Beneficial Bancorp, Inc.
Apr 22, 2016
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Beneficial Bancorp, Inc. Announces First Quarter Results

PHILADELPHIA, April 22, 2016 (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, 2016.  Beneficial recorded net income of $5.0 million, or $0.07 per diluted share, for the quarter ended March 31, 2016 compared to net income of $5.3 million, or $0.07 per diluted share, for the quarter ended March 31, 2015

Highlights for the quarter ended March 31, 2016 are as follows:

On April 15, 2016, Beneficial announced the completion of its acquisition of Conestoga Bank.  The results of Conestoga Bank's operations will be included in Beneficial's financial statements beginning on April 15, 2016.  During the second quarter of 2016, Beneficial expects to record merger and other restructuring charges of approximately $8.0 million, pre-tax, as a result of the completion of the transaction.

In connection with the closing of the Conestoga transaction, the Company announced the implementation of an expense management reduction program following a comprehensive review of the Company's and Bank's operating cost structure.  Under the expense management reduction program, the Bank will reduce its salary and benefits expense by approximately 11% during the second quarter of 2016.  Employees whose positions are eliminated as a result of the reduction in force will receive severance packages, which will include outplacement services.  During the second quarter of 2016, the Company expects to record a charge of approximately $1.2 million, pre-tax, as a result of the expense management reduction program.

"We are pleased with our performance during the quarter" said Gerard Cuddy, Beneficial's President and CEO.  "We are excited to have completed our acquisition of Conestoga Bank on April 14, 2016. We believe this acquisition, which will increase our total assets to approximately $5.5 billion, will provide even greater strength, size and stability for our customers, employees, shareholders and the communities we serve. The continued deployment of the second-step conversion proceeds into the loan portfolio has also improved our balance sheet mix and increased our net interest income levels.  Our lending teams have been able to organically grow our loan portfolio and we continue to increase our core deposits in our markets.  Our focus remains on a superior customer experience, management of expenses and prudent capital management to improve the financial performance of our organization." 

Balance Sheet
Total assets decreased $12.0 million, or 0.2%, to $4.81 billion at March 31, 2016 compared to $4.83 billion at December 31, 2015.  Cash and cash equivalents decreased $122.2 million to $111.8 million at March 31, 2016 from $233.9 million at December 31, 2015.  The decrease in cash and cash equivalents was primarily driven by the deployment of a portion of the second-step conversion proceeds to support organic loan growth, the participation in a portfolio of multi-family loans during the quarter as well as repurchases of our common stock.

Investments decreased $95.8 million, or 7.0%, to $1.3 billion at March 31, 2016 compared to $1.4 billion at December 31, 2015, as we continued to focus on improving our balance sheet mix by reducing the percentage of our assets in cash and 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 increased $210.3 million, or 7.2%, to $3.15 billion at March 31, 2016 from $2.94 billion at December 31, 2015.  The increase in loans was due to $92.8 million in organic growth primarily in commercial real estate, commercial construction, and commercial business loan portfolios as well as a $117.5 million participation in a portfolio of multi-family loans.  

Commercial loans include shared national credits, which are participations in loans or loan commitments of at least $20.0 million that are shared by three or more banks.  The shared national credit loans are typically variable rate with terms ranging from one to seven years.  At March 31, 2016, shared national credits totaled $227.2 million compared to $222.4 million at December 31, 2015. All of these loans were classified as pass rated as of March 31, 2016 as all payments are current and the loans are performing in accordance with their contractual terms.

Deposits increased $58.6 million, or 1.7%, to $3.51 billion at March 31, 2016 from $3.45 billion at December 31, 2015.  The $58.6 million increase in deposits during the quarter ended March 31, 2016 was primarily due to increases of $35.8 million and $34.9 million in savings and club deposits and interest business checking deposits, respectively, partially offset by a $14.4 million decrease in municipal deposits and a $13.8 million decrease in interest retail checking deposits.

Stockholders' equity decreased $69.0 million, or 6.2%, to $1.05 billion at March 31, 2016 from $1.12 billion at December 31, 2015.  The decrease in stockholders' equity was primarily due to the repurchase of 6,283,435 shares of common stock during the quarter, partially offset by $5.0 million increase in retained earnings.

Net Interest Income
For the quarter ended March 31, 2016, net interest income was $32.2 million, an increase of $2.1 million, or 7.0%, from the quarter ended March 31, 2015. The increase in net interest income was primarily due to improvement in our balance sheet mix and related interest earning assets with growth occurring in our higher yielding loan portfolio with reductions in cash and investment levels.  The net interest margin totaled 2.87% for the quarter ended March 31, 2016 as compared to 2.75% for the same period in 2015. The increase in the net interest margin for the quarter ended March 31, 2016 was primarily due to a change in the mix of the interest earning assets from lower yielding investment securities into higher yielding loans. The continued low interest rate environment will put pressure on the net interest margin in future periods but we are focused on growing our loan portfolio and continuing to improve our balance sheet mix to help stabilize our net interest margin.

Non-interest Income
For the quarter ended March 31, 2016 non-interest income totaled $5.3 million, a decrease of $300 thousand, or 5.3%, compared to $5.6 million for the same period in 2015.  The decrease was primarily due to a $168 thousand limited partnership net loss and a $155 thousand decline in mortgage banking income during the quarter ended March 31, 2016.

Non-interest Expense
For the quarter ended March 31, 2016, non-interest expense totaled $30.3 million, a decrease of $158 thousand, or 0.5%, from the quarter ended March 31, 2015.  The decrease in non-interest expense was primarily driven by a $526 thousand decline in professional fees, a $504 thousand decrease in occupancy expense due to lower snow removal costs and a $403 thousand decrease in marketing expense.  These decreases were partially offset by $838 thousand of merger costs associated with the acquisition of Conestoga Bank and a $325 thousand increase in salaries and benefits primarily due to merit increases.

Income Taxes
For the quarter ended March 31, 2016, we recorded a provision for income taxes of $2.2 million, reflecting an effective tax rate of 30.7%, compared to a provision for income taxes of $2.0 million, reflecting an effective tax rate of 27.6%, for the quarter ended March 31, 2015.  The increase in income tax expense and the effective tax rate during these periods is due to a higher ratio of taxable income compared to tax exempt income for the quarter ended March 31, 2016 as compared to the same periods in 2015.  The effective tax rates differ from the statutory rate of 35% principally because of tax-exempt investments, non-taxable income related to bank-owned life insurance and tax credits received on affordable housing partnerships. These tax credits relate to investments maintained by the Bank as a limited partner in partnerships that sponsor affordable housing projects utilizing low-income housing credits pursuant to Section 42 of the Internal Revenue Code.

Asset Quality
Asset quality metrics remain strong as non-performing loans, excluding government guaranteed student loans, decreased to $13.7 million at March 31, 2016, compared to $14.8 million at December 31, 2015.  Our ratio of non-performing loans to total assets, excluding government guaranteed student loans, decreased to 0.29% at March 31, 2016 compared to 0.31% at December 31, 2015.

As a result of our strong asset quality metrics and low net charge-offs recorded in recent periods, we did not record a provision for loan losses during the quarter ended March 31, 2016. Net charge-offs decreased $1.9 million, or 87.7%, to $267 thousand during the quarter ended March 31, 2016 compared to $2.2 million during the quarter ended December 31, 2015.  As a result of the improvement in our asset quality metrics and net recoveries received, we recorded a $2.0 million negative provision for loan losses for the quarter ended March 31, 2015.

At March 31, 2016, the Bank's allowance for loan losses totaled $45.2 million, or 1.44% of total loans, compared to $45.5 million, or 1.55% of total loans, at December 31, 2015.

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, 2016, Beneficial's tangible capital to tangible assets totaled 19.64%. In addition, at March 31, 2016, we had the ability to borrow up to $1.5 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
 3/31/2016 12/31/2015 3/31/2015 Capitalized Ratio 3/31/2016
          
Tier 1 Leverage (to average assets) 20.58%  22.38%  21.46%  5.0% $728,715 
Common Equity Tier 1 Capital (to risk weighted assets) 29.15%  33.36%  38.32%  6.5%  729,281 
Tier 1 Capital (to risk weighted assets) 29.89%  34.13%  38.32%   8.0%  704,900 
Total Capital Ratio (to risk weighted assets) 31.14%  35.38%  39.58%  10.0%  680,833 
                    

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

        Minimum Well Excess Capital
  3/31/2016 12/31/2015 3/31/2015  Capitalized Ratio 3/31/2016
           
Tier 1 Leverage (to average assets)  16.81%  16.86%  16.62%   5.0% $551,596 
Common Equity Tier 1 Capital (to risk weighted assets) 24.42%  25.74%  29.68%   6.5%  576,185 
Tier 1 Capital (to risk weighted assets) 24.42 %  25.74%  29.68%   8.0%  527,955 
Total Capital Ratio (to risk weighted assets) 25.67%  26.99%  30.94%   10.0%  503,923 
                     

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 67 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 Conestoga Bank into our operations and our ability to realize related revenue synergies and cost savings within expected time frames. 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,
   2016    2015   2015 
ASSETS:      
Cash and cash equivalents:      
Cash and due from banks $40,381   $43,978  $42,594 
Interest-bearing deposits  71,384   189,942   264,121 
Total cash and cash equivalents  111,765   233,920   306,715 
       
Investment securities:      
Available-for-sale  582,402   655,162   733,210 
Held-to-maturity  673,222   696,310   757,730 
Federal Home Loan Bank stock, at cost  8,786   8,786   8,830 
Total investment securities  1,264,410   1,360,258   1,499,770 
       
Loans:  3,151,785    2,941,446   2,665,961 
Allowance for loan losses  (45,234)  (45,500)   (49,144)
Net loans  3,106,551   2,895,946   2,616,817 
       
Accrued interest receivable  14,794   14,298   13,736 
       
Bank premises and equipment, net  72,465   73,213   79,616 
       
Other assets:      
Goodwill  121,973   121,973   121,973 
Bank owned life insurance  65,095   64,827   63,724 
Other intangibles  3,915   4,389   5,670 
Other assets  53,726   57,871   62,432 
Total other assets   244,709   249,060   253,799 
Total assets $4,814,694  $4,826,695  $4,770,453 
       
LIABILITIES AND STOCKHOLDERS' EQUITY:      
Liabilities:      
Deposits:      
Non-interest bearing deposits $409,716  $409,232  $394,653 
Interest bearing deposits   3,100,774   3,042,691   3,020,674 
Total deposits  3,510,490   3,451,923    3,415,327 
Borrowed funds  190,410   190,405   190,392 
Other liabilities  67,206   68,821   70,008 
Total liabilities  3,768,106    3,711,149   3,675,727 
Commitments and contingencies      
Stockholders' equity:      
Preferred stock - $.01 par value  -   -   - 
Common stock - $.01 par value  831   829   827 
Additional paid-in capital  789,978   787,503   782,423 
Unearned common stock held by      
employee stock ownership plan  (31,397)  (32,014)  (33,820)
Retained earnings  387,974   382,951   365,309 
Accumulated other comprehensive loss, net  (18,562)  (23,374)  (19,747)
Treasury stock, at cost  (82,236)  (349)  (266)
Total stockholders' equity  1,046,588   1,115,546   1,094,726 
Total liabilities and stockholders' equity $4,814,694  $4,826,695  $4,770,453 
       


BENEFICIAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
  
 For the Three Months Ended
 March 31, December 31, March 31,
 2016
  2015
 2015
INTEREST INCOME:     
Interest and fees on loans$29,990  $29,073  $26,266 
Interest on overnight investments 259   165    269 
Interest and dividends on investment securities:     
Taxable 6,360   6,920   7,910 
Tax-exempt 325   325   498 
Total interest income 36,934   36,483   34,943 
      
INTEREST EXPENSE:     
Interest on deposits:     
Interest bearing checking accounts 466   418   423 
Money market and savings deposits 1,322   1,312   1,307 
Time deposits 1,628   1,765   1,833 
Total 3,416   3,495    3,563 
Interest on borrowed funds 1,278   1,281   1,247 
Total interest expense 4,694   4,776   4,810 
Net interest income 32,240   31,707   30,133 
Provision for loan losses -   -   (2,000)
Net interest income after provision for loan losses 32,240   31,707   32,133 
      
NON-INTEREST INCOME:     
Insurance and advisory commission and fee income 1,990   1,637   1,986 
Service charges and other income 3,385   3,864   3,507 
Mortgage banking income (28)  162    127 
Net loss on sale of investment securities (4)  (5)  (5)
Total non-interest income  5,343   5,658   5,615 
      
NON-INTEREST EXPENSE:     
Salaries and employee benefits 15,817   15,960   15,492 
Occupancy expense 2,293    2,055   2,797 
Depreciation, amortization and maintenance 2,317   2,292   2,301 
Marketing expense 913   501   1,316 
Intangible amortization expense 474   477    466 
FDIC insurance 553   527   548 
Merger and restructuring charges  838   753   - 
Professional fees 1,029   760   1,555 
Classified loan and other real estate owned related expense 292   24   292 
Other 5,807   6,360   5,724 
Total non-interest expense 30,333   29,709   30,491 
      
Income before income taxes 7,250    7,656   7,257 
Income tax expense 2,227   2,906   2,006 
       
NET INCOME$5,023  $4,750  $5,251 
      
EARNINGS PER SHARE - Basic$0.07  $0.06  $0.07 
EARNINGS PER SHARE - Diluted$0.07  $0.06  $0.07 
      
Average common shares outstanding - Basic 76,162,515   78,679,709   78,454,187 
Average common shares outstanding - Diluted 76,993,671   79,614,379   79,073,032 
      


BENEFICIAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Selected Consolidated Financial and Other Data
(Dollars in thousands)
  
 For the Three Months Ended
 March 31, 2016 December 31, 2015 March 31, 2015
 AverageYield / AverageYield / AverageYield /
 BalanceRate BalanceRate BalanceRate
         
Investment Securities:$1,506,173  1.84% $1,614,053  1.84% $1,934,271   1.79%
Overnight investments 205,383  0.50%  226,461  0.29%  430,391  0.25%
Stock 8,787  4.45%  8,786  4.50%  8,833  20.78%
Other Investment securities 1,292,003  2.04%  1,378,806  2.07%  1,495,047  2.13%
         
Loans: 2,975,549  4.02%  2,814,708  4.09%  2,449,445  4.31%
Residential 734,020  4.16%  731,828  4.18%  676,032   4.33%
Commercial Real Estate 1,087,469  3.94%  946,483  4.14%  650,686  4.59%
Business and Small Business 531,762  3.77%  514,805  3.81%  494,773   3.99%
Personal Loans 622,298  4.22%  621,592  4.17%  627,954  4.23%
         
Total Interest Earning Assets$4,481,722  3.29% $4,428,761  3.27% $4,383,716  3.20%
         
Deposits:$3,067,501  0.45% $3,005,608  0.46% $3,165,515  0.46%
Savings 1,155,603   0.34%  1,123,969  0.34%  1,122,098  0.35%
Money Market 399,739  0.34%  406,391  0.33%  426,792  0.33%
Demand 763,857  0.23%  699,548  0.22%  796,491  0.20%
Demand - Municipals 128,946  0.11%  138,270  0.11%  145,307  0.11%
Total Core Deposits 2,448,145  0.29%  2,368,178  0.29%  2,490,688  0.28%
         
Time Deposits 619,356  1.06%  637,430  1.10%  674,827  1.10 %
         
Borrowings 190,462  2.70%  190,403  2.67%  190,456  2.65%
         
Total Interest Bearing Liabilities$3,257,963  0.58% $3,196,011   0.59% $3,355,971  0.58%
         
Non-interest bearing deposits 395,940    386,219    366,686  
         
Net interest margin  2.87%   2.84%    2.75%
         


ASSET QUALITY INDICATORS March 31, December 31,  March 31,
(Dollars in thousands) 2016   2015   2015 
      
Non-performing assets:     
Non-accruing loans$13,731  $14,768  $14,112 
Accruing loans past due 90 days or more 21,223   22,900   24,072 
Total non-performing loans 34,954    37,668   38,184 
      
Real estate owned 827   1,276    1,406 
      
Total non-performing assets$35,781  $38,944  $39,590 
       
Non-performing loans to total loans 1.11%  1.28%  1.43%
Non-performing assets to total assets 0.74%  0.81%  0.83%
Non-performing assets less accruing government guaranteed student loans     
past due 90 days or more to total assets 0.30% 0.33% 0.33%
ALLL to total loans 1.44%  1.55%  1.84%
ALLL to non-performing loans 129.41%  120.79%  128.70%
ALLL to non-performing loans, excluding government guaranteed student loans 329.43%  308.10%  348.24%
            


Key performance ratios (annualized) are as follows for the quarter ended (unaudited):
  
 For the Three Months Ended
 March 31, December 31, March 31,
  2016   2015   2015 
PERFORMANCE RATIOS:     
(annualized)     
Return on average assets  0.42%  0.39%  0.45%
Return on average equity 1.87%  1.67%  2.30%
Net interest margin 2.87%  2.84%  2.75%
Efficiency ratio 80.71%  79.50%  85.29%
Tangible common equity 19.64%  21.04%  20.83%
            
CONTACT:

Thomas D. Cestare

Executive Vice President and Chief Financial Officer

PHONE: (215) 864-6009

Source: Beneficial Bank

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