PHILADELPHIA, Jan. 30, 2014 (GLOBE NEWSWIRE) -- Beneficial Mutual Bancorp, Inc. ("Beneficial") (Nasdaq:BNCL), the parent company of Beneficial Bank (the "Bank"), today announced its financial results for the quarter and year ended December 31, 2013. Beneficial recorded net income of $3.0 million, or $0.04 per diluted share, for the quarter ended December 31, 2013 compared to net income of $3.8 million, or $0.05 per diluted share, recorded for the quarter ended December 31, 2012. Net income for the year ended December 31, 2013 totaled $12.6 million, or $0.17 per diluted share, compared to $14.2 million, or $0.18 per diluted share, for the year ended December 31, 2012. Net income for the year ended December 31, 2012 included $2.2 million of merger and restructuring charges related to the acquisition of SE Financial Corporation ("SE Financial").
Highlights for the quarter and year ended December 31, 2013 are as follows:
- Loan portfolio was stabilized during the quarter and increased $1.9 million to $2.3 billion as of December 31, 2013.
- We experienced continued improvement in our asset quality metrics during the year with non-performing loans, excluding government guaranteed student loans, decreasing $16.6 million, or 24.3%, to $51.8 million from $68.4 million at December 31, 2012. Our non-performing assets ratio, excluding government guaranteed student loans, improved to 1.26% at December 31, 2013 compared to 1.60% at December 31, 2012.
- Net charge-offs decreased 35.3% and 38.9%, respectively, during the quarter and year ended December 31, 2013 to $2.7 million and $15.0 million, respectively, compared to $4.2 million and $24.6 million, respectively, for the same periods in 2012.
- As a result of the improvement in our asset quality metrics, we were able to reduce our provision for loan losses during the quarter and year ended December 31, 2013 to $1.5 million and $13.0 million, respectively, compared to $6.0 million and $28.0 million, respectively, for the same periods in 2012.
- Beneficial repurchased 985,971 shares of its common stock during the quarter and 2,193,652 during the year ended December 31, 2013.
- Our balance sheet remained strong at December 31, 2013, with our allowance for loan losses totaling $55.6 million, or 2.38% of total loans, compared to $57.6 million, or 2.36% of total loans, at December 31, 2012.
- Capital levels remain strong with tangible capital to tangible assets totaling 10.89% at December 31, 2013.
Gerard Cuddy, Beneficial's President and CEO, stated, "Throughout 2013, we made progress toward a number of our goals. We improved our asset quality metrics, continued our share repurchase program and made significant investments in talent, brand, and technology to drive future growth. During the fourth quarter, we were able to stabilize the loan portfolio. In 2014, our top priority remains improving our balance sheet mix, building out our lending teams and growing our loan portfolio."
Balance Sheet
Total assets decreased $423.0 million, or 8.4%, to $4.6 billion at December 31, 2013 from $5.0 billion at December 31, 2012. Cash and cash equivalents decreased $134.2 million to $355.7 million at December 31, 2013 from $489.9 million at December 31, 2012. The decrease in cash and cash equivalents was primarily driven by a decline in municipal deposits as a result of our planned re-pricing and run-off strategy with respect to these deposits. Cash remains elevated due to investment and loan prepayments.
Investments decreased $180.6 million, or 10.3%, to $1.6 billion at December 31, 2013 from $1.8 billion at December 31, 2012. The decrease in investments was driven by investment prepayments and the change in the unrealized position on available-for-sale securities from an unrealized gain of $29.6 million at December 31, 2012 to an unrealized loss of $8.0 million at December 31, 2013 due to an increase in intermediate and long-term interest rates. We continue to focus on purchasing high quality agency bonds, and maintain a portfolio that provides a steady stream of cash flow both in the current and in rising interest rate environments. During the quarter, we sold $6.2 million of pooled trust securities that resulted in a $1.2 million loss due to the uncertainty regarding banking institutions being allowed to hold pooled trust preferred securities under the Volcker Rule that was issued in December 2013. These securities were in a $740 thousand unrealized loss position at the time of the sale.
Loans decreased $105.5 million, or 4.3%, to $2.3 billion at December 31, 2013 from $2.4 billion at December 31, 2012. Despite total loan originations of $560.4 million during the year ended December 31, 2013, our loan portfolio decreased as a result of high commercial loan repayments and continued weak loan demand. The increase in intermediate and long term interest rates during the year also resulted in lower mortgage loan originations. During the quarter ended December 31, 2012, we began to hold in portfolio some of our agency eligible mortgage production as the yields on these mortgages were attractive compared to the rates available on investment securities. As a result of this decision, our mortgage banking income decreased $1.7 million to $1.0 million during the year ended December 31, 2013 as compared to $2.7 million during the same period last year.
Deposits decreased $267.5 million, or 6.8%, to $3.7 billion at December 31, 2013 from $3.9 billion at December 31, 2012. The decrease in deposits during the year ended December 31, 2013 was primarily the result of a $228.6 million decrease in municipal deposits which was consistent with the planned run-off associated with our re-pricing of higher-cost, non-relationship-based municipal accounts.
At December 31, 2013, stockholders' equity decreased to $615.1 million, or 13.4% of total assets, compared to $633.9 million, or 12.7% of total assets, at December 31, 2012. The decrease in stockholders' equity was primarily the result of a $37.6 million decrease in the unrealized gain position on available-for-sale securities and $21.7 million of stock repurchases, partially offset by a $9.5 million decline in the accumulated other comprehensive loss component of Beneficial's pension and other postretirement benefit liabilities and an increase in retained earnings from net income of $12.6 million for the year ended December 31, 2013.
Net Interest Income
Both the low interest rate environment, which has reduced the yields on our investment and loan portfolios, and lower loan balances, as a result of high commercial loan repayments and continued weak loan demand, caused net interest income to decrease $3.1 million and $15.7 million to $30.2 million and $123.7 million, respectively, for the quarter and year ended December 31, 2013 compared to $33.3 million and $139.4 million, respectively, for the same periods in 2012. Net interest margin decreased to 2.78% and 2.81%, respectively, for the quarter and year ended December 31, 2013 from 2.92% and 3.13%, respectively, for the same periods in 2012. The net interest margin was benefited by 5 basis points from loan prepayment fees and recoveries for the quarter ended December 31, 2013. We expect that the continued low interest rate environment will put pressure on net interest margin in future periods until we experience loan growth.
Non-interest Income
For the quarter ended December 31, 2013, non-interest income totaled $5.3 million, a decrease of $1.5 million, or 22.6%, from the quarter ended December 31, 2012. The decrease was primarily due to a $1.7 million decrease in the net gain on the sale of investment securities as a result of the loss recorded in connection with the sale of the pooled trust preferred securities and a $331 thousand decrease in mortgage banking income given the decision to hold in portfolio some of our mortgage production during the fourth quarter of 2012. These decreases were partially offset by a $508 thousand decrease in the amortization and impairment on low income housing partnership investments.
For the year ended December 31, 2013, non-interest income totaled $25.1 million, a decrease of $2.5 million, or 9.0%, from the year ended December 31, 2012. The decrease was primarily due to a $1.5 million decrease in the net gain on the sale of investment securities and a $1.7 million decrease in mortgage banking income, partially offset by a $639 thousand increase in debit card interchange fee income.
Non-interest Expense
For the quarter ended December 31, 2013, non-interest expense totaled $29.9 million, a decrease of $471 thousand, or 1.6%, from the quarter ended December 31, 2012. The decrease in non-interest expense was primarily due to a $1.6 million decline in professional fees and a $1.0 million decrease in other real estate owned expenses, partially offset by a $1.6 million increase in marketing expense associated with our 2013 rebranding and advertising campaign.
For the year ended December 31, 2013, non-interest expense totaled $120.7 million, a decrease of $2.4 million, or 2.0%, from the year ended December 31, 2012. The decrease in non-interest expense was primarily due to a $2.4 million decrease in merger and restructuring charges relating to our acquisition of SE Financial in 2012, a $1.9 million decrease in classified loan and other real estate owned expenses, a $2.3 million decrease in intangible amortization expense as a result of intangibles assets that were fully amortized and a $773 thousand intangible asset impairment charge recorded in the fourth quarter of 2012, and a $632 thousand decrease in FDIC insurance expense. These decreases to non-interest expense were partially offset by a $2.4 million increase in marketing expense associated with our 2013 brand refresh advertising campaign, a $665 thousand increase in correspondent bank charges, and a net increase in salaries and other expenses of approximately $900 thousand associated with the outsourcing of certain information technology functions. Professional fees for the year ended December 31, 2013 include $711 thousand of costs associated with a second step transaction that we were pursuing directly before the Department of Justice ("DOJ") fair lending investigation.
Income Taxes
For the quarter and year ended December 31, 2013, we recorded a provision for income taxes of $1.1 million and $2.6 million, respectively, reflecting an effective tax rate of 26.4% and 17.1%, respectively. This compared to a benefit for income taxes of $110 thousand and a provision for income taxes of $1.8 million for the quarter and year ended December 31, 2012, respectively, reflecting an effective tax benefit of (3.0%) and expense of 11.0%, respectively. The higher effective tax rate for the fourth quarter of 2013 can be attributed to greater pre-tax income than originally forecasted and the recording of a valuation allowance of $269 thousand on a 2010 charitable contribution carryforward that will expire December 31, 2015. The benefit for income taxes for the fourth quarter of 2012 can be attributed to provision to return adjustments and merger expenses associated with our acquisition of SE Financial, partially offset by a charge for the write-off of a charitable contribution carryover which expired at December 31, 2012. The tax rates differ from the statutory rate of 35% principally because of tax-exempt investments, non-taxable income related to bank-owned life insurance and tax credits received on affordable housing partnerships. These tax credits relate to investments maintained by the Bank as a limited partner in partnerships that sponsor affordable housing projects utilizing low-income housing credits pursuant to Section 42 of the Internal Revenue Code.
Asset Quality
Asset quality metrics showed continued signs of improvement during the year ended December 31, 2013. Non-performing loans, including loans 90 days past due and still accruing, decreased to $76.2 million at December 31, 2013, compared to $92.4 million at December 31, 2012. Non-performing loans at December 31, 2013 included $24.4 million of government guaranteed student loans, which represented 32.0% of total non-performing loans. Net charge-offs during the quarter and year ended December 31, 2013 were $2.7 million and $15.0 million, respectively, compared to $4.2 million and $24.6 million during the quarter and year ended December 31, 2012, respectively. At December 31, 2013, the Bank's allowance for loan losses totaled $55.6 million, or 2.38% of total loans, compared to $57.6 million, or 2.36% of total loans, at December 31, 2012.
Capital
The Bank's capital position remains strong relative to current regulatory requirements. The Bank continues to have substantial liquidity as the inflows of deposits and prepayments have largely been retained in cash or invested in high quality government-backed securities. In addition, at December 31, 2013, we had the ability to borrow up to $1.3 billion combined from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia. Our capital ratios are considered to be well capitalized and are as follows:
| Minimum Well | Excess Capital | ||||
| 12/31/2013 | 9/30/2013 | 12/31/2012 | Capitalized Ratio | 12/31/2013 | |
| Tangible Capital | 10.89% | 10.74% | 10.30% | ||
| Tier 1 Capital (to average assets) | 10.22% | 10.25% | 9.53% | 5% | $232,952 |
| Tier 1 Capital (to risk weighted assets) | 20.57% | 20.92% | 19.23% | 6% | $323,176 |
| Total Capital (to risk weighted assets) | 21.83% | 22.18% | 20.50% | 10% | $262,521 |
Maintaining strong capital levels remains one of our top priorities. Our capital levels are in excess of well capitalized levels under the current regulatory requirements as well as the proposed capital rules under Basel III.
Subsequent Event
In late January, we received correspondence from the DOJ indicating that the DOJ had completed its review and determined that the matter did not require enforcement action by the DOJ and was being referred back to the Federal Deposit Insurance Corporation (FDIC). We are not able to determine whether further action will be taken at this point with respect to the ultimate resolution of this matter and we are in discussions with the FDIC Staff. Until this matter is resolved, it is unlikely that we will be filing any regulatory applications related to strategic expansion or regarding a second step conversion.
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, except share amounts) | |||
| December 31, | September 30, | December 31, | |
| 2013 | 2013 | 2012 | |
| ASSETS: | |||
| Cash and Cash Equivalents: | |||
| Cash and due from banks | $41,801 | $52,732 | $54,924 |
| Interest-bearing deposits | 313,882 | 330,900 | 434,984 |
| Total cash and cash equivalents | 355,683 | 383,632 | 489,908 |
| Investment Securities: | |||
| Available-for-sale | 1,034,180 | 1,101,128 | 1,267,491 |
| Held-to-maturity | 528,829 | 540,391 | 477,198 |
| Federal Home Loan Bank stock, at cost | 17,417 | 17,417 | 16,384 |
| Total investment securities | 1,580,426 | 1,658,936 | 1,761,073 |
| Loans: | 2,341,807 | 2,339,863 | 2,447,304 |
| Allowance for loan losses | (55,649) | (56,860) | (57,649) |
| Net loans | 2,286,158 | 2,283,003 | 2,389,655 |
| Accrued Interest Receivable | 13,999 | 14,688 | 15,381 |
| Bank Premises and Equipment, net | 71,753 | 64,308 | 64,224 |
| Other Assets: | |||
| Goodwill | 121,973 | 121,973 | 121,973 |
| Bank owned life insurance | 41,414 | 41,611 | 40,569 |
| Other intangibles | 8,007 | 8,476 | 9,879 |
| Other assets | 104,000 | 107,961 | 113,742 |
| Total other assets | 275,394 | 280,021 | 286,163 |
| Total Assets | $4,583,413 | $4,684,588 | $5,006,404 |
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||
| Liabilities: | |||
| Deposits: | |||
| Non-interest bearing deposits | $291,109 | $299,616 | $328,892 |
| Interest bearing deposits | 3,368,907 | 3,447,642 | 3,598,621 |
| Total deposits | 3,660,016 | 3,747,258 | 3,927,513 |
| Borrowed funds | 250,370 | 250,366 | 250,352 |
| Other liabilities | 57,881 | 67,191 | 194,666 |
| Total liabilities | 3,968,267 | 4,064,815 | 4,372,531 |
| Commitments and Contingencies | |||
| Stockholders' Equity: | |||
| Preferred Stock -- $.01 par value | -- | -- | -- |
| Common Stock – $.01 par value | 823 | 823 | 823 |
| Additional paid-in capital | 356,963 | 356,109 | 354,082 |
| Unearned common stock held by employee stock ownership plan | (16,102) | (16,551) | (17,901) |
| Retained earnings (partially restricted) | 342,025 | 339,066 | 329,447 |
| Accumulated other comprehensive loss, net | (21,354) | (22,640) | (7,027) |
| Treasury stock, at cost | (47,209) | (37,034) | (25,551) |
| Total stockholders' equity | 615,146 | 619,773 | 633,873 |
| Total Liabilities and Stockholders' Equity | $4,583,413 | $4,684,588 | $5,006,404 |
| BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES | |||||
| Unaudited Consolidated Statements of Income | |||||
| (Dollars in thousands, except per share amounts) | |||||
| For the Quarter Ended | For the Year Ended | ||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| INTEREST INCOME: | |||||
| Interest and fees on loans | $27,432 | $28,374 | $31,862 | $114,514 | $132,682 |
| Interest on overnight investments | 235 | 202 | 304 | 821 | 893 |
| Interest and dividends on investment securities: | |||||
| Taxable | 8,065 | 8,039 | 7,451 | 31,255 | 33,876 |
| Tax-exempt | 676 | 692 | 716 | 2,786 | 2,979 |
| Total interest income | 36,408 | 37,307 | 40,333 | 149,376 | 170,430 |
| INTEREST EXPENSE: | |||||
| Interest on deposits: | |||||
| Interest bearing checking accounts | 725 | 704 | 1,110 | 2,948 | 4,712 |
| Money market and savings deposits | 1,683 | 1,708 | 1,866 | 6,653 | 8,392 |
| Time deposits | 2,010 | 2,051 | 2,260 | 8,242 | 9,765 |
| Total | 4,418 | 4,463 | 5,236 | 17,843 | 22,869 |
| Interest on borrowed funds | 1,838 | 2,053 | 1,829 | 7,797 | 8,104 |
| Total interest expense | 6,256 | 6,516 | 7,065 | 25,640 | 30,973 |
| Net interest income | 30,152 | 30,791 | 33,268 | 123,736 | 139,457 |
| Provision for loan losses | 1,500 | 1,500 | 6,000 | 13,000 | 28,000 |
| Net interest income after provision for loan losses | 28,652 | 29,291 | 27,268 | 110,736 | 111,457 |
| NON-INTEREST INCOME: | |||||
| Insurance and advisory commission and fee income | 1,607 | 1,778 | 1,671 | 7,170 | 7,389 |
| Service charges and other income | 4,092 | 3,378 | 3,576 | 15,561 | 14,604 |
| Mortgage banking income | 133 | 131 | 464 | 1,017 | 2,731 |
| Net gain on sale of investment securities | (556) | 297 | 1,107 | 1,377 | 2,882 |
| Total non-interest income | 5,276 | 5,584 | 6,818 | 25,125 | 27,606 |
| NON-INTEREST EXPENSE: | |||||
| Salaries and employee benefits | 14,185 | 14,634 | 13,844 | 57,154 | 57,529 |
| Occupancy expense | 2,406 | 2,402 | 2,512 | 9,826 | 9,887 |
| Depreciation, amortization and maintenance | 2,180 | 2,215 | 2,141 | 9,026 | 8,919 |
| Marketing expense | 1,737 | 1,457 | 127 | 5,234 | 2,811 |
| Intangible amortization expense | 469 | 468 | 1,289 | 1,872 | 4,163 |
| FDIC Insurance | 803 | 888 | 1,054 | 3,589 | 4,221 |
| Merger and restructuring charges | (30) | -- | (588) | (189) | 2,233 |
| Professional fees | 536 | 1,640 | 2,118 | 5,058 | 5,396 |
| Classified loan & other real estate owned related expense | 1,851 | 1,449 | 3,031 | 6,384 | 8,243 |
| Other | 5,773 | 5,637 | 4,853 | 22,734 | 19,723 |
| Total non-interest expense | 29,910 | 30,790 | 30,381 | 120,688 | 123,125 |
| Income before income taxes | 4,018 | 4,085 | 3,705 | 15,173 | 15,938 |
| Income tax expense (benefit) | 1,060 | 585 | (110) | 2,595 | 1,759 |
| NET INCOME | $2,958 | $3,500 | $3,815 | $12,578 | $14,179 |
| EARNINGS PER SHARE – Basic | $0.04 | $0.05 | $0.05 | $0.17 | $0.18 |
| EARNINGS PER SHARE – Diluted | $0.04 | $0.05 | $0.05 | $0.17 | $0.18 |
| Average common shares outstanding – Basic | 75,059,646 | 75,870,327 | 76,358,242 | 75,841,392 | 76,657,265 |
| Average common shares outstanding – Diluted | 75,359,197 | 76,129,245 | 76,540,551 | 76,085,398 | 76,827,872 |
| BENEFICIAL MUTUAL BANCORP, INC. AND SUBSIDIARIES | ||||||||
| Selected Consolidated Financial and Other Data (Unaudited) | ||||||||
| (Dollars in thousands) | ||||||||
| For the Quarter Ended | For the Year Ended | |||||||
| December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||
| Average | Yield / | Average | Yield / | Average | Yield / | Average | Yield / | |
| Balance | Rate | Balance | Rate | Balance | Rate | Balance | Rate | |
| Investment Securities: | $1,988,859 | 1.80% | $2,074,556 | 1.63% | $2,009,845 | 1.73% | $1,879,717 | 2.01% |
| Overnight investments | 369,712 | 0.25% | 476,927 | 0.25% | 325,443 | 0.25% | 353,058 | 0.25% |
| Stock | 17,417 | 2.06% | 16,808 | 0.47% | 17,774 | 1.17% | 18,312 | 0.19% |
| Other Investment securities | 1,601,730 | 2.16% | 1,580,821 | 2.06% | 1,666,628 | 2.03% | 1,508,347 | 2.44% |
| Loans: | 2,333,015 | 4.66% | 2,475,399 | 5.14% | 2,381,870 | 4.79% | 2,565,672 | 5.17% |
| Residential | 684,793 | 4.51% | 661,751 | 4.81% | 680,593 | 4.60% | 661,308 | 4.93% |
| Commercial Real Estate | 573,562 | 4.92% | 666,684 | 5.33% | 600,856 | 5.02% | 699,970 | 5.29% |
| Business and Small Business | 411,458 | 4.97% | 437,207 | 5.91% | 418,202 | 5.21% | 475,872 | 5.96% |
| Personal Loans | 663,202 | 4.40% | 709,757 | 4.77% | 682,219 | 4.51% | 728,522 | 4.75% |
| Total Interest Earning Assets | $4,321,874 | 3.35% | $4,549,955 | 3.54% | $4,391,715 | 3.39% | $4,445,389 | 3.83% |
| Deposits: | $3,433,823 | 0.51% | $3,622,429 | 0.58% | $3,473,127 | 0.51% | $3,513,312 | 0.65% |
| Savings | 1,129,787 | 0.44% | 1,018,934 | 0.50% | 1,096,502 | 0.44% | 944,997 | 0.56% |
| Money Market | 457,259 | 0.38% | 513,938 | 0.45% | 474,500 | 0.39% | 532,266 | 0.59% |
| Demand | 675,426 | 0.24% | 626,902 | 0.30% | 668,165 | 0.25% | 581,003 | 0.29% |
| Demand - Municipals | 434,633 | 0.28% | 665,404 | 0.38% | 475,605 | 0.27% | 636,140 | 0.48% |
| Total Core Deposits | 2,697,105 | 0.35% | 2,825,178 | 0.42% | 2,714,772 | 0.35% | 2,694,406 | 0.49% |
| Time Deposits | 736,718 | 1.08% | 797,251 | 1.13% | 758,355 | 1.09% | 818,906 | 1.19% |
| Borrowings | 250,368 | 2.91% | 250,355 | 2.91% | 264,586 | 2.95% | 260,918 | 3.11% |
| Total Interest Bearing Liabilities | $3,684,191 | 0.67% | $3,872,784 | 0.73% | $3,737,713 | 0.69% | $3,774,230 | 0.82% |
| Non-interest bearing deposits | 299,419 | 307,197 | 305,815 | 300,153 | ||||
| Net interest margin | 2.78% | 2.92% | 2.81% | 3.13% | ||||
| ASSET QUALITY INDICATORS | December 31, | September 30, | December 31, | September 30, |
| (Dollars in thousands) | 2013 | 2013 | 2012 | 2011 |
| Non-performing assets: | ||||
| Non-accruing loans* | $51,765 | $50,258 | $68,417 | $118,901 |
| Accruing loans past due 90 days or more** | 24,410 | 22,057 | 24,013 | 25,515 |
| Total non-performing loans | 76,175 | 72,315 | 92,430 | 144,416 |
| Real estate owned | 5,861 | 7,488 | 11,752 | 19,058 |
| Total non-performing assets | $82,036 | $79,803 | $104,182 | $163,474 |
| Non-performing loans to total loans | 3.25% | 3.09% | 3.78% | 5.37% |
| Non-performing assets to total assets | 1.79% | 1.70% | 2.08% | 3.53% |
| Non-performing assets less accruing government guaranteed student loans past due 90 days or more to total assets | 1.26% | 1.23% | 1.60% | 2.98% |
| ALLL to total loans | 2.38% | 2.43% | 2.36% | 2.01% |
| ALLL to non-performing loans | 73.05% | 78.63% | 62.37% | 37.48% |
| ALLL to non-performing loans (excluding government guaranteed student loans) | 107.50% | 113.14% | 84.26% | 45.52% |
* Non-accruing loans at December 31, 2013, September 30, 2013, and December 31, 2012 do not include $499 thousand, $2.0 million and $2.3 million, respectively, of loans acquired with deteriorated credit quality, which have been recorded at their fair value at acquisition and are performing as expected.
** Includes $24.4 million, $22.0 million, and $24.0 million in government guaranteed student loans as of December 31, 2013 September 30, 2013, and December 31, 2012, respectively.
Impaired loan charge offs as a percentage of the unpaid principal balances at December 31, 2013 are as follows:
| IMPAIRED LOANS: | ||||
| At December 31, 2013 (Dollars in thousands) | Recorded Investment | Unpaid Principal Balance | Life-to-Date Charge offs | % of Unpaid Principal Balance |
| Impaired Loans by Category: | ||||
| Commercial Real Estate | $20,613 | $28,116 | ($7,503) | 26.69% |
| Commercial Business | 26,022 | 30,264 | (4,242) | 14.02% |
| Commercial Construction | 2,518 | 6,214 | (3,696) | 59.48% |
| Residential Real Estate | 11,393 | 11,955 | (562) | 4.70% |
| Residential Construction | 130 | 338 | (208) | 61.54% |
| Consumer Personal | 1,211 | 1,229 | (18) | 1.46% |
| Total Impaired Loans | $61,887 | $78,116 | ($16,229) | 20.78% |
The impaired loans table above does not include $499 thousand of loans acquired with deteriorated credit quality, which have been recorded at their fair value at acquisition and are performing as expected.
Key Performance ratios are as follows for the quarter (annualized) and year end periods indicated:
| For the Quarter Ended (annualized) | For the Year Ended | ||||
| December 31, | September 30, | December 31, | December 31, | ||
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| PERFORMANCE RATIOS: | |||||
| Return on average assets | 0.25% | 0.29% | 0.30% | 0.26% | 0.29% |
| Return on average equity | 1.86% | 2.21% | 2.35% | 2.01% | 2.23% |
| Net interest margin | 2.78% | 2.81% | 2.92% | 2.81% | 3.13% |
| Efficiency ratio | 84.42% | 84.65% | 75.93% | 81.07% | 73.70% |
| Tangible Common Equity | 10.89% | 10.74% | 10.30% | 10.89% | 10.30% |