Beneficial Mutual Bancorp, Inc. Announces Third Quarter 2009 Results
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PHILADELPHIA--(BUSINESS WIRE)-- Beneficial Mutual Bancorp, Inc. ("Beneficial") (NASDAQGS: BNCL), the parent company of Beneficial Bank (the "Bank"), today announced its financial results for the three and nine months ended September 30, 2009.
For the three months ended September 30, 2009, Beneficial recorded net income of $5.8 million, or $0.07 per share, compared to net loss of $50 thousand, or $0.00 per share for the three months ended June 30, 2009. The increase in earnings resulted primarily from an increase of $2.3 million in net interest income and a reduction in the provision for loan losses of $5.1 million, partially offset by an impairment charge of $1.0 million recorded as a result of an evaluation of goodwill and other intangible assets related to the Company's insurance brokerage subsidiary. During the nine months ended September 30, 2009, Beneficial recorded earnings of $10.9 million, or $0.14 per share. For the nine-month period ended September 30, 2008, which included a pre-tax curtailment gain of $7.3 million related to pension plan modifications, Beneficial earned $19.5 million, or $0.25 per share.
"We are pleased to report positive earnings for the quarter, and are particularly focused on growing the core components of our business," said Gerard Cuddy, Beneficial's President and CEO. "Deposit and loan balances continued to expand during the quarter while our net interest margin increased to 3.39%. Our relationship-based core deposits now constitute 70% of total deposits, up from 60% at September 30, 2008. Credit quality challenges continue. While our quarterly loan loss provision declined during the quarter, we believe that credit costs will remain elevated due to continued economic weakness. We remain confident in our strong balance sheet, sound capital position, improving operating performance and the commitment of our employees to help our customers do the right thing financially."
Highlights for the quarter included:
-- Deposits increased by $244.2 million, or 8.0%, to $3.3 billion at
September 30, 2009, up from $3.0 billion at June 30, 2009.
-- Total loans outstanding increased $56.0 million during the quarter ended
September 30, 2009 to $2.8 billion from $2.7 billion at June 30, 2009.
-- Net interest income for the three months ended September 30, 2009
increased to $32.7 million from $30.4 million for the three months ended
June 30, 2009, an increase of $2.3 million or 7.4%.
-- The provision for loan losses decreased $5.1 million for the three
months ended September 30, 2009 to $2.0 million, down from $7.1 million
for the three months ended June 30, 2009.
-- A non-cash impairment charge of $1.0 million was recorded during the
quarter ended September 30, 2009 as a result of an evaluation of
goodwill and other intangible assets related to the Company's insurance
brokerage subsidiary.
Balance Sheet
Total assets increased $259.3 million, or 6.2%, from $4.2 billion at June 30, 2009, to $4.4 billion at September 30, 2009. The increase in total assets was primarily due to an increase in cash and cash equivalents of $106.2 million, an increase in investment securities of $92.7 million and an increase in total loans outstanding of $56.0 million. Both commercial and residential real estate loan portfolios experienced growth during the quarter ended September 30, 2009.
Total deposits increased $244.2 million, or 8.0%, to $3.3 billion at September 30, 2009, compared to $3.0 billion at June 30, 2009. Core deposits, including savings, money market and checking account balances, grew by $265.8 million to $2.3 billion at September 30, 2009, up from $2.0 billion at June 30, 2009. The strongest growth was in municipal checking account balances, which increased 44.3% from $457.5 million at June 30, 2009 to $659.9 million at September 30, 2009. Time deposits declined $12.7 million from June 30, 2009 to $963.3 million at September 30, 2009.
At September 30, 2009, Beneficial's stockholders' equity equaled $635.3 million, or 14.3% of total assets, compared to stockholders' equity of $620.2 million, or 14.8% of total assets at June 30, 2009.
Asset Quality
Non-performing loans totaled $120.7 million, or 2.7% of total assets, at September 30, 2009, compared to $80.5 million, or 1.9% of total assets, at June 30, 2009. At September 30, 2009, non-performing loans consisted of $76.7 million in commercial loans, $22.5 million in residential real estate loans and $21.5 million in consumer loans. Of the total non-performing consumer loans, $21.1 million, or 98.1%, are government guaranteed student loans. Net charge-offs during the three-month period ended September 30, 2009 were $2.5 million, compared to $1.2 million during the three months ended June 30, 2009. The allowance for loan losses at September 30, 2009 totaled $42.7 million, or 1.6% of total loans outstanding, compared to $43.2 million, or 1.6% of total loans outstanding, at June 30, 2009.
The Bank recorded a provision for loan losses of $2.0 million during the three months ended September 30, 2009, compared to a provision of $7.1 million for the quarter ended June 30, 2009. The provision includes $0.5 million related to specific commercial loans, with the remainder related to portfolio growth and the ongoing evaluation of risk factors applied to the loan portfolio, reflecting the continued weakness in the economic environment during the quarter.
Net Interest Income
Beneficial's net interest income increased $2.3 million, or 7.4%, to $32.7 million for the quarter ended September 30, 2009, compared to $30.4 million for quarter ended June 30, 2009, and increased by $3.6 million, or 12.3%, compared to net interest income for the three months ended September 30, 2008.
The net interest margin increased to 3.39% for the three months ended September 30, 2009, an increase of 15 basis points from the three months ended June 30, 2009, as a result of an increase in interest income of $1.5 million and a decrease of $0.8 million in interest expense. The Bank has continued to improve its mix of deposits. At September 30, 2009, core deposits comprised 70.7% of total deposits, with time deposits representing 29.3% of total deposits.
Non-interest Income
Non-interest income increased to $6.5 million for the three months ended September 30, 2009, up $0.4 million from the $6.1 million recorded for the second quarter of 2009. The increase in non-interest income resulted primarily from an increase in service charges and other income. During the quarter ended September 30, 2009, the Company recorded a charge of $0.5 million in other real estate owned relating to a decline in property value.
Non-interest Expense
Non-interest expense was $30.5 million for the three months ended September 30, 2009, up $0.7 million, or 2.6%, from $29.8 million for the three months ended June 30, 2009. The largest factor contributing to this increase was the $1.0 million non-cash impairment charge related to goodwill associated with the Bank's wholly owned insurance subsidiary, Beneficial Insurance Services, LLC. Formed to facilitate the 2005 asset purchase of its foundation insurance agency, the subsidiary subsequently acquired an additional agency in 2007. This non-cash charge was the consequence of deterioration in general conditions in the economy, and its impact on insurance premiums. Beneficial does not anticipate any similar charges in future quarters.
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 68 offices in the greater Philadelphia and South 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)
September 30, June 30, December 31, September 30,
2009 2009 2008 2008
ASSETS:
Cash and Cash
Equivalents:
Cash and due from $147,975 $41,989 $44,380 $47,674
banks
Interest-bearing 423 237 9 11,902
deposits
Federal funds sold - - - 2,250
Total cash and cash 148,398 42,226 44,389 61,826
equivalents
Investment Securities:
Available-for-sale
(amortized cost of
$1,129,150 and
$1,044,000 at
September 30, and June 1,165,253 1,066,615 1,114,086 1,024,390
30, 2009 and
$1,095,252 and
$1,032,592 at December
31 and September 30,
2008, respectively)
Held-to-maturity
(estimated fair value
of $54,479 and $59,733
at September 30 and
June 30, 2009 and 52,176 58,086 76,014 84,401
$77,369 and $83,963 at
December 31 and
September 30, 2008,
respectively)
Federal Home Loan Bank 28,068 28,068 28,068 27,872
stock, at cost
Total investment 1,245,497 1,152,769 1,218,168 1,136,663
securities
Loans: 2,750,949 2,694,971 2,424,582 2,323,280
Allowance for loan (42,742 ) (43,235 ) (36,905 ) (25,208 )
losses
Net loans 2,708,207 2,651,736 2,387,677 2,298,072
Accrued Interest 19,264 17,972 17,543 17,506
Receivable
Bank Premises and 77,402 77,691 78,490 77,724
Equipment, net
Other Assets:
Goodwill 110,486 111,462 111,462 110,436
Bank owned life 31,971 31,589 30,850 30,481
insurance
Other intangibles 21,311 22,203 23,985 24,893
Other assets 82,531 78,163 89,486 85,369
Total other assets 246,299 243,417 255,783 251,179
Total Assets $4,445,067 $4,185,811 $4,002,050 $3,842,970
LIABILITIES AND
STOCKHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 230,856 $ 248,487 $226,382 $226,303
deposits
Interest bearing 3,051,369 2,789,529 2,515,297 2,408,850
deposits
Total deposits 3,282,225 3,038,016 2,741,679 2,635,153
Borrowed funds 443,616 443,611 580,054 535,896
Other liabilities 83,957 83,940 69,777 64,981
Total liabilities 3,809,798 3,565,567 3,391,510 3,236,030
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, 2009 and December
31 and September 30,
2008
Common Stock - $.01
par value, 300,000,000
shares authorized,
82,264,457 shares
issued and outstanding 823 823 823 823
as of September 30 and
June 30, 2009 and
December 31 and
September 30, 2008
Additional paid-in 344,663 343,885 342,420 343,765
capital
Unearned common stock
held by employee stock (26,385 ) (26,990 ) (28,510 ) (29,013 )
ownership plan
Retained earnings 307,004 301,184 296,106 299,044
(partially restricted)
Accumulated other
comprehensive gain 12,760 3,817 (299 ) (7,679 )
(loss), net
Treasury stock, at
cost, 410,904 and
283,204 shares, at
September 30 and June (3,596 ) (2,475 ) - -
30, 2009 and 0 shares
at December 31 and
September 30, 2008
Total stockholders' 635,269 620,244 610,540 606,940
equity
Total Liabilities and $4,445,067 $4,185,811 $4,002,050 $3,842,970
Stockholders' Equity
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars in thousands, except per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
INTEREST INCOME:
Interest and fees on $36,244 $33,564 $103,522 $98,756
loans
Interest on federal - 14 2 522
funds sold
Interest and dividends
on investment
securities:
Taxable 11,293 14,074 37,294 43,751
Tax-exempt 902 428 2,108 1,164
Total interest income 48,439 48,080 142,926 144,193
INTEREST EXPENSE:
Interest on deposits:
Interest bearing 2,319 1,410 6,415 3,931
checking accounts
Money market and savings 2,515 3,856 8,669 11,277
deposits
Time deposits 6,176 8,748 21,160 29,976
Total 11,010 14,014 36,244 45,184
Interest on borrowed 4,749 4,975 14,108 14,741
funds
Total interest expense 15,759 18,989 50,352 59,925
Net interest income 32,680 29,091 92,574 84,268
Provision for loan 2,000 3,191 12,100 5,791
losses
Net interest income
after provision for loan 30,680 25,900 80,474 78,477
losses
NON-INTEREST INCOME:
Insurance commission and 1,818 2,738 6,281 7,879
related income
Service charges and 3,456 3,827 10,217 12,157
other income
Impairment charge on
securities available for (195 ) (264 ) (1,425 ) (737 )
sale
Gain on sale of
investment securities 1,383 159 5,548 430
available for sale
Total non-interest 6,462 6,460 20,621 19,729
income
NON-INTEREST EXPENSE:
Salaries and employee 14,583 13,933 42,865 40,083
benefits
Pension curtailment - - - (7,289 )
Occupancy 2,970 3,070 9,072 8,827
Depreciation,
amortization and 2,277 2,096 6,724 6,118
maintenance
Advertising 1,138 1,220 4,124 3,545
Amortization of 892 906 2,674 4,306
intangible
Impairment of goodwill 976 - 976 -
Other 7,686 5,414 22,275 15,582
Total non-interest 30,522 26,639 88,710 71,172
expense
Income before income 6,620 5,721 12,385 27,034
taxes
Income tax expense 800 1,400 1,487 7,550
NET INCOME $5,820 $4,321 $10,898 $19,484
EARNINGS PER SHARE - $0.07 $0.05 $0.14 $0.25
Basic
EARNINGS PER SHARE - $0.07 $0.05 $0.14 $0.25
Diluted
Average common shares 77,651,098 78,566,856 77,695,061 79,010,679
outstanding - Basic
Average common shares 77,675,526 78,573,633 77,707,151 79,010,679
outstanding - Diluted
BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES
Selected Consolidated Financial and Other Data of the Company (Unaudited)
(Dollars in thousands)
September 30, June 30, December 31, September 30,
2009 2009 2008 2008
ASSET QUALITY
INDICATORS:
Non-performing assets:
Non-accruing loans $73,692 $53,557 $17,163 $13,342
Accruing loans past due 46,996 26,935 20,883 15,023
90 days or more
Total non-performing 120,688 80,492 38,046 28,365
loans
Troubled debt 14,247 17,888 16,442 -
restructurings
Real estate owned 8,194 7,306 6,297 7,355
Total non-performing $143,129 $105,686 $60,785 $35,720
assets
Non-performing loans to 4.39 % 2.99 % 1.57 % 1.22 %
total loans
Non-performing loans to 2.72 % 1.92 % 0.95 % 0.74 %
total assets
Non-performing assets to 3.22 % 2.52 % 1.52 % 0.93 %
total assets
Non-performing assets
less accruing loans
Past due 90 days or more 2.16 % 1.88 % 1.00 % 0.54 %
to total assets
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2009 2008 2009 2008
PERFORMANCE RATIOS:
(annualized)
Return on average assets 0.53 % 0.46 % 0.35 % 0.70 %
Return on average equity 3.69 % 2.82 % 2.36 % 4.22 %
Net interest margin 3.39 % 3.41 % 3.27 % 3.34 %
7
Source: Beneficial Mutual Bancorp, Inc.
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