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PHILADELPHIA, Feb 03, 2009 /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 quarter and year ended December 31, 2008.
For the quarter ended December 31, 2008, Beneficial reported a net loss of $2.9 million, or ($0.04) per share compared to a net loss of $0.2 million for the same quarter in 2007. Beneficial reported net income of $16.5 million or $0.21 per share for the year ended December 31, 2008 compared to a net loss of $1.5 million for the year ended December 31, 2007. During 2008, 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.
The fourth quarter loss resulted primarily from a provision for loan losses of $13.1 million during the period, and an impairment charge of $2.5 million related to the value of certain equity securities and mutual funds deemed to be other-than-temporarily impaired (OTTI). In the fourth quarter of 2007, the provision for loan losses was $2.2 million and an OTTI impairment charge of $1.2 million was recorded with respect to equity securities.
In July 2007, Beneficial completed its initial public offering and acquired FMS Financial Corporation (FMS), the parent company of Farmers & Mechanics Bank of Burlington, New Jersey, which resulted in significant changes to Beneficial's balance sheet and income statement compared to the current year period.
"We continue to grow market share by taking advantage of the opportunities the current environment presents to a well-capitalized company like Beneficial," said Gerard Cuddy, Beneficial's President and CEO. "While our fourth quarter performance was impacted by the severe economic and market deterioration in the U.S. and abroad, I'm encouraged that our core deposit gathering, lending, insurance and wealth management activities remain strong and continue to grow. Our employees are doing a great job. They continue to work hard to help our existing and new customers do the right thing financially. I remain confident that Beneficial's capital strength, asset quality, liquidity, strong customer focus, and values provide a substantial platform for sustained growth."
Highlights for the quarter ended December 31, 2008 included:
-- Total loans outstanding grew by $101.3 million, or 4.4%, to $2.4 billion
at December 31, 2008, up from $2.3 billion at the end of the third
quarter 2008.
-- Total deposits increased $106.5 million, or 4.0%, to $2.7 billion during
the quarter.
-- Net interest income increased by $0.7 million, or 2.2%, to $29.7 million
for the quarter, up from $29.1 million for the third quarter 2008.
-- Due to its strong capital position, Beneficial elected not to
participate in the Treasury Department's Capital Purchase Program.
Highlights for the year ended December 31, 2008 included:
-- Total loans outstanding grew $303.7 million, or 14.3% to end the year at
$2.4 billion.
-- Total deposits increased during 2008 by $276.5 million, or 11.2%, to
$2.7 billion.
-- Net interest income increased by 35.5% to $114.0 million, up from $84.1
million for the year ended December 31, 2007.
-- Non-interest income increased $10.2 million during 2008, or 76.5% to
$23.6 million.
Balance Sheet
During the quarter ended December 31, 2008, total assets increased $159.1 million, or 4.1%, to $4.0 billion. Loans outstanding increased by $101.3 million during the quarter as commercial loans grew by $76.8 million and consumer loans increased, primarily as a result of the purchase of a guaranteed student loan participation totaling $40.1 million, partially offset by declines in home equity and auto loans. Investment securities increased by $81.5 million during the quarter, while cash and cash equivalents decreased $17.4 million. Total deposits increased $106.5 million, or 4.0% during the quarter, to $2.7 billion at December 31, 2008, as core deposits grew by $78.2 million and time deposits increased by $29.8 million.
For the year ended December 31, 2008, total assets grew by $444.2 million or 12.5% over the $3.6 billion at December 31, 2007. This increase was mainly attributable to an increase in loans outstanding of $303.7 million and growth in investment securities of $137.6 million. Total deposits grew by 11.2%, or $276.5 million, to $2.7 billion during the year.
At December 31, 2008, Beneficial's stockholders' equity equaled $610.5 million, or 15.3% of total assets, compared to stockholders' equity of $606.9 million, or 15.8% of total assets at September 30, 2008. This increase resulted primarily from an increase in unrealized gains on available for sale securities of $16.2 million, as interest rates declined sharply during the quarter, partially offset by an increase in pension liability of $10.2 million during the quarter. The increase in pension liabilities was due primarily to a decline in the value of the pension funds' equity holdings. During the year ended December 31, 2008, Beneficial's stockholders' equity decreased 1.5% to $610.5 million compared to $619.8 reported at December 31, 2007.
Asset Quality
Beneficial is not a participant or originator in the subprime mortgage loan or subprime collateralized debt markets, and held no Fannie Mae or Freddie Mac preferred shares or subordinated debt, and therefore has no direct exposure to risks associated with these activities.
Beneficial recorded a $13.1 million provision for loan losses during the quarter ended December 31, 2008 compared to a provision of $2.2 million recorded during the quarter ended December 31, 2007. The increase in the provision was due primarily to specific loans evaluated for impairment as noted below, our continuous evaluation of non-performing loans, a risk assessment reflecting a rapid deterioration in the economic environment, and the increase in commercial loans outstanding. Specific details of the provision recorded during the quarter ended December 31, 2008 are as follows:
-- $5.7 million, or 43.5% of the quarterly provision, was related to one
shared national credit to a national home builder. As part of the
Shared National Credit Program, this loan is reviewed annually by the
Federal Deposit Insurance Corporation to ensure an efficient and
consistent review and classification. The balance of this loan was $6.5
million at December 31, 2008. This loan has been reserved to reflect
the anticipated net realizable value of the liquidation of the
underlying collateral;
-- $1.9 million was associated with reserves for other specific commercial
loans to reflect the net realizable value of their underlying
collateral;
-- $5.4 million was related to the ongoing evaluation of risk factors
applied to the remainder of the loan portfolio.
For the year ended December 31, 2008, a provision for loan losses of $18.9 million was recorded, bringing the allowance for loan losses at December 31, 2008 to $36.9 million, or 1.5% of total loans outstanding, compared to $23.3 million, or 1.1% of total loans outstanding, at December 31, 2007. This allowance represents management's estimate of the amount necessary to cover known and inherent losses in the loan portfolio.
Net charge-offs for the quarter ended December 31, 2008 equaled $1.4 million, compared to $0.9 million for the quarter ended December 31, 2007. Non-performing loans increased to $38.0 million, or 1.0% of total assets, at December 31, 2008, and were comprised of $23.6 million in commercial loans, $7.9 million in consumer loans and $6.5 million in residential real estate loans. This compares to non-performing loans of $16.3 million, or 0.5% of total assets, at December 31, 2007.
At December 31, 2008, Beneficial's investments in pooled trust preferred collateralized debt obligations include three securities, each of which are in the most senior tranches, with a total book value of $25.1 million and an estimated fair value of $19.3 million. The most senior tranches of collateralized debt obligations generally are protected from defaults by over-collateralization. Based on management's analysis as of December 31, 2008, all of these securities are expected to return 100% of their principal and interest.
Due to the weakened condition of the market for equity securities and mutual funds in the fourth quarter of 2008 and the evaluation of the near term prospects of the issuers in relation to the severity of the decline, Beneficial recorded a charge related to the value of common equity securities of various financial services companies and mutual funds that were deemed to be OTTI. The OTTI charge recognized during the quarter ended December 31, 2008 equaled $2.5 million, of which $1.9 million related to equity securities and $0.6 million related to mutual funds.
Net Interest Income
Beneficial's net interest income increased $3.7 million, or 14.0%, for the quarter ended December 31, 2008, from $26.1 million for the same quarter in 2007. For the year ended December 31, 2008, net interest income equaled $114.0 million, an increase of $29.9 million, or 35.5%, from the previous year attributable primarily to increased volume levels.
For the quarter ended December 31, 2008, the net interest margin increased seven basis points to 3.34% compared to 3.27% for the same quarter in 2007. The net interest margin increased by 16 basis points for the year ended December 31, 2008 to 3.33%, up from 3.17% for the year ended December 31, 2007.
Non-interest Income
Non-interest income decreased to $3.9 million for the quarter ended December 31, 2008, down $0.2 million, or 4.5%, from the quarter ended December 31, 2007, as increases in insurance commission income and service charges and other income were offset by the previously mentioned impairment charge.
For the year ended December 31, 2008, non-interest income rose $10.2 million, or 76.5%, over the year ended December 31, 2007. The largest contributors to that increase were an increase in insurance commission income of $4.9 million, or 93.2%, and an increase in service charges and other income of $6.9 million, or 76.4% over prior year. The increase in insurance commission income was a result of the acquisition of CLA Agency, Inc. (CLA), a full-service property and casualty and professional liability insurance brokerage company during the fourth quarter of 2007.
Non-interest Expense
Non-interest expense was $27.1 million for the quarter ended December 31, 2008, compared to $32.6 million for the same quarter in 2007. This $5.4 million decrease was due primarily to a decrease in salaries and employee benefits of $6.2 million related to severance payments incurred in the fourth quarter of 2007 in connection with the acquisition of FMS and a separate reduction in force, offset by an increase in advertising expense by $1.0 million.
For the year ended December 31, 2008, non-interest expense decreased $2.7 million from December 31, 2007. During 2008, Beneficial elected to freeze its defined benefit plans and recorded a pension curtailment gain of $7.3 million. This gain was offset by an increase in occupancy expense of $2.3 million and an increase in advertising expense of $1.8 million. The increase in occupancy expense is a result of the acquisitions of FMS and CLA in 2007.
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. Beneficial 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 (SEC), 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.
CONTACT: 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)
December September December
31, 2008 30, 2008 31, 2007
ASSETS:
Cash and Cash Equivalents:
Cash and due from banks $44,380 $47,674 $53,545
Interest-bearing deposits 9 11,902 4,782
Federal funds sold - 2,250 -
Total cash and cash
equivalents 44,389 61,826 58,327
Investment Securities:
Available-for-sale
(amortized cost of
$1,095,252 and
$1,032,592 for
December 31 and
September 30, 2008,
respectively and
$938,835 at December
31, 2007) 1,114,086 1,024,390 949,795
Held-to-maturity
(estimated fair value
of $77,369 and
$83,963 at December 31
and September 30,
2008, respectively
and $111,127 at
December 31, 2007) 76,014 84,401 111,986
Federal Home Loan Bank
stock, at cost 28,068 27,872 18,814
Total investment
securities 1,218,168 1,136,663 1,080,595
Loans: 2,424,582 2,323,280 2,120,922
Allowance for loan losses (36,905) (25,208) (23,341)
Net loans 2,387,677 2,298,072 2,097,581
Accrued Interest Receivable 17,543 17,506 18,089
Bank Premises and Equipment, net 78,490 77,724 79,027
Other Assets:
Goodwill 111,462 110,436 110,335
Bank owned life insurance 30,850 30,481 29,405
Other intangibles 23,985 24,893 29,199
Other assets 89,486 85,369 55,260
Total other assets 255,783 251,179 224,199
Total Assets $4,002,050 $3,842,970 $3,557,818
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing deposits $226,382 $226,303 $242,351
Interest bearing deposits 2,515,297 2,408,850 2,222,812
Total deposits 2,741,679 2,635,153 2,465,163
Borrowed funds 580,054 535,896 407,122
Other liabilities 69,777 64,981 65,736
Total liabilities 3,391,510 3,236,030 2,938,021
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock - $.01
par value, 100,000,000 shares
authorized, none
issued or outstanding
as of December 31
and September 30,
2008 and December 31,2007 - - -
Common Stock - $.01
par value, 300,000,000 shares
authorized, 82,264,457 shares
issued and outstanding as of
December 31 and September 30, 2008
and December 31, 2007 823 823 823
Additional paid-in capital 342,420 343,765 360,126
Unearned common stock
held by the employee
savings and stock
ownership plan (28,510) (29,013) (30,635)
Retained earnings (partially
restricted) 296,106 299,044 291,360
Accumulated other comprehensive
loss, net (299) (7,679) (1,877)
Total stockholders'
equity 610,540 606,940 619,797
Total Liabilities and
Stockholders' Equity $4,002,050 $3,842,970 $3,557,818
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007
INTEREST INCOME:
Interest and fees on loans $33,890 $33,106 $132,645 $117,334
Interest on federal funds
sold 1 336 523 1,613
Interest and dividends on
investment securities:
Taxable 14,303 14,042 58,054 37,885
Tax-exempt 540 310 1,704 1,062
Total interest
income 48,734 47,794 192,926 157,894
INTEREST EXPENSE:
Interest on deposits:
Interest bearing checking
Accounts 1,560 1,722 5,490 4,250
Money market and savings
Deposits 3,772 3,556 15,049 12,503
Time deposits 8,627 11,464 38,603 40,501
Total 13,959 16,742 59,142 57,254
Interest on borrowed funds 5,032 4,963 19,773 16,520
Total interest
Expense 18,991 21,705 78,915 73,774
Net interest income 29,743 26,088 114,011 84,120
Provision for loan losses 13,110 2,170 18,901 2,470
Net interest income after
provision for loan losses 16,633 23,918 95,110 81,650
NON-INTEREST INCOME:
Insurance commission and
related income 2,212 2,110 10,090 5,223
Service charges and
other income 3,816 3,508 15,973 9,053
Impairment charge on
Securities
available-for-sale (2,479) (1,192) (3,216) (1,192)
Net gain on sale of
investment securities
available for sale 327 (368) 757 288
Total non-interest
income 3,876 4,058 23,604 13,372
NON-INTEREST EXPENSE:
Salaries and employee
Benefits 12,601 18,832 52,684 51,118
Pension curtailment gain - - (7,289) -
Occupancy 2,866 2,913 11,693 9,367
Depreciation, amortization
and maintenance 2,107 2,227 8,225 6,970
Advertising 2,754 1,747 6,300 4,507
Amortization of
intangibles 907 1,810 5,213 3,434
Other 5,897 5,030 21,477 25,636
Total non-interest
expense 27,132 32,559 98,303 101,032
Income (Loss) before income
Taxes (6,623) (4,583) 20,411 (6,010)
Income tax expense (benefit) (3,685) (4,415) 3,865 (4,465)
NET INCOME (LOSS) $(2,938) $(168) $16,546 $(1,545)
EARNINGS (LOSS) PER
SHARE - Basic $(0.04) $(0.00) $0.21 $(0.03)
EARNINGS (LOSS) PER
SHARE - Diluted $(0.04) $(0.00) $0.21 $(0.03)
Average common
shares outstanding
- Basic 77,778,319 79,143,390 78,702,419 61,374,792
Average common
shares outstanding
- Diluted 77,778,319 79,143,390 78,702,419 61,374,792
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Selected Consolidated Financial and Other Data
(Dollars in thousands)
December September December
31, 2008 30, 2008 31, 2007
ASSET QUALITY INDICATORS:
Non-performing assets:
Non-accruing loans $17,163 $13,342 $7,685
Accruing loans past due 90
days or more 20,883 15,023 8,626
Total non-performing loans 38,046 28,365 16,311
Troubled debt restructurings 16,442 - -
Real estate owned 6,297 7,355 4,797
Total non-performing
assets $60,785 $35,720 $21,108
ASSET QUALITY RATIOS:
Non-performing loans to total loans 1.57% 1.22% 0.77%
Non-performing loans to total assets 0.95% 0.74% 0.46%
Non-performing assets to total assets 1.52% 0.93% 0.59%
Non-performing assets less
accruing loans
Past due 90 days or more
to total assets 1.00% 0.54% 0.35%
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2008 2007 2008 2007
PERFORMANCE RATIOS:
(annualized)
Return on average assets (0.30%) (0.02%) 0.44% (0.05%)
Return on average equity (1.93%) (0.11%) 2.70% (0.35%)
Net interest margin 3.34% 3.27% 3.33% 3.17%
SOURCE Beneficial Mutual Bancorp, Inc.
http://www.thebeneficial.com
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