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Beneficial Mutual Bancorp, Inc. Announces Quarter and Year Ended December 31, 2010 Results

PHILADELPHIA--(BUSINESS WIRE)-- Beneficial Mutual Bancorp, Inc. ("Beneficial") (NASDAQGS: BNCL), the parent company of Beneficial Mutual Savings Bank (the "Bank" or the "Company"), today announced its financial results for the quarter and year ended December 31, 2010.

Beneficial recorded a net loss of $0.4 million, or $0.00 per share, for the quarter ended December 31, 2010, compared to net income of $6.2 million, or $0.08 per share, for the quarter ended December 31, 2009. Net loss for the year ended December 31, 2010 totaled $9.0 million, or $0.12 per share, compared to net income of $17.1 million, or $0.22 per share, for the year ended December 31, 2009.

The net loss for the quarter and year ended December 31, 2010 was primarily due to higher provisions for loan losses. For the quarter and year ended December 31, 2010 the provision for loan losses were $8.0 million and $70.2 million, respectively, compared to $3.6 million and $15.7 million for the quarter and year ended December 31, 2009, respectively. Although the provision for loans losses decreased during the fourth quarter of 2010 compared to the third quarter of 2010, our commercial loan portfolio, primarily commercial real estate loans, continues to experience high charge-off levels. Some economic measures are showing signs of improvement, however we believe the recovery for commercial real estate in our region will take some time causing continued downward pressure on property valuations. The Company is charging-off the collateral deficiency on all of its classified collateral dependent loans once they are 90 days delinquent across all loan portfolios given our outlook for commercial real estate in our region.

Results for the quarter ended December 31, 2010 compared to the prior year period were also impacted by the final adjustment of income tax expense for the year based on full year pre-tax income/(loss). This resulted in an income tax expense of $3.3 million on pre-tax income of $2.9 million for the quarter ended December 31, 2010 compared to income tax expense of $0.1 million on pre-tax income of $6.2 million for the quarter ended December 31, 2009.

At December 31, 2010, the Company's allowance for loan losses totaled $45.4 million, or 1.6% of total loans, and non-performing assets were $140.4 million, resulting in an allowance for loan losses to non-performing assets ratio of 32.3% compared to an allowance for loan losses of $45.9 million, or 1.6% of total loans, and non-performing assets of $162.9 million, resulting in an allowance for loan losses to non-performing assets ratio of 28.2% at December 31, 2009.

Gerard Cuddy, Beneficial's President and CEO, stated "Although our financial results improved from the third quarter, credit costs continue to have a significant impact on our business and we expect these costs to remain elevated in 2011. Despite a difficult year, we made progress in a number of areas that will well position Beneficial when economic conditions improve. During 2010, we increased both net interest income and non-interest income, widened our net interest margin, improved our operating efficiency, grew core deposits, expanded our presence with two new campuses in Cherry Hill, New Jersey and preserved our capital. In 2011, we will continue to be focused on improving our core profitability as we manage through the current credit environment. We are committed to educating our customers and providing the tools necessary to make wise financial decisions and will continue to invest in our customers, employees and communities."

Beneficial's capital levels and liquidity at December 31, 2010 remain strong with excess capital of $189.2 million and $267.0 million above the well capitalized levels as shown below:

12/31/10   12/31/10

Capital Ratios

Excess Capital

 
Tangible Capital 10.16 %
Tier 1 Capital (to average assets) 8.89 % $189,222
Tier 1 Capital (to risk weighted assets) 15.69 % $267,026
Total Capital (to risk weighted assets) 16.95 % $191,471

Highlights for the quarter and year ended December 31, 2010:

Balance Sheet

Total assets increased $256.1 million, or 5.5%, to $4.9 billion at December 31, 2010 compared to $4.7 billion at December 31, 2009. The growth in total assets was primarily attributable to an increase in investment securities of $288.7 million and other assets of $92.3 million. Beneficial's loan portfolio balance remained stable during 2010 at $2.8 billion despite low demand for both consumer and business loans as consumers and businesses continue to deleverage and remain cautious about the economy.

Total deposits increased $433.1 million, or 12.3%, to $3.9 billion at December 31, 2010 compared to $3.5 billion at December 31, 2009. Increases in checking accounts of $410.6 million and savings accounts of $164.1 million were partially offset by decreases in time deposits of $97.9 million and money market accounts of $43.7 million.

Net Interest Income and Margin

For the quarter ended December 31, 2010, Beneficial reported net interest income of $37.1 million, an increase of $2.3 million, or 6.6%, from the same quarter in 2009. The net interest margin decreased 5 basis points to 3.24% for the quarter ended December 31, 2010, from 3.29% for the same quarter in 2009 as the low interest rate environment reduced the yields on our investment portfolio decreasing the rate on our interest earning assets. This decrease in yield on interest earning assets was offset by reductions in rates paid on our deposits and lower borrowings costs. For the year ended December 31, 2010, net interest income increased $20.3 million, or 15.9%, to $147.6 million compared to $127.3 million for the year ended December 31, 2009 with the net interest margin increasing 4 basis points to 3.32%. Although the yield on interest earnings assets also decreased for the year ended December 31, 2010 given the reduction on yields for the investment portfolio, deposit repricings and decreases in borrowings have lowered the cost of interest bearing liabilities and improved net interest margin during the year.

Non-interest Income

Non-interest income increased to $6.9 million for the quarter ended December 31, 2010, from $6.2 million recorded for the same quarter in 2009. Results for the quarter ended December 31, 2010 include a $1.3 million increase in service charges and other income to $4.8 million due to higher interchange fees and increases in the cash surrender value of life insurance.

For the year ended December 31, 2010, non-interest income increased $373 thousand to $27.2 million from $26.8 million for the year ended December 31, 2009. This increase was primarily a result of an increase in service charges and other income of $2.2 million, insurance and advisory income of $525 thousand, trading securities profits of $298 thousand and a decrease in impairment charges on securities available for sale of $1.5 million, partially offset by a decrease in gains on sale of investment securities available for sale of $4.1 million.

Non-interest Expense

Non-interest expense for the quarter ended December 31, 2010 increased $1.9 million or 6.2% to $33.1 million when compared to the same period in 2009 and increased $8.5 million, or 7.1%, to $128.4 million for the year ended December 31, 2010 compared to the year ended December 31, 2009. The increases were primarily due to increases in salaries and benefits from normal merit increases, as well as growth in the number of employees. The Company also had increases in marketing expenses as it continued to enhance its product offerings and visibility in the marketplace and increases in expenses for internet banking, debit card rewards programs and expenses and losses related to other real estate owned. For the year ended December 31, 2010 the Company's efficiency ratio dropped to 73.4% compared to 77.7% for the year ended December 31, 2009.

Asset Quality

Non-performing assets, including loans 90 days past due and still accruing, decreased to $140.4 million, or 2.85% of total assets at December 31, 2010 from $162.9 million, or 3.49% of total assets at December 31, 2009 as a result of the charge-offs recorded during quarter and year ended December 31, 2010. Net charge-offs during the quarter and year ended December 31, 2010 were $7.6 million and $70.7 million, respectively compared to $0.5 million and $6.7 million during the quarter and year ended December 31, 2009, respectively. The Company charges-off any collateral deficiency on all collateral dependent classified loans once they are 90 days delinquent. Non-performing assets at December 31, 2010 include $27.9 million, or 19.9%, of government guaranteed student loans where Beneficial has little risk of credit loss. Non-performing assets increased $6.6 million to $140.4 million at December 31, 2010 from $133.8 million at September 30, 2010. The increase in nonperforming assets was due primarily to collateral deficiencies for commercial real estate loans that were charged off during the fourth quarter of 2010.

Provisions for credit losses of $8.0 million and $70.2 million were recorded for the quarter and year ended December 31, 2010, respectively, compared to $3.6 million and $15.7 million for the quarter and year ended December 31, 2009, respectively. The increase in the provision for loan losses recorded for the quarter ended and year December 31, 2010 was primarily driven by increased reserves required for commercial real estate loans given the continued deterioration in the value of collateral for these loans as the overall economic environment in the Company's region struggles to recover. The allowance for loan losses remained constant at 1.6% at December 31, 2010 and 2009.

The Company continues to rigorously review its loan portfolio to ensure that the collateral values remain sufficient to support the outstanding loan balances. In addition, Beneficial will continue to work diligently to maximize the recovery of balances that have been charged off.

Capital

Stockholders' equity totaled $615.5 million, or 12.5%, of total assets at December 31, 2010 compared to $637.0 million, or 13.6% of total assets at December 31, 2009. Beneficial repurchased 1,139,000 of shares of its common stock owned by public shareholders at an average price of $8.62 during the year ended December 31, 2010 at a total cost of $9.9 million. Beneficial's tangible equity to tangible assets totaled 10.16% at December 31, 2010 compared to 11.14% at December 31, 2009.

About Beneficial Mutual 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 65 offices in the greater Philadelphia and Southern New Jersey regions. Insurance services are offered through the Beneficial Insurance Services, LLC and wealth management services are offered through the Beneficial Advisors, LLC, both wholly owned subsidiaries 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 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.

     
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Financial Condition
(Dollars in thousands, except share amounts)
 
December 31, September 30, December 31,
2010 2010 2009
ASSETS:
Cash and Cash Equivalents:
Cash and due from banks $33,778 $38,223 $39,739
Overnight investments 56,521   177,887   139,962  
Total cash and cash equivalents 90,299 216,110 179,701
 
Trading Securities 6,316 - 31,825
 
Investment Securities:
Available-for-sale 1,541,991 1,419,095 1,287,106
Held-to-maturity 86,609 88,782 48,009
Federal Home Loan Bank stock, at cost 23,244   27,168   28,068  
Total investment securities 1,651,844   1,535,045   1,363,183  
 
Loans: 2,796,402 2,768,753 2,790,119
Allowance for loan losses (45,366 ) (44,959 ) (45,855 )
Net loans 2,751,036 2,723,794 2,744,264
 
Accrued Interest Receivable 19,566 18,483 19,375
 
Bank Premises and Equipment, net 64,339 69,466 81,255
Other Assets:
Goodwill 110,486 110,486 110,486
Bank owned life insurance 33,818 33,464 32,357
Other intangibles 16,919 17,777 20,430
Other assets 185,162   174,561   90,804  
Total other assets 346,385   336,288   254,077  
Total Assets $4,929,785   $4,899,186   $4,673,680  
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing deposits $282,050 $292,159 $242,412
Interest bearing deposits 3,660,254   3,566,144   3,266,835  
Total deposits 3,942,304 3,858,303 3,509,247
Borrowed funds 273,317 343,313 433,620
Other liabilities 98,617   63,481   93,812  
Total liabilities 4,314,238   4,265,097   4,036,679  
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock - $.01 par value - - -
Common Stock - $.01 par value 823 823 823
Additional paid-in capital 348,415 347,581 345,356
Unearned common stock held by employee stock ownership plan (22,587 ) (23,073 ) (25,489 )
Retained earnings (partially restricted) 304,232 304,589 313,195
Accumulated other comprehensive income, net (1,882 ) 12,752 6,712
Treasury stock, at cost (13,454 ) (8,583 ) (3,596 )
Total stockholders' equity 615,547   634,089   637,001  
 
Total Liabilities and Stockholders' Equity $4,929,785   $4,899,186   $4,673,680  
   
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
 
For the Quarter Ended For the Year Ended
December 31,   December 31, December 31,   December 31,
2010 2009 2010 2009
INTEREST INCOME:
Interest and fees on loans $36,812 $36,660 $146,753 $140,183
Interest on overnight investments 116 110 437 113
Interest on trading securities 16 1 85 1
Interest and dividends on investment securities:
Taxable 10,481 12,145 45,627 49,438
Tax-exempt 1,060   1,131   4,612   3,239  
Total interest income 48,485 50,047 197,514 192,974
 
INTEREST EXPENSE:
Interest on deposits:
Interest bearing checking accounts 2,926 2,637 10,541 9,052
Money market and savings deposits 2,463 2,404 9,507 11,073
Time deposits 3,088   5,564   14,710   26,724  
Total 8,477 10,605 34,758 46,849
Interest on borrowed funds 2,930   4,675   15,138   18,783  
Total interest expense 11,407   15,280   49,896   65,632  
 
Net interest income 37,078 34,767 147,618 127,342
 
Provision for loan losses 8,000   3,597   70,200   15,697  
Net interest income after provision for loan losses 29,078  

 

31,170
  77,418  

 

111,645
 
 
NON-INTEREST INCOME:
Insurance and advisory commission and fee income 1,941 1,854 8,658 8,133
Service charges and other income 4,859 3,523 15,934 13,743
Impairment charge on securities available-for-sale - (161 ) (88 ) (1,587 )
Gain on sale of investment securities available-for-sale 16 982 2,390 6,530
Trading securities profits 91   28   326   28  
Total non-interest income 6,907   6,226   27,220   26,847  
 
NON-INTEREST EXPENSE:
Salaries and employee benefits 14,733 15,387 61,048 58,251
Occupancy expense 2,848 2,920 11,815 11,992
Depreciation, amortization and maintenance 2,401 2,098 9,260 8,822
Marketing expense 857 1,764 5,898 5,889
Intangible amortization expense 858 881 3,511 3,555
Impairment of goodwill - - - 976
FDIC Insurance 1,541 1,249 5,606 5,633
Other 9,836   6,857   31,252   24,748  
Total non-interest expense 33,074   31,156   128,390   119,866  
 
Income (Loss) before income taxes 2,911   6,240   (23,752 ) 18,626  
 
Income tax expense (benefit) 3,267   49   (14,789 ) 1,537  
 
NET INCOME (LOSS) $(356 ) $6,191   $(8,963 ) $17,089  
 
EARNINGS (LOSS) PER SHARE — Basic $(0.00 ) $0.08 $(0.12 ) $0.22
EARNINGS (LOSS) PER SHARE — Diluted $(0.00 ) $0.08 $(0.12 ) $0.22
 
Average common shares outstanding — Basic 77,215,313 77,687,208 77,593,808 77,693,082
Average common shares outstanding — Diluted 77,215,313 77,765,818 77,593,808 77,723,668
       
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Selected Consolidated Financial and Other Data of the Company (Unaudited)
 

Net Interest Margin Table

 
Quarter Ended December 31, Year ended December 31,
2010   2009 2010   2009
Average   Yield / Average Yield / Average   Yield / Average Yield /
Description (in thousands) Balance   Rate Balance   Rate Balance   Rate Balance   Rate
 
Overnight investments $ 182,355 0.25 % $ 183,913 0.23 % $ 172,712 0.25 % $ 47,734 0.23 %
 
Investments 1,602,488 2.88 % 1,262,738 4.21 % 1,479,092 3.40 % 1,181,415 4.46 %
 
Loans: 2,784,525 5.27 % 2,772,867 5.27 % 2,794,245 5.25 % 2,650,116 5.29 %
Residential 690,899 5.07 % 637,432 5.47 % 672,391 5.22 % 585,565 5.56 %
Commercial Real Estate 780,283 5.21 % 779,724 4.69 % 786,296 4.95 % 778,120 4.98 %
Business and Small Business 528,199 5.71 % 517,015 5.71 % 535,611 5.57 % 443,929 5.63 %
Personal Loans 785,144   5.21 % 838,696   5.38 % 799,947   5.36 % 842,502   5.21 %
 
Total Interest Earning Assets $ 4,569,368 4.23 % $ 4,219,518 4.73 % $ 4,446,049 4.44 % $ 3,879,265 4.97 %
 
Deposits: 3,645,172 0.92 % 3,210,611 1.31 % 3,433,609 1.01 % 2,860,627 1.64 %
Savings 677,377 0.73 % 489,480 0.72 % 623,819 0.73 % 427,478 0.62 %
Money Market 620,670 0.77 % 664,126 0.91 % 622,762 0.80 % 611,930 1.37 %
Demand 387,606 0.26 % 334,052 0.34 % 373,737 0.29 % 322,195 0.47 %
Demand - Municipals 1,107,952   0.96 % 779,826   1.20 % 932,004   1.02 % 518,383   1.46 %
Total Core 2,793,605 0.77 % 2,267,484 0.88 % 2,552,322 0.79 % 1,879,986 1.07 %
 
Time Deposits 851,567 1.45 % 943,127 2.34 % 881,287 1.68 % 980,641 2.73 %
 
Borrowings 314,836   3.69 % 440,900   4.21 % 379,534   3.99 % 454,997   4.13 %
 
Total Interest Bearing Liabilities $3,960,008 1.14 % $3,651,511 1.66 % $3,813,143 1.31 % $3,315,624 1.98 %
 
Non-interest bearing deposits 282,863 241,772 268,702 239,871
 
Net interest margin 3.24 % 3.29 % 3.32 % 3.28 %
     
ASSET QUALITY INDICATORS December 31, September 30, December 31,
(Dollars in thousands) 2010   2010   2009
 
Non-performing assets:
Non-accruing loans $95,803 $89,205 $72,307
Accruing loans past due 90 days or more* 27,932   27,106   81,512
Total non-performing loans** $123,735 $116,311 $153,819
 
Real estate owned 16,694   17,438   9,061
 
Total non-performing assets $140,429   $133,749   $162,880
 
Non-performing loans to total loans 4.42% 4.20% 4.32%
Non-performing loans to total assets 2.51% 2.37% 2.58%
Non-performing assets to total assets 2.85% 2.73% 3.49%

Non-performing assets less accruing loans

 Past due 90 days or more to total assets

2.28%

2.18%

2.45%

 

* Includes $27.9 million, $26.4 million and $33.1 million in government guaranteed student loans as of December 31 and, September 30, 2010 and December 31, 2009, respectively.

** Includes $26.7 million, $26.5 million and $33.3 million of troubled debt restructured loans (TDRs) as of December 31 and September 30, 2010 and December 31, 2009, respectively.

   
PERFORMANCE RATIOS

For the Quarter

For the Year

(annualized)

Ended December 31,

Ended December 31,
2010   2009 2010   2009
 
 
Return on average assets (0.04 )% 0.53 % (0.18 )% 0.40 %
Return on average equity (0.28 )% 3.84 % (1.39 )% 2.74 %
Net interest margin 3.24 % 3.29 % 3.32 % 3.28 %
Efficiency ratio 75.35 % 76.10 % 73.44 % 77.74 %
Tangible Common Equity 10.16 % 11.14 % 10.16 % 11.14 %

Beneficial Mutual Bancorp, Inc.
Thomas D. Cestare
Executive Vice President and Chief Financial Officer
215-864-6009

Source: Beneficial Mutual Bancorp, Inc.

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