Prudential Bancorp, Inc. of Pennsylvania Announces First Quarter Results

PHILADELPHIA, Jan. 29, 2010 (GLOBE NEWSWIRE) -- Prudential Bancorp, Inc. of Pennsylvania (the “Company”) (Nasdaq:PBIP), the “mid-tier” holding company for Prudential Savings Bank (the “Bank”), today reported net income of $686,000 or $.07 per diluted share, for the quarter ended December 31, 2009 as compared to a net loss of $993,000, or $(0.09) per diluted share, for the quarter ended December 31, 2008. The improved results of operations for the quarter ended December 31, 2009, were primarily due to reduced non-interest expenses in the 2009 period as compared to a $2.2 million non-cash other than temporary impairment (“OTTI”) charge related to certain of the non-agency mortgage-backed securities received as a result of the redemption in kind of a mutual fund during the third quarter of fiscal 2008. 

Tom Vento, President and Chief Executive Officer, stated, “We are pleased to be reporting our second consecutive quarter of positive net income, although like the financial institutions industry in general, we are still managing asset quality issues.” 

At December 31, 2009, the Company’s total assets were $506.2 million, a decrease of $8.5 million from $514.8 million at September 30, 2009. The decrease was primarily attributable to net decreases during the first quarter of fiscal 2010 in the investment and mortgage-backed securities portfolio of $9.2 million. As certain government agency securities were called, the proceeds were used to fund the outflow of deposits.

Total liabilities decreased $8.6 million to $450.3 million at December 31, 2009 from $458.9 million at September 30, 2009. The decrease was primarily the result of an $11.2 million decrease in deposits, primarily in certificates of deposit. The decrease was partially offset by an increase in advances from the Federal Home Loan Bank of $4.0 million to partially fund the net outflow of deposits. Certificates of deposit decreased as bank deposit products became less desirable due to decreases in market interest rates and our decision not to actively compete for higher cost certificate accounts.

Stockholders’ equity increased by $88,000 to $55.9 million at December 31, 2009. The largest component of changes in equity during the quarter ended December 31, 2009 was net income of $686,000, partially offset by dividends of $497,000.

Net interest income increased $212,000 or 5.6% to $4.0 million for the three months ended December 31, 2009 as compared to $3.8 million for the same three month period in 2008. The increase was due to a $973,000 or 28.1% decrease in interest expense partially offset by a $761,000, or 10.5% decrease in interest income. The decrease in interest expense resulted primarily from a 102 basis point decrease to 2.25% in the weighted average rate paid on interest-bearing liabilities, reflecting the decrease in market rates of interest during the year, partially offset by a $18.8 million or 4.4% increase in the average balance of interest-bearing liabilities, primarily in certificates of deposit, for the three months ended December 31, 2009, as compared to the same period in 2008. The decrease in interest income resulted primarily from a 66 basis point decline in the weighted average yield on interest-earning assets reflecting the effects of declines in market rates of interest in the 2009 period, partially offset by a $2.3 million or 0.5% increase in the average balance of interest-earning assets for the three months ended December 31, 2009 as compared to the same period in 2008. 

For the quarter ended December 31, 2009, the net interest margin was 3.30%, as compared to 3.14% for the same period in 2008. The increase in the net interest margin for the 2009 period was primarily due to the large decrease in the average rates paid on interest-bearing liabilities reflecting declines in market rates of interest which were more rapidly reflected in the cost of funds due to a greater interest sensitivity of such liabilities.

The Company established a provision for loan losses of $135,000 for the quarter ended December 31, 2009, compared to $313,000 for the comparable quarter in 2008. The larger provision for the 2008 period primarily related to a 40-unit condominium project in which another bank acted as the lead lender that had experienced payment delinquencies and the estimated net realizable value of the collateral was less than the loan balance. The loan was subsequently transferred to real estate owned during the second fiscal quarter of 2009.  At December 31, 2009, the Company’s non-performing assets totaled $6.8 million or 1.3% of total assets. The non-performing assets consisted of one construction loan totaling 640,000, three commercial real estate loans totaling $790,000, 11 one- to four-family residential mortgage loans totaling $1.4 million and four real estate owned properties totaling $4.1 million. The allowance for loan losses totaled $2.9 million, or 1.1% of total loans and 103.4% of non-performing loans at December 31, 2009. 

Non-interest income amounted to $19,000 for the three months ended December 31, 2009, compared with a loss of $2.0 million for the same period in 2008. The loss experienced in the 2008 period was due to OTTI charges arising from the Company’s investment in a mutual fund and the subsequent redemption in kind of such investment. The decline in the amount of losses recognized between the 2008 and 2009 periods reflected the decline in the amount of the OTTI charges from $2.2 million for the three months ended December 31, 2008 to $204,000 during the three months ended December 31, 2009 related to the non-agency mortgage-backed securities acquired as part of the June 2008 redemption in kind of the investment in the mutual fund.

For the quarter ended December 31, 2009, non-interest expense increased $99,000 compared to the same period in 2008. The increase for the three month period was primarily due to expenses of $154,000 related to stock benefit plans which were not incurred in the 2008 period and pension contributions of $66,000 in excess of the amount recognized in the comparable period in 2008. These increases were partially offset by a decrease of $75,000 in professional services expenses in December 31, 2009 from the comparable period in 2008.

The Company recognized income tax expense for the quarter ended December 31, 2009 of $622,000 compared to income tax expense of $44,000 for the three months ended December 31, 2008. The increase in income tax expense was primarily attributable to the recognition of income before taxes during the three months ended December 31, 2009 as compared to a loss before taxes in the comparable period in 2008. Also contributing to the increase was a $108,000 increase in the valuation allowance for a deferred tax asset related to a capital loss carryforward.

Prudential Bancorp, Inc. of Pennsylvania is the "mid-tier" holding company for Prudential Savings Bank. Prudential Savings Bank is a Pennsylvania-chartered, FDIC-insured savings bank that was originally organized in 1886. The Bank conducts business from its headquarters and main office in Philadelphia, Pennsylvania as well as six additional full-service branch offices, five of which are in Philadelphia and one of which is in Drexel Hill in Delaware County, Pennsylvania.

The Prudential Bancorp, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5265

This news release contains certain forward-looking statements, including statements about the financial condition, results of operations and earnings outlook for Prudential Bancorp, Inc. of Pennsylvania. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as "believe," "expect," "anticipate," "estimate" and "intend" or future or conditional verbs such as "will," "would," "should," "could" or "may." Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors, many of which are beyond the Company's control, could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. The Company's reports filed from time-to-time with the Securities and Exchange Commission, describe some of these factors, including general economic conditions, changes in interest rates, deposit flows, the cost of funds, changes in credit quality and interest rate risks associated with the Company's business and operations. Other factors described include changes in our loan portfolio, changes in competition, fiscal and monetary policies and legislation and regulatory changes. Investors are encouraged to review the Company's periodic reports filed with the Securities and Exchange Commission for financial and business information regarding the Company at www.prudentialsavingsbank.com under the Investor Relations menu. We undertake no obligation to update any forward-looking statements.