Beneficial Mutual Bancorp Inc. of Philadelphia said Friday that it has cut 40 jobs, or about 5% of its work force, to improve its profitability.
The move will result in a $3.7 million charge in the fourth quarter for severance expenses, Gerard Cuddy, the president and chief executive of the $3.5 billion-asset company, said in a press release.
"While the actions we have taken have resulted in some short-term charges, we believe they are essential to our long-term profitability and our ability to create a more valuable franchise," Mr. Cuddy said.
Beneficial, a recently converted mutual, reported a second-quarter profit of $1.9 million. It had an efficiency ratio of 89% for the quarter, versus 80% in the second quarter of 2006, according to the Federal Deposit Insurance Corp.
Mike Shafir, an analyst with Sterne, Agee & Leach Inc., said the work force cuts are a step in the right direction for the company.
"It's a good message to send to the market," he said. "They are looking within to reduce expenses and eventually attempt to reach a more commercial bank-like profitability ratio."
A spokesman for Beneficial said the layoffs had nothing to do with overlap from its July acquisition of the $1.2 billion-asset FMS Financial Corp. of Burlington, N.J. But the company would not further discuss the cuts.
Beneficial completed the first step of its mutual-to-stock conversion at the same time as the FMS acquisition, using some of the $236 million it raised to pay for the deal. It issued about 44% of its stock, with its mutual holding company retaining the rest.
