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PHILADELPHIA, Oct 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Beneficial Mutual Bancorp, Inc. (Beneficial) (Nasdaq: BNCL), the parent company of Beneficial Bank, today announced its financial results for the third quarter of 2008.
Net income for the three months ended September 30, 2008 was $4.3 million, compared to $9.1 million for the second quarter of 2008. Earnings per share for the third quarter of 2008 were $0.05, compared to earnings per share of $0.11 for the second quarter of 2008. During the second quarter, Beneficial recorded a non-recurring curtailment gain of $7.3 million related to pension plan modifications. The after-tax impact of this curtailment gain was $4.7 million. Net income for the first nine months of 2008 was $19.5 million, or $0.25 per share, compared to ($1.4 million), or ($0.02) per share for the first nine months of 2007.
In July 2007, Beneficial completed its initial public offering and acquired FMS Financial Corporation, the parent company of Farmers & Mechanics Bank of Burlington, New Jersey, which resulted in significant changes to Beneficial's balance sheet and income statement from the prior year period. These changes included a $10.0 million contribution to The Beneficial Foundation, which was established to make grants and donations to non-profit organizations primarily located within the Company's market area.
Beneficial recorded a $3.2 million provision for loan losses during the third quarter of 2008, and incurred an impairment charge of $0.3 million related to the value of certain common equity securities deemed to be other-than-temporarily impaired (OTTI). In the second quarter, the provision for loan losses was $2.3 million and an OTTI impairment charge of $0.5 million was recorded.
"The fundamentals of our banking operations remain strong, in the face of the most challenging operating environment in generations," said Gerard Cuddy, Beneficial's President and Chief Executive Officer. "This environment is characterized by an unprecedented transformation of the regulatory, financial, investment and capital markets landscape. These extraordinary conditions and the velocity of change pose significant challenges, but also represent increased market share opportunities for Beneficial. While our third quarter performance was negatively impacted by an increase in the provision for loan losses and an impairment charge in the investment portfolio, our core deposit gathering, lending, insurance and wealth management activities remain strong. Beneficial's capital strength, asset quality, liquidity and strong customer focus continue to provide a substantial platform for sustained growth. We're proud to be the oldest and largest bank headquartered in Philadelphia, home of the world champion Phillies."
Highlights for the quarter ended September 30, 2008 included:
-- Total loans outstanding grew by $89.0 million, or 4.0%, to $2.3 billion at September 30, 2008, up from $2.2 billion at the end of the prior quarter.
-- Total deposits increased $33.8 million, or 1.3%, to $2.6 billion during the quarter.
-- Net interest income increased by $1.0 million, or 3.6%, to $29.1 million for the quarter, up from $28.1 million for the prior quarter.
-- Non-interest income increased during the quarter by $0.5 million, or 8.3%, to $6.5 million.
Balance Sheet
During the quarter ended September 30, 2008, total assets increased $95.0 million, or 2.5%, to $3.8 billion. The increase in total assets resulted primarily from an increase in total loans outstanding of $89.0 million and an increase in cash and cash equivalents of $15.1 million, offset by a decrease in investment securities of $15.0 million from June 30, 2008. Total deposits increased $33.8 million, or 1.3% during the quarter, to $2.6 billion at September 30, 2008.
At September 30, 2008, Beneficial's stockholders' equity equaled $606.9 million, or 15.8% of total assets, compared to stockholders' equity of $617.6 million, or 16.5% of total assets at June 30, 2008. This decrease was mainly a result of the acquisition of approximately $17.1 million of Beneficial common stock by a trust formed to purchase shares to fund restricted stock awards under the 2008 Equity Incentive Plan. Under this previously disclosed program, purchases were made in the open market at the discretion of the independent trustee.
Asset Quality
Beneficial is not a participant or originator in the subprime mortgage loan or subprime collateralized debt markets and therefore has no direct exposure to risks associated with these activities.
The allowance for loan losses at September 30, 2008 totaled $25.2 million, or 1.09%, of total loans outstanding, compared to $22.5 million, or 1.01% of total loans outstanding at June 30, 2008. This allowance represents management's estimate of the level necessary to cover known and inherent losses in the loan portfolio.
Beneficial recorded a provision for loan losses of $3.2 million during the three months ended September 30, 2008, compared to $2.3 million during the three months ended June 30, 2008. The increase in the provision was due primarily to our continuous evaluation of non-performing loans, a risk assessment regarding weakening economic conditions, along with the increase in commercial loans outstanding.
Net charge-offs for the three-month period ended September 30, 2008 were $0.5 million, compared to the $0.3 million reported for the three-month period ended June 30, 2008. Non-performing loans increased to $28.3 million, or 0.7% of total assets, at September 30, 2008, compared to $15.7 million, or 0.4% of total assets at June 30, 2008.
Beneficial has no exposure to losses from Fannie Mae or Freddie Mac preferred shares or subordinated debt. At September 30, 2008, Beneficial's investments in pooled trust preferred collateralized debt obligations include three securities, each of which are AAA-rated senior tranches, with a total book value of $30.4 million and an estimated fair value of $23.9 million. The senior tranches of collateralized debt obligations generally are protected from defaults by over-collateralization. Based on management's analysis as of September 30, 2008, all of these securities are expected to return 100% of their principal and interest.
Net Interest Income
Beneficial's net interest income increased $1.0 million, or 3.6%, to $29.1 million for the three months ended September 30, 2008, compared to $28.1 million for the prior quarter as interest income increased and interest expense declined. The net interest margin increased by 10 basis points during the quarter, to 3.41%, up from 3.31% for the quarter ended June 30, 2008.
Non-interest Income
Non-interest income increased to $6.5 million for the three months ended September 30, 2008, up $0.5 million, or 8.5% from the previous quarter, as a decline in service charges and other income was more than offset by an increase in insurance commission revenue. In addition, an impairment charge of $0.3 million related to the value of certain common equity securities was lower than a similar impairment charge of $0.5 million incurred during the prior quarter.
Non-interest Expense
Non-interest expense was $26.6 million for the three months ended September 30, 2008, compared to $18.6 million for the prior quarter. During the prior quarter, Beneficial elected to freeze its defined benefit plans and recorded a pension curtailment gain of $7.3 million.
About Beneficial Mutual Bancorp
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 for more than 150 years. The Bank is the oldest and largest bank headquartered in Philadelphia, Pennsylvania with 72 offices in the greater Philadelphia and Southern New Jersey regions. Insurance services are offered through Beneficial Insurance Services, LLC and wealth management services are offered through Beneficial Advisors, LLC, both wholly owned subsidiaries of the Bank. For more information about 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 and changes in the quality or composition of Beneficial's loan or investment portfolios. 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.
Joseph F. Conners
Executive Vice President and
Chief Financial Officer
PHONE: (215) 864-6000
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Financial Condition
(Dollars in thousands, except per share amounts)
September 30, June 30, December 31, September 30,
2008 2008 2007 2007
ASSETS:
Cash and Cash
Equivalents:
Cash and due from
banks $47,674 $46,373 $53,545 $58,634
Interest-bearing
deposits 11,902 238 4,782 3,065
Federal funds sold 2,250 131 - 35,861
Total cash and
cash equivalents 61,826 46,742 58,327 97,560
Investment Securities:
Available-for-sale
(amortized cost of
$1,032,592,
$1,050,513, at
September 30 and
June 30, 2008
respectively and
$938,835 and
$908,324 at December
31, and September
30, 2007,
respectively) 1,024,390 1,041,424 949,795 911,159
Held-to-maturity
(estimated fair
value of $83,963
and $87,311 at
September 30 and
June 30, 2008
respectively and
$111,127 and
$113,756 at
December 31 and
September 30, 2007,
respectively) 84,401 88,159 111,986 116,027
Federal Home Loan
Bank stock, at cost 27,872 22,112 18,814 18,558
Total investment
securities 1,136,663 1,151,695 1,080,595 1,045,744
Loans: 2,323,280 2,234,252 2,120,922 2,088,141
Allowance for loan
losses (25,208) (22,539) (23,341) (22,094)
Net loans 2,298,072 2,211,713 2,097,581 2,066,047
Accrued Interest
Receivable 17,506 16,265 18,089 18,763
Bank Premises and
Equipment, net 77,724 78,192 79,027 72,996
Other Assets:
Goodwill 110,436 110,440 110,335 112,132
Bank owned life
insurance 30,481 30,117 29,405 29,049
Other intangibles 24,893 25,799 29,199 23,548
Other assets 85,369 76,969 55,260 65,045
Total other assets 251,179 243,325 224,199 229,774
Total Assets $3,842,970 $3,747,932 $3,557,818 $3,530,884
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest
bearing deposits $226,303 $228,531 $242,351 $258,533
Interest bearing
deposits 2,408,850 2,372,797 2,222,812 2,202,543
Total deposits 2,635,153 2,601,328 2,465,163 2,461,076
Borrowed funds 535,896 471,788 407,122 363,664
Other liabilities 64,981 57,238 65,736 92,658
Total liabilities 3,236,030 3,130,354 2,938,021 2,917,398
Commitments and
Contingencies
Stockholders' Equity:
Preferred Stock -
$.01 par value,
100,000,000 shares
authorized, none
issued or outstanding
as of September 30 and
June 30, 2008 and
December 31 and
September 30, 2007 - - - -
Common Stock - $.01
par value, 300,000,000
shares authorized,
82,264,457 shares
issued and outstanding
as of September 30,
2008, June 30, 2008
and December 31, and
September 30, 2007 823 823 823 823
Additional paid-in
capital 343,765 360,156 360,126 360,128
Unearned common
stock held by the
employee savings
and stockownership
plan (29,013) (29,829) (30,635) (31,515)
Retained earnings
(partially
restricted) 299,044 294,723 291,360 291,530
Accumulated other
comprehensive
loss, net (7,679) (8,295) (1,877) (7,480)
Total stockholders'
equity 606,940 617,578 619,797 613,486
Total Liabilities and
Stockholders' Equity $3,842,970 $3,747,932 $3,557,818 $3,530,884
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2008 2007 2008 2007
INTEREST INCOME:
Interest and fees on loans $33,564 $32,588 $98,756 $84,229
Interest on federal funds
sold 14 985 522 1,277
Interest and dividends on
investment securities:
Taxable 14,074 12,682 43,751 23,843
Tax-exempt 428 256 1,164 752
Total interest income 48,080 46,511 144,193 110,101
INTEREST EXPENSE:
Interest on deposits:
Interest bearing
checking accounts 1,410 1,626 3,931 2,528
Money market and
savings deposits 3,856 3,374 11,277 8,947
Time deposits 8,748 10,955 29,976 29,038
Total 14,014 15,955 45,184 40,513
Interest on borrowed funds 4,975 4,438 14,741 11,557
Total interest expense 18,989 20,393 59,925 52,070
Net interest income 29,091 26,118 84,268 58,031
Provision for loan losses 3,191 0 5,791 300
Net Interest Income After
Provision for Loan Losses 25,900 26,118 78,477 57,731
NON-INTEREST INCOME:
Insurance commission
and related income 2,738 979 7,879 3,113
Service charges and
other income 3,827 2,824 12,157 5,545
Impairment charge on
securities available-for-
sale (264) - (737) -
Net gain on sale of
investment securities
available for sale 159 (24) 430 656
Total non-interest income 6,460 3,779 19,729 9,314
NON-INTEREST EXPENSE:
Salaries and employee
benefits 13,933 13,896 40,083 32,286
Pension curtailment gain - - (7,289) -
Occupancy 3,070 2,460 8,827 6,454
Depreciation,
amortization and
maintenance 2,096 1,989 6,118 4,744
Advertising 1,220 1,033 3,545 2,760
Amortization of
intangible 906 1,452 4,306 1,623
Other 5,414 14,580 15,582 20,605
Total non-interest expense 26,639 35,410 71,172 68,472
Income (Loss) before income
taxes 5,721 (5,513) 27,034 (1,427)
Income tax expense (benefit) 1,400 (475) 7,550 (50)
NET INCOME (LOSS) $4,321 ($5,038) $19,484 ($1,377)
EARNINGS (LOSS) PER SHARE -
Basic $0.05 ($0.07) $0.25 ($0.02)
EARNINGS (LOSS) PER SHARE -
Diluted $0.05 ($0.07) $0.25 ($0.02)
Average common shares
outstanding - Basic 78,566,856 74,723,331 79,010,679 55,451,926
Average common shares
outstanding - Diluted 78,573,633 74,723,331 79,010,679 55,451,926
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Selected Consolidated Financial and Other Data
(Dollars in thousands)
September 30, June 30, December 31, September 30,
2008 2008 2007 2007
ASSET QUALITY INDICATORS:
Non-performing
assets:
Non-accruing loans $13,342 $3,406 $7,685 $8,239
Accruing loans past
due 90 days or more 15,023 12,284 8,626 7,837
Total non-performing loans 28,365 15,690 16,311 16,076
Real estate owned 7,355 7,439 4,797 5,106
Total non-performing
assets $35,720 $23,129 $21,108 $21,182
ASSET QUALITY RATIOS:
Non-performing loans
to total loans 1.22% 0.70% 0.77% 0.77%
Non-performing loans
to total assets 0.74% 0.42% 0.46% 0.46%
Non-performing assets
to total assets 0.93% 0.62% 0.59% 0.60%
Non-performing assets less
accruing loans Past due
90 days or more to total
assets 0.54% 0.29% 0.35% 0.38%
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
PERFORMANCE RATIOS:
(annualized)
Return on average
assets 0.46% (0.59%) 0.70% (0.07%)
Return on average
equity 2.82% (3.56%) 4.22% (0.36%)
Net interest margin 3.41% 3.43% 3.34% 3.13%
September 30, June 30, December 31, September 30,
2008 2008 2007 2007
Other:
Employees (full-time
equivalents) 869 862 877 818
SOURCE Beneficial Mutual Bancorp, Inc.
http://www.thebeneficial.com/
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