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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 20, 1999
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(Date of earliest event reported)
Commonwealth Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 0-27942 23-2828883
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2 West Lafayette Street, Norristown, Pennsylvania 19401
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(Address of principal executive offices) (Zip Code)
(610) 251-1600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
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Item 5. Other Events
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On April 20, 1999, Commonwealth Bancorp. Inc. (the "Company") announced that
net income was $4.1 million for the first quarter of 1999, compared to $3.9
million for the first quarter of 1998. The Company reported earnings per share
of $0.30 on a diluted basis for the first quarter of 1999, an increase of 20%,
compared to earnings of $0.25 per common share for the first quarter of 1998.
For additional information, reference is made to the Press Release, dated April
20, 1999, which is attached hereto as Exhibit 99 and is incorporated herein by
reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits:
99 Press Release dated April 20, 1999
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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 under-
signed thereunto duly authorized.
COMMONWEALTH BANCORP, INC.
Date: April 21, 1999 By: /s/Charles M. Johnston
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Charles M. Johnston
Chief Financial Officer
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Exhibit 99
For release: IMMEDIATELY
Contact: Charles M. Johnston
Chief Financial Officer (610) 313-2189
COMMONWEALTH BANCORP, INC. REPORTS RECORD EARNINGS PER SHARE FOR
FIRST QUARTER 1999
NORRISTOWN, PA, April 20, 1999 - Commonwealth Bancorp, Inc. (NASDAQ: CMSB),
today reported record earnings per common share of $0.30 on a diluted basis for
the first quarter of 1999, an increase of 20%, compared to earnings of $0.25 per
common share for the first quarter of 1998. Net income was $4.1 million for the
first quarter of 1999, compared to $3.9 million for the first quarter of 1998.
"We are pleased to report record earnings per share for the first quarter of
1999," stated Charles H. Meacham, Chairman and Chief Executive Officer. He
added, "Commonwealth's retail, commercial and mortgage banking businesses
continued to demonstrate positive trends in the first quarter of 1999. Compared
to last year's first quarter, average consumer loans increased by 24% to $244
million, average commercial loans increased by 17% to $137 million, and average
demand and money market deposits increased by 18% to $709 million. In addition,
the combination of mortgage servicing fees and gain on sale of mortgage loans
increased by 61% to $5.1 million in this year's first quarter. Also, Common-
wealth increased its quarterly dividend by 13% during the first quarter of 1999,
to $0.09 per share, and completed its fifth common stock repurchase program
since the beginning of 1997."
Net interest income was $17.5 million and average interest-earning assets
totaled $2.1 billion for both the first quarter of 1999 and the first quarter of
1998. Average loans represented 88% of average deposits in the first quarter of
1999, compared to 85% in the first quarter of 1998.
The net interest margin was 3.46% in the first quarter of 1999, compared to
3.33% in the first quarter of 1998. The increase was primarily attributable to
a 0.39% decrease in the cost of interest-bearing liabilities, offset, in part,
by a 0.21% reduction in the yield on interest-earning assets. The decrease in
the cost of interest-bearing liabilities was primarily related to a reduction in
the average cost of certificates of deposit. Also contributing to the decrease
in the cost of interest-bearing liabilities was an increase in lower costing
demand and money market deposits, and a decrease in higher costing certificates.
The reduction in the yield on interest-earning assets was, in large part, due to
generally lower market interest rates.
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Noninterest income totaled $7.9 million in the first quarter of 1999, compared
to $6.0 million in the first quarter of 1998. The increase reflected a $2.1
million increase in the net gain on sale of mortgage loans, primarily attribut-
able to an increase in loans sold on a servicing released basis.
Noninterest expense was $18.7 million in the first quarter of 1999, compared to
$17.4 million in the first quarter of 1998. The increase was primarily
attributable to an increase in mortgage banking expenses and higher expenses
relating to the accelerated vesting of certain stock benefit plans due to
retirements. The opening of three supermarket branch offices and two
traditional branch offices also contributed to the increase in noninterest
expense in the first quarter of 1999.
Provision for loan losses totaled $1.0 million in the first quarter of 1999,
compared to $0.5 million in the first quarter of 1998. The increase was
primarily attributable to an increase in the consumer and commercial loan port-
folios. At March 31, 1999, the allowance for loan losses totaled $9.9 million,
or 0.76%, of loans, compared to $9.6 million, or 0.71%, at December 31, 1998.
Net credit losses totaled $0.6 million, or 0.19% of average loans in the first
quarter of 1999. This compared to $0.5 million, or 0.15% of average loans in
the first quarter of 1998.
Nonperforming assets totaled $11.3 million, or 0.51% of assets at March 31,
1999, compared to $11.1 million, or 0.49%, at December 31, 1998.
Provision for income taxes was $1.7 million, or 29% of income before income
taxes in the first quarter of 1999, compared to $1.8 million, or 32%, in the
first quarter of 1998. The decrease in the tax rate in the first quarter of
1999 was primarily attributable to historic and low income housing tax credits.
During the first quarter of 1999, the Company purchased 0.7 million shares of
its common stock at a purchase price of $10.5 million. There were no purchases
during the first quarter of 1998. The repurchased shares were held as treasury
stock and are reserved for general corporate purposes and/or issuance pursuant
to the Company's stock option plans. At March 31, 1999, shareholders' equity
represented 8.4% of assets, compared to 8.5% at December 31, 1998.
The Bank's core and risk-based capital ratios were 6.3% and 12.5%, respectively,
at March 31, 1999, compared to 5.9% and 11.6%, respectively, at December 31,
1998.
Commonwealth Bancorp, Inc., with consolidated assets of $2.2 billion, is the
holding company for Commonwealth Bank, which has 61 branches throughout south-
east Pennsylvania. ComNet Mortgage Services, a division of Commonwealth Bank,
has offices in Pennsylvania, Maryland, New Jersey, Rhode Island, and Virginia.
ComNet also operates under the trade name of Homestead Mortgage in Maryland.
Certain statements contained herein may not be based on historical facts and are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as
amended. Actual results could differ materially from those indicated in such
statements due to risks, uncertainties and changes with respect to a variety of
market and other factors.
Detailed supplemental information follows.
Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except share amounts)
For the Quarter
Ended March 31,
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1999 1998
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(Unaudited)
Interest income:
Interest on loans $26,259 $25,383
Interest and dividends on deposits
and money market investments 1,041 683
Interest on investment securities 1,377 743
Interest on mortgage-backed securities 7,930 12,270
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Total interest income 36,607 39,079
Interest expense:
Interest on deposits 13,784 14,944
Interest on notes payable and other
borrowings 5,286 6,620
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Total interest expense 19,070 21,564
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Net interest income 17,537 17,515
Provision for loan losses 1,000 500
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Net interest income after provision
for loan losses 16,537 17,015
Noninterest income:
Deposit fees and related income 2,187 2,051
Servicing fees 894 1,047
Net gain on sale of mortgage loans 4,161 2,092
Other 650 816
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Total noninterest income 7,892 6,006
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Noninterest expense:
Compensation and employee benefits 9,618 8,989
Occupancy and office operations 2,817 2,600
FDIC premium 190 193
Advertising and promotion 414 437
Amortization of intangible assets 1,289 1,417
Other 4,378 3,735
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Total noninterest expense 18,706 17,371
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Income before income taxes 5,723 5,650
Income tax provision 1,660 1,798
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Net income $ 4,063 $ 3,852
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Basic weighted average number of shares
outstanding 13,358,378 14,983,836
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Basic earnings per share $0.30 $0.26
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Diluted weighted average number of shares
outstanding 13,693,354 15,640,878
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Diluted earnings per share $0.30 $0.25
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Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share amounts)
March 31, December 31,
1999 1998
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(Unaudited)
Assets:
Cash and due from banks $ 45,863 $ 58,028
Interest-bearing deposits 47,491 43,829
Short-term investments available for sale 9,915 4,820
Mortgage loans held for sale 59,282 120,642
Investment securities
Securities available for sale (cost of
$174,091 and $344,407,respectively),
at market value 174,017 34,515
Mortgage-backed securities
Securities held to maturity (market value
of $118,389 and $133,735, respectively),
at cost 116,532 132,105
Securities available for sale (cost of
$306,253 and $388,349, respectively),
at market value 308,553 392,036
Loans receivable, net 1,301,022 1,338,177
Accrued interest receivable, net 11,503 11,260
FHLB stock, at cost 18,400 18,400
Premises and equipment, net 17,004 16,887
Intangible assets 38,541 39,830
Mortgage servicing rights 8,133 9,969
Other assets, including net deferred taxes
of $3,396 and $2,508, respectively 41,635 37,001
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Total assets 2,197,891 2,257,499
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Liabilities:
Deposits $1,603,494 $1,605,299
Notes payable and other borrowings:
Secured noes due to Federal Home Loan
Bank of Pittsburgh 203,000 240,500
Securities sold under agreements to
repurchase 140,000 166,000
Other borrowings 8,460 --
Advances from borrowers for taxes and
insurance 30,552 28,960
Accrued interest payable, accrued expenses
and other liabilities 27,742 24,562
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Total liabilities 2,013,248 2,065,321
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Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.10 par value;
5,000,000 shares authorized;
none issued -- --
Common stock, $0.10 par value;
30,000,000 shares authorized;
18,068,285 shares issued and
14,039,291 outstanding at March 31,
1999
18,054,315 shares issued and 14,721,408
outstanding at December 31, 1998 1,807 1,806
Additional paid-in capital 135,930 135,588
Retained earnings 126,785 123,917
Unearned stock benefit plan compensation (9,904) (10,666)
Unrealized gain on marketable securities, net 1,447 2,467
Treasury stock, at cost; 4,028,994 and
3,332,907 shares respectively (71,422) (60,934)
Total shareholders' equity 184,643 192,178
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Total liabilities and shareholders'
equity $2,197,891 $2,257,499
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Commonwealth Bancorp, Inc. and Subsidiaries
Selected Financial Data
(in thousands, except per share data)
For the Quarter Ended
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March 31, 1999 March 31, 1998
(Unaudited) (Unaudited)
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BALANCE SHEET DATA:
Average Loans $1,397,863 $1,327,723
Average Interest-Earning Assets 2,057,129 2,132,501
Average Assets 2,213,701 2,290,597
Average Deposits 1,596,163 1,568,469
Average Interest-Bearing Liabilities 1,970,958 2,027,879
Average Shareholders' Equity 189,561 216,442
OPERATING DATA:
Annualized Return on Assets 0.74% 0.68%
Annualized Return on Equity 8.69% 7.22%
Mortgage Originations $189,666 $294,173
Average Yield on Loans 7.62% 7.75%
Average Yield on Interest-Earning Assets 7.22% 7.43%
Average Cost of Interest-Bearing Liabilities 3.92% 4.31%
Net Interest Margin 3.46% 3.33%
As of
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March 31, 1999 December 31, 1999
(Unaudited)
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Book Value Per Share $13.15 $13.05
Tangible Book Value Per Share 10.41 10.35
Nonperforming Loans 9,770 10,012
Nonperforming Assets 11,276 11,061
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