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 three and nine months ended September 30, 2010.
Beneficial recorded a net loss of $21.7 million, or $0.28 per share, for the quarter ended September 30, 2010, compared to net income of $5.8 million, or $0.07 per share, for the quarter ended September 30, 2009. A net loss for the nine months ended September 30, 2010 totaled $8.6 million, or $0.11 per share, compared to net income of $10.9 million, or $0.14 per share for the nine months ended September 30, 2009.
During the third quarter, the Company saw considerable deterioration in the value of a number of large collateral dependent commercial real estate loans. Additionally, the Company has seen a pronounced slowdown in the commercial real estate market limiting traditional refinance and repayment sources. The Company now believes the recovery for commercial real estate in its region will take longer than previously anticipated causing continued downward pressure on property valuations. As a result, during the third quarter the Company recorded a significantly elevated provision for credit losses of $51.1 million compared to $2.0 million in the third quarter of 2009. The provision was primarily driven by specific reserves required for commercial real estate loans that the Company had previously designated as criticized loans and a decision to charge-off the collateral deficiency on all of its criticized loans (those classified as special mention, substandard, doubtful, or loss), including those currently performing. Additionally, as a result of this decision, the Company reversed $2.6 million of interest that was accrued on these loans resulting in a 24 basis point reduction to net interest margin for the quarter. Beneficial intends to work diligently with its commercial real estate customers to maximize the recovery of these loans.
Although we saw deterioration in the collateral of our existing criticized asset portfolio, we have not seen any increases in total criticized loans, as both the number and the absolute dollar amount of criticized loans has remained consistent.