Beneficial Mutual Bancorp, Inc. Logo

Print Print page | Email Email page | PDF Download PDF
« Previous Release | Next Release »



Beneficial Mutual Bancorp, Inc. Reports Third Quarter Net Income of $4.1 Million

PHILADELPHIA--(BUSINESS WIRE)-- Beneficial Mutual Bancorp, Inc. ("Beneficial") (NASDAQGS: BNCL), the parent company of Beneficial Bank (the "Bank" or the "Company"), today announced its financial results for the three and nine months ended September 30, 2011.

Beneficial recorded net income of $4.1 million, or $0.05 per share, for the quarter ended September 30, 2011, compared to a net loss of $21.7 million, or $0.28 per share, for the quarter ended September 30, 2010. Net income for the nine months ended September 30, 2011 totaled $5.2 million or $0.07 per share, compared to a net loss of $8.6 million, or $0.11 per share, for the nine months ended September 30, 2010. Net income for the nine months ended September 30, 2011 included $5.1 million of restructuring charges related to the implementation of an expense management reduction program during the first quarter of 2011. Net loss for the quarter and nine months ended September 30, 2010 was driven by a provision for loan losses of $51.1 million and $62.2 million, respectively, due to specific reserves required for commercial real estate loans. During the quarter ended September 30, 2011, we repurchased approximately 274,000 shares of our stock and adopted a new stock repurchase program that will enable us to acquire up to 2,500,000 shares, or 7.0% of the Company's outstanding common stock. Capital levels improved and remain strong with tangible capital to tangible assets increasing to 11.2% at September 30, 2011 compared to 10.2% at December 31, 2010.

Gerard Cuddy, Beneficial's President and CEO, stated, "During the third quarter, we continued to see improved profitability and capital levels as a result of the initiatives we have put in place during the year. We also are encouraged by the second consecutive quarter where we saw stabilization in our non-performing assets."

"However, we remain concerned about economic conditions and the interest rate environment and believe we are in a period of slow growth that will last well past 2012. The local and national market data for housing, unemployment, retail sales, and business confidence coupled with the international banking crisis, will continue to restrain economic growth and compress industry margins. This outlook has shaped our thinking with regard to strategic and financial planning, capital management, and talent acquisition. Despite low loan demand, we are continuing to prudently expand our lending and credit teams to reposition the balance sheet while taking market share."

"The only sign of encouragement on the economy thus far this year is that the American consumer appears to be emerging as the only rational player, working to meet their obligations, de-lever, and return to a savings rate and discipline that has been missing for the last decade."

Although credit costs have decreased from the prior year, credit costs continue to have a significant impact on our financial results. During the three and nine months ended September 30, 2011, the Bank recorded a provision for credit losses in the amount of $9.0 million and $29.0 million, respectively, compared to $51.1 million and $62.2 million for the three and nine months ended September 30, 2010, respectively. We have begun to see some stabilization in our credit quality as non-performing assets remained relatively constant for the quarter at $163.5 million as compared to $162.6 million at June 30, 2011 and $161.7 million at March 31, 2011. However, we remain cautious given the current economic environment and future outlook with slow GDP growth, high unemployment levels, and soft residential and commercial real estate markets. As a result, we continue to build our reserves. At September 30, 2011, the Company's allowance for loan losses totaled $54.1 million, or 2.01% of total loans, compared to $45.4 million, or 1.62% of total loans, at December 31, 2010. Approximately one-third of our commercial real estate and commercial construction portfolios contractually matures in 2011 and we are actively managing these maturities and continuing to write off collateral deficiencies on all classified loans once they are 90 days delinquent. We expect that market conditions, coupled with the large amount of commercial maturities, will result in an elevated provision for credit losses for the rest of 2011.

During the quarter, the balance of deposits decreased $155.7 million primarily due to the run-off of higher cost, non-relationship-based deposits. At September 30, 2011, we had higher than usual cash balances as we were holding cash to cover additional municipal deposit run-off that is expected to occur during the remainder of 2011, as well as investments that were purchased and had not yet settled as of September 30, 2011. The balance of loans decreased by $42.2 million during the quarter as a result of continued slow loan demand. Also during the quarter, we benefited from the impact of the expense management reduction program we implemented in the first quarter of 2011, as total operating expenses decreased $5.1 million to $28.2 million for the quarter ended September 30, 2011 compared to $33.3 million for the third quarter of 2010.

Highlights for the quarter and year ended September 30, 2011:

Balance Sheet

Total assets decreased $297.2 million, or 6.0%, to $4.6 billion at September 30, 2011 from $4.9 billion at December 31, 2010. During the year, management took advantage of low interest rates to increase profitability, improve the Bank's capital position and reduce the Bank's interest rate risk profile by selling investments and reducing higher cost, non-relationship-based municipal deposits. At September 30, 2011, we had higher than usual cash balances as we were holding cash to cover additional municipal deposit run-off that is expected to occur during the remainder of 2011, as well as approximately $77.3 million of investment purchases that had not yet settled as of September 30, 2011. As a result, cash and cash equivalents increased from $90.3 million at December 31, 2010 to $398.1 million at September 30, 2011. The balance of investments at September 30, 2011 decreased $402.7 million, or 24.4%, to $1.2 billion from $1.6 billion at December 31, 2010, as we continue to sell longer term investments to shorten the duration of the investment portfolio and better position Beneficial for rising interest rates.

Total loans decreased $109.0 million, or 3.9%, to $2.7 billion at September 30, 2011 from $2.8 billion at December 31, 2010, primarily due to continued slow loan demand as consumers and businesses continue to deleverage and remain cautious about the economy. We expect loan demand to remain weak for the rest of 2011. Additionally, we continue to sell the majority of our residential mortgage loan production with approximately $12.4 million of loans sold in the third quarter of 2011.

At September 30, 2011, Beneficial's stockholders' equity increased to $628.5 million, or 13.6% of total assets, compared to $615.5 million, or 12.5% of total assets, at December 31, 2010.

Net Interest Income

For the quarter ended September 30, 2011, Beneficial reported net interest income of $34.8 million, a decrease of $259 thousand, or 0.7%, from the quarter ended September 30, 2010. Net interest income for the third quarter of 2010 included interest reversals of $2.6 million related to loans that were put on non-accrual status which resulted in a 24 basis point reduction to net interest margin for the quarter. Net interest income for the three months ended September 30, 2011 has been impacted by high levels of cash as we have actively run-off higher cost, non-relationship-based municipal deposits to improve our interest rate risk position and capital levels. The net interest margin was 3.21% for the quarter ended September 30, 2011, compared to 3.14% for the quarter ended September 30, 2010. We have been able to lower the cost of our liabilities to 0.98% for the quarter ended September 30, 2011 compared to 1.27% for the quarter ended September 30, 2010, by reducing borrowings and repricing higher cost deposits. The reduction in deposit costs has been primarily due to decreasing rates on our municipal deposit portfolio as we run-off of higher cost, non-relationship-based municipal deposits. In addition, rates have dropped in all other deposit categories consistent with the interest rate environment.

For the nine months ended September 30, 2011, net interest income decreased $3.2 million, or 2.9%, to $107.3 million from $110.5 million for the nine months ended September 30, 2010. The net interest margin decreased 13 basis points to 3.22% for the nine months ended September 30, 2011, from 3.35% for the nine months ended September 30, 2010. The decrease in net interest income was driven by excess levels of cash and by low interest rates which have reduced the yields on our investment portfolio as excess liquidity is invested at lower yields. Mortgage re-financings have also resulted in lower yields on our mortgage portfolio. We have been able to reduce the cost of our interest bearing liabilities over this time period with average rates decreasing to 1.02% for the nine months ended September 30, 2011, from 1.37% for the nine months ended September 30, 2010.

Non-interest Income

For the quarter ended September 30, 2011, non-interest income totaled $6.3 million, an increase of $564 thousand, or 9.8%, from the quarter ended September 30, 2010. The increase was primarily due to a $308 thousand gain on loan sales related to our SBA lending and mortgage banking programs and a $125 thousand increase in debit card fees.

Non-interest income decreased $2.1 million to $18.2 million for the nine months ended September 30, 2011 compared to the same period in 2010. The decrease in non-interest income was primarily due to a $1.8 million decrease in gain on the sale of securities.

Non-interest Expense

For the quarter ended September 30, 2011, non-interest expense totaled $28.2 million, a decrease of $5.1 million, or 15.4%, from the quarter ended September 30, 2010. The decrease in non-interest expense during the third quarter was primarily due to decreases in salaries and benefits, marketing, and loan expenses as a result of the expense reduction initiatives implemented during the first quarter of 2011.

Non-interest expense decreased $3.8 million to $91.5 million for the nine months ended September 30, 2011 compared to the same period in 2010, primarily due to a $3.9 million decrease in salaries and benefits, a $2.3 million decrease in marketing expense, a $628 thousand decrease in occupancy expense and a $600 thousand decrease in correspondent bank charges as a result of the expense reduction initiatives implemented during the first quarter of 2011. These decreases were partially offset by a $5.1 million restructuring charge related to the previously described expense reduction initiatives implemented in the first quarter of 2011.

Asset Quality

Non-performing loans, including loans 90 days past due and still accruing, remained relatively constant at $144.4 million at September 30, 2011, compared to $143.9 million at June 30, 2011. Non-performing loans at September 30, 2011 included $25.5 million of government guaranteed student loans, which represented 17.7% of total non-performing loans. Net charge offs during the quarter ended September 30, 2011 were $6.2 million, compared to $6.1 million for the quarter ended June 30, 2011, $8.0 million for the quarter ended March 31, 2011 and $7.6 million for the quarter ended December 31, 2010. At September 30, 2011, the Company's allowance for loan losses totaled $54.1 million, or 2.01% of total loans, compared to $51.3 million, or 1.88% of total loans, at June 30, 2011 and $45.4 million, or 1.62% of total loans, at December 31, 2010.

Capital

Our capital ratios improved compared to the prior quarter as a result of our continued efforts to shrink the Company's balance sheet. The Company's capital position remains strong relative to current regulatory requirements. The Company continues to have substantial liquidity as the inflows of deposits have largely been retained in cash or invested in high quality government-backed securities. In addition, the Company continues to have significant available borrowing capacity from its contingent funding sources with over $1.0 billion in available liquidity. Our capital ratios as of September 30, 2011 compared to June 30, 2011 and December 31, 2010, as well as our excess capital over regulatory minimums as of September 30, 2011 to be considered well capitalized are as follows:

        Minimum Well   Excess Capital
9/30/2011 6/30/2011 12/31/2010 Capitalized Ratio 9/30/2011
 
Tangible Capital 11.18% 10.87% 10.16%
Tier 1 Capital (to average assets) 9.70% 9.28% 8.89% 5% $215,808
Tier 1 Capital (to risk weighted assets) 17.67% 17.13% 15.69% 6% $294,285
Total Capital (to risk weighted assets) 18.93% 18.39% 16.95% 10% $225,217

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 60 offices in the greater Philadelphia and South 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)

  September 30,   June 30,   December 31,   September 30,
2011 2011 2010 2010
ASSETS:
Cash and Cash Equivalents:
Cash and due from banks $38,029 $36,458 $33,778 $38,223
Interest-bearing deposits 360,051 310,704 56,521 177,887
Total cash and cash equivalents 398,080 347,162 90,299 216,110
 
Trading Securities - - 6,316 -
 
Investment Securities:
Available-for-sale 814,857 901,563 1,541,991 1,419,095
Held-to-maturity 414,319 406,914 86,609 88,782
Federal Home Loan Bank stock, at cost 19,929 20,978 23,244 27,168
Total investment securities 1,249,105 1,329,455 1,651,844 1,535,045
 
Loans: 2,687,415 2,729,592 2,796,402 2,768,753
Allowance for loan losses (54,120) (51,298) (45,366) (44,959)
Net loans 2,633,295 2,678,294 2,751,036 2,723,794
 
Accrued Interest Receivable 16,685 17,496 19,566 18,483
 
Bank Premises and Equipment, net 60,199 61,302 64,339 69,466
 
Other Assets:
Goodwill 110,486 110,486 110,486 110,486
Bank owned life insurance 34,901 34,529 33,818 33,464
Other intangibles 14,244 15,153 16,919 17,777
Other assets 115,613 118,604 185,162 174,561
Total other assets 275,244 278,772 346,385 336,288
Total Assets $4,632,608 $4,712,481 $4,929,785 $4,899,186
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing deposits $276,035 $288,799 $282,050 $292,159
Interest bearing deposits 3,325,662 3,468,642 3,660,254 3,566,144
Total deposits 3,601,697 3,757,441 3,942,304 3,858,303
Borrowed funds 250,330 250,326 273,317 343,313
Other liabilities 152,088 80,700 98,617 63,481
Total liabilities 4,004,115 4,088,467 4,314,238 4,265,097
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock - $.01 par value - - - -
Common Stock — $.01 par value 823 823 823 823
Additional paid-in capital 349,994 349,221 348,415 347,581
Unearned common stock held by
employee stock ownership plan (20,306) (21,066) (22,587) (23,073)
Retained earnings (partially restricted) 309,391 305,313 304,232 304,589
Accumulated other comprehensive income (loss), net 4,516 3,177 (1,882) 12,752
Treasury stock, at cost (15,925) (13,454) (13,454) (8,583)
Total stockholders' equity 628,493 624,014 615,547 634,089
Total Liabilities and Stockholders' Equity $4,632,608 $4,712,481 $4,929,785 $4,899,186

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

         
For the Three Months Ended For the Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2011 2011 2010 2011 2010
INTEREST INCOME:
Interest and fees on loans $ 34,577 $ 35,610 $ 35,480 $ 106,013 $ 109,940
Interest on overnight investments 254 247 151 603 321
Interest on trading securities - - 14 26 70
Interest and dividends on investment securities:
Taxable 8,286 8,952 10,497 27,210 35,146
Tax-exempt 849 923 1,150 2,764 3,552
Total interest income 43,966 45,732 47,292 136,616 149,029
 
INTEREST EXPENSE:
Interest on deposits:
Interest bearing checking accounts 1,562 2,195 2,556 6,187 7,616
Money market and savings deposits 2,300 2,293 2,441 6,998 7,045
Time deposits 3,173 3,354 3,395 9,646 11,621
Total 7,035 7,842 8,392 22,831 26,282
Interest on borrowed funds 2,100 2,137 3,810 6,506 12,208
Total interest expense 9,135 9,979 12,202 29,337 38,490
Net interest income 34,831 35,753 35,090 107,279 110,539
Provision for loan losses 9,000 10,000 51,050 29,000 62,200
Net interest income after provision for loan losses 25,831 25,753 (15,960) 78,279 48,339
 
NON-INTEREST INCOME:
Insurance and advisory commission and fee income 1,898 1,667 1,944 6,102 6,716
Service charges and other income 4,205 3,470 3,387 11,368 11,076
Net gain on sale of investment securities 197 233 370 616 2,374
Impairment charge on AFS securities - - (88) - (88)
Trading securities profits - - 123 81 235
Total non-interest income 6,300 5,370 5,736 18,167 20,313
 
NON-INTEREST EXPENSE:
Salaries and employee benefits 13,960 13,482 15,580 42,452 46,316
Occupancy expense 2,610 2,635 2,906 8,338 8,966
Depreciation, amortization and maintenance 2,165 2,143 2,443 6,556 6,859
Marketing expense 951 872 2,392 2,720 5,041
Intangible amortization expense 908 906 886 2,674 2,653
FDIC Insurance 1,055 1,621 1,361 4,314 4,065
Restructuring charge - 963 - 5,058 -
Other 6,575 6,475 7,783 19,411 21,415
Total non-interest expense 28,224 29,097 33,351 91,523 95,315
 
Income (Loss) before income taxes 3,907 2,026 (43,575) 4,923 (26,663)
Income tax (benefit) expense (172) 47 (21,845) (236) (18,057)
         
NET INCOME (LOSS) $ 4,079 $ 1,979 $ (21,730) $ 5,159 $ (8,606)
 
EARNINGS (LOSS) PER SHARE — Basic $0.05 $0.03 ($0.28) $0.07 ($0.11)
EARNINGS (LOSS) PER SHARE — Diluted $0.05 $0.03 ($0.28) $0.07 ($0.11)
 
Average common shares outstanding — Basic 77,132,264 77,092,682 77,541,313 77,077,506 77,721,359
Average common shares outstanding — Diluted 77,244,916 77,301,043 77,541,313 77,250,785 77,721,359

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

               
Three Months Ended Nine Months Ended
September 30, 2011 September 30, 2010 September 30, 2011 September 30, 2010
Average Yield / Average Yield / Average Yield / Average Yield /
Balance   Rate Balance   Rate Balance   Rate Balance   Rate
 
Investment Securities: $ 1,627,254 2.31% $ 1,648,672 2.87% $ 1,700,471 2.40% $ 1,606,970 3.24%
Trading Securities - 0.00% 4,350 1.25% 2,976 1.19% 7,965 1.17%
Overnight investments 397,463 0.25% 237,271 0.25% 318,099 0.25% 169,462 0.25%
Stock 20,248 0.00% 27,764 0.60% 21,435 0.03% 27,965 0.56%
Other Investment securities 1,209,543 3.02% 1,379,287 3.37% 1,357,961 2.94% 1,401,578 3.67%
 
Loans: 2,708,194 5.09% 2,812,250 5.03% 2,749,367 5.15% 2,797,521 5.25%
Residential 678,447 4.92% 673,600 5.00% 691,976 4.93% 666,153 5.27%
Commercial Real Estate 765,834 4.97% 797,965 4.55% 774,691 5.09% 788,323 4.87%
Business and Small Business 505,706 5.65% 549,331 5.16% 514,807 5.66% 538,109 5.52%
Personal Loans 758,207 4.98% 791,354 5.44% 767,893 5.06% 804,936 5.41%
 
Total Interest Earning Assets $ 4,335,448 4.05% $ 4,460,922 4.23% $ 4,449,838 4.10% $ 4,404,491 4.52%
 
Deposits: $ 3,438,916 0.81% $ 3,426,923 0.97% $ 3,570,013 0.86% $ 3,362,313 1.05%
Savings 764,729 0.65% 651,867 0.75% 733,744 0.67% 605,770 0.72%
Money Market 594,802 0.69% 605,550 0.79% 610,703 0.72% 623,467 0.81%
Demand 440,133 0.21% 382,554 0.28% 422,689 0.23% 369,063 0.30%
Demand - Municipals 764,812 0.69% 901,353 1.01% 912,305 0.80% 872,710 1.04%
Total Core Deposits 2,564,476 0.60% 2,541,324 0.78% 2,679,441 0.66% 2,471,010 0.79%
 
Time Deposits 874,440 1.44% 885,599 1.53% 890,572 1.46% 891,303 1.75%
 
Borrowings 250,328 3.33% 376,571 4.01% 257,368 3.38% 401,337 4.07%
 
Total Interest Bearing Liabilities $ 3,689,244 0.98% $ 3,803,494 1.27% $ 3,827,381 1.02% $ 3,763,650 1.37%
 
Non-interest bearing deposits 275,650 274,642 280,332 263,930
 
Net interest margin 3.21% 3.14% 3.22% 3.35%

BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars in thousands)

  September 30,

2011

  June 30,

2011

 

December 31,

2010

  September 30,

2010

ASSET QUALITY INDICATORS:
Non-performing assets:
Non-accruing loans $118,901 $118,697 $95,803 $89,205
Accruing loans past due 90 days or more* 25,515 25,173 27,932 27,106
Total non-performing loans** $144,416 $143,870 $123,735 $116,311
 
Real estate owned 19,058 18,740 16,694 17,438
 
Total non-performing assets $163,474 $162,610 $140,429 $133,749
 
Non-performing loans to total loans 5.37% 5.27% 4.42% 4.20%
Non-performing loans to total assets 3.12% 3.05% 2.51% 2.37%
Non-performing assets to total assets 3.53% 3.45% 2.85% 2.73%
Non-performing assets less accruing loans

past due 90 days or more to total assets

2.98%

2.92%

2.28%

2.18%

*Includes $25.5 million, $25.2 million, $27.9 million and $26.6 million in government guaranteed student loans as of September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010, respectively.

** Includes $26.5 million, $27.0 million, $26.7 million and $26.5 million of troubled debt restructured loans (TDRs) as of September 30, 2011, June 30, 2011, December 31, 2010 and September 30, 2010 respectively.

Impaired loan charge offs as a percentage of the unpaid principal balances at September 30, 2011 are as follows:

 

 

               

At September 30, 2011

(Dollars in thousands)

 

Recorded

Investment

 

Unpaid Principal

Balance

  Charge offs  

% of Unpaid

Principal Balance

Impaired Loans by Category:      
Commercial Real Estate $ 33,373 $ 46,337 $ (12,964 ) 27.98 %
Commercial Business 25,303 32,004 (6,701 ) 20.94 %
Commercial Construction 42,332 69,031 (26,699 ) 38.68 %
Residential Real Estate 14,442 14,991 (549 ) 3.66 %
Residential Construction 1,967 2,066 (99 ) 4.79 %
Consumer Personal   1,484     1,621     (137 )   8.45 %
Total Impaired Loans $ 118,901   $ 166,050   $ (47,149 )   28.39 %

Key Performance ratios (annualized) are as follows for the three month and nine month periods indicated:

         
For the Three Months Ended For the Nine Months Ended
September 30, June 30, December 31, September 30,
2011 2011 2010 2011 2010
PERFORMANCE RATIOS:
(annualized)
Return on average assets 0.34% 0.16% -0.04% 0.14% -0.24%
Return on average equity 2.54% 1.30% -0.28% 1.13% -1.74%
Net interest margin 3.21% 3.16% 3.24% 3.22% 3.35%
Efficiency ratio 68.79% 70.71% 75.35% 72.91% 72.80%
Tangible Common Equity 11.18% 10.87% 10.16% 11.18% 10.60%

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

Source: Beneficial Mutual Bancorp, Inc.

News Provided by Acquire Media

Close window | Back to top