Non-interest expense for the quarter ended September 30, 2010 increased $2.8 million or 9.3% to $33.4 million and increased $6.6 million, or 7.4%, to $95.3 million for the nine months ended September 30, 2009 compared to the same periods ended September 30, 2009. The increases were primarily due to increases in salaries and benefits from normal merit increases, as well as growth in the number of employees. The Company also had increases in marketing expenses as it continued to enhance its product offerings and visibility in the marketplace. Other expenses increased during the quarter primarily due to increased costs for internet banking, debit card reward programs, and expenses for other real estate owned. For the nine months ended September 30, 2010 the Company’s efficiency ratio improved to 72.8% from 78.3% for the nine months ended September 30, 2009.
Non-performing assets, including loans 90 days past due and still accruing, decreased to $133.7 million, or 2.73% of total assets at September 30, 2010 from $162.9 million, or 3.49% of total assets at December 31, 2009. Included in non-performing loans at September 30, 2010 is $26.4 million, or 19.7% of total non-performing assets, that are government guaranteed student loans where Beneficial has no risk of credit loss. Net charge-offs during the quarter ended September 30, 2010 were $57.0 million, compared to $2.5 million during the quarter ended September 30, 2009. Provisions for credit losses of $51.1 million were recorded for the quarter, with the allowance for loan losses at September 30, 2010 remaining consistent at 1.6% of total loans outstanding, as compared to 1.6% of total loans outstanding, at December 31, 2009.The $51.1 million provision for loan losses recorded for the quarter ended September 30, 2010 was primarily driven by increased reserves required for commercial real estate loans as a result of considerable deterioration in the value of a number of the Company’s large commercial real estate loans, a pronounced slowdown in the commercial real estate market and a challenged overall economic environment in the Company’s region that it does not see recovering anytime in the near future.