancorp, Inc.
Employee Stock Ownership Plan ("ESOP") by an agreement between the
Company and PNC Bank, National Association, which acts as trustee of
the plan ("Trustee"). As of the Voting Record Date, 1,075,238 shares
of Common Stock held in the Trust were unallocated and 226,185 shares
had been allocated to the accounts of participating employees. Under
the terms of the ESOP, the Trustee must vote the allocated shares held
in the ESOP in accordance with the instructions of the participating
employees. Unallocated shares held in the ESOP will be voted by the
Trustee in the same proportion for and against proposals to
stockholders as the ESOP participants and beneficiaries actually vote
shares of Common Stock allocated to their individual accounts. Any
allocated shares which either abstain on the proposal or are not voted
will be disregarded in determining the percentage of stock voted for
and against each proposal by the participants and beneficiaries.
(4) Includes 21,758 shares held jointly with Mr. Meacham's wife, 57,294
shares held on behalf of Mr. Meacham in the Company's Voluntary
Investment Plan ("VIP"), 34,480 shares held in the 1993 Management
Recognition Plan and Trust of the Company ("MRP"), which may be voted
by him pending vesting and distribution, 3,068 shares allocated to Mr.
Meacham pursuant to the ESOP and 62,324 shares which may be acquired
upon the exercise of stock options exercisable within 60 days of the
Voting Record Date.
(5) Includes 5,102 shares held jointly with Mr. Beyer's wife, 27,775 shares
held by Mr. Beyer's wife, 17,542 shares held in a partnership which Mr.
Beyer is the general partner, and 14,683 shares held in a personal
trust for the benefit of Mr. Beyer.
<PAGE> 14
11
(6) Includes 2,098 shares held in the MRP, which may be voted by the
individual pending vesting and distribution and 14,411 shares which may
be acquired upon the exercise of stock options exercisable within 60
days of the Voting Record Date.
(7) Includes 8,829 shares held jointly with Mr. Colen's wife and children
and 10,000 shares held in a trust which Mr. Cohen is trustee.
(8) Includes 2,953 shares held by Mr. Conner's wife, children and
grandchildren.
(9) Includes 12,740 shares held jointly with Mr. Haines' wife.
(10) Includes 23,156 shares held jointly with Mr. Mirabile's wife and 3,000
shares held by Mr. Mirabile's wife.
(11) Includes 27,007 shares held jointly with Mr. Sclufer's wife and
children.
(12) Includes 30,775 shares held jointly with Mr. Welde's wife, 727 shares
held by Mr. Welde as custodian for his grandchildren, 1,038 shares held
by Mr. Welde's son, 6,293 shares held in the MRP, which may be voted by
him pending vesting and distribution and 14,411 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Voting Record Date.
(13) Includes 3,214 shares held by Mr. Lambert's wife, 22,844 shares held on
behalf of Mr. Lambert in the VIP, 13,138 shares held in the MRP, which
may be voted by him pending vesting and distribution, 2,578 shares
allocated to him pursuant to the ESOP and 16,985 shares which may be
acquired upon the exercise of stock options exercisable within 60 days
of the Voting Record Date.
(14) Includes 1,465 shares held jointly with Mr. Ward's wife, 156 shares
held on behalf of Mr. Ward in the VIP, 13,138 shares held in the MRP,
which may be voted by Mr. Ward pending vesting and distribution, 2,684
shares allocated to him pursuant to the ESOP and 16,985 shares which
may be acquired upon the exercise of stock options exercisable within
60 days of the Voting Record Date.
(15) Includes 48 shares held on behalf of Mr. Monnich in the VIP, 14,330
shares held in the MRP, which may be voted by Mr. Monnich pending
vesting and distribution, 2,072 shares allocated to him pursuant to the
ESOP and 4,878 shares which may be acquired upon the exercise of stock
options exercisable within 60 days of the Voting Record Date.
(16) Includes 14,885 shares held jointly with Mr. Todd's wife, 897 shares
held by Mr. Todd's wife, 2,804 shares held by Mr. Todd's children,
43,311 shares held on behalf of Mr. Todd in the VIP, 13,138 shares held
in the MRP, which may be voted by Mr. Todd pending vesting and
distribution, 1,866 shares held in the ESOP and 14,372
<PAGE> 15
12
shares which may be acquired upon the exercise of stock options
exercisable within 60 days of the Voting Record Date.
(17) Includes 123,653 shares held on behalf of executive officers in the
VIP, 88,224 shares held in the MRP, which may be voted by directors and
executive officers pending vesting and distribution, 12,273 shares
allocated to executive officers pursuant to the ESOP and 115,544 shares
which may be acquired by executive officers and directors upon the
exercise of stock options exercisable within 60 days of the Voting
Record Date.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Bank for services
rendered in all capacities during the past three years to the Chief Executive
Officer and the most highly compensated executive officers of the Bank and its
subsidiaries whose total compensation during the year ended December 31, 1995
exceeded $100,000.
<PAGE> 16
13
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation(4)
------------------------------------------ ------------------------
Other
Name and Annual Stock All Other
Principal Position Year Salary(1) Bonus(2) Compensation(3) Grants(5) Options(6) Compensation(7)
------------------ ---- --------- ------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles H. Meacham 1995 $307,400 $63,530 $0 $ 0 0 $18,830
Chairman, President and 1994 285,000 92,037 0 276,610 130,675 10,528
Chief Executive Officer 1993 295,000 80,086 0 0 0 1,685
Robert M. Lambert 1995 128,750 24,602 0 0 0 16,498
Senior Vice President and 1994 125,000 34,550 0 105,380 42,468 9,332
Chief Information Officer 1993 121,500 20,415 0 0 0 1,963
Patrick J. Ward 1995 146,160 27,928 0 0 0 15,570
Senior Vice President and 1994 126,000 34,827 0 105,380 42,468 7,428
Chief Financial Officer 1993 118,500 30,796 0 0 0 91
William J. Monnich 1995 116,336 22,744 0 79,210 32,704 13,320
Senior Vice President, 1994 85,684 20,030 0 9,330 9,764 5,049
Community Banking Division 1993 82,000 14,948 0 0 0 0
LeRoy T. Todd, Jr. 1995 93,215 17,812 0 0 0 12,796
Senior Vice President and 1994 90,500 25,061 0 105,380 35,935 7,622
Corporate Secretary 1993 88,500 10,324 0 0 0 2,228
Russell I. Wakal(8) 1995 171,360 0 0 0 0 1,634
Senior Vice President 1994 168,000 53,054 0 131,720 55,536 10,478
of the Bank and 1993 150,000 0 0 0 0 1,635
President of ComNet
</TABLE>
<PAGE> 17
14
- -------------------
(1) Includes amounts deferred by the named executive officer pursuant to
the VIP, a non-contributory defined contribution plan which is
intended to qualify under Section 401(k) of the Code and pursuant to
which employees may defer up to 10% of their compensation.
(2) Consists of bonuses paid under the Bank's Management Incentive
Compensation Plan which awards are based on a combination of the
Bank's financial performance and an individual's or group rating for
the year indicated.
(3) Does not include amounts attributable to miscellaneous benefits
received by executive officers, including the use of Bank-owned
automobiles. In the opinion of management of the Bank the costs to
the Bank of providing such benefits to any individual executive
officer during the year ended December 31, 1995 did not exceed the
lesser of $50,000 or 10% of the total of annual salary and bonus
reported for the individual.
(4) All amounts have been adjusted for the exchange of Common Stock for
common stock of the Bank in the Conversion and Reorganization.
(5) Represents the grant of restricted Common Stock pursuant to the MRP,
which were deemed to have had the indicated value at the date of
grant, and which had a fair market value of $622,573, $237,705,
$237,105, $199,215 and $237,105 for the grants to Messrs. Meacham,
Lambert, Ward, Monnich and Todd, respectively, at December 31, 1995.
The awards vest 20% a year from the date of grant.
(6) Consists of awards granted pursuant to the 1993 Stock Incentive Plan
which options to purchase 10,000 shares are exercisable each year
commencing on the date of grant for Mr. Meacham and are exercisable at
the rate of 20% a year from the date of grant for all other executive
officers.
(7) Consists of amounts allocated during the year ended December 31, 1995
on behalf of Messrs. Meacham, Lambert, Ward, Monnich, Todd and Wakal
pursuant to the ESOP of $17,145, $14,535, $15,570, $13,320, $10,508
and $-0-, respectively, and amounts paid in lieu of insurance benefits
or premiums previously paid to officers of the Bank of $1,685, $1,963,
$-0-, $-0-, $2,288 and $1,634, respectively.
(8) Mr. Wakal's employment with the Bank terminated in September 1995.
<PAGE> 18
15
DIRECTOR COMPENSATION
BOARD FEES. During the year ended December 31, 1995, each member of
the Board of Directors of the Bank received an annual fee of $8,200, plus $900
for each meeting attended. Board members also received a fee of $500 for each
committee meeting attended during 1995. In addition, each Board member
received $100 per month for health insurance cost reimbursement.
DIRECTORS' STOCK OPTION PLAN. The Company has adopted the 1993
Directors' Stock Option Plan (the "Directors' Plan") which provides for the
grant of compensatory stock options to non-employee directors. Pursuant to the
Directors' Plan, each director of the Bank who was not an employee of the Bank
or any subsidiary was granted a compensatory stock option to purchase 12,970
shares of Common Stock on January 21, 1994 and an option to purchase 1,442
shares of Common Stock on January 21, 1995. Options granted pursuant to the
Directors' Plan have an exercise price equal to the fair market value of a
share of Common Stock on the date of grant and are vested and exercisable six
months from the date of grant. The share amounts have been adjusted for the
exchange in the Conversion and Reorganization.
RECOGNITION PLAN FOR DIRECTORS. The Company has adopted the
Recognition Plan for Directors which provides for the grant of restricted
Common Stock to non-employee directors. Pursuant to the Recognition Plan for
Directors, each director of the Bank who was not an employee of the Bank or any
subsidiary was granted 3,044 shares of restricted stock on January 21, 1994
(except that Mr. Welde was granted 9,131 shares) and 339 shares of restricted
stock on January 21, 1995 (except that Mr. Welde was granted 1,016 shares). The
restricted stock granted pursuant to the Recognition Plan for Directors vests
20% per year from the date of grant. The share amounts have been adjusted for
the exchange in the Conversion and Reorganization.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with each of Messrs.
Meacham, Lambert, Todd, Ward and Monnich pursuant to which the Bank agreed to
employ these persons in their respective positions for a term of three years at
an initial salary of $307,400, $128,750, $93,215, $146,160 and $116,336,
respectively. Each such salary may be increased in the discretion of the Board
of Directors of the Bank and any such salary, as it may be increased from time
to time, may not be decreased during the term of the employment agreement
without the prior written consent of the affected officer. On an annual basis,
the Board of Directors of the Bank considers renewal of each employment
agreement for an additional year, and the term of an employment agreement shall
be extended for an additional one-year period unless the Bank or the officer
elects, not less than 30 days prior to the annual anniversary date, not to
extend the employment term. Each employment agreement is terminable with or
without cause by the Bank. The employment agreements
<PAGE> 19
16
between the Bank and the officers provide that in the event of a wrongful
termination of employment (including a voluntary termination by the officer as
a result of the Bank's material breach of the agreement or as a result of
certain adverse actions which are taken with respect to his or her employment
following a Change in Control of the Bank, as defined) the officer would be
entitled to an amount of cash severance which is equal to the officer's base
salary as of the date of termination (two times base salary in the case of Mr.
Meacham), payable in 12 equal monthly installments (24 equal monthly
installments in the case of Mr. Meacham), and the officer would be entitled to
continued participation in certain employee benefit plans of the Bank until the
earlier of new employment with comparable benefits and 12 months from the date
of termination (24 months in the case of Mr. Meacham), provided that in the
event that there had been a Change in Control of the Bank prior to the wrongful
termination of the officer's employment, or there existed certain specified
events which could lead to a Change in Control of the Bank, the cash severance
would amount to two times the officer's average annual compensation, including
bonuses, during the preceding five years (three times such average annual
compensation in the case of Mr. Meacham) and continued participation in certain
employee benefit plans of the Bank until the earlier of new employment with
comparable benefits and 24 months from the date of termination (36 months in
the case of Mr. Meacham). Each employment agreement provides that in the event
that any of the payments to be made thereunder or otherwise upon termination of
employment are deemed to constitute "excess parachute payments" within the
meaning of Section 280G of the Code, then such payments and benefits received
thereunder shall be reduced, in the manner determined by the officer, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits being non-deductible by the Bank for federal income tax
purposes. Excess parachute payments generally are payments in excess of three
times the base amount, which is defined to mean the recipient's average annual
compensation from the employer includable in the recipient's gross income
during the most recent five taxable years ending before the date on which a
change in control of the employer occurred. Recipients of excess parachute
payments are subject to a 20% excise tax on the amount by which such payments
exceed the base amount, in addition to regular income taxes, and payments in
excess of the base amount are not deductible by the employer as compensation
expense for federal income tax purposes.
<PAGE> 20
17
STOCK OPTIONS
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during the year ended
December 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
==========================================================================================================================
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(3)
- ---------------------------------------------------------------------------------------------------------------------------
Options % of Total Options Exercise Expiration
Name Granted Granted to Employees(1) Price(2) Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Robert M. Lambert -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
William J. Monnich 32,704 100% $6.38 2/23/05 $182,292 $383,633
- ---------------------------------------------------------------------------------------------------------------------------
LeRoy D. Todd, Jr. -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Russell I. Wakal -- -- -- -- -- --
===========================================================================================================================
</TABLE>
(1) Percentage of options granted to all employees during 1995.
(2) In all cases the exercise price was based on the fair market value of
a share of Common Stock on the date of grant.
(3) Assumes compounded rates of return for the remaining life of the
options and future stock prices of $10.39 and $16.54 at compounded
rates of return of 5% and 10%, respectively.
The following table sets forth certain information concerning
exercises of stock options by the named executive officers during the year
ended December 31, 1995 and options held at December 31, 1995
<TABLE>
<CAPTION>
================================================================================================================================
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------------
Value of
Number of Unexercised
Unexercised Options at
Shares Options at Year End Year End(1)
Acquired on Value ---------------------------------------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Charles H. Meacham -- -- 62,325 68,350 $375,000 $411,250
- --------------------------------------------------------------------------------------------------------------------------------
Robert M. Lambert -- -- 16,986 25,483 102,200 153,325
- --------------------------------------------------------------------------------------------------------------------------------
Patrick J. Ward -- -- 16,986 25,483 102,200 153,325
- --------------------------------------------------------------------------------------------------------------------------------
William J. Monnich -- -- 10,446 32,023 62,050 192,675
- --------------------------------------------------------------------------------------------------------------------------------
LeRoy D. Todd, Jr. -- -- 14,372 21,562 86,475 129,738
- --------------------------------------------------------------------------------------------------------------------------------
Russell I. Wakal -- -- -- -- -- --
================================================================================================================================
</TABLE>
(1) Based on a per share market price of $10.83 at December 31, 1995, as
adjusted for the exchange in the Conversion and Reorganization.
<PAGE> 21
18
PENSION PLAN
The following table sets forth estimated annual benefits payable upon
retirement at age 65 to the named executive officers under the Bank's defined
benefit pension plan ("Pension Plan") based upon various levels of compensation
and years of service.
<TABLE>
<CAPTION>
Years of Service
Remuneration -------------------------------------------------------------------
- ------------ 15 20 25 30 35
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$125,000 $34,688 $46,250 $ 57,313 $ 69,375 $ 72,500
150,000 42,188 56,250 70,313 84,375 88,125
175,000 49,688 66,250 82,313 99,375 103,750
200,000 57,188 76,250 95,313 114,375 119,375
225,000 64,688 86,250 107,313 129,375 135,000
250,000 72,188 96,250 120,313 144,375 150,625
300,000 87,188 116,250 145,313 174,375 181,875
</TABLE>
The indicated amounts in the above table assume that participants
elect a straight life annuity form of benefit.
Benefits are generally payable under the Pension Plan upon retirement
at age 65 based upon an average of an employee's five highest consecutive
annual amounts of compensation, excluding bonuses, commissions, overtime pay
and other compensation, and excluding taxable fringe benefit amounts, during
the last ten years prior to retirement. Such amounts are within 10% of the
total compensation and bonus reported for the named individuals in the Summary
Compensation Table above.
The maximum annual compensation which may be taken into account under
the Internal Revenue Code (as adjusted from time to time by the Internal
Revenue Service) for calculating contributions under qualified defined benefit
plans currently is $150,000 and the maximum annual benefit permitted under such
plans currently is $118,800.
At December 31, 1995, Messrs. Meacham, Ward, Lambert, Todd and Monnich
had 21, three, nine, 47 and three years of credited service, respectively,
under the Pension Plan.
VOLUNTARY INVESTMENT PLAN
The Bank maintains a Voluntary Investment Plan ("VIP") for the benefit
of employees. The VIP is a non-contributory defined contribution plan which is
intended to qualify under Section 401(k) of the Code. Participants may
contribute to the VIP by salary reduction up to 15% (10% for highly compensated
employees) of annual compensation for the year. Such contributions defer the
employee's earnings up to a maximum of $9,240 in each plan year. The Bank does
not contribute to the VIP. Pursuant to the VIP and the trust agreement entered
into between the Bank and the VIP trustee, all funds contributed
<PAGE> 22
19
are held in a trust fund, which are invested at the direction of the employee
in four separate funds; a certificate of deposit fund, a mutual stock fund, a
GNMA fund, or a Common Stock fund.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established an Employee Stock Ownership Plan ("ESOP")
for employees age 21 or older who have at least one year of credited service
with the Bank. The ESOP is funded by the Company's contributions made in cash
(which primarily will be invested in Common Stock) or Common Stock. Benefits
may be paid either in shares of Common Stock or in cash.
In June 1996, the ESOP borrowed $9.3 million from the Company to
purchase 7,897,720 shares of Common Stock in the Conversion and Reorganization
and to repay the balance of the loan from an unaffiliated lender used to
purchase shares of common stock of the Bank in the Bank's initial public
offering in January 1994. The Company makes scheduled discretionary cash
contributions to the ESOP sufficient to amortize the principal and interest on
the loan, which has a maturity of ten years. The Company may, in any plan
year, make additional discretionary contributions for the benefit of plan
participants in either cash or shares of Common Stock, which may be acquired
through the purchase of outstanding shares in the market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made,
would be funded through additional borrowings by the ESOP or additional
contributions from the Company. The timing, amount and manner of future
contributions to the ESOP will be affected by various factors, including
prevailing regulatory policies, the requirements of applicable laws and
regulations and market conditions.
Generally accepted accounting principles require that any borrowing by
the ESOP be reflected as a liability on the Company's statement of financial
condition. In addition, shares purchased with borrowed funds will, to the
extent of the borrowings, be excluded from stockholders' equity, representing
unearned compensation to employees for future services not yet performed.
Consequently, to the extent of the ESOP purchases of already issued shares in
the open market, the Company's consolidated liabilities will increase to the
extent of the ESOP's borrowings, and total and per share stockholders' equity
will be reduced to reflect such borrowings. To the extent of the ESOP
purchases of newly-issued shares from the Company, total stockholders' equity
would neither increase nor decrease, but per share stockholders' equity and per
share net income would decrease because of the increase in the number of
outstanding shares. In either case, as the borrowings used to fund ESOP
purchases are repaid, total stockholders' equity will correspondingly increase.
Shares purchased by the ESOP with the proceeds of the loan are held in
a loan suspense account and released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares released
from the suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be
<PAGE> 23
20
reallocated among remaining participating employees and may reduce any amount
the Company might otherwise have contributed to the ESOP. Benefits may be
payable upon retirement, early retirement, disability or separation from
service. The Company's contributions to the ESOP are not fixed, so benefits
payable under the ESOP cannot be estimated.
A Committee appointed by the Board of Directors of the Company
administers the ESOP ("ESOP Committee") and an unaffiliated financial
institution has been appointed to act as trustee of the related trust. The
ESOP Committee may instruct the trustee regarding investment of funds
contributed to the ESOP. Under the ESOP, the trustee must vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating employees, and allocated shares for which employees do not give
instructions will be voted in the same ratio on any matter as to those shares
for which instructions are given. Unallocated shares held in the ESOP will be
voted by the ESOP trustee after considering the recommendation of the ESOP
Committee.
The ESOP is subject to the requirements of ERISA and the regulations
of the IRS and the Department of Labor thereunder.
SUPPLEMENTAL BENEFIT PLANS
The Board of Directors of the Bank has authorized an excess benefit
plan ("EBP") and a supplemental executive retirement plan ("SERP") to provide
certain additional retirement benefits to Mr. Meacham. The EBP provides that
Mr. Meacham shall receive an annual allocation of stock units representing
shares of common stock of the Bank. The number of stock units allocable to his
benefit each year shall be equal to the difference between the annual
allocation of shares that would have been made to him in the Bank's ESOP,
assuming that his compensation was $235,840, the previous limitation under the
Code prior to amendments which reduced such limitation to $150,000 as set forth
in Section 401(a)(17) of the Code, minus the number of shares actually
allocated to his ESOP account in a particular year. The SERP provides that Mr.
Meacham shall receive a supplemental retirement benefit at or after his normal
retirement date which is calculated to produce a total retirement benefit
payable by the Bank equal to 50% of his final average earnings, as defined,
with certain offsets, and a reduction in the case of early retirement. For
purposes of the SERP, Mr. Meacham's final average earnings means the average
of his highest annual compensation received during any five of the current and
preceding ten calendar years, with certain adjustments and exclusions.
COMPENSATION COMMITTEE
Executive compensation philosophy, policies, and programs are the
responsibility of the Compensation and Benefits Committee of the Board of
Directors. During 1995, the members of the committee were Messrs. Colen,
Mirabile and Beyer. No members of the committee is a current or former officer
or employee of the Bank or any of its subsidiaries.
<PAGE> 24
21
The report of the committee with respect to compensation for the Chief
Executive Officer and all other executive officers is set forth below.
REPORT OF THE COMPENSATION COMMITTEE
The members recognize that Commonwealth must attract, retain and
motivate the best people to achieve its business objectives. To do so, it must
compensate its executives fairly and competitively in the markets in which it
competes. The competitive market for executives is primarily, banks of a
similar asset size located in Pennsylvania and southern New Jersey; and
secondarily, public banks of a similar asset size located in the northeastern
quadrant of the United States.
The current compensation program permits recognition of individual
contribution, business unit results, and overall corporate results. Currently,
executive compensation comprises base salary, short-term incentives, and stock
grants from the initial public offering.
BASE SALARY. The Compensation and Benefits Committee establishes base
salaries for executives of Commonwealth by conducting an annual review
utilizing salary survey data provided by an external compensation consultant.
It is the intention of the Committee to pay base salaries at, or
slightly below, the average salary paid by competitive banks.
INCENTIVE PLAN. The incentive portion of the executives' total
compensation program is tied to the achievement of specific individual and
group corporate results. Because it is the committee's intention to link a
significant portion of executive pay to changes in shareholder value the annual
incentive bonus will include annual financial measures that are highly
correlated to market indicators, such as Net Income, Earnings per Share, Cash
Flow, and/or Return on Equity. Also, the Committee's intention is to offset
conservative base salaries with significant upside potential via annual
incentives (and stock plans) to provide for above average total remuneration in
years when Commonwealth has outstanding performance.
In addition, the Committee recognizes the importance of high level of
customer satisfaction as an indicator of sustained performance and therefore
the payout of the executives' incentives is tied to the achievement of customer
satisfaction indicators.
TAX DEDUCTIBILITY. At this point, and for the foreseeable future,
Commonwealth does not anticipate problems with tax deductibility of executive
compensation. If, in the future, this becomes a concern, the Compensation and
Benefits Committee will revisit the issue.
Joseph E. Colen, Jr.
Harry P. Mirabile
George C. Beyer, Jr.
<PAGE> 25
22
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return on the
Common Stock since the Bank's initial public offering of the Common Stock in
January 1994 with (i) the yearly cumulative total return on the stocks included
in the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") Stock Market Index (for United States companies), (ii) the yearly
cumulative return on the stocks included in the NASDAQ Financial Stock Index
and (iii) the yearly cumulative total return on the stocks included in the Ryan
Beck Mutual Holding Company Stock Index. All of these cumulative returns are
computed assuming the reinvestment of dividends at the frequency with which
dividends were paid during the applicable years.
NASDAQ STOCK MKT
<TABLE>
<CAPTION>
date base year divide by base vale * 100
<S> <C> <C> <C> <C>
Dec-93 250.116 250.116 1.000 100.000
Jan-94 257.707 250.116 1.030 103.035
Feb-94 255.299 250.116 1.021 102.072
Mar-94 239.595 250.116 0.958 95.794
Apr-94 236.485 250.116 0.946 94.550
May-94 237.064 250.116 0.948 94.782
Jun-94 228.398 250.116 0.913 91.317
Jul-94 233.087 250.116 0.932 93.192
Aug-94 247.945 250.116 0.991 99.132
Sep-94 247.309 250.116 0.989 96.878
Oct-94 252.168 250.116 1.008 100.820
Nov-94 243.802 250.116 0.975 97.476
Dec-94 244.490 250.116 0.978 97.751
Jan-95 245.772 250.116 0.983 98.263
Feb-95 258.757 250.116 1.035 103.455
Mar-95 266.418 250.116 1.065 106.518
Apr-95 274.795 250.116 1.099 109.867
May-95 281.908 250.116 1.127 112.711
Jun-95 304.742 250.116 1.218 121.840
Jul-95 327.098 250.116 1.308 130.779
Aug-95 333.747 250.116 1.334 133.437
Sep-95 341.422 250.116 1.365 136.505
Oct-95 339.295 250.116 1.357 135.655
Nov-95 347.274 250.116 1.388 138.845
Dec-95 345.484 250.116 1.381 138.130
</TABLE>
NASDAQ FINANCIAL STOCKS
<TABLE>
<CAPTION>
date base year divide by base value * 100
<S> <C> <C> <C>
Dec-93 248.587 248.587 1.000 100.000
Jan-94 254.800 248.587 1.025 102.499
Feb-94 251.525 248.587 1.012 101.182
Mar-94 244.547 248.587 0.984 98.375
Apr-94 251.379 248.587 1.011 101.123
May-94 260.490 248.587 1.048 104.788
Jun-94 259.610 248.587 1.044 104.434
Jul-94 263.298 248.587 1.059 105.918
Aug-94 272.006 248.587 1.094 109.421
Sep-94 267.337 248.587 1.075 107.543
Oct-94 259.641 248.587 1.044 104.447
Nov-94 247.954 248.587 0.997 99.745
Dec-94 249.168 248.587 1.002 100.234
Jan-95 257.480 248.587 1.036 103.577
Feb-95 270.265 248.587 1.087 108.720
Mar-95 274.040 248.587 1.102 110.239
Apr-95 278.811 248.587 1.122 122.158
May-95 287.791 248.587 1.158 115.771
Jun-95 296.803 248.587 1.194 119.369
Jul-95 310.985 248.587 1.251 125.101
Aug-95 327.183 248.587 1.316 161.617
Sep-95 338.276 248.587 1.361 136.080
Oct-95 339.670 248.587 1.366 136.640
Nov-95 355.391 248.587 1.430 142.964
Dec-95 353.023 248.587 1.420 142.012
dates are last trading day of month - closing price
</TABLE>
MHO INDEX
<TABLE>
<CAPTION>
date base year divide by base value * 100
<S> <C> <C> <C>
Dec-93 100.000 100 1.000 100.000
Jan-94 119.104 100 1.191 119.104
Feb-94 117.877 100 1.179 117.877
Mar-94 144.738 100 1.147 114.738
Apr-94 155.630 100 1.156 115.630
May-94 123.344 100 1.233 123.344
Jun-94 129.066 100 1.291 129.066
Jul-94 135.690 100 1.357 135.690
Aug-94 141.963 100 1.420 141.963
Sep-94 144.088 100 1.441 144.088
Oct-94 137.755 100 1.378 137.755
Nov-94 122.345 100 1.223 122.345
Dec-94 120.385 100 1.204 120.385
Jan-95 125.416 100 1.254 125.416
Feb-95 128.894 100 1.289 125.894
Mar-95 122.813 100 1.228 122.813
Apr-95 128.638 100 1.286 128.638
May-95 134.233 100 1.342 134.233
Jun-95 142.861 100 1.429 142.861
Jul-95 149.351 100 1.494 149.351
Aug-95 156.390 100 1.564 156.390
Sep-95 174.005 100 1.740 174.005
Oct-95 178.153 100 1.782 178.153
Nov-95 167.320 100 1.673 167.320
Dec-95 159.576 100 1.596 159.576
dates are last trading day of month - closing price
</TABLE>
CSB STOCK - AT 1/24/94 CLOSING PRICE
<TABLE>
<CAPTION>
Shares Value of
Shares Dividend$ Bought Shares Shares base value
Price BOP Per Share Div. $ w/ Div. EOP EOP 100
<S> <C> <C> <C> <C> <C> <C> <C>
Dec-93 10.000 100.000 $0.000 $0.00 0.000 100.000 1,000.00 100.000
Jan-94 15.500 100.000 $0.000 $0.00 0.000 100.000 1,550.00 155.000
Feb-94 13.375 100.000 $0.000 $0.00 0.000 100.000 1,337.50 133.750
Mar-94 12.500 100.000 $0.077 $7.70 0.616 100.616 1,257.70 125.770
Apr-94 13.688 100.616 $0.000 $0.00 0.000 100.616 1,377.23 137.723
May-94 14.250 100.616 $0.000 $0.00 0.000 100.616 1,433.78 143.378
Jun-94 15.500 100.616 $0.100 $10.06 0.649 101.265 1,569.61 156.961
Jul-94 14.875 101.265 $0.000 $0.00 0.000 101.265 1,506.32 150.632
Aug-94 15.375 101.265 $0.000 $0.00 0.000 101.265 1,556.95 155.695
Sep-94 15.125 101.265 $0.100 $10.13 0.670 101.935 1,541.76 154.176
Oct-94 14.500 101.935 $0.000 $0.00 0.000 101.935 1,478.05 147.805
Nov-94 12.500 101.935 $0.000 $0.00 0.000 101.935 1,274.18 127.418
Dec-94 12.375 101.935 $0.100 $10.19 0.824 102.758 1,271.63 127.163
Jan-95 13.000 102.758 $0.000 $0.00 0.000 102.758 1.335.86 133.586
Feb-95 12.750 102.758 $0.000 $0.00 0.000 102.758 1,310.17 131.017
Mar-95 13.375 102.758 $0.125 $12.84 0.960 103.719 1,387.24 138.724
Apr-95 14.250 103.719 $0.000 $0.00 0.000 103.719 1,477.99 147.799
May-95 15.375 103.719 $0.000 $0.00 0.000 103.719 1,594.68 159.468
Jun-95 15.750 103.719 $0.125 $12.96 0.823 104.542 1,646.53 164.653
Jul-95 17.875 104.542 $0.000 $0.00 0.000 104.542 1,868.69 186.869
Aug-95 19.250 104.542 $0.000 $0.00 0.000 104.542 2,012.43 201.243
Sep-95 23.125 104.542 $0.125 $13.07 0.565 105.107 2,430.60 243.080
Oct-95 23.875 105.107 $0.000 $0.00 0.000 105.107 2,509.43 250.943
Nov-95 23.000 105.107 $0.000 $0.00 0.000 105.107 2,417.46 241.745
Dec-95 22.500 105.107 $0.125 $13.14 0.584 105.691 2,378.05 237.805
</TABLE>
Graph represents $100 invested in the Bank's initial public offering of
Common Stock issued on January 21, 1994 at $10.00 per share. The Common Stock
commenced trading on the NASDAQ Stock Market on January 24, 1994 at $15.625 per
share.
<PAGE> 26
23
INDEBTEDNESS OF MANAGEMENT
In accordance with applicable federal laws and regulations, the Bank
used to offer mortgage loans to its directors, officers and full-time employees
for the financing of their primary residences and certain other loans. Except
for interest rates and fees, these loans generally were made on substantially
the same terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans
neither involve more than the normal risk of collectibility nor present other
unfavorable features.
As a result of the application of Section 22(h) of the Federal Reserve
Act to savings associations, effective August 1989, any credit extended by a
savings association, such as the Bank to its executive officers, directors and,
to the extent otherwise permitted, principal stockholder(s), or any related
interest of the foregoing, must be (i) on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions by the savings association with non-affiliated parties
and (ii) not involve more than the normal risk of repayment or present other
unfavorable features. As of December 31, 1995, four of the directors and
executive officers of the Company or the Bank had aggregate loan balances in
excess of $60,000, which amounted to $583,938 in the aggregate, or
approximately less than 1% of the Bank's retained earnings as of such date.
All such loans were made by the Bank in the ordinary course of business and
were not made with favorable terms nor did they involve more than the normal
risk of collectibility.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen LLP
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending December 31, 1996, and further
directed that the selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by Arthur Andersen LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Arthur Andersen LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR FISCAL 1996.
<PAGE> 27
24
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 1997, must be received at
the principal executive offices of the Company, 70 Valley Stream Parkway, P.O.
Box 2100, Valley Forge, Pennsylvania 19482, Attention: LeRoy D. Todd, Jr.,
Senior Vice President and Secretary, no later than December 23, 1996. If such
proposal is in compliance with all applicable requirements, it will be included
in the proxy statement and set forth on the form of proxy issued for such
annual meeting of stockholders. It is urged that any such proposals be sent
certified mail, return receipt requested.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1995 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE 1934
ACT. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO LEROY D. TODD, JR., SENIOR
VICE PRESIDENT AND SECRETARY, COMMONWEALTH BANCORP, INC., 70 VALLEY STREAM
PARKWAY, P.O. BOX 2100, VALLEY FORGE, PENNSYLVANIA 19482. THE FORM 10-K IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
OTHER MATTERS
Management is not aware of any business to come before the Annual
Meeting other than the matters described above in this Proxy Statement.
However, if any other matters should properly come before the meeting, it is
intended that the proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
<PAGE> 28
REVOCABLE PROXY
COMMONWEALTH BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COMMONWEALTH BANCORP, INC. FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON JULY 19, 1996 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of Commonwealth
Bancorp, Inc. (the "Company") as proxies, each with power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all the shares of Common Stock of the Company held of record by the
undersigned on June 20, 1996 at the Annual Meeting of Stockholders to be held
at The People's Light & Theater Company, located at 39 Conestoga Road,
Malvern, Pennsylvania, on July 19, 1996, at 10:00 a.m., Eastern Time, and any
adjournment thereof.
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
Nominees for three-year term expiring in 1999:
Joseph E. Colen, Jr.; Richard J. Conner; and Matthew T. Welde.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL to ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE> 29
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES OF THE
COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT OTHERWISE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTOR'S NOMINEES
FOR DIRECTOR, FOR THE PROPOSAL TO RATIFY THE AUDITORS AND OTHERWISE AT THE
DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TIME IT IS VOTED AT THE ANNUAL MEETING.
Dated: ,1996
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Signatures
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAMES(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD
JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
