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[COMMONWEALTH BANCORP, INC. LOGO]
COMMONWEALTH
BANCORP, INC.
For release: IMMEDIATELY
Contact: Charles M. Johnston, Chief Financial Officer (610) 313-2189
COMMONWEALTH BANCORP, INC. REPORTS STRONG RESULTS FOR SECOND QUARTER 2000
NORRISTOWN, PA, JULY 18, 2000 - COMMONWEALTH BANCORP, INC. (NASDAQ: CMSB),
today reported net income of $3.8 million, or $0.35 per common share on a
diluted basis, for the second quarter of 2000, compared to net income of $4.4
million, or $0.33 per common share on a diluted basis, for the second quarter
of 1999. The second quarter 1999 financial results reflected a $0.7 million
(after-tax) gain on the sale of two branches in Lebanon County, Pennsylvania.
This gain was offset, in part, by a $0.3 million (after-tax) charge relating to
certain assets acquired in the 1996 acquisition of 12 branches in Lebanon and
Berks Counties, Pennsylvania. Exclusive of these items, net income would have
been $4.0 million, or $0.30 per share on a diluted basis, for the quarter ended
June 30, 1999.
For the six months ended June 30, 2000, net income was $7.2 million, or $0.65
per common share on a diluted basis, compared to net income of $8.5 million, or
$0.63 per common share on a diluted basis, for the six months ended June 30,
1999. Exclusive of the above items which affected the second quarter 1999
financial results, net income would have been $8.1 million, or $0.60 per share
on a diluted basis, for the six months ended June 30, 1999.
On a business segment basis, net income from Community Banking, exclusive of
the above items, increased from $3.1 million, or $0.23 per common share, in the
second quarter of 1999, to $4.1 million, or $0.37 per common share, in the
second quarter of 2000. Net income from Mortgage Banking decreased from $0.9
million, or $0.07 per common share, in the second quarter of 1999, to a loss of
$0.3 million, or $0.02 per common share, in the second quarter of 2000.
Net income from Community Banking, exclusive of the above items, increased from
$5.5 million, or $0.41 per common share, for the six months ended June 30,
1999, to $7.7 million, or $0.69 per common share, for the six months ended June
30, 2000. Net income from Mortgage Banking decreased from $2.5 million, or
$0.19 per common share, for the six months ended June 30, 1999, to a loss of
$0.4 million, or $0.04 per common share, for the six months ended June 30,
2000.
"Commonwealth continued to achieve outstanding results in Community Banking,"
stated Charles H. Meacham, Commonwealth's Chairman and Chief Executive Officer.
He added, "Compared to the second quarter of 1999, average consumer loans
increased 28% to $345 million and average commercial loans increased 36% to
$203 million. This has contributed to the strong improvement in Commonwealth's
net interest margin, which was 4.30% in the second quarter of 2000, compared to
3.56% in the second quarter of 1999." 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."
COMMONWEALTH BANCORP, INC.
Mailing Address: P.O. Box 2100, Valley Forge, PA 19482-2100
Shipping Address: 2 West Lafayette Street, Norristown, PA 19401-4758
610-313-1600
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Net interest income was $18.5 million in the second quarter of 2000, compared
to $17.8 million in the second quarter of 1999. For the six months ended June
30, 2000, net interest income was $36.5 million, versus $35.3 million for the
comparable period in 1999. These increases were 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 4.30% in the
second quarter of 2000, compared to 3.56% in the second quarter of 1999. The
increase was primarily attributable to a 0.65% 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 0.16% decrease in the cost of interest-bearing
liabilities. The decrease in the cost of interest-bearing liabilities was
primarily related to 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.
For the six months ended June 30, 2000, the net interest margin on a fully
taxable equivalent basis was 4.22%, versus 3.51% in the comparable 1999 period.
The increase was primarily attributable to a 0.57% increase in the yield on
interest-earning assets, which was primarily attributable to the same factors
responsible for the increase in the second quarter of 2000. Also contributing
to the increase in net interest margin was a 0.23% decrease in the cost of
interest-bearing liabilities. The decrease in the cost of interest-bearing
liabilities was primarily related to the same factors responsible for the
decrease in the second quarter of 2000.
Noninterest income totaled $5.5 million in the second quarter of 2000, compared
to $7.7 million in the second quarter of 1999. The decrease reflected a $1.6
million decrease in the net gain on sale of mortgage loans, which was primarily
attributable to a decrease in mortgage originations due to generally higher
market interest rates. Also during the second quarter of 2000, servicing fees
decreased by $0.9 million relating to the sale of mortgage servicing rights
during the third quarter of 1999. Also contributing to the decrease was a $1.0
million gain on the sale of two branches in Lebanon County, Pennsylvania,
during the second quarter of 1999. The above decreases were partially offset by
a $0.6 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 income was $10.4 million for the first six months of 2000, compared
to $15.6 million for the same 1999 period. The decrease was primarily
attributable to the same factors responsible for the decrease in the second
quarter of 2000.
Noninterest expense was $17.6 million in the second quarter of 2000, compared
to $18.3 million in the second quarter of 1999. The decrease was primarily
attributable to a decrease in mortgage banking expenses and a $0.5 million
nonrecurring charge in the second quarter of 1999 relating to certain assets
acquired in the 1996 acquisition of 12 branches in Lebanon and Berks Counties,
Pennsylvania.
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Noninterest expense was $34.7 million for the six months ended June 30, 2000,
compared to $37.0 million for the same period in 1999. The decrease was
primarily attributable to the same factors responsible for the decrease in the
second quarter of 2000, as well as lower expenses relating to certain stock
benefit plans.
Provision for loan losses totaled $1.2 million and $2.3 million in the second
quarter and six months ended June 30, 2000, respectively. The provision for
loan losses totaled $1.0 million and $2.0 million in the second quarter and six
months ended June 30, 1999, respectively. At June 30, 2000, the allowance for
loan losses totaled $10.6 million, or 0.74% of loans, compared to $10.5
million, or 0.76% of loans, at December 31, 1999.
Net credit losses totaled $1.1 million, or 0.30% of average loans in the second
quarter of 2000. This compared to $1.0 million, or 0.29% of average loans in
the second quarter of 1999. For the six months ended June 30, 2000, net credit
losses totaled $2.2 million, or 0.32% of average loans, compared to $1.6
million, or 0.24%, in the same 1999 period. The increases were primarily
related to an increase in consumer net credit losses, which were $1.0 million
and $2.1 million in the second quarter and six months ended June 30, 2000,
compared to $0.5 million and $0.8 million in the second quarter and six months
ended June 30, 1999.
Nonperforming assets totaled $9.8 million, or 0.51% of assets at June 30, 2000,
compared to $10.4 million, or 0.54%, at December 31, 1999.
Provision for income taxes was $1.4 million, or 26.5% of income before income
taxes in the second quarter of 2000, compared to $1.8 million, or 29%, in the
second quarter of 1999. For the first six months of 2000, provision for income
taxes was $2.6 million, or 26.5% of income before income taxes, compared to
$3.5 million, or 29%, in the first six months of 1999. The decrease in the
effective tax rate in the second quarter and first six months of 2000, relative
to the comparable periods in 1999, 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 6.4% and 10.7%,
respectively, at June 30, 2000, compared to 6.4% and 11.3%, respectively, at
December 31, 1999. The decrease in the Bank's risk-based capital ratio since
December 31, 1999 was primarily due to growth in the consumer and commercial
loan portfolios. As of June 30, 2000, the Bank was in full compliance with all
regulatory capital requirements.
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.
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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Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $28,366 $26,184 $55,722 $52,443
Interest and dividends on deposits and money
market investments 496 855 971 1,896
Interest on investment securities 530 2,485 1,495 3,862
Interest on mortgage-backed securities 4,477 6,559 9,327 14,489
----------- ----------- ----------- -----------
Total interest income 33,869 36,083 67,515 72,690
Interest expense:
Interest on deposits 12,227 13,552 24,575 27,336
Interest on notes payable and other borrowings 3,160 4,744 6,408 10,030
----------- ----------- ----------- -----------
Total interest expense 15,387 18,296 30,983 37,366
----------- ----------- ----------- -----------
Net interest income 18,482 17,787 36,532 35,324
Provision for loan losses 1,200 1,000 2,325 2,000
----------- ----------- ----------- -----------
Net interest income after provision for loan
losses 17,282 16,787 34,207 33,324
Noninterest income:
Deposit fees and related income 3,069 2,493 5,660 4,680
Servicing fees 189 1,051 420 1,945
Net gain on sale of mortgage loans 1,036 2,606 2,096 6,767
Other 1,158 1,572 2,179 2,222
----------- ----------- ----------- -----------
Total noninterest income 5,452 7,722 10,355 15,614
----------- ----------- ----------- -----------
Noninterest expense:
Compensation and employee benefits 8,732 9,198 17,441 18,816
Occupancy and office operations 2,687 2,688 5,411 5,505
Amortization of intangible assets 1,239 1,221 2,450 2,510
Other 4,900 5,201 9,440 10,183
----------- ----------- ----------- -----------
Total noninterest expense 17,558 18,308 34,742 37,014
----------- ----------- ----------- -----------
Income before income taxes 5,176 6,201 9,820 11,924
Income tax provision 1,371 1,798 2,602 3,458
----------- ----------- ----------- -----------
Net income $3,805 $4,403 $7,218 $8,466
=========== =========== =========== ===========
Basic weighted average number of shares outstanding 10,738,767 12,933,582 10,804,089 13,144,806
=========== =========== =========== ===========
Basic earnings per share $0.35 $0.34 $0.67 $0.64
=========== =========== =========== ===========
Diluted weighted average number of shares outstanding 10,962,546 13,342,552 11,057,845 13,516,984
=========== =========== =========== ===========
Diluted earnings per share $0.35 $0.33 $0.65 $0.63
=========== =========== =========== ===========
</TABLE>
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Commonwealth Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Assets: (Unaudited)
Cash and due from banks $64,794 $54,677
Interest-bearing deposits - 3,499
Short-term investments available for sale 44 3,575
Mortgage loans held for sale 35,886 24,005
Investment securities
Securities available for sale (cost of $34,113
and $68,301, respectively), at market value 33,397 68,219
Mortgage-backed securities
Securities held to maturity (market value of $84,969
and $92,965, respectively), at cost 85,106 93,674
Securities available for sale (cost of $168,628
and $202,076, respectively), at market value 165,680 197,280
Loans receivable, net 1,413,946 1,361,430
Accrued interest receivable, net 8,824 9,499
FHLB stock, at cost 18,400 18,400
Premises and equipment, net 15,678 15,535
Intangible assets 32,927 33,048
Other assets, including net deferred taxes of $6,985
and $7,460, respectively 39,060 39,555
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Total assets $1,913,742 $1,922,396
============ ============
Liabilities:
Deposits $1,488,496 $1,503,746
Notes payable and other borrowings:
Secured notes due to Federal Home Loan Bank of Pittsburgh 145,447 127,000
Securities sold under agreements to repurchase 65,000 100,000
Other borrowings 20,887 9,076
Advances from borrowers for taxes and insurance 12,245 9,326
Accrued interest payable, accrued expenses and other liabilities 28,319 20,883
------------ ------------
Total liabilities 1,760,394 1,770,031
------------ ------------
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 11,568,320 outstanding at June 30, 2000
18,068,127 shares issued and 11,934,695 outstanding at December 31, 1999 1,807 1,807
Additional paid-in capital 137,279 136,966
Retained earnings 140,451 135,780
Unearned stock benefit plan compensation (7,551) (8,504)
Accumulated other comprehensive loss (2,381) (3,171)
Treasury stock, at cost; 6,499,807 and 6,133,432 shares, respectively (116,257) (110,513)
------------ ------------
Total shareholders' equity 153,348 152,365
------------ ------------
Total liabilities and shareholders' equity $1,913,742 $1,922,396
============ ============
</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 For the Six Months Ended
---------------------------- -----------------------------
6/30/00 6/30/99 6/30/00 6/30/99
---------------------------- -----------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Average Mortgage Loans $876,246 $945,495 $875,863 $981,001
Average Consumer Loans 344,857 269,979 335,757 257,104
Average Commercial Loans 202,822 148,777 198,375 142,857
Average Loans 1,423,925 1,364,251 1,409,995 1,380,962
Average Interest-Earning Assets 1,739,566 2,010,652 1,751,766 2,033,759
Average Assets 1,888,548 2,161,240 1,898,495 2,187,324
Average Core Deposits 970,971 975,075 961,435 955,944
Average Certificates of Deposit 523,616 631,912 537,681 645,669
Average Deposits 1,494,587 1,606,987 1,499,116 1,601,613
Average Interest-Bearing Liabilities 1,707,123 1,934,705 1,717,192 1,952,739
Average Shareholders' Equity 150,005 183,770 150,788 186,650
OPERATING DATA:
Annualized Return on Assets 0.81% 0.82% 0.76% 0.78%
Annualized Return on Equity 10.20% 9.61% 9.63% 9.15%
Mortgage Originations $108,951 $179,330 $186,570 $368,996
Average Yield on Mortgage Loans (a) 7.37% 7.22% 7.33% 7.21%
Average Yield on Consumer Loans (a) 9.17% 8.92% 9.07% 8.92%
Average Yield on Commercial Loans (a) 8.95% 8.61% 8.87% 8.55%
Average Yield on Loans (a) 8.03% 7.71% 7.96% 7.66%
Average Yield on Interest-Earning Assets (a) 7.86% 7.21% 7.78% 7.21%
Average Cost of Core Deposits 2.33% 2.28% 2.33% 2.31%
Average Cost of Certificates of Deposit 5.08% 5.09% 5.02% 5.12%
Average Cost of Deposits 3.29% 3.38% 3.30% 3.44%
Average Cost of Interest-Bearing Liabilities 3.63% 3.79% 3.63% 3.86%
Net Interest Margin (a) 4.30% 3.56% 4.22% 3.51%
Period End Book Value Per Share $13.26 $13.04 $13.26 $13.04
Period End Tangible Book Value Per Share 10.41 10.40 10.41 10.40
Period End Nonperforming Loans 6,589 6,873 6,589 6,873
Period End Nonperforming Assets 9,780 7,974 9,780 7,974
</TABLE>
(a) Taxable equivalent basis
