<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
[X] SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission file number: 0-27942
A. Full title of the Plan:
Commonwealth Bank Voluntary Investment Plan
B. Name of issuer of the securities held pursuant to the Plan and
the address of its principal executive office:
Commonwealth Bancorp, Inc.
2 West Lafayette Street
Norristown, Pennsylvania 19401
AS FILED ON OCTOBER 24, 1997
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements (filed in Exhibit 1 hereto):
Independent Auditor's Report
Statement of Net Assets Available for Plan Benefits as of
December 31, 1996
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1996
Notes to Financial Statements
Schedules
(b) Exhibits:
1. Financial statements required by Item 1(a)
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees have duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
COMMONWEALTH BANK VOLUNTARY
INVESTMENT PLAN
PNC BANK, TRUSTEE
October 24, 1997 By: /s/Joseph Petz
------------------------
Joseph Petz
<PAGE> 4
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995
TOGETHER WITH AUDITORS' REPORT
<PAGE> 5
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996 2
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS 3
AS OF DECEMBER 31, 1995
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR
PLAN BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996 4
NOTES TO FINANCIAL STATEMENTS 5-9
SCHEDULES:
I. SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES-ITEM 27(a) 10
II. SCHEDULE OF REPORTABLE TRANSACTIONS-ITEM 27(d) 11
</TABLE>
<PAGE> 6
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Compensation and Benefits Committee of the
Commonwealth Bank
Voluntary Investment Plan:
We have audited the accompanying statements of net assets available for plan
benefits of Commonwealth Bank Voluntary Investment Plan (the "Plan") as of
December 31, 1996 and 1995, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1996. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of December 31, 1996 and 1995, and the changes in its net assets available
for plan benefits for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions are presented for
purposes of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in
the statements of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits is presented for purposes of
additional information rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated, in all material respects, in relation
to the basic financial statements taken as a whole.
Philadelphia, Pa.,
September 12, 1997
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<PAGE> 7
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity Fidelity Compass
Advisor Advisor Capital Compass
Stable Growth Government Common Small Capital
Value Opportunities Investment Stock Cap Growth Balanced
Fund Fund Fund Fund Fund Fund
---------- --------------- -------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at fair value $ -- $ 3,677,851 $ 279,380 $ 6,459,292 $ 246,895 $ 227,760
INVESTMENTS, at contract value 934,268 -- -- -- -- --
LOANS TO PARTICIPANTS -- -- -- -- -- --
-------- --------------- -------------- ------------ -------------- ----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $934,268 $ 3,677,851 $ 279,380 $ 6,459,292 $ 246,895 $ 227,760
======== =============== ============== ============ ============== ==========
<CAPTION>
Janus Loan
Fund Fund Total
---------- --------- -------------
<S> <C> <C> <C>
INVESTMENTS, at fair value $ 271,349 $ -- $ 11,162,527
INVESTMENTS, at contract value -- -- 934,268
LOANS TO PARTICIPANTS -- 514,080 514,080
--------- --------- ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 271,349 $ 514,080 $ 12,610,875
========= ========= ============
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE> 8
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Fidelity Fidelity Compass
Advisor Advisor Capital Compass
Stable Growth Government Common Small Capital
Value Opportunities Investment Stock Cap Growth Balanced
Fund Fund Fund Fund Fund Fund
---------- --------------- -------------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENTS, at fair value $ -- $ 2,905,801 $ 269,085 $ 4,081,095 $ 18,144 $ 59,027
INVESTMENTS, at contract value 759,873 -- -- -- -- --
LOANS TO PARTICIPANTS -- -- -- -- -- --
---------- --------------- -------------- ------------ -------------- --------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 759,873 $ 2,905,801 $ 269,085 $ 4,081,095 $ 18,144 $ 59,027
========== =============== ============== ============ ============== ========
<CAPTION>
Janus Loan
Fund Fund Total
-------- -------- -----------
<S> <C> <C> <C>
INVESTMENTS, at fair value $ 50,640 $ -- $ 7,383,792
INVESTMENTS, at contract value -- -- 759,873
LOANS TO PARTICIPANTS -- 309,290 309,290
-------- -------- -----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 50,640 $309,290 $ 8,452,955
======== ======== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE> 9
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Fidelity Fidelity Compass
Advisor Advisor Capital Compass
Stable Growth Government Common Small Cap Capital
Value Opportunities Investment Stock Growth Balanced
Fund Fund Fund Fund Fund Fund
--------- ------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net unrealized appreciation
(depreciation) in fair
value of investments $ 42,630 $ 314,054 $ (10,309) $1,846,422 $(21,629) $ 5,669
Contributions by employees 87,398 330,877 41,837 188,424 33,745 23,821
Interest and dividends 3,949 207,985 17,075 83,432 19,716 11,836
Net transfers of assets to
(from) the plan 223,554 481,281 58,992 299,258 193,006 151,893
--------- ----------- ---------- --------- -------- --------
Total additions 357,531 1,334,197 107,595 2,417,536 224,838 193,219
--------- ----------- ---------- --------- -------- --------
NET TRANSFERS OF ASSETS
FROM (TO) OTHER FUNDS (156,714) (362,001) (73,135) 497,181 14,578 (5,365)
--------- ----------- ---------- --------- -------- --------
DEDUCTIONS FROM NET
ASSETS:
Benefits paid to participants 25,071 195,253 23,806 535,552 10,628 19,063
Other 1,351 4,893 359 968 37 58
--------- ----------- ---------- --------- -------- --------
Total deductions 26,422 200,146 24,165 536,520 10,665 19,121
--------- ----------- ---------- --------- -------- --------
Net increase in net assets
available for plan benefits 174,395 772,050 10,295 2,378,197 228,751 168,733
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
BEGINNING OF YEAR 759,873 2,905,801 269,085 4,081,095 18,144 59,027
--------- ----------- ---------- --------- -------- --------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
END OF YEAR $ 934,268 $ 3,677,851 $ 279,380 $6,459,292 $246,895 $227,760
========= =========== ========== ========== ======== ========
<CAPTION>
Janus Loan
Fund Fund Total
-------- -------- -----------
<S> <C> <C> <C>
ADDITIONS TO NET ASSETS:
Net unrealized appreciation
(depreciation) in fair
value of investments $ 2,397 $ 9,114 $ 2,188,348
Contributions by employees 54,315 -- 760,417
Interest and dividends 1,644 -- 345,637
Net transfers of assets to
(from) the plan 207,893 152,574 1,768,451
---------- -------- -----------
Total additions 266,249 161,688 5,062,853
---------- -------- -----------
NET TRANSFERS OF ASSETS
FROM (TO) OTHER FUNDS (2,043) 87,499 --
---------- -------- -----------
DEDUCTIONS FROM NET
ASSETS:
Benefits paid to participants 43,408 44,397 897,178
Other 89 -- 7,755
---------- -------- -----------
Total deductions 43,497 44,397 904,933
---------- -------- -----------
Net increase in net assets
available for plan benefits 220,709 204,790 4,157,920
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
BEGINNING OF YEAR 50,640 309,290 8,452,955
---------- -------- -----------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
END OF YEAR $ 271,349 $514,080 $12,610,875
========== ======== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
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<PAGE> 10
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. PLAN DESCRIPTION:
General
The following description of the Commonwealth Bank Voluntary Investment Plan
(the "Plan") provides only general information. Participants should refer to
the plan document as amended and restated effective as of January 1, 1994,
together with amendments to the Plan document and to the summary plan
description for more complete information.
The Plan is a defined contribution plan subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA), as amended. Those
eligible to participate in the Plan are salaried employees of Commonwealth Bank
(the "Bank") who have completed one year of service and have attained age 21.
In July 1995, the Bank acquired four branches of Fidelity Federal Savings and
Loan Association ("Fidelity Federal"), which included the employment of certain
Fidelity Federal employees. Based on an amendment executed on June 26, 1995,
effective August 1, 1995, the Plan allows former Fidelity Federal employees
hired by the Bank on or about July 29, 1995, to count prior service with
Fidelity Federal for purposes of Years of Eligibility Service under the Plan,
and to provide that former Fidelity Federal employees who meet the eligibility
requirements as of October 1, 1995, will become participants in the Plan as of
October 1, 1995.
In April 1996, the Bank acquired twelve branches of Meridian Bancorp, Inc.
which included related employment of certain Meridian employees. Effective
July 1, 1996, the Plan was amended to allow former Meridian employees hired by
the Bank on or about June 28, 1996, to include prior service with Meridian for
purposes of determining Years of Vesting Service and Years of Eligibility
Service under the Plan, but not for purposes of determining Years of
Participation Service, and to provide that former Meridian employees who meet
the eligibility requirements as of July 1, 1996, will become participants in
the Plan as of July 1, 1996.
Contributions to the Plan are voluntary. Participants are able to contribute a
portion of their pretax earnings, subject to certain limitations (Note 2). All
participants are fully vested in all contributions made.
The Plan changed its trustee in October 1995 from Commonwealth Bank to PNC
Bank, N.A.
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<PAGE> 11
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accompanying financial statements have been prepared using the accrual
basis of accounting in accordance with the AICPA Audit and Accounting Guide,
"Audits of Employee Benefit Plans."
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of net assets and liabilities at the date of
the financial statements and the reported amounts of contributions, earnings
and disbursements during the reporting period. Actual results could differ
from those estimates.
Reclassifications
Certain items in the 1995 financial statements have been reclassified in order
to conform with the 1996 financial statement presentation.
Investments
Investments in common trust funds and mutual funds are recorded at the current
unit value (which is based upon the value of the underlying securities), and
include interest and dividends earned by the funds.
The Plan's Stable Value Fund holds an investment in the PNC Investment Contract
Fund, a common trust fund which holds guaranteed investment contracts. These
fully benefit-responsive contracts are included in the financial statements for
the year ended December 31, 1996 at contract value.
The difference between fair value and the purchase price during the year or
beginning of year fair value is reflected in the statement of changes in net
assets available for plan benefits as net unrealized appreciation
(depreciation) in the aggregate fair value of investments.
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<PAGE> 12
The current value of individual investments that represents 5% or more of the
Plan's total net assets available for benefits as of December 31, 1996 and
1995, is as follows:
<TABLE>
<CAPTION>
December 31
----------------------------
Investment 1996 1995
------------------------ ------------ ------------
<S> <C> <C>
Stable Value Fund $ 934,268 $ 759,873
Fidelity Advisor Growth
Opportunities Fund 3,677,851 2,905,801
Common Stock Fund 6,459,292 4,081,095
</TABLE>
Contributions
Contributions are made from participants' pretax earnings at the election of
the participant through payroll deduction. Contributions by any participant
cannot exceed 15% of annual compensation up to the Internal Revenue Service
(IRS) annual contribution limitation. Employees can elect to invest their
contributions in either certificates of deposit, mutual funds or common stock
of the Bank. Funds available for investment during 1996 and 1995 include the
following:
Commonwealth Stable Value Fund: A fund invested primarily in Guaranteed
Investment Contract Funds (GICS) which seeks to generate returns above the
rates earned by money market funds while generally maintaining a stable
principal value.
Fidelity Advisor Government Investment Fund: A fund invested primarily in
securities backed by the full faith and credit of the U.S. government and its
various agencies and instrumentalities. The fund has the flexibility to invest
in government sectors on the basis of value, as well as economic and market
conditions.
Fidelity Advisor Growth Opportunities Fund: A fund invested primarily in
traditional growth stocks of companies with potential for above-average growth
in earnings or sales.
Common Stock Fund: A fund invested in Commonwealth Common Stock.
Compass Capital Balanced Fund: A fund invested primarily in equity and fixed
income securities which seeks long-term capital appreciation from stocks and
current income from bonds. The equity portion of the fund combines a value and
growth style in an attempt to identify market opportunities; while the fixed
income portion of the fund selects securities from across the entire investment
grade spectrum.
Compass Capital Small Cap Growth Fund: A fund invested primarily in small cap
stocks which exhibit earnings growth rate prospects in excess of the benchmark
average. The fund emphasizes investment in small companies with a market
capitalization under $1 billion and seeks to select stocks with earnings growth
momentum and relative price strength in the top 35% of their peer group.
- 7 -
<PAGE> 13
Janus Fund: A fund invested primarily in a diversified portfolio of common
stocks of issuers of any size. Generally, the fund emphasizes issuers with
larger market capitalizations and seeks long-term growth of capital.
Certain participants hold life insurance contracts which are allocated
specifically to individual participants' accounts. Accordingly, cash values
and benefits accruing under these policies are excluded from assets available
for plan benefits. These contracts are no longer an investment option.
However, Universal Life Insurance contracts purchased before July 1990 will
continue to be held by this Plan.
Investment Income
Investment income is distributed to participants' accounts on a pro-rata basis,
taking into consideration the investment elections made by the participant.
Administrative Expenses
All administrative expenses incurred in the operation of the Plan are generally
paid by the participants.
3. PARTICIPANT LOANS:
Under defined conditions, participants are entitled to borrow in a limited
capacity from the Plan. Loans generally bear interest at the rate of prime
plus 2% and are repayable over no more than five years, unless the loan
provides funding for the purchase of the participant's principal residence.
4. DISTRIBUTIONS TO PARTICIPANTS:
Distributions to retiring and terminated participants are generally made in the
year following retirement or termination. Distributions due participants at
December 31, 1996 and 1995, amounted to $511,120 and $653,279, respectively.
The distributions due to participants are classified as a component of net
assets in the accompanying financial statements.
5. TAX STATUS:
The Plan has received a favorable determination letter from the IRS that the
Plan constitutes a qualified plan under the Internal Revenue Code Section
401(a) and, therefore, the related trust is exempt from federal income taxes
under the Internal Revenue Code Section 501(a). Management believes the Plan
is designed and operating in accordance with the Internal Revenue Code.
Accordingly, federal income taxes have not been provided for in the
accompanying financial statements.
6. PLAN TERMINATION:
Although it has not expressed any intent to do so, the Bank has the right under
the Plan to terminate the Plan subject to the provisions of ERISA.
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<PAGE> 14
7. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
Net assets available for plan benefits per
the financial statements $12,610,875 $ 8,452,955
Cash surrender value of life insurance
policies (see Note 2) 23,497 23,497
Less: accrued benefits payable (511,120) --
----------- ------------
Net assets available for plan benefits per
Form 5500 $12,123,252 $ 8,476,452
=========== ============
</TABLE>
8. SUBSEQUENT EVENT:
In January 1997, the Bank acquired Homestead Mortgage, Inc. which included
related employment of certain Homestead employees. Effective March 11, 1997,
the Plan was amended to allow all former Homestead employees hired by the Bank
to become participants in the Plan as of March 1, 1997.
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<PAGE> 15
SCHEDULE I
EIN #: 23-2760253
PLAN #: 002
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
ITEM 27(a)--SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Par Value
or Number Current
Description of Investment of Shares Cost Value
-------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
STABLE VALUE FUND:
Commonwealth Bank 880,371 $ 896,456 $ 934,268
COMMON STOCK FUND:
Commonwealth Bank 495,174 2,585,966 6,459,292
FIDELITY INVESTMENTS:
Advisor Investment Government Fund 29,533 281,224 279,380
Advisor Growth Opportunities Fund 104,188 3,362,792 3,677,851
PNC INVESTMENTS:
Balanced Fund 14,720 224,894 227,760
Small Cap Growth Fund 12,578 271,074 246,895
Janus Fund 8,054 280,588 271,349
------------- -------------
$ 7,902,994 $ 12,096,795
============= =============
LOANS TO PARTICIPANTS (8% to 13%) 514,080 $ 514,080 $ 514,080
============= =============
</TABLE>
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<PAGE> 16
SCHEDULE II
EIN #: 23-2760253
PLAN #: 002
COMMONWEALTH BANK
VOLUNTARY INVESTMENT PLAN
ITEM 27(d)--SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Cost of
Asset Number of Purchase Assets Sale Gain
Identity of Party Description Transactions Price Sold Price (Loss)
-------------------------- ---------------------- ------------- ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Single
------
Commonwealth Bank Common Stock Fund 1 $ 515,816 $ -- $ -- $ --
Fidelity Advisor Growth
Opportunities Fund 1 481,282 -- -- --
Series
------
Commonwealth Bank Common Stock Fund 199 1,901,116 1,278,552 1,369,341 90,789
Fidelity Advisor Growth
Opportunities Fund 110 1,126,155 635,946 668,159 32,213
PNC Bank Loan Fund 60 431,654 235,978 235,978 --
Commonwealth Bank Stable Value Fund 81 378,319 241,737 246,554 4,817
</TABLE>
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