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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 18, 2000
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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
On April 18, 2000, Commonwealth Bancorp, Inc.reported earnings per
common share of $0.31 on a diluted basis for the first quarter of 2000, compared
to earnings of $0.30 per common share for the first quarter of 1999. Net
income was $3.4 million for the first quarter of 2000, compared to $4.1 million
for the first quarter of 1999. For additional information, reference is made to
the Press Release, dated April 18, 2000, 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 18, 2000
2
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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 19, 2000 By: /s/Charles M. Johnston
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Charles M. Johnston
Chief Financial Officer
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Exhibit 99
[COMMONWEALTH BANCORP, INC. LETTERHEAD]
For release: IMMEDIATELY
Contact: Charles M. Johnston, Chief Financial Officer (610) 313-2189
COMMONWEALTH BANCORP, INC. REPORTS FIRST QUARTER 2000 FINANCIAL RESULTS
NORRISTOWN, PA, APRIL 18, 2000 - COMMONWEALTH BANCORP, INC. (NASDAQ: CMSB),
today reported earnings per common share of $0.31 on a diluted basis for the
first quarter of 2000, compared to earnings of $0.30 per common share for the
first quarter of 1999. Net income was $3.4 million for the first quarter of
2000, compared to $4.1 million for the first quarter of 1999.
On a business segment basis, net income from Community Banking increased by 49%
from $2.4 million in the first quarter of 1999, to $3.6 million in the first
quarter of 2000. Net income from Mortgage Banking decreased from $1.7 million
in the first quarter of 1999, to a loss of $0.2 million in the first quarter of
2000.
"Commonwealth's strong performance in Community Banking reflected excellent
growth in consumer and commercial loans, and continued expansion of demand and
money market deposits," stated Charles H. Meacham, Commonwealth's Chairman and
Chief Executive Officer. He added, "Compared to the first quarter of 1999,
average consumer loans increased 34% to $327 million, average commercial loans
increased 42% to $194 million, and average demand and money market deposits
increased 3% to $730 million." He continued, "The decrease in Mortgage Banking
net income was primarily related to decreased mortgage origination volumes
resulting from higher interest rates, and the sale of Commonwealth's third
party mortgage servicing portfolio in 1999."
Net interest income was $18.1 million in the first quarter of 2000, compared to
$17.5 million in the first quarter of 1999. The increase was primarily
attributable to a higher net interest margin which was partially offset by a
decrease in average interest earning assets.
The net interest margin on a fully taxable equivalent basis was 4.15% in the
first quarter of 2000, compared to 3.46% in the first quarter of 1999. The
increase was primarily attributable to a 0.48% increase in the yield on
interest-earning assets, which was primarily attributable to higher market
interest rates and a favorable change in investment mix, involving an increase
in higher yielding consumer and commercial loans, and a decrease in lower
yielding mortgage loans and securities. Also contributing to the increase in
net interest margin was a 0.29% decrease in the cost of interest-bearing
liabilities. The decrease in the cost of interest-bearing liabilities was
primarily related to a reduction in the average cost of certificates of
deposit, which decreased from 5.15% in the first quarter of 1999 to 4.96% in
the first quarter of 2000. Also contributing to the decrease in the cost of
interest-bearing liabilities was a favorable change in funding mix, involving
an increase in lower costing demand and money market deposits, and a decrease
in higher costing certificates and wholesale borrowings.
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Noninterest income totaled $4.9 million in the first quarter of 2000, compared
to $7.9 million in the first quarter of 1999. The decrease reflected a $3.1
million decrease in the net gain on sale of mortgage loans, primarily
attributable to a decrease in mortgage originations due to generally higher
market interest rates. Also during the first quarter of 2000, servicing fees
decreased by $0.7 million relating to the sale of mortgage servicing rights
during the third quarter of 1999. The above decreases were partially offset by
a $0.4 million increase in deposit fees and related income, primarily relating
to an increase in transaction accounts and revenue relating to the acquisition
of certain business interests of Tyler Consulting, Inc. during the first
quarter of 2000.
Noninterest expense was $17.2 million in the first quarter of 2000, compared to
$18.7 million in the first quarter of 1999. The decrease was primarily
attributable to a decrease in mortgage banking expenses and lower expenses
relating to certain stock benefit plans.
Provision for loan losses totaled $1.1 million in the first quarter of 2000,
compared to $1.0 million in the first quarter of 1999. At March 31, 2000, the
allowance for loan losses totaled $10.4 million, or 0.75% of loans, compared to
$10.5 million, or 0.76%, at December 31, 1999.
Net credit losses totaled $1.2 million, or 0.33% of average loans in the first
quarter of 2000. This compared to $0.6 million, or 0.19% of average loans in
the first quarter of 1999. The increase was primarily related to an increase in
consumer net credit losses, which were $1.1 million in the first quarter of
2000, compared to $0.3 million in the first quarter of 1999.
Nonperforming assets totaled $10.5 million, or 0.55% of assets at March 31,
2000, compared to $10.4 million, or 0.54%, at December 31, 1999.
Provision for income taxes was $1.2 million, or 26.5% of income before income
taxes in the first quarter of 2000, compared to $1.7 million, or 29%, in the
first quarter of 1999. The decrease in the effective tax rate in the first
quarter of 2000 was primarily attributable to lower pre-tax income, which
resulted in a higher relative percentage of tax-advantaged income to total
income.
The Bank's core and risk-based capital ratios were 6.1% and 10.5%,
respectively, at March 31, 2000, compared to 6.4% and 11.3%, respectively, at
December 31, 1999. The decrease in the Bank's capital ratios during the first
quarter of 2000 was primarily due to growth in the consumer and commercial loan
portfolios, and dividends to Commonwealth Bancorp, Inc. to fund common stock
repurchases. As of March 31, 2000, the Bank was in full compliance with all
regulatory capital requirements and maintained capital ratios which were
generally in line with internal targeted levels.
Commonwealth Bancorp, Inc., with consolidated assets of $1.9 billion, is the
holding company for Commonwealth Bank, which has 62 branches throughout
southeast Pennsylvania. ComNet Mortgage Services, a division of Commonwealth
Bank, has offices in Pennsylvania, Maryland, New Jersey, and Virginia. ComNet
also operates under the trade name of Homestead Mortgage in Maryland.
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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.
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<TABLE>
<CAPTION>
Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except share and per share amounts)
For the Quarter
Ended March 31,
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2000 1999
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(Unaudited)
<S> <C> <C>
Interest income:
Interest on loans $27,356 $26,259
Interest and dividends on deposits and money
market investments 475 1,041
Interest on investment securities 965 1,377
Interest on mortgage-backed securities 4,850 7,930
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Total interest income 33,646 36,607
Interest expense:
Interest on deposits 12,348 13,784
Interest on notes payable and other borrowings 3,248 5,286
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Total interest expense 15,596 19,070
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Net interest income 18,050 17,537
Provision for loan losses 1,125 1,000
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Net interest income after provision for loan losses 16,925 16,537
Noninterest income:
Deposit fees and related income 2,591 2,187
Servicing fees 231 894
Net gain on sale of mortgage loans 1,060 4,161
Other 1,021 650
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Total noninterest income 4,903 7,892
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Noninterest expense:
Compensation and employee benefits 8,709 9,618
Occupancy and office operations 2,724 2,817
Amortization of intangible assets 1,211 1,289
Other 4,540 4,982
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Total noninterest expense 17,184 18,706
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Income before income taxes 4,644 5,723
Income tax provision 1,231 1,660
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Net income $3,413 $4,063
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Basic weighted average number of shares outstanding 10,869,410 13,358,378
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Basic earnings per share $0.31 $0.30
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Diluted weighted average number of shares outstanding 11,153,144 13,693,354
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Diluted earnings per share $0.31 $0.30
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</TABLE>
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<TABLE>
<CAPTION>
Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
March 31, December 31,
2000 1999
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<S> <C> <C>
Assets: (Unaudited)
Cash and due from banks $60,537 $54,677
Interest-bearing deposits - 3,499
Short-term investments
available for sale 61 3,575
Mortgage loans held for
sale 16,475 24,005
Investment securities
Securities available for
sale (cost of $68,798
and $68,301, respectively),
at market value 68,393 68,219
Mortgage-backed securities
Securities held to
maturity (market value of
$88,671 and $92,965,
respectively), at cost 89,219 93,674
Securities available for
sale (cost of $184,174
and $202,076, respectively),
at market value 178,667 197,280
Loans receivable, net 1,387,562 1,361,430
Accrued interest
receivable, net 9,752 9,499
FHLB stock, at cost 18,400 18,400
Premises and equipment, net 16,024 15,535
Intangible assets 34,156 33,048
Other assets, including
net deferred taxes of $7,821
and $7,460, respectively 37,995 39,555
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Total assets $1,917,241 $1,922,396
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Liabilities:
Deposits $1,514,239 $1,503,746
Notes payable and other
borrowings:
Secured notes due to
Federal Home Loan Bank of
Pittsburgh 112,142 127,000
Securities sold under
agreements to repurchase 90,000 100,000
Other borrowings 14,850 9,076
Advances from borrowers
for taxes and insurance 9,695 9,326
Accrued interest payable,
accrued expenses and other
liabilities 27,644 20,883
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Total liabilities 1,768,570 1,770,031
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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; 18,068,127 shares issued
and 11,568,294 outstanding
at March 31, 2000
18,068,127 shares issued
and 11,934,695 outstanding
at December 31, 1999 1,807 1,807
Additional paid-in capital 137,146 136,966
Retained earnings 137,845 135,780
Unearned stock benefit
plan compensation (8,027) (8,504)
Accumulated other
comprehensive loss (3,842) (3,171)
Treasury stock, at cost;
6,499,833 and 6,133,432
shares, respectively (116,258) (110,513)
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Total shareholders' equity 148,671 152,365
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Total liabilities and
shareholders' equity $1,917,241 $1,922,396
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</TABLE>
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Commonwealth Bancorp, Inc. and Subsidiaries
Selected Financial Data
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Quarter Ended
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March 31, 2000 March 31, 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
BALANCE SHEET DATA:
Average Mortgage Loans $875,480 $1,016,902
Average Consumer Loans 326,625 244,086
Average Commercial Loans 193,734 136,875
Average Loans 1,395,839 1,397,863
Average Interest-Earning Assets 1,763,726 2,057,129
Average Assets 1,908,578 2,213,701
Average Core Deposits 952,191 936,585
Average Certificates of Deposit 551,746 659,578
Average Deposits 1,503,937 1,596,163
Average Interest-Bearing Liabilities 1,727,603 1,970,958
Average Shareholders' Equity 151,570 189,561
OPERATING DATA:
Annualized Return on Assets 0.72% 0.74%
Annualized Return on Equity 9.06% 8.69%
Mortgage Originations $77,619 $189,666
Average Yield on Mortgage Loans (a) 7.30% 7.19%
Average Yield on Consumer Loans (a) 8.97% 8.92%
Average Yield on Commercial Loans (a) 8.79% 8.48%
Average Yield on Loans (a) 7.90% 7.62%
Average Yield on Interest-Earning Assets (a) 7.70% 7.22%
Average Cost of Core Deposits 2.34% 2.34%
Average Cost of Certificates of Deposit 4.96% 5.15%
Average Cost of Deposits 3.30% 3.50%
Average Cost of Interest-Bearing Liabilities 3.63% 3.92%
Net Interest Margin (a) 4.15% 3.46%
Period End Book Value Per Share $12.85 $13.15
Period End Tangible Book Value Per Share 9.90 10.41
Period End Nonperforming Loans 7,661 9,770
Period End Nonperforming Assets 10,529 11,276
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(a) Taxable equivalent basis
</TABLE>
