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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
April 15, 1997
________________________________________________________________________________
(Date of earliest event reported)
Commonwealth Bancorp, Inc.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Pennsylvania 0-27942 23-2828883
________________________________________________________________________________
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
P.O. Box 2100
70 Valley Stream Parkway, Valley Forge, Pennsylvania 19482
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(Address of principal executive offices) (Zip Code)
(610) 251-1600
________________________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Page 1 of 9 Pages.
Exhibit Index appears on page 2.
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Item 5. Other Events
On April 15, 1997, Commonwealth Bancorp. Inc. (the "Company"), announced
net income of $4.7 million for first quarter of 1997. Net income was $2.6
million for the first quarter of 1996. For additional information, reference
is made to the Press Release, dated April 15, 1997, which is attached hereto
as Exhibit 99 and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits:
99 Press Release, dated April 15, 1997
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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 thereunto duly authorized.
COMMONWEALTH BANCORP, INC.
Date: April 22, 1997 By: /s/ Charles M. Johnston
------------------------
Charles M. Johnston
Chief Financial Officer
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(COMMONWEALTH BANCORP, INC. LETTERHEAD)
For release: IMMEDIATELY
Contact: Charles M. Johnston, Chief Financial Officer, (610) 313-2189
COMMONWEALTH BANCORP, INC. REPORTS RECORD EARNINGS
FOR FIRST QUARTER 1997
Norristown, PA, April 15, 1997 -- Commonwealth Bancorp, Inc. (NASDAQ: CMSB),
today reported net income of $4.7 million for the first quarter of 1997. Net
income was $2.6 million for the first quarter of 1996.
The $2.0 million, or 77%, increase in net income in the first quarter of
1997, compared to the first quarter of 1996, was primarily attributable to a
$1.0 million (after-tax) nonrecurring net gain on the sale of the Company's
previous headquarters building and a branch property, as well as earnings
relating to the 1996 acquisition of 12 branch offices in Berks and Lebanon
Counties, PA ("Berks Acquisition"). In addition, the leveraging of the
capital raised in the Company's June 1996 Conversion, Reorganization and
stock offering contributed to the increase in first quarter 1997 net income.
Earnings per share of common stock were $0.28 in the first quarter of 1997,
compared to $0.33 in the first quarter of 1996. The decrease in earnings per
share was primarily attributable to an increase in the number of common
shares outstanding after the completion of the Company's Conversion,
Reorganization and stock offering in June 1996. As part of that transaction,
former holders of Commonwealth Bank common stock exchanged each of their
shares for 2.0775 shares of Commonwealth Bancorp, Inc. common stock.
The first quarter of 1997 was marked by a number of significant
accomplishments. During the quarter, Commonwealth:
- Completed the acquisition of five mortgage production offices of
Homestead Mortgage, Inc. located in MD and PA;
- Opened its 15th supermarket branch office, bringing the total number of
branches to 54 in the Bank's eight county region in Southeast PA;
- Completed the sale of the Company's previous headquarters building in
Malvern, PA and successfully relocated to lower-cost facilities in
Norristown, PA;
- Completed the purchase of 0.9 million shares of the Company's common
stock to be used for general corporate purposes;
- Increased the quarterly dividend by 17% to $0.07 per share.
Reflecting on the Company's accomplishments in the first quarter, Charles H.
Meacham, Chairman and Chief Executive Officer, noted, "Commonwealth made
excellent progress toward the realization of its strategic goals in the first
quarter of 1997. The Company met the challenges associated with the
headquarters relocation while continuing to expand its core businesses of
retail, business, and mortgage banking, and effectively managing its strong
capital position."
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COMMONWEALTH BANCORP, INC. REPORTS RECORD EARNINGS
FOR FIRST QUARTER 1997
page 2
Commonwealth's earnings for the first quarter of 1997 reflected $1.6 million
in non-cash expenses relating to the amortization of goodwill and core
deposit intangibles acquired in various acquisitions and accounted for under
the purchase method of accounting. This compared to $0.6 million of such
expenses in the first quarter of 1996.
Net interest income was $17.8 million in the first quarter of 1997, an
increase of 44% compared to $12.4 million in the first quarter of 1996. The
increase was primarily attributable to sharply higher interest-earning asset
levels, and a modestly higher net interest margin.
Average interest-earning assets were $2.0 billion in the first quarter of
1997, compared to $1.4 billion in the first quarter of 1996. The increase
was due primarily to the Berks Acquisition and to the leveraging of the
capital raised in the stock offering. In addition, growth in supermarket
banking and business banking contributed to the increase in interest-earning
assets.
The net interest margin was 3.58% in the first quarter of 1997, up slightly
from 3.47% in the first quarter of 1996. The increase was attributable to a
0.07% improvement in the favorable effect relating to interest free funds and
a 0.04% improvement in the spread between the yield on interest-earning
assets and the cost of interest-bearing liabilities (net interest spread).
Noninterest income totaled $5.4 million in the first quarter of 1997,
compared to $3.4 million in the first quarter of 1996. The increase
primarily reflected a $1.5 million net gain on the sale of the Company's
previous headquarters building and the sale of a branch property. Also
contributing to the increase in noninterest income in the first quarter of
1997 was a $0.5 million increase in deposit fees. The increase in deposit
fees was primarily attributable to the Berks Acquisition, growth in
supermarket banking, and expansion of Commonwealth's business banking
activities.
Noninterest expense was $15.7 million in the first quarter of 1997, compared
to $11.7 million in the first quarter of 1996. The increase was primarily
attributable to higher expenses relating to the Berks Acquisition and the
acquisition of the Homestead Mortgage production offices, as well as to
expenses related to growth in supermarket banking and expansion of business
banking activities. The increase in noninterest expense was offset, in part,
by a $0.6 million decrease in FDIC premium expense. This decrease was
related to a reduction in deposit insurance premiums from $0.23 to
approximately $0.08 per $100 of deposits, and to a $0.2 million refund of
prior year FDIC premiums received in the first quarter of 1997.
Provision for credit losses totaled $0.3 million in the first quarter of 1997,
compared to no provision recorded in the first quarter of 1996. At March 31,
1997, the allowance for credit losses totaled $10.0 million, or 0.89% of
loans. The allowance for credit losses was $7.5 million, or 0.89% of loans
at March 31, 1996. The increase in the allowance for credit losses in 1997
was primarily due to the $2.4 million in allowance acquired in the Berks
Acquisition.
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COMMONWEALTH BANCORP, INC. REPORTS RECORD EARNINGS
FOR FIRST QUARTER 1997
page 3
Net credit losses totaled $0.2 million, or 0.08% of average loans in the
first quarter of 1997. This compared to $0.1 million, or 0.03% of average
loans in the first quarter of 1996. The increase in net credit losses was
primarily related to the loans acquired in the Berks Acquisition.
Nonperforming assets totaled $9.4 million, or 0.42% of assets at March 31,
1997, compared to $7.3 million, or 0.44%, at March 31, 1996. The increase in
nonperforming assets was primarily related to the commercial loans acquired
in the Berks Acquisition.
The Bank's core capital ratio was 6.5% at March 31, 1997. This compared to
7.3% at March 31, 1996. The decrease was primarily attributable to the
increase in intangibles related to the Berks Acquisition.
Commonwealth Bancorp, Inc., with consolidated assets in excess of $2.2
billion, is the holding company for Commonwealth Bank, which has branches
throughout southeast Pennsylvania. ComNet Mortgage Services, a division of
Commonwealth Bank, has offices in Pennsylvania, Connecticut, Maryland, New
Jersey, and Rhode Island.
Detailed supplemental information follows.
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COMMONWEALTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share amounts)
For the Quarter Ended March 31,
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1997 1996
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(Unaudited)
Interest income:
Interest on loans $ 22,055 $ 16,380
Interest and dividends on deposits and money
market investments 565 601
Interest on investment securities 1,014 722
Interest on mortgage-backed securities 13,821 8,970
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Total interest income 37,455 26,673
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Interest expense:
Interest on deposits 13,915 10,540
Interest on notes payable and other borrowings 5,692 3,750
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Total interest expense 19,607 14,290
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Net interest income 17,848 12,383
Provision for loan losses 300 0
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Net interest income after provision
for loan losses 17,548 12,383
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Noninterest income:
Deposit fees and related income 1,534 1,072
Servicing fees 1,202 1,166
Net gain on sales of mortgage loans 719 872
Net loss on sales of foreclosed real estate (69) (55)
Other 1,982 350
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Total noninterest income 5,368 3,405
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Noninterest expense:
Compensation and employee benefits 7,938 5,722
Occupancy and office operations 2,427 1,947
FDIC premium (31) 613
Advertising and promotion 418 317
Amortization of intangible assets 1,578 573
Other 3,397 2,526
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Total noninterest expense 15,727 11,698
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Income before income taxes 7,189 4,090
Income tax provision 2,519 1,452
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Net income $ 4,670 $ 2,638
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Weighted-average number of shares outstanding 16,556,570 7,996,103
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Earning per share $ 0.28 $ 0.33
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COMMONWEALTH BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION> March 31, December 31,
1997 1996
--------------------------------
(Unaudited)
<S> <C> <C>
Assets:
Cash and due from banks $ 36,792 $ 39,268
Interest-bearing deposits 0 15,111
Short-term investments available for sale 31,507 5,723
Mortgage loans held for sale 35,213 17,335
Investments securities
Securities available for sale (cost of $70,069
and $53,815, respectively), at market value 69,905 53,935
Mortgage-backed securities
Securities held to maturity (market value of $227,802
and $239,447, respectively), at cost 227,893 237,743
Securities available for sale (cost of $603,677
and $511,833, respectively), at market value 600,888 514,964
Loans receivable, net 1,116,269 1,113,114
Accrued interest receivable, net 13,159 13,339
FHLB stock, at cost 14,175 11,159
Premises and equipment, net 15,715 25,369
Intangible assets 49,656 51,220
Mortgage servicing rights 7,770 7,677
Other assets, including net deferred taxes of $3,300 and $1,144, respectively 17,066 14,004
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Total assets $ 2,236,008 $ 2,119,961
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Liabilities:
Deposits $ 1,497,607 $ 1,491,450
Notes payable and other borrowings:
Secured notes due to Federal Home Loan Bank of Pittsburgh 214,000 175,000
Secured sold under agreements to repurchase 250,467 176,674
Advances from borrowers for taxes and insurance 27,267 23,883
Accrued interest payable, accrued expenses and other liabilities 32,737 21,030
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Total liabilities 2,022,078 1,888,037
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Shareholders' Equity:
Preferred stock, $0.10 par value; 5,000,000 shares
authorized; none issue
Common stock, $0.10 par value; 30,000,000 shares authorized
18,008,425 shares issued and 17,110,825 outstanding at March 31, 1997
17,953,613 shares issued and outstanding at December 31, 1996 1,801 1,795
Additional paid-in capital 133,097 132,931
Retained earnings 109,169 105,577
Unearned stock benefit plan compensation (14,451) (10,510)
Unrealized (loss) gain on marketable securities, net (1,919) 2,131
Treasury stock, at cost; 897,600 shares at March 31, 1997 (13,767) --
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Total shareholders' equity 213,930 231,924
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Total liabilities and shareholders' equity $ 2,236,008 $ 2,119,961
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COMMONWEALTH BANCORP, INC.
Selected Financial Highlights
(dollars in thousands, except per share data)
For the Quarter Ended
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BALANCE SHEET DATA: March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
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Average Loans $1,105,066 $798,478
Average Interest-Earning Assets 2,021,841 1,434,805
Average Asset 2,160,499 1,529,423
Average Deposits 1,495,072 1,118,266
Average Interest-Bearing Liabilities 1,896,554 1,367,018
Average Shareholders' Equity 223,654 136,833
As of
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March 31, 1997 December 31, 1996
(Unaudited)
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Book Value Per Share $12.50 $12.92
Tangible Book Value Per Share 9.60 10.07
Non-performing Loans 8,258 8,058
Non-performing Assets 9,445 9,148
For the Quarter Ended
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OPERATING DATA: March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
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Annualized Return on Assets 0.88% 0.69%
Annualized Return on Equity 8.46% 7.75%
ComNet Mortgage Originations $98,199 $128,974
Net Income Per Share 0.28 0.33
As of
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CAPITAL RATIOS:* March 31, 1997 December 31, 1996
(Unaudited)
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Core Capital 6.5% 6.6%
Risk Based Capital 14.0% 14.2%
* Represents ratios of Commonwealth Bank.
