Beneficial Mutual Bancorp Inc. in Philadelphia reported a $21.7 million third-quarter loss Friday, compared with net income of $5.8 million a year earlier, after a spike in its loan-loss provision.
The $4.9 billion-asset company blamed the loss on a "pronounced slowdown" in the commercial real estate market and a "considerable deterioration" in the collateral value of several large commercial realty loans.
"We see no evidence of an economic recovery in our region and believe any economic recovery will take place over a significantly longer period of time than originally anticipated," Gerard Cuddy, Beneficial Mutual's chief executive, said in a press release.
Consequently, the company took a $51.1 million provision for loan losses, more than 25 times its provision in the third quarter of 2009.
Cuddy said Beneficial Mutual had addressed "all known collateral deficiencies" for its criticized loans, even those that are still performing.
As a result of the review, however, the company reversed $2.6 million of interest accrued on those loans. The consequence was a 24-basis-point shrinkage in the net interest margin, to 3.14%.
Though the collateral of the criticized-asset portfolio deteriorated, the portfolio did not grow in size, Cuddy noted.
Beneficial Mutual is considered well capitalized by regulatory standards, with a leverage ratio of 9.26% and a total risk-based capital ratio of 17.46% at Sept. 30.