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Beneficial Bancorp, Inc.
Apr 20, 2018

Beneficial Bancorp, Inc. Announces First Quarter Results and Cash Dividend to Shareholders

PHILADELPHIA, April 20, 2018 (GLOBE NEWSWIRE) -- Beneficial Bancorp, Inc. ("Beneficial") (NASDAQ:BNCL), the parent company of Beneficial Bank (the "Bank"), today announced its financial results for the quarter ended March 31, 2018.  Beneficial recorded net income of $9.8 million, or $0.13 per diluted share, for the quarter ended March 31, 2018, compared to net income of $8.4 million, or $0.11 per diluted share, for the quarter ended March 31, 2017.

On April 19, 2018, the Company declared a cash dividend of 6 cents per share, payable on or after May 10, 2018, to common shareholders of record at the close of business on April 30, 2018.

Highlights for the quarter ended March 31, 2018, are as follows:

  • Net interest margin totaled 3.20% for the quarter ended March 31, 2018 compared to 3.04% for the same period in 2017.  Net interest income increased $2.4 million, or 6.0%, for the quarter compared to the same period in the prior year.  Net interest margin and net interest income increased primarily due to higher yields on the investment and loan portfolios following three Federal Reserve Bank federal funds rate increases of 25 basis points in 2017.

  • During the quarter ended March 31, 2018, our loan portfolio decreased $30.7 million, or 0.8%, as a result of increases in our core commercial real estate and C&I portfolios of 1.3% and 4.4%, respectively, which were more than offset by decreases in our shared national credit and consumer loan portfolios.

  • Charge-offs continue to remain low.  Net charge-offs for the quarter ended March 31, 2018, totaled $1.2 million, or 12 basis points annualized of average loans, compared to net charge-offs of $766 thousand, or 8 basis points annualized of average loans, in the same period in the 2017.

  • During the quarter ended March 31, 2018, the Company recorded a $308 thousand net gain on the sale of $4.7 million of the guaranteed portion of SBA loans.
     
  • Asset quality metrics continued to remain strong with a non-performing assets to total assets, excluding government guaranteed student loans, of 0.41% at March 31, 2018.  Our allowance for loan losses totaled $43.1 million, or 1.08% of total loans, as of March 31, 2018, compared to $43.3 million, or 1.07% of total loans, as of December 31, 2017.

  • Our effective tax rate decreased to 22.3% for the first quarter of 2018 compared to 29.6% in the first quarter of 2017 as a result of H.R. 1, which was enacted on December 22, 2017 and lowered the federal corporate tax rate to 21% from 35%.

  • During the quarter ended March 31, 2018, the Company purchased 715,600 shares of its common stock under its previously announced stock repurchase plan.  Our tangible capital to tangible assets decreased to 15.02% at March 31, 2018, compared to 15.07% at March 31, 2017.  The decrease in this ratio can be attributed to share repurchases and cash dividends.  Tangible book value per share totaled $11.21 at March 31, 2018.

Gerard Cuddy, Beneficial's President and CEO, stated "Our financial results continue to improve, driven by a rise in interest rates, continued favorable asset quality and management of our expense base.  Organic growth continues to be a challenge.  We are seeing some growth in our commercial lending businesses, but the pace of growth has slowed.  We are working diligently to build out the Neumann Finance team and infrastructure and expect to start booking leases in the second half of 2018 to positively impact revenue growth."

Balance Sheet
Total assets decreased $9.9 million, or 0.2%, to $5.79 billion at March 31, 2018, compared to $5.80 billion at December 31, 2017.  The decrease in total assets was primarily due to a decrease in total investment securities and loans, partially offset by an increase in cash and cash equivalents.   

Cash and cash equivalents increased $45.1 million, or 8.1%, to $602.7 million at March 31, 2018, from $557.6 million at December 31, 2017.  The increase in cash and cash equivalents was primarily driven by investment maturities and repayments and a decrease in our total loan portfolio.
           
Investments decreased $28.2 million, or 3.2%, to $842.6 million at March 31, 2018, compared to $870.8 million at December 31, 2017, as we continued to focus on improving our balance sheet mix by reducing the percentage of our assets in investments and growing our loan portfolio.  We continue to focus on maintaining a high quality investment portfolio that provides a steady stream of cash flows both in the current and in rising interest rate environments.

Loans decreased $30.7 million, or 0.8%, to $4.00 billion at March 31, 2018, from $4.03 billion at December 31, 2017.  During the quarter ended March 31, 2018, our commercial real estate and commercial and industrial loan portfolios increased $21.6 million, representing 1.3% growth, and $20.5 million, representing 4.4% growth, respectively.  However, this growth was offset by decreases in our consumer loan portfolios and our shared national credit portfolio.  The $31.4 million decrease in our total consumer loan portfolio was due primarily to a $17.7 million decrease in indirect auto loans resulting from our planned run-off of this portfolio segment.  As previously disclosed, we decided to exit the indirect lending business in the first quarter of 2017.

Deposits increased $37.6 million, or 0.9%, to $4.19 billion at March 31, 2018, from $4.15 billion at December 31, 2017.  Growth in deposits was achieved primarily by a $77.6 million increase in core deposits and a $12.9 million increase in time deposits, partially offset by the maturity of $51.1 million of brokered certificates of deposit.  The increase in core deposits was also attributable to $43.2 million of tax refunds.

Borrowings decreased $25.4 million to $515.0 million at March 31, 2018.  During the quarter ended March 31, 2018, the Company paid off $25.8 million of a higher cost trust preferred debenture.

Stockholders' equity decreased $18.7 million, or 1.8%, to $1.02 billion at March 31, 2018, from $1.03 billion at December 31, 2017.  The decrease in stockholders' equity was primarily due the declaration of cash dividends and stock repurchases, partially offset by net income of $9.8 million.

Net Interest Income
For the quarter ended March 31, 2018, net interest income was $43.2 million, an increase of $2.4 million, or 6.0%, from the quarter ended March 31, 2017.  The increase in net interest income was primarily due to an increase in average interest earning assets of $36.6 million, primarily loans, and higher yields on the investment and loan portfolios following three Federal Reserve Bank federal funds rate increases of 25 basis points in 2017. The Company paid off $25.8 million of a higher cost trust preferred debenture during the quarter. The net interest margin totaled 3.20% for the quarter ended March 31, 2018 as compared to 3.04% for the same period in 2017. During the quarter ended March 31, 2018, the net interest margin was positively impacted by 5 basis points due to loan prepayments compared to a 2 basis point positive impact during the quarter ended March 31, 2017 related to loan prepayments. Also during the quarter ended March 31, 2018, the net interest margin was negatively impacted 15 basis points by higher cash levels due to slower than anticipated loan growth as average cash for the quarter totaled $537.6 million, an increase of $276.0 million from $261.6 million during the quarter ended March 31, 2017.

Non-interest Income
For the quarter ended March 31, 2018, non-interest income totaled $6.7 million, a decrease of $404 thousand, or 5.7%, from the quarter ended March 31, 2017.  The decrease was primarily due to a $308 thousand net gain on the sale of $4.7 million of SBA loans recorded during the quarter ended March 31, 2018 compared to a $654 thousand net gain on the sale of $7.3 million of SBA loans recorded during the quarter ended March 31, 2017.

Non-interest Expense
For the quarter ended March 31, 2018, non-interest expense totaled $36.4 million, an increase of $990 thousand, or 2.8%, from the quarter ended March 31, 2017.  The increase in non-interest expense was primarily due to an increase in salaries and employee benefits of $1.1 million due primarily to enhanced medical coverage provided to our entire employee base, annual merit increases, and the costs associated with the formation of Neumann Finance. Marketing expense increased $818 thousand to $1.9 million due to the production and airing of a new television commercial. Other expenses decreased $529 thousand primarily from declines in training and on-line banking expenses.

Income Taxes
For the quarter ended March 31, 2018, we recorded a provision for income taxes of $2.8 million, reflecting an effective tax rate of 22.3%, compared to a provision for income taxes of $3.5 million, reflecting an effective tax rate of 29.6%, for the quarter ended March 31, 2017.  The decrease in the effective tax rate for the quarter ended March 31, 2018 compared to the same period a year ago is primarily due to the passage of H.R. 1, which was enacted on December 22, 2017 and lowered the federal corporate tax rate to 21% from 35%.

Asset Quality
Non-accruing loans, excluding government guaranteed student loans, increased $2.8 million to $23.3 million at March 31, 2018, compared to $20.5 million at December 31, 2017.  Our ratio of non-performing assets to total assets, excluding government guaranteed student loans, increased to 0.41% at March 31, 2018, compared to 0.36% at December 31, 2017.  As a result of charge-offs, we recorded a $999 thousand provision for loan losses during the quarter ended March 31, 2018 compared to a $600 thousand provision for loan losses during the quarter ended March 31, 2017.  Our allowance for loan losses totaled $43.1 million, or 1.08% of total loans, as of March 31, 2018, compared to $43.3 million, or 1.07% of total loans, as of December 31, 2017, and $43.1 million, or 1.06% of total loans, as of March 31, 2017.

Capital
Beneficial's and the Bank's capital position remains strong relative to current regulatory requirements. Beneficial and the Bank continue to have substantial liquidity that has been retained in cash or invested in high quality government-backed securities. As of March 31, 2018, Beneficial's tangible capital to tangible assets totaled 15.02%. In addition, at March 31, 2018, we had the ability to borrow up to $2.2 billion combined from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia. Beneficial's capital ratios are considered to be well capitalized and are as follows:

           
       Minimum Well Excess Capital
 3/31/2018 12/31/2017 3/31/2017 Capitalized Ratio 3/31/2018
           
Tier 1 Leverage (to average assets)15.45% 16.19% 16.18% 5.0% $586,332     
Common Equity Tier 1 Capital (to risk weighted assets)21.74% 22.12% 21.37% 6.5%  607,610 
Tier 1 Capital (to risk weighted assets)21.74% 22.76% 21.97% 8.0%  547,806 
Total Capital Ratio (to risk weighted assets)22.82% 23.84% 23.03% 10.0%  511,299 
           

The Bank's capital ratios are considered to be well capitalized and are as follows:

            
        Minimum Well Excess Capital
 3/31/2018 12/31/2017 3/31/2017  Capitalized Ratio 3/31/2018
            
Tier 1 Leverage (to average assets)14.69%  14.46% 14.68%  5.0% $543,494 
Common Equity Tier 1 Capital (to risk weighted assets)20.68% 20.34% 19.95%  6.5%  564,911 
Tier 1 Capital (to risk weighted assets)20.68% 20.34% 19.95%  8.0%  505,163 
Total Capital Ratio (to risk weighted assets)21.77% 21.42% 21.00%  10.0%  468,729     
            

Maintaining strong capital levels remains one of our top priorities.  Our capital levels are in excess of well capitalized levels under Basel III regulatory requirements.

About Beneficial Bancorp, Inc.
Beneficial is a community-based, diversified financial services company providing consumer and commercial banking services. Its principal subsidiary, Beneficial Bank, has served individuals and businesses in the Delaware Valley area since 1853. The Bank is the oldest and largest bank headquartered in Philadelphia, Pennsylvania, with 61 offices in the greater Philadelphia and South New Jersey regions. Insurance services are offered through Beneficial Insurance Services, LLC and wealth management services are offered through the Beneficial Advisors, LLC, both wholly owned subsidiaries of the Bank. Equipment leasing services are offered through Beneficial Equipment Leasing Corporation, which is a wholly owned subsidiary of the Bank.  For more information about the Bank and Beneficial, please visit www.thebeneficial.com.

Forward Looking Statements
This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets, changes in deposit flows, changes in the quality or composition of Beneficial's loan or investment portfolios, our ability to successfully integrate the assets, liabilities, customers, systems and employees of acquired companies into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and our ability to successfully engage in leasing activities through our new investment in Neumann Finance. Additionally, other risks and uncertainties may be described in Beneficial's Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q or its other reports as filed with the Securities and Exchange Commission, which are available through the SEC's website at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, Beneficial assumes no obligation to update any forward-looking statements.

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Financial Condition
(Dollars in thousands, except share amounts)

  March 31, December 31, March 31,
  2018 2017 2017
ASSETS:      
Cash and cash equivalents:      
Cash and due from banks $40,306   $45,048  $45,777 
Interest-bearing deposits   562,350   512,567   374,302 
Total cash and cash equivalents  602,656   557,615   420,079 
       
Investment securities:      
Available-for-sale  301,920    310,308   438,467 
Held-to-maturity  517,453   537,302   559,441 
Federal Home Loan Bank stock, at cost  23,210   23,210   23,231 
Total investment securities  842,583   870,820   1,021,139 
       
Loans and leases:  4,003,465   4,034,130   4,056,262 
Allowance for loan and lease losses  (43,108)  (43,267)  (43,095)
Net loans and leases  3,960,357   3,990,863   4,013,167 
       
Accrued interest receivable  18,077   17,512   16,715 
       
Bank premises and equipment, net   69,436   70,573   74,302 
       
Other assets:      
Goodwill  169,002   169,002    169,002 
Bank owned life insurance  80,594    80,172   79,891 
Other intangibles  2,685   2,884   3,878 
Other assets  43,533   39,387   63,646 
Total other assets  295,814   291,445   316,417 
Total assets $5,788,923  $5,798,828  $5,861,819 
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
Liabilities:      
Deposits:      
Non-interest bearing deposits $564,450  $563,185  $539,987 
Interest bearing deposits  3,623,612   3,587,308   3,678,869 
Total deposits  4,188,062   4,150,493   4,218,856 
Borrowed funds  515,000   540,439   540,427  
Other liabilities  69,750   73,006   72,570 
Total liabilities  4,772,812   4,763,938   4,831,853 
Commitments and contingencies      
Stockholders' equity:      
Preferred stock - $.01 par value  -   -   - 
Common stock - $.01 par value  845   845   842 
Additional paid-in capital  802,056   799,658   784,245 
Unearned common stock held by employee stock ownership plan   (26,461)  (27,078)  (28,929 )
Retained earnings  397,799   405,497   403,093 
Accumulated other comprehensive loss, net  (30,108)   (26,127)  (25,345)
Treasury stock, at cost  (128,545)  (118,497)  (103,940)
Total Beneficial Bancorp, Inc. stockholders' equity  1,015,586   1,034,298   1,029,966 
Noncontrolling interest  525   592   - 
Total stockholders' equity   1,016,111   1,034,890    1,029,966 
Total liabilities and stockholders' equity $5,788,923  $5,798,828  $5,861,819 
       

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
(Dollars in thousands, except per share amounts)

 For the Quarter Ended  
 March 31, December 31, March 31,  
 2018 2017 2017  
INTEREST INCOME:       
Interest and fees on loans and leases$43,054  $45,736  $41,487   
Interest on overnight investments 2,055   1,664   529   
Interest and dividends on investment securities:       
Taxable 5,119   5,067   5,356   
Tax-exempt 18   18    22   
Total interest income 50,246    52,485   47,394   
        
INTEREST EXPENSE:       
Interest on deposits:       
Interest bearing checking accounts 639    599   602   
Money market and savings deposits 1,485   1,513   1,461   
Time deposits 2,576   2,681   2,187   
Total 4,700   4,793   4,250   
Interest on borrowed funds 2,345   2,740   2,370   
Total interest expense 7,045   7,533    6,620   
Net interest income 43,201   44,952   40,774   
Provision for loan and lease losses 999   1,018   600   
Net interest income after provision for loan and lease losses 42,202   43,934   40,174   
        
NON-INTEREST INCOME:       
Insurance and advisory commission and fee income 1,923   1,607   2,093   
Service charges and other income 4,196   5,200   4,099   
Mortgage banking and SBA income 468   358   879   
Net gain (loss) on investment securities 77   -   (3)  
Total non-interest income 6,664   7,165   7,068   
        
NON-INTEREST EXPENSE:       
Salaries and employee benefits 19,957   19,555   18,828   
Occupancy expense 3,031   2,590   2,735   
Depreciation, amortization and maintenance 2,282   2,324   2,416   
Marketing expense 1,920   1,525   1,102   
Intangible amortization expense 199   213   568    
FDIC insurance 429   431   432   
Professional fees 1,037   1,370   1,211   
Classified loan and other real estate owned related expense 224   188    268   
Other 7,278   7,182   7,807   
Total non-interest expense 36,357   35,378   35,367   
        
Income before income taxes 12,509   15,721   11,875   
Income tax expense 2,785   19,065   3,520   
        
CONSOLIDATED NET INCOME (LOSS)$9,724   ($3,344) $8,355   
Net loss attributable to noncontrolling interest (67)   (8)  -   
NET INCOME (LOSS) ATTRIBUTABLE TO BENEFICIAL BANCORP, INC.$9,791   ($3,336) $8,355   
        
EARNINGS (LOSS) PER SHARE - Basic$0.13   ($0.05) $0.11   
EARNINGS (LOSS) PER SHARE - Diluted$0.13   ( $0.05) $0.11   
        
DIVIDENDS DECLARED PER SHARE$0.31  $0.06  $0.06   
        
Average common shares outstanding - Basic 70,903,395   70,831,659    70,041,340   
Average common shares outstanding - Diluted 71,536,544   70,831,659   70,822,040   
        

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Selected Consolidated Financial and Other Data 
(Dollars in thousands)

   For the Quarter Ended
  
 March 31, 2018
 December 31, 2017
 March 31, 2017
 Average Yield/ Average Yield/ Average Yield/
 Balance Rate Balance Rate Balance Rate
            
Investment securities:$1,395,784 2.06% $1,419,309 1.89% $1,306,704 1.81%
Overnight investments 537,611 1.53%    500,691 1.30%  261,607 0.82%
Stock 23,213 8.14%    23,210 4.66%    22,545 4.65%
Other investment securities 834,960  2.24%    895,408 2.15%  1,022,552 2.00%
            
Loans and leases: 4,010,689 4.30%    4,003,152 4.52%    4,063,153 4.10%
Residential 945,042 3.92%    936,031 3.92%  894,589 3.89%
Commercial real estate 1,676,673 4.26%  1,665,059 4.78%  1,642,713 4.05%
Business and small business 854,654 4.66%    837,988 4.63%  866,015 4.32%
Personal 534,320 4.56%    564,074 4.57%  659,836  4.17%
            
Total interest earning assets$5,406,473 3.73% $5,422,461 3.83% $5,369,857 3.54%
            
Deposits:$3,617,339 0.53% $3,632,094 0.52% $3,654,673 0.47%
Savings 1,292,482 0.34%  1,291,485 0.34%  1,290,405 0.34%
Money market 419,881 0.37%  434,947 0.37%  448,439 0.34%
Demand 938,808 0.25%  902,421 0.24%  917,011  0.24%
Demand - municipals 120,453 0.20%  125,699 0.18%  128,463 0.19%
Total core deposits   2,771,624 0.31%    2,754,552 0.30%    2,784,318 0.30%
            
Time deposits 845,715 1.24%  877,542 1.21%  870,355 1.02%
            
Borrowings 535,403 1.75%  540,474 1.98%  523,258 1.81%
            
Total interest bearing liabilities$4,152,742 0.69% $4,172,568 0.72% $4,177,931 0.64%
            
Non-interest bearing deposits 537,107    534,075    506,097  
            
Net interest margin  3.20%   3.28%   3.04%
             


      
ASSET QUALITY INDICATORS (unaudited) March 31, December 31, March 31,
(Dollars in thousands) 2018   2017   2017 
Non-performing assets:     
Non-accruing loans$23,292  $20,521  $23,930 
Accruing loans past due 90 days or more 21,310   14,152   16,805 
Total non-performing loans 44,602   34,673   40,735 
Real estate owned 204   189   346 
Total non-performing assets$44,806  $34,862  $41,081 
      
Non-performing loans to total loans and leases 1.11%   0.86%   1.00% 
Non-performing assets to total assets 0.77%   0.60%   0.70% 
Non-performing assets less accruing government guaranteed     
  student loans past due 90 days or more to total assets 0.41%  0.36%  0.41% 
ALLL to total loans and leases 1.08%   1.07%   1.06% 
ALLL to non-performing loans 96.65%   124.79%   105.79% 
ALLL to non-performing loans, excluding government     
  guaranteed student loans 185.08%   210.84%   180.09% 

Key performance ratios (annualized) are as follows for the quarter ended (unaudited):

 For the Quarter Ended 
 March 31,  December 31, March 31, 
 2018  2017  2017  
PERFORMANCE RATIOS:      
(annualized)      
Return on average assets0.68% (0.25%) 0.59% 
Return on average assets (excluding tax reform act impact)0.68% 0.65% 0.59% 
Return on average equity3.89% (1.38%) 3.35% 
Return on average equity (excluding tax reform act impact)3.89% 3.63% 3.35% 
Net interest margin3.20% 3.28% 3.04% 
Net charge-off ratio0.12% 0.10% 0.08% 
Efficiency ratio72.91% 68.20% 73.92% 
Efficiency ratio (excluding merger & restructuring charges)72.91% 69.93% 73.92% 
Tangible common equity11.21% 15.33% 15.07% 
Tangible common equity (excluding tax reform act impact) 11.21% 15.53% 15.07% 


CONTACT:     Thomas D. Cestare
 Executive Vice President and Chief Financial Officer
PHONE:(215) 864-6009

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Source: Beneficial Bank

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1818 Beneficial Bank Place
1818 Market Street
Philadelphia, PA 19103

888.742.5272
info@thebeneficial.com
The use of non-secure email is intended for general questions, inquiries and comments only. Confidential Customer information cannot be accepted electronically.


Routing No: 236075689
SWIFT Code: BENFUS33

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