News Column

Beneficial Bancorp will reorganize, sell more shares to investors

August 16, 2014

By Joseph N. DiStefano, The Philadelphia Inquirer

Aug. 16--Philadelphia's largest and oldest bank plans to scrap what is left of its old depositor-owned, mutual-ownership scheme and sell shares now valued at more than $600 million to stock market investors.

Beneficial Mutual Bancorp, the publicly traded company that owns Beneficial Bank and its 58 regional branches and $4 billion in loans and investments, announced late Thursday its plans to sell the 60 percent of its shares that are owned by its Beneficial Savings Bank Mutual Holding Company affiliate to the public.

The company will reorganize into a new entity: Beneficial Bancorp, which will be publicly traded on the stock market and owned by investors.

Beneficial Mutual Bancorp has been trading on NASDAQ near $14 a share. At that price, it will raise about $640 million. The company plans to donate up to $1 million to its charitable foundation.

In his statement, chief executive Gerard Cuddy said the deal would "provide us with additional capital to pursue our strategic and growth objectives."

Beneficial will likely put out more detail on its plans in a Securities and Exchange Commission prospectus in the next few days, according to Matthew Breese, a Maine-based bank analyst at Sterne Agee. He said Beneficial's move to sell is "a bit earlier than expected."

The stock has risen above $13 in recent months for the first time since the company sold shares to the public in 2007. Frank Schiraldi, analyst at Sandler O'Neill + Partners L.P., had predicted the increase last winter, when shares traded below $10. Schiraldi and other analysts speculate that Beneficial, once fully public, is likely to attract takeover bids from larger banks, as well as interest from activist investors seeking higher dividends or to force a sale at a premium price.

Beneficial could deserve a higher price, wrote bank analyst Rick Weiss, in a report to clients of Boenning & Scattergood, the West Conshohocken-based brokerage. "It would be very difficult to replicate Beneficial's franchise value," according to Weiss. "The stock deserves a premium."

Major owners of Beneficial's publicly traded shares at present include Wellington Management Co., which manages mutual funds for Vanguard Group and other clients, and the BlackRock and Dimensional fund groups.

Since early 2013, Beneficial had been effectively frozen from reorganizing or acquiring because of a federal government investigation of alleged lending discrimination by the company. That "fair lending" investigation has ended without government action against the company, leaving Beneficial free to deal, the company said.

The bank was founded by Irish Catholic immigrants in the 1850s and historically run by Irish Americans. A picture of Philadelphia's Catholic bishop from those times, St. John Neumann, has long decorated its boardroom, which Cuddy moved from the old Walnut Street financial district to the high-rise tower at 1818 Market St., in a bid to update and raise the company's profile.



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Source: Philadelphia Inquirer (PA)

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