10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to              

Commission file number:   001-36806

BENEFICIAL BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	47-1569198
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

1818 Market Street, Philadelphia, Pennsylvania	19103
(Address of principal executive offices)	(Zip Code)

(215) 864-6000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one)

Large Accelerated Filer o	Accelerated Filer x
Non-Accelerated Filer o	Smaller Reporting Company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x

As of July 30, 2015, there were 82,824,449 shares of the registrant’s common stock outstanding.

BENEFICIAL BANCORP, INC.

Table of Contents

`		Page No.
Part I. Financial Information
Item 1.	Financial Statements (unaudited)
	Unaudited Condensed Consolidated Statements of Financial Condition as of June 30, 2015 and December 31, 2014	1
	Unaudited Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2015 and 2014	2
	Unaudited Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2015 and 2014	3
	Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2015	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	62
Item 4.	Controls and Procedures	64
Part II. Other Information
Item 1.	Legal Proceedings	65
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibits	65
Signatures		67

PART I.   FINANCIAL INFORMATION

Item 1.    Financial Statements

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Financial Condition

(Dollars in thousands, except share and per share amounts)	June 30, 2015			December 31, 2014
ASSETS
CASH AND CASH EQUIVALENTS:
Cash and due from banks	$	48,114		$	40,684
Overnight Investments	238,189			493,331
Total cash and cash equivalents	286,303			534,015
INVESTMENT SECURITIES:
Available-for-sale, at fair value (amortized cost of $681,819 and $748,858 at June 30, 2015 and December 31, 2014, respectively)	689,775			757,834
Held-to-maturity (estimated fair value of $745,602 and $731,589 at June 30, 2015 and December 31, 2014, respectively)	745,730			727,755
Federal Home Loan Bank stock, at cost	8,786			8,830
Total investment securities	1,444,291			1,494,419
LOANS:	2,708,508			2,421,745
Allowance for loan losses	(47,792		)	(50,654		)
Net loans	2,660,716			2,371,091
ACCRUED INTEREST RECEIVABLE	13,657			13,383
BANK PREMISES AND EQUIPMENT, Net	79,159			78,957
OTHER ASSETS:
Goodwill	121,973			121,973
Bank owned life insurance	64,647			63,349
Other intangibles	5,203			6,136
Other assets	60,550			68,199
Total other assets	252,373			259,657
TOTAL ASSETS	$	4,736,499		$	4,751,522
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Non-interest bearing deposits	$	381,667		$	369,683
Interest-bearing deposits	2,993,464			3,510,026
Total deposits	3,375,131			3,879,709
Borrowed funds	190,396			190,388
Other liabilities	69,162			70,531
Total liabilities	3,634,689			4,140,628
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS’ EQUITY:
Preferred Stock - $.01 par value; 100,000,000 shares authorized, None issued or outstanding as of June 30, 2015 and December 31, 2014	—			—
Common Stock - $.01 par value 500,000,000 shares authorized, 82,850,317 and 90,809,621 issued and 82,820,428 and 82,698,392 outstanding, as of June 30, 2015 and December 31, 2014, respectively	829			826
Additional paid-in capital	784,587			362,685
Unearned common stock held by employee savings and stock ownership plan	(33,248		)	(14,306		)
Retained earnings (partially restricted)	372,364			360,058
Accumulated other comprehensive loss	(22,382		)	(22,663		)
Treasury Stock at cost, 29,889 shares and 8,111,229 shares at June 30, 2015 and December 31, 2014, respectively	(340		)	(75,706		)
Total stockholders’ equity	1,101,810			610,894
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	4,736,499		$	4,751,522

See accompanying notes to unaudited condensed consolidated financial statements.

1

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Income

	For the Three Months Ended					For the Six Months Ended
	June 30,			June 30,		June 30,			June 30,
(Dollars in thousands, except per share amounts)	2015			2014		2015			2014
INTEREST INCOME:
Interest and fees on loans	$	28,196		$	26,202	$	54,461		$	52,660
Interest on overnight investments	157			190		426			379
Interest and dividends on investment securities:
Taxable	7,215			7,736		15,126			15,530
Tax-exempt	394			658		892			1,321
Total interest income	35,962			34,786		70,905			69,890
INTEREST EXPENSE:
Interest on deposits:
Interest bearing checking accounts	381			422		805			865
Money market and savings deposits	1,334			1,349		2,641			2,678
Time deposits	1,762			1,988		3,595			3,989
Total	3,477			3,759		7,041			7,532
Interest on borrowed funds	1,261			1,810		2,508			3,611
Total interest expense	4,738			5,569		9,549			11,143
Net interest income	31,224			29,217		61,356			58,747
Provision for loan losses	(1,600		)	250		(3,600		)	1,750
Net interest income after provision for loan losses	32,824			28,967		64,956			56,997
NON-INTEREST INCOME:
Insurance and advisory commission and fee income	1,486			1,609		3,472			3,690
Service charges and other income	5,425			4,503		8,932			7,705
Mortgage banking income	267			115		394			240
Net (loss) gain on sale of investment securities	(4		)	94		(9		)	297
Total non-interest income	7,174			6,321		12,789			11,932
NON-INTEREST EXPENSE:
Salaries and employee benefits	15,845			14,783		31,337			29,793
Occupancy expense	2,211			2,436		5,008			6,054
Depreciation, amortization and maintenance	2,174			2,117		4,475			4,594
Marketing expense	1,148			736		2,464			1,621
Intangible amortization expense	467			467		933			934
FDIC Insurance	512			805		1,060			1,588
Professional fees	1,297			1,034		2,852			2,389
Classified loan and other real estate owned related expense	799			627		1,091			969
Other	5,542			6,205		11,265			12,502
Total non-interest expense	29,995			29,210		60,485			60,444
Income before income taxes	10,003			6,078		17,260			8,485
Income tax expense	2,948			1,502		4,954			1,437
NET INCOME	$	7,055		$	4,576	$	12,306		$	7,048
EARNINGS PER SHARE — Basic	$	0.09		$	0.06	$	0.16		$	0.09
EARNINGS PER SHARE — Diluted	$	0.09		$	0.06	$	0.16		$	0.09
Average common shares outstanding — Basic	78,374,704			80,907,413		78,414,226			81,280,507
Average common shares outstanding — Diluted	79,058,474			81,603,832		79,067,396			81,939,284

See accompanying notes to the unaudited condensed consolidated financial statements.

2

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income

	For the Six Months Ended
	June 30,
(Dollars in thousands)	2015			2014
Net Income	$	12,306		$	7,048
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding (losses) gains on available for sale securities arising during the period (net of deferred tax of $377 and $6,765 for the six months ended June 30, 2015 and 2014, respectively)	(652		)	11,644
Unrealized losses on available-for sale securities transferred to held-to-maturity during the period (net of deferred tax of $1,990 for the six months ended June 30, 2014)	—			(3,426		)
Accretion of unrealized losses on available-for-sale securities transferred to held-to-maturity (net of deferred tax of $153 and $109 for the six months ended June 30, 2015 and 2014, respectively)	265			189
Reclassification adjustment for net losses (gains) on available for sale securities included in net income (net of tax of $3 and $109 for the six months ended June 30, 2015 and 2014, respectively)	6			(188		)
Defined benefit pension plans:
Pension gains, other postretirement and postemployment benefit plan adjustments (net of tax of $490 and $265 for the six months ended June 30, 2015 and 2014, respectively)	662			268
Total other comprehensive income	281			8,487
Comprehensive income	$	12,587		$	15,535

See accompanying notes to the unaudited condensed consolidated financial statements.

3

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Dollars in thousands, except share amounts)	Number of Shares Issued		Common Stock		Additional Paid in Capital			Common Stock held by KSOP			Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
BALANCE, JANUARY 1, 2015	90,809,621		$	826	$	362,685		$	(14,306	)	$	360,058	$	(75,706	)	$	(22,663	)	$	610,894
Net Income											12,306								12,306
KSOP shares committed to be released					337			1,211											1,548
Stock option expense					816														816
Restricted stock expense					613														613
Stock options exercised	137,644		2		1,292														1,292
Purchase of treasury stock*													(340		)				(340		)
Net unrealized losses on AFS securities arising during the period (net of deferred tax of $377)																(652		)	(652		)
Accretion of unrealized losses on AFS securities transferred to HTM during the period (net of deferred tax of $153)																265			265
Reclassification adjustment for net losses on AFS securities included in net income (net of tax of $3)																6			6
Pension, other post retirement and postemployment benefit plan adjustments (net of tax of $490)																662			662
Second-step conversion and stock offering:
Beneficial Mutual Savings Bank MHC shares sold in public offering, including 2,015,352 shares purchased by the ESOP, net of offering costs	50,383,817		1		494,550			(20,153		)									474,400
Retirement of MHC shares	(50,367,473	)
Fractional shares resulting from conversion of existing shares at 1.0999 exchange ratio	(2,063	)
Treasury stock retired	(8,111,229	)			(75,706		)						75,706
BALANCE, JUNE 30, 2015	82,850,317		$	829	$	784,587		$	(33,248	)	$	372,364	$	(340	)	$	(22,382	)	$	1,101,810

* Represents shares that were withheld subject to restricted stock awards, under the Beneficial Bancorp, Inc. 2008 Equity Incentive Plans, as payment of taxes due upon the vesting of the restricted awards.

See accompanying notes to the unaudited condensed consolidated financial statements.

4

BENEFICIAL BANCORP, INC. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

	For the Six Months Ended June 30,
(Dollars in thousands)	2015			2014
OPERATING ACTIVITIES:
Net income	$	12,306		$	7,048
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	(3,600		)	1,750
Depreciation and amortization	3,018			3,092
Intangible amortization	933			934
Net loss (gain) on sale of investments	9			(297		)
Accretion of discount on investments	(280		)	(210		)
Amortization of premium on investments	3,076			2,880
Gain on sale of loans	(175		)	(103		)
Deferred income taxes	—			2,212
Net loss from disposition of premises and equipment	8			26
Proceeds from sale of fixed assets held for sale	(83		)	—
Other real estate impairment	4			376
Net gain on sale of other real estate	(117		)	(995		)
Amortization of KSOP	1,548			1,142
Increase in bank owned life insurance	(1,298		)	(636		)
Stock based compensation	1,429			1,266
Origination of loans held for sale	(11,171		)	(6,162		)
Proceeds from sale of loans	9,955			17,065
Changes in assets and liabilities:
Accrued interest receivable	(274		)	603
Accrued interest payable	(62		)	(122		)
Income taxes receivable	3,987			1,632
Other liabilities	(156		)	6
Other assets	(4,053		)	273
Net cash provided by operating activities	15,004			31,780
INVESTING ACTIVITIES:
Loans originated or acquired	(575,349		)	(332,839		)
Principal repayment on loans	290,591			289,431
Purchases of investment securities available for sale	(4,985		)	(30,999		)
Proceeds from sales of investment securities available for sale	—			3,088
Proceeds from maturities, calls or repayments of investment securities available for sale	70,926			67,075
Purchases of investment securities held to maturity	(70,247		)	—
Proceeds from maturities, calls or repayments of investment securities held to maturity	51,205			36,144
Net (purchases) proceeds from sales of money market and mutual funds	(220		)	13,711
Redemption of Federal Home Loan Bank stock	44			1,811
Proceeds from sale other real estate owned	462			4,778
Purchases of premises and equipment	(3,245		)	(10,515		)
Proceeds from sale of premises and equipment	17			24
Cash used in other investing activities	(386		)	(232		)
Net cash (used in) provided by investing activities	(241,187		)	41,477
FINANCING ACTIVITIES:
Increase in borrowed funds	6,000			6,000
Repayment of borrowed funds	(5,992		)	(5,991		)
Net increase (decrease) in checking, savings and demand accounts	4,324			(127,345		)
Net decrease in time deposits	(26,813		)	(27,206		)
Proceeds from the exercise of stock options	1,292			2,050
Purchase of treasury stock	(340		)	(22,480		)
Net cash used in financing activities	(21,529		)	(174,972		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(247,712		)	(101,715		)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	534,015			355,683
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	286,303		$	253,968
SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NON-CASH INFORMATION:
Cash payments for interest	$	9,611		$	11,265
Cash payments (refunds) for income taxes	969			(2,410		)
Transfers of loans to other real estate owned	125			306
Transfers of securities at fair value from available for sale to held to maturity				152,200
Transfers of bank branches to fixed assets held for sale				36
Loans transferred from held in portfolio to held for sale				6,270
Issuance of common stock funded by stock subscriptions received prior to January 1, 2015, net of offering costs	474,398			—

See accompanying notes to the unaudited condensed consolidated financial statements.

5

BENEFICIAL BANCORP, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Annual Report on Form 10-K filed by Beneficial Bancorp, Inc. (the “Company” or “Beneficial”) with the U.S. Securities and Exchange Commission on February 26, 2015.  The results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015 or any other period.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  Specifically, the financial statements include the accounts of Beneficial Bank (the “Bank”), the Company’s wholly owned subsidiary, and the Bank’s wholly owned subsidiaries. The Bank’s wholly owned subsidiaries are: (i) Beneficial Advisors, LLC, which offers wealth management services and non-deposit investment products, (ii) Neumann Corporation, a Delaware corporation formed to manage certain investments, (iii) Beneficial Insurance Services, LLC, which provides insurance services to individual and business customers and (iv) BSB Union Corporation, a leasing company. Additionally, the Company has subsidiaries that hold other real estate acquired in foreclosure or transferred from the real estate loan portfolio. All significant intercompany accounts and transactions have been eliminated.

Management makes significant operating decisions based upon the analysis of the entire Company and financial performance is evaluated on a company-wide basis. Accordingly, the various financial services and products offered are included in one reportable operating segment: community banking as outlined under guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC” or “codification”) Topic 280 for Segment Reporting.

Use of Estimates in the Preparation of Financial Statements

These unaudited interim condensed consolidated financial statements are prepared in conformity with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates include the allowance for loan losses, goodwill, other intangible assets, income taxes, postretirement benefits, and the fair value of investment securities.  Actual results could differ from those estimates and assumptions.

NOTE 2 — NATURE OF OPERATIONS

The Company is a Maryland corporation that was incorporated in August 2014 to be the successor to Beneficial Mutual Bancorp, Inc. (“Beneficial Mutual Bancorp”) upon completion of the second-step conversion of the Bank from the two-tier mutual holding company structure to the stock holding company structure. Beneficial Savings Bank MHC was the former mutual holding company for Beneficial Mutual Bancorp prior to completion of the second-step conversion. In conjunction with the second-step conversion, each of Beneficial Savings Bank MHC and Beneficial Mutual Bancorp ceased to exist. The second-step conversion was completed on January 12, 2015, at which time the Company sold, for gross proceeds of $503.8 million, a total of 50,383,817 shares of common stock at $10.00 per share, including 2,015,352 shares purchased by the Bank’s employee savings and stock ownership plan. As part of the second-step conversion, each of the existing 29,394,417 outstanding shares of Beneficial Mutual Bancorp common stock owned by persons other than Beneficial Savings Bank MHC was converted into 1.0999 of a share of Company common stock. As a result of the second-step conversion, all share information prior to January 12, 2015 has been subsequently revised to reflect the 1.0999 exchange ratio.

The consolidated financial statements include the accounts of the Company, the Bank, a Pennsylvania chartered savings bank, and the Bank’s subsidiaries. Because the Bank’s second-step conversion was completed on January 12, 2015, all financial and other information before that date that is included in this

6

Quarterly Report on Form 10-Q is derived from the consolidated financial statements of Beneficial Mutual Bancorp.

The Company owns 100% of the issued and outstanding common stock of the Bank, a Pennsylvania chartered bank. The Bank offers a variety of consumer and commercial banking services to individuals, businesses, and nonprofit organizations through 56 offices throughout the Philadelphia and Southern New Jersey area. The Bank is supervised and regulated by the Pennsylvania Department of Banking and Securities Department and the Federal Deposit Insurance Corporation (the “FDIC”). The Company is regulated by the Board of Governors of the Federal Reserve System the Federal Reserve Board. The deposits of the Bank are insured up to the applicable legal limits by the Deposit Insurance Fund of the FDIC.

NOTE 3 — CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the balances of each component of accumulated other comprehensive income (“AOCI”) for the six months ended June 30, 2015 and June 30, 2014.  All amounts are presented net of tax.

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2015	$	2,711		$	(25,374	)	$	(22,663	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding losses on AFS securities	(652		)	—			(652		)
Accretion of unrealized losses on AFS securities transferred to HTM	265			—			265
Amount reclassified from accumulated other comprehensive loss	6			662			668
Net current-period other comprehensive income	(381		)	662			281
Ending balance, June 30, 2015	$	2,330		$	(24,712	)	$	(22,382	)

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2014	$	(5,078	)	$	(16,276	)	$	(21,354	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding gains on AFS securities	11,644			—			11,644
Unrealized losses on AFS securities transferred to HTM	(3,426		)	—			(3,426		)
Accretion of unrealized losses on AFS securities transferred to HTM	189			—			189
Amount reclassified from accumulated other comprehensive loss	(188		)	268			80
Net current-period other comprehensive income	8,219			268			8,487
Ending balance, June 30, 2014	$	3,141		$	(16,008	)	$	(12,867	)

The following tables present reclassifications out of AOCI by component for the six months ended June 30, 2015 and June 30, 2014:

7

For the Six Months Ended June 30, 2015

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
Components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	9		Net loss on sale of investment securities
	(3		)	Income tax benefit
	$	6		Net of tax
Amortization of defined benefit pension items
Prior service costs	$	(259	)(1)	Other non-interest expense
Net recognized actuarial losses	1,411		(1)	Other non-interest expense
	$	1,152		Total before tax
	(490		)	Income tax benefit
	$	662		Net of tax

(1)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

For the Six Months Ended June 30, 2014

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	(297	)	Net gain on sale of investment securities
	109			Income tax expense
	$	(188	)	Net of tax
Amortization of defined benefit pension items
Transition obligation	$	82	(1)	Other non-interest expense
Prior service costs	(263		)(1)	Other non-interest expense
Net recognized actuarial losses	714		(1)	Other non-interest expense
	$	533		Total before tax
	(265		)	Income tax benefit
	$	268		Net of tax

(1)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

NOTE 4 — EARNINGS PER SHARE

The following table presents a calculation of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2014. Earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding. The difference between common shares issued and basic average common shares outstanding, for purposes of

8

calculating basic earnings per share, is a result of subtracting unallocated employee stock ownership plan (“ESOP”) shares and unvested restricted stock shares. See Note 14 for further discussion of stock grants.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except share and per share amounts)	2015		2014		2015		2014
Basic and diluted earnings per share:
Net income	$	7,055	$	4,576	$	12,306	$	7,048
Basic average common shares outstanding	78,374,704		80,907,413		78,414,226		81,280,507
Effect of dilutive securities	683,770		696,419		653,170		658,777
Dilutive average shares outstanding	79,058,474		81,603,832		79,067,396		81,939,284
Net earnings per share
Basic	$	0.09	$	0.06	$	0.16	$	0.09
Diluted	$	0.09	$	0.06	$	0.16	$	0.09

Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented. For the three and six months ended June 30, 2015, there were 861,961 outstanding options that were anti-dilutive and therefore excluded from the earnings per share calculation. For the three and six months ended June 30, 2014 there were 741,882 outstanding options that were anti-dilutive and therefore excluded from the earnings per share calculation.  As a result of the second-step conversion, the share and per share information for the 2014 periods have been adjusted to reflect the 1.0999 exchange ratio.

NOTE 5 — INVESTMENT SECURITIES

The amortized cost and estimated fair value of investments in debt and equity securities at June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	7,293	$	57	$	—	$	7,350
GNMA guaranteed mortgage certificates	4,737		181		—		4,918
GSE mortgage-backed securities	591,450		8,072		1,850		597,672
GSE collateralized mortgage obligations	38,365		53		187		38,231
Municipal bonds	31,319		1,605		—		32,924
Corporate securities	4,986		59		—		5,045
Money market and mutual funds	3,669		—		34		3,635
Total	$	681,819	$	10,027	$	2,071	$	689,775

9

	June 30, 2015
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	699,907	$	4,701	$	5,319	$	699,289
GSE collateralized mortgage obligations	42,953		557		183		43,327
Municipal bonds	870		80		—		950
Foreign bonds	2,000		36		—		2,036
Total	$	745,730	$	5,374	$	5,502	$	745,602

	December 31, 2014
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	8,538	$	76	$	—	$	8,614
Ginnie Mae guaranteed mortgage certificates	5,038		194		—		5,232
GSE mortgage-backed securities	641,952		9,981		2,985		648,948
Collateralized mortgage obligations	45,494		59		283		45,270
Municipal bonds	44,378		1,986		—		46,364
Money market, mutual funds and certificates of deposit	3,458		—		52		3,406
Total	$	748,858	$	12,296	$	3,320	$	757,834

	December 31, 2014
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	677,501	$	6,202	$	2,507	$	681,196
Collateralized mortgage obligations	47,384		264		227		47,421
Municipal bonds	870		91		—		961
Foreign bonds	2,000		11		—		2,011
Total	$	727,755	$	6,568	$	2,734	$	731,589

During the six months ended June 30, 2015, the Bank sold $180 thousand of money market and mutual funds that resulted in a loss of $9 thousand.

The following tables provide information on the gross unrealized losses and fair market value of the Company’s investments with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2015 and December 31, 2014:

10

	At June 30, 2015
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	521,193	$	5,037	$	206,180	$	2,132	$	727,373	$	7,169
Collateralized mortgage obligations	17		1		42,764		369		42,781		370
Subtotal, debt securities	$	521,210	$	5,038	$	248,944	$	2,501	$	770,154	$	7,539
Mutual Funds	—		—		727		34		727		34
Total temporarily impaired securities	$	521,210	$	5,038	$	249,671	$	2,535	$	770,881	$	7,573

	At December 31, 2014
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	38,246	$	200	$	396,600	$	5,292	$	434,846	$	5,492
Collateralized mortgage obligations	31,990		170		22,881		340		54,871		510
Subtotal, debt securities	$	70,236	$	370	$	419,481	$	5,632	$	489,717	$	6,002
Mutual Funds	—		—		896		52		896		52
Total temporarily impaired securities	$	70,236	$	370	$	420,377	$	5,684	$	490,613	$	6,054

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company determines whether the unrealized losses are temporary in accordance with guidance under FASB ASC Topic 320 for Investments - Debt and Equity Securities. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer. The likelihood of recovering the Company’s investment, whether the Company has the intent to sell the investment or that it is more likely than not that the Company will be required to sell the investment before recovery is also used to determine the nature of the decline in market value of the securities.

The Company records the credit portion of OTTI through earnings based on the credit impairment estimates generally derived from cash flow analyses. The remaining unrealized loss, due to factors other than credit, is recorded in other comprehensive income (“OCI”). The Company had an unrealized loss of $7.2 million related to its GSE mortgage-backed securities as of June 30, 2015.  Additionally, the Company had an unrealized loss of $370 thousand on GSE collateralized mortgage obligations and an unrealized loss of $34 thousand on mutual funds as of June 30, 2015.

Mortgage-Backed Securities

The Company’s investments that were in a loss position for greater than 12 months included GSE mortgage-backed securities with an unrealized loss of 1.0% as of June 30, 2015.  The Company’s investments that were in a loss position for less than 12 months included GSE mortgage-backed securities with an unrealized loss of 1.0% as of June 30, 2015. The unrealized loss is due to current interest rate levels relative to the Company’s cost. Because the unrealized losses are due to current interest rate levels relative to the Company’s cost and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell these investments before recovery of its amortized cost, which may be at maturity, the Company does not consider these investments to be other-than temporarily impaired at June 30, 2015.

Collateralized Mortgage Obligations (CMOs)

The Company’s investments that were in a loss position for greater than 12 months included GSE CMOs with an unrealized loss of 0.9% as of June 30, 2015. The Company’s investments that were in a loss position for less than 12 months included GSE CMOs with an unrealized loss of 0.3% as of June 30, 2015. The unrealized loss is due to current interest rate levels relative to the Company’s cost. Because the unrealized losses are due to current interest rate levels relative to the Company’s cost and not credit quality,

11

and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell these investments before recovery of its amortized cost, which may be at maturity, the Company does not consider these investments to be other-than temporarily impaired at June 30, 2015.

The following table sets forth the stated maturities of the investment securities at June 30, 2015 and December 31, 2014. Maturities for mortgage-backed securities are dependent upon the rate environment and prepayments of the underlying loans.  For purposes of this table they are presented separately.

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
(Dollars are in thousands)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Due in one year or less	$	352	$	354	$	347	$	352
Due after one year through five years	4,685		4,865		8,268		8,531
Due after five years through ten years	23,515		24,152		28,870		29,666
Due after ten years	15,046		15,948		15,431		16,429
Mortgage-backed securities	634,552		640,821		692,484		699,450
Money market and mutual funds	3,669		3,635		3,458		3,406
Total	$	681,819	$	689,775	$	748,858	$	757,834
Held-to-maturity:
Due in one year or less	$	120	$	121	$	1,620	$	1,623
Due after one year through five years	2,495		2,571		995		1,052
Due after five years through ten years	255		294		255		297
Due after ten years	—		—		—		—
Mortgage-backed securities	742,860		742,616		724,885		728,617
Total	$	745,730	$	745,602	$	727,755	$	731,589

At June 30, 2015 and December 31, 2014, $89.6 million and $127.1 million, respectively, of securities were pledged to secure municipal deposits.  At June 30, 2015 and December 31, 2014, the Company had $380 thousand and $317 thousand, respectively, of securities pledged as collateral on interest rate swaps.

At June 30, 2015 and December 31, 2014, the Company held stock in the Federal Home Loan Bank (“FHLB”) of Pittsburgh totaling $8.8 million.  The Company accounts for the stock based on guidance which requires that the investment be carried at cost and be evaluated for impairment based on the ultimate recoverability of the par value. The Company evaluated its holdings in FHLB stock at June 30, 2015 and believes its holdings in the stock are ultimately recoverable at par.

12

NOTE 6 — LOANS

Loans at June 30, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	June 30, 2015			December 31, 2014
Commercial:
Commercial real estate	$	831,831		$	609,646
Commercial business loans	477,385			442,190
Commercial construction	65,765			69,140
Total commercial loans	1,374,981			1,120,976
Residential:
Residential real estate	711,213			667,800
Residential construction	262			268
Total residential loans	711,475			668,068
Consumer loans:
Home equity & lines of credit	226,706			227,055
Personal	24,583			28,668
Education	189,409			195,185
Automobile	181,354			181,793
Total consumer loans	622,052			632,701
Total loans	2,708,508			2,421,745
Allowance for losses	(47,792		)	(50,654		)
Loans, net	$	2,660,716		$	2,371,091

As of June 30, 2015, commercial real estate loans include a $200.1 million participation in a portfolio of multi-family loans that was entered into during the first quarter of 2015.  The Company also purchased $35.4 million of residential real estate loans during the six months ended June 30, 2015. These loans all met the Company’s underwriting standards and are secured by real estate located within the Company’s market area.

Included in the balance of residential loans are approximately $1.4 million and $1.5 million of loans held for sale at June 30, 2015 and December 31, 2014, respectively. These loans are carried at the lower of cost or estimated fair value, on an aggregate basis. Loans held for sale are loans originated by the Bank to be sold to a third party who is under contractual obligation to purchase the loans from the Bank.  For the three and six months ended June 30, 2015, the Bank sold residential mortgage loans with an unpaid principal balance of approximately $4.3 million and $9.8 million, respectively, and recorded mortgage banking income of approximately $267 thousand and $394 thousand, respectively.  The Bank retained the related servicing rights for the loans that were sold to Fannie Mae and receives a 25 basis point servicing fee from the purchaser of the loans.

Commercial business loans include shared national credits, which are participations in loans or loan commitments of at least $20.0 million that are shared by three or more banks.  Included in the shared national credit portfolio are purchased participations and assignments in leveraged lending transactions.  Leveraged lending transactions are generally used to support a merger- or acquisition-related transaction, to back a recapitalization of a company’s balance sheet or to refinance debt.  When considering a participation in the leveraged lending market, the Company will participate only in first lien senior secured term loans that are highly rated (investment grade) by the rating agencies and that trade in active secondary markets.  The Company actively monitors the secondary market for these types of loans to ensure that it maintains flexibility to sell such loans in the event of deteriorating credit quality.  To further minimize risk and based on our current capital levels and loan portfolio, the Company has limited the total amount of leveraged loans to $150.0 million with no single obligor exceeding $15.0 million while maintaining single industry concentrations below 30% of the leveraged lending limit. The Company may reevaluate these limits in future periods.

The shared national credit loans are typically variable rate with terms ranging from one to seven years.  At June 30, 2015, shared national credits totaled $216.8 million, which included $131.1 million of leveraged lending transactions. All of these loans were classified as pass rated as of June 30, 2015 as all payments are current and the loans are performing in accordance with their contractual terms.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio.  The Company evaluates the appropriateness of the allowance for loan losses balance on loans on a quarterly basis.  When additional allowances are necessary, a provision for loan losses is charged to earnings and, when less allowances are necessary, a credit is taken. The Company’s methodology for assessing the

13

appropriateness of the allowance for loan losses consists of:  (1) a specific valuation allowance on identified problem loans; (2) a general valuation allowance on the remainder of the loan portfolio; and (3) an unallocated component.  Management established an unallocated reserve to cover uncertainties that the Company believes have resulted in losses that have not yet been allocated to specific elements of the general component. Such factors include uncertainties in economic conditions and in identifying triggering events that directly correlate to subsequent loss rates, changes in appraised value of underlying collateral, risk factors that have not yet manifested themselves in loss allocation factors and historical loss experience data that may not precisely correspond to the current portfolio or economic conditions. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodology for estimating general losses in the portfolio. The appropriate allowance level is estimated based upon factors and trends identified by the Company at the time the consolidated financial statements are prepared. Management continuously evaluates its allowance methodology; however, the evaluation has determined that the relative minor unallocated allowance has not had significant changes in recent periods.

The Company charges-off the collateral or discounted cash flow deficiency on all loans at 90 days past due, except government guaranteed student loans, and all loans rated substandard or worse that are 90 days past due.  As a result, no specific valuation allowance was maintained at June 30, 2015 or December 31, 2014.

The summary activity in the allowance for loan losses for all portfolios for the six months ended June 30, 2015 and 2014, and for the year ended December 31, 2014, is as follows:

	Six Months Ended						Year Ended
	June 30,						December 31,
(Dollars in thousands)	2015			2014			2014
Balance, beginning of year	$	50,654		$	55,649		$	55,649
Provision for loan losses	(3,600		)	1,750			200
Charge-offs	(2,502		)	(8,506		)	(14,529		)
Recoveries	3,240			3,731			9,334
Balance, end of period	$	47,792		$	52,624		$	50,654

The following table sets forth the activity in the allowance for loan losses by portfolio for the six months ended June 30, 2015 and the year ended December 31, 2014:

14

	COMMERCIAL									RESIDENTIAL					CONSUMER
June 30, 2015 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550		$	50,654
Charge-offs	(320		)	(637		)	—			(107		)	—		(239		)	(239		)	(39		)	(921		)	—			(2,502		)
Recoveries	303			2,170			57			15			—		102			94			—			499			—			3,240
Provision (credit)	1,412			(4,741		)	(912		)	(349		)	—		25			(299		)	25			1,312			(73		)	(3,600		)
Allowance ending balance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated for impairment	19,411			15,056			1,488			1,519			—		2,557			1,513			271			5,500			477			47,792
Total Allowance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Loans receivable:
Ending balance
Individually evaluated for impairment	$	18,002		$	3,514		$	207		$	11,103		$	262	$	2,117		$	10		$	—		$	—		$	—		$	35,215
Collectively evaluated for impairment	813,829			473,871			65,558			700,110			—		224,589			24,573			189,409			181,354			—			2,673,293
Total Portfolio	$	831,831		$	477,385		$	65,765		$	711,213		$	262	$	226,706		$	24,583		$	189,409		$	181,354		$	—		$	2,708,508

15

	COMMERCIAL									RESIDENTIAL					CONSUMER
December 31, 2014 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated		Total
Allowance for credit losses:
Beginning balance	$	22,089		$	19,301		$	3,188		$	2,200		$	—	$	3,133		$	2,687		$	306		$	2,195		$	550	$	55,649
Charge-offs	(5,804		)	(5,338		)	—			(702		)	—		(180		)	(724		)	(99		)	(1,682		)	—		(14,529		)
Recoveries	3,112			4,499			733			88			—		198			103			—			601			—		9,334
Provision (credit)	(1,381		)	(198		)	(1,578		)	374			—		(482		)	(109		)	78			3,496			—		200
Allowance ending balance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—
Collectively evaluated for impairment	18,016			18,264			2,343			1,960			—		2,669			1,957			285			4,610			550		50,654
Total Allowance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Financing receivable:
Ending balance
Individually evaluated for impairment	$	17,984		$	4,172		$	1,419		$	12,003		$	268	$	2,184		$	122		$	—		$	—		$	—	$	38,152
Collectively evaluated for impairment	591,662			438,018			67,721			655,797			—		224,871			28,546			195,185			181,793			—		2,383,593
Total Portfolio	$	609,646		$	442,190		$	69,140		$	667,800		$	268	$	227,055		$	28,668		$	195,185		$	181,793		$	—	$	2,421,745

16

The provision for loan losses charged to expense is based upon past loan loss experience and an evaluation of estimated losses in the current loan portfolio, including the evaluation of impaired loans under FASB ASC Topic 310 for Loans and Debt Securities.  Under FASB ASC Topic 310 for Receivables, for all loan segments a loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. When all or a portion of the loan is deemed uncollectible, the uncollectible portion is charged-off. The measurement is based either on the fair value of the collateral if the loan is collateral dependent, the liquidation value, or the present value of expected future cash flows discounted at the loan’s effective interest rate.  Most of the Company’s commercial loans are collateral dependent and, therefore, the Company uses the value of the collateral to measure the loss. Any collateral or discounted cash flow deficiency for loans that are 90 days past due are charged-off. Impairment losses are included in the provision for loan losses.  Large groups of homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring.

Classified Loans

The Bank’s credit review process includes a risk classification of all commercial and residential loans that includes pass, special mention, substandard and doubtful.  The classification of a loan may change based on changes in the creditworthiness of the borrower. The description of the risk classifications are as follows:

A loan is classified as pass when payments are current and it is performing under the original contractual terms. A loan is classified as special mention when the borrower exhibits potential credit weakness or a downward trend which, if not checked or corrected, will weaken the asset or inadequately protect the Bank’s position.  While potentially weak, the borrower is currently marginally acceptable; no loss of principal or interest is envisioned.  A loan is classified as substandard when the borrower has a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt. A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor, normal repayment from this borrower is in jeopardy, and there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. A loan is classified as doubtful when a borrower has all weaknesses inherent in a loan classified as substandard with the added provision that: (1) the weaknesses make collection of debt in full on the basis of currently existing facts, conditions and values highly questionable and improbable; (2) serious problems exist to the point where a partial loss of principal is likely; and (3) the possibility of loss is extremely high, but because of certain important, reasonably specific pending factors which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens and additional refinancing plans. The Company charges-off the collateral or discounted cash flow deficiency on all loans classified as substandard or worse. In all cases, loans are placed on non-accrual when 90 days past due or earlier if collection of principal or interest is considered doubtful.

The following tables set forth the amounts and percentage of the portfolio of classified asset categories for the commercial and residential loan portfolios at June 30, 2015 and December 31, 2014:

17

Commercial and Residential Loans

Credit Risk Internally Assigned

	June 30, 2015
	Commercial				Commercial				Commercial				Residential				Residential
(Dollars in thousands)	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	812,418	98	%	$	446,328	93	%	$	65,558	100	%	$	706,393	99	%	$	132	50	%	$	2,030,829	97	%
Special Mention	7,470		1	%	12,894		3	%	—		—	%	—		—	%	—		—	%	20,364		1	%
Substandard	11,943		1	%	18,163		4	%	207		—	%	4,820		1	%	130		50	%	35,263		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	831,831	100	%	$	477,385	100	%	$	65,765	100	%	$	711,213	100	%	$	262	100	%	$	2,086,456	100	%

	December 31, 2014
	Commercial				Commercial				Commercial				Residential				Residential
	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	579,847	95	%	$	419,316	95	%	$	66,191	96	%	$	662,394	99	%	$	138	51	%	$	1,727,886	97	%
Special Mention	13,795		2	%	5,628		1	%	—		—	%	—		—	%	—		—	%	19,423		1	%
Substandard	16,004		3	%	17,246		4	%	2,949		4	%	5,406		1	%	130		49	%	41,735		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	609,646	100	%	$	442,190	100	%	$	69,140	100	%	$	667,800	100	%	$	268	100	%	$	1,789,044	100	%

The Bank’s credit review process is based on payment history for all consumer loans.  The collateral deficiency on consumer loans is charged-off when they become 90 days delinquent with the exception of education loans which are guaranteed by the U.S. government.

The following tables set forth the consumer loan risk profile based on payment activity as of June 30, 2015 and December 31, 2014:

18

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2015
(Dollars in thousands)	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	224,973	99	%	$	24,583	100	%	$	163,949	87	%	$	181,354	100	%	$	594,859	96	%
Non-performing	1,733		1	%	—		—	%	25,460		13	%	—		—	%	27,193		4	%
Total	$	226,706	100	%	$	24,583	100	%	$	189,409	100	%	$	181,354	100	%	$	622,052	100	%

	December 31, 2014
	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	225,197	99	%	$	28,557	100	%	$	169,889	87	%	$	181,793	100	%	$	605,436	96	%
Non-performing	1,858		1	%	111		—	%	25,296		13	%	—		—	%	27,265		4	%
Total	$	227,055	100	%	$	28,668	100	%	$	195,185	100	%	$	181,793	100	%	$	632,701	100	%

Loan Delinquencies and Non-accrual Loans

The Company monitors the past due and non-accrual status of loans in determining the loss classification, impairment status and the allowance for loan losses.  Generally, all loans past due 90 days or more are put on non-accrual status.  Education loans greater than 90 days delinquent continue to accrue interest as they are U.S. government guaranteed with little risk of credit loss.

The following tables provide information about delinquent and non-accrual loans in the Company’s portfolio at the dates indicated:

19

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of June 30, 2015

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	792	4	%	$	—	—	%	$	821	3	%	$	1,613	3	%	$	830,218	31	%	$	831,831	31	%	$	—	$	1,912	15	%
Commercial business loans	1,262		6	%	—		—	%	418		1	%	1,680		3	%	475,705		18	%	477,385		18	%	—		1,114		9	%
Commercial construction	—		—	%	—		—	%	207		1	%	207		—	%	65,558		2	%	65,765		2	%	—		207		2	%
Total commercial	$	2,054	10	%	$	—	—	%	$	1,446	5	%	$	3,500	6	%	$	1,371,481	51	%	$	1,374,981	51	%	$	—	$	3,233	26	%
Residential:
Residential real estate	$	1,871	9	%	$	144	1	%	$	3,330	11	%	$	5,345	8	%	$	705,868	27	%	$	711,213	26	%	$	—	$	7,584	59	%
Residential construction	—		—	%	—		—	%	262		1	%	262		0	%	—		—	%	262		—	%	—		262		2	%
Total residential	$	1,871	9	%	$	144	1	%	$	3,592	12	%	$	5,607	8	%	$	705,868	27	%	$	711,475	26	%	$	—	$	7,846	61	%
Consumer loans:
Home equity & lines of credit	$	819	4	%	$	211	2	%	$	1,026	3	%	$	2,056	3	%	$	224,650	8	%	$	226,706	8	%	$	—	$	1,733	13	%
Personal	138		1	%	31		—	%	—		—	%	169		—	%	24,414		1	%	24,583		1	%	—		—		—	%
Education	13,737		64	%	9,787		95	%	25,460		80	%	48,984		79	%	140,425		6	%	189,409		7	%	—		—		—	%
Automobile	2,544		12	%	206		2	%	—		—	%	2,750		4	%	178,604		7	%	181,354		7	%	—		—		—	%
Total consumer	$	17,238	81	%	$	10,235	99	%	$	26,486	83	%	$	53,959	86	%	$	568,093	22	%	$	622,052	23	%	$	—	$	1,733	13	%
Total	$	21,163	100	%	$	10,379	100	%	$	31,524	100	%	$	63,066	100	%	$	2,645,442	100	%	$	2,708,508	100	%	$	—	$	12,812	100	%

20

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of December 31, 2014

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	202	1	%	$	—	—	%	$	966	3	%	$	1,168	2	%	$	608,478	26	%	$	609,646	25	%	$	—	$	1,721	12	%
Commercial business loans	755		4	%	—		—	%	1,012		3	%	1,767		3	%	440,423		18	%	442,190		18	%	—		1,755		12	%
Commercial construction	—		—	%	—		—	%	402		1	%	402		1	%	68,738		3	%	69,140		3	%	—		402		3	%
Total commercial	$	957	5	%	$	—	—	%	$	2,380	7	%	$	3,337	6	%	$	1,117,639	47	%	$	1,120,976	46	%	$	—	$	3,878	27	%
Residential:
Residential real estate	$	1,843	8	%	$	356	3	%	$	3,414	11	%	$	5,613	9	%	$	662,187	28	%	$	667,800	28	%	$	—	$	8,500	58	%
Residential construction	—		—	%	—		—	%	268		1	%	268		—	%	—		—	%	268		—	%	—		268		2	%
Total residential	$	1,843	8	%	$	356	3	%	$	3,682	12	%	$	5,881	9	%	$	662,187	28	%	$	668,068	28	%	$	—	$	8,768	60	%
Consumer loans:
Home equity & lines of credit	$	755	4	%	$	635	6	%	$	979	3	%	$	2,369	3	%	$	224,686	10	%	$	227,055	9	%	$	—	$	1,858	12	%
Personal	308		1	%	134		1	%	—		—	%	442		1	%	28,226		1	%	28,668		1	%	—		111		1	%
Education	14,743		69	%	8,918		85	%	25,296		78	%	48,957		76	%	146,228		6	%	195,185		8	%	25,296		—		—	%
Automobile	2,811		13	%	481		5	%	—		—	%	3,292		5	%	178,501		8	%	181,793		8	%	—		—		—	%
Total consumer	$	18,617	87	%	$	10,168	97	%	$	26,275	81	%	$	55,060	85	%	$	577,641	25	%	$	632,701	26	%	$	25,296	$	1,969	13	%
Total	$	21,417	100	%	$	10,524	100	%	$	32,337	100	%	$	64,278	100	%	$	2,357,467	100	%	$	2,421,745	100	%	$	25,296	$	14,615	100	%

21

Troubled Debt Restructured Loans

The Bank determines whether a restructuring of debt constitutes a troubled debt restructuring (“TDR”) in accordance with guidance under FASB ASC Topic 310 Receivables. The Bank considers a loan a TDR when the borrower is experiencing financial difficulty and the Bank grants a concession that it would not otherwise consider but for the borrower’s financial difficulties.  A TDR includes a modification of debt terms or assets received in satisfaction of the debt (including a foreclosure or a deed in lieu of foreclosure) or a combination of types.  The Bank evaluates selective criteria to determine if a borrower is experiencing financial difficulty, including the ability of the borrower to obtain funds from sources other than the Bank at market rates.  The Bank considers all TDR loans as impaired loans and, generally, they are put on non-accrual status.  The Bank will not consider the loan a TDR if the loan modification was made for customer retention purposes and the modification reflects prevailing market conditions. The Bank’s policy for returning a loan to accruing status requires the preparation of a well-documented credit evaluation, which includes the following:

·A review of the borrower’s current financial condition in which the borrower must demonstrate sufficient cash flow to support the repayment of all principal and interest including any amounts previously charged-off;

·An updated appraisal or home valuation, which must demonstrate sufficient collateral value to support the debt;

·Sustained performance based on the restructured terms for at least six consecutive months; and

·Approval by the Special Assets Committee, which consists of the Chief Credit Officer, the Chief Financial Officer and other members of senior management.

The following table summarizes loans whose terms were modified in a manner that met the definition of a TDR as of June 30, 2015 and 2014.  The Company had one accruing TDR in the amount of $151 thousand that was modified during the six months ended June 30, 2015.

	June 30,			June 30,
	2015			2014
(Dollars in thousands)	No. of Loans	Balance		No. of Loans	Balance
Commercial:
Commercial real estate	2	$	821	3	$	1,012
Commercial business loans	—	—		2	3,673
Commercial construction	—	—		2	725
Total commercial	2	821		7	5,410
Residential:
Residential real estate	3	365		2	129
Residential construction	—	—		—	—
Total real estate loans	3	365		2	129
Consumer loans:
Home equity & lines of credit	1	221		3	447
Automobile	—	—		1	15
Total consumer loans	1	221		4	462
Total loans	6	$	1,407	13	$	6,001

22

The following tables summarize information about TDRs as of and for the six months ended June 30, 2015 and 2014:

	For the Six Months Ended June 30, 2015
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	3	$	972
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	3	972
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	3	1,292
Outstanding principal balance immediately after modification	3	972
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	—	—
Outstanding principal balance at period end	6	1,407
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	2	821

	For the Six Months Ended June 30, 2014
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	—	$	—
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	—	—
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	—	—
Outstanding principal balance immediately after modification	—	—
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	8	2,789
Outstanding principal balance at period end	13	6,001
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	3	1,534

Impaired Loans

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures the extent of the impairment in accordance with guidance under FASB ASC Topic 310 for Receivables.  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value or discounted cash flows.  However, collateral value is predominantly used to assess the fair value of an impaired loan. Those impaired loans not requiring an allowance represent loans for which the fair value of the collateral or expected repayments exceed the recorded investments in such loans.

23

Components of Impaired Loans

Impaired Loans

Year to date June 30, 2015

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,912	$	1,977	$	—	$	1,788	$	—	$	—
Commercial Business	1,114		1,448		—		1,862		—		—
Commercial Construction	207		207		—		429		—		—
Residential Real Estate	7,735		8,291		—		8,263		—		—
Residential Construction	262		470		—		265		—		—
Home Equity and Lines of Credit	1,733		1,743		—		1,737		—		—
Personal	—		—		—		18		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		1		—		—
Total Impaired Loans:	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—
Commercial	$	3,233	$	3,632	$	—	$	4,079	$	—	$	—
Residential	7,997		8,761		—		8,528		—		—
Consumer	1,733		1,743		—		1,756		—		—
Total	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—

The impaired loans table above includes a $151 thousand accruing TDR that was modified during the six months ended June 30, 2015 and is performing in accordance with its modified terms.

Impaired Loans

For the Year Ended December 31, 2014

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,721	$	2,337	$	—	$	10,858	$	—	$	—
Commercial Business	3,255		4,691		—		9,061		—		—
Commercial Construction	1,362		1,362		—		1,399		—		—
Residential Real Estate	8,500		9,037		—		9,517		—		—
Residential Construction	268		476		—		195		—		—
Home Equity and Lines of Credit	1,908		1,935		—		1,335		—		—
Personal	111		111		—		108		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		151		—		—
Total Impaired Loans:	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—
Commercial	$	6,338	$	8,390	$	—	$	21,318	—		—
Residential	8,768		9,513		—		9,712		—		—
Consumer	2,019		2,046		—		1,594		—		—
Total	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—

The impaired loans table above includes $2.5 million of accruing TDRs that were modified during 2014 and are performing in accordance with their modified terms.

24

The Company charged-off the collateral or discounted cash flow deficiency on all impaired loans and, as a result, no specific valuation allowance was required for any impaired loans at June 30, 2015. Interest income that would have been recorded for the six months ended June 30, 2015, had impaired loans been current according to their original terms, amounted to $424 thousand.

Non-performing loans (which include non-accrual loans and loans past due 90 days or more and still accruing) at June 30, 2015 and December 31, 2014 amounted to $38.3 million and $39.9 million, respectively, and included $25.5 million and $25.3 million, respectively, of government guaranteed student loans.

NOTE 7 — GOODWILL AND OTHER INTANGIBLES

The goodwill and other intangible assets arising from the Company’s acquisitions of SE Financial Corp., FMS Financial Corporation, CLA Agency, Inc. and Paul Hertel & Company were accounted for in accordance with the accounting guidance in FASB ASC Topic 350 for Intangibles - Goodwill and Other.  The other intangibles are amortizing intangibles, which primarily consist of core deposit intangibles, which are amortized over an estimated useful life of ten years. As of June 30, 2015, the core deposit intangibles net of accumulated amortization totaled $3.2 million. The remaining balance of other amortizing intangibles includes a customer list intangible amortized over a remaining estimated useful life of six years.

Goodwill and other intangibles at June 30, 2015 are summarized below.

(Dollars in thousands)	Goodwill		Intangibles
Balance at January 1, 2015	$	121,973	$	6,136
Additions	—		—
Amortization	—		(933		)
Balance at June 30, 2015	$	121,973	$	5,203

During 2014, management reviewed qualitative factors for the Bank unit including financial performance, market changes and general economic conditions and noted there was not a significant change in any of these factors as compared to 2013. Accordingly, it was determined that it was more likely than not that the fair value of each reporting unit continued to be in excess of its carrying amount as of December 31, 2014. As it relates to Beneficial Insurance Services, LLC, the Company performed an impairment test which estimates the fair value of equity using discounted cash flow analyses as well as guideline company and guideline transaction information. The inputs and assumptions are incorporated in the valuations including projections of future cash flows, discount rates, the fair value of tangible and intangible assets and liabilities, and applicable valuation multiples based on the guideline information. Based on the Company’s latest annual impairment assessment of Beneficial Insurance Services, LLC, management believes that the fair value is in excess of the carrying amount. As a result, management concluded that there was no impairment of goodwill during the year ended December 31, 2014. During the six months ended June 30, 2015, the Company noted no indicators of impairment as it relates to goodwill or other intangibles.

25

NOTE 8 — OTHER ASSETS

The following table provides selected information on other assets at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
(Dollars in thousands)	2015		2014
Investments in affordable housing and other partnerships	$	10,113	$	10,131
Prepaid assets	2,775		2,197
Net deferred tax assets	43,416		43,685
Other real estate	1,359		1,578
Fixed assets held for sale	179		391
Mortgage servicing rights	1,412		1,403
All other assets	1,296		8,814
Total other assets	$	60,550	$	68,199

The Company follows the authoritative guidance under ASC 860-50 - Servicing Assets and Liabilities to account for its mortgage servicing rights (“MSRs”). The Company utilizes the fair value measurement method to value its existing mortgage servicing assets at fair value in accordance with ASC 860-50.  Under the fair value measurement method, the Company measures its MSRs at fair value at each reporting date and reports changes in the fair value of its MSRs in earnings in the period in which the changes occur.  See Note 18 for further discussion of MSRs.

NOTE 9 — DEPOSITS

Deposits consisted of the following major classifications at June 30, 2015 and December 31, 2014:

	June 30,		% of Total		December 31,		% of Total
(Dollars in thousands)	2015		Deposits		2014		Deposits
Non-interest bearing deposits	$	381,667	11.3	%	$	369,683	9.5	%
Interest-earning checking accounts	659,645		19.5	%	632,345		16.3	%
Stock subscription proceeds deposited in interest bearing account (1)	—		—		463,036		11.9	%
Municipal checking accounts	108,604		3.2	%	179,439		4.6	%
Money market accounts	422,916		12.5	%	424,789		11.0	%
Savings accounts	1,145,543		34.0	%	1,126,848		29.1	%
Certificates of deposit	656,756		19.5	%	683,569		17.6	%
Total deposits	$	3,375,131	100.0	%	$	3,879,709	100.0	%

(1)Additional stock subscription proceeds of $19.1 million were held in escrow in various deposit accounts at December 31, 2014.

NOTE 10 — BORROWED FUNDS

Borrowed funds at June 30, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	June 30, 2015		December 31, 2014
FHLB advances	$	165,000	$	165,000
Statutory trust debenture	25,396		25,388
Total borrowed funds	$	190,396	$	190,388

The Company pledges loans to secure its borrowings at the Federal Reserve Bank of Philadelphia. At June 30, 2015 and December 31, 2014, loans in the amount of $217.1 million and $237.8 million, respectively, were pledged to secure the Company’s borrowing capacity at the Federal Reserve Bank of Philadelphia.

26

NOTE 11 — REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered by state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Dodd-Frank Act required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. In early July 2013, the Federal Reserve Board and the Office of the Comptroller of the Currency approved revisions to their capital adequacy guidelines and prompt corrective action rules that implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules text released in December 2010, and loss absorbency rules issued in January 2011, which include significant changes to bank capital, leverage and liquidity requirements.

In July 2013, the Federal Deposit Insurance Corporation and the Federal Reserve Board approved a new rule that substantially amended the regulatory risk-based capital rules applicable to Beneficial Bank and Beneficial Bancorp. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The rules include new risk-based capital and leverage ratios, which became effective on January 1, 2015, and revised the definition of what constitutes “capital” for purposes of calculating those ratios. The new minimum capital level requirements applicable to the Company and the Bank are: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from current rules); and (4) a Tier 1 leverage ratio of 4% for all institutions. The rules also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 capital ratio of 8.5%, and (3) a total capital ratio of 10.5%. The new capital conservation buffer requirement will be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase by that amount each year until fully implemented in January 2019. An institution is also subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

As of June 30, 2015, the Company’s and the Bank’s current capital levels exceed the required capital amounts to be considered “well capitalized” and we believe they also meet the fully-phased in minimum capital requirements, including the related capital conservation buffers, as required by the Basel III capital rules.

The following table summarizes the Company’s Regulatory Capital Requirements as of June 30, 2015:

27

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	1,016,523	22.07	%	$	184,203	4.00	%	$	230,254	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	996,520		38.35	%	116,924		4.50	%	168,890		6.50	%
Tier 1 Capital (to risk weighted assets)	1,016,523		39.12	%	155,899		6.00	%	207,865		8.00	%
Total Capital (to risk weighted assets)	1,049,261		40.38	%	207,865		8.00	%	259,831		10.00	%

The following table summarizes the Bank’s Regulatory Capital Requirements as of June 30, 2015 and December 31, 2014:

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	764,570	16.62	%	$	184,043	4.00	%	$	230,053	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	116,716		4.50	%	168,590		6.50	%
Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	155,622		6.00	%	207,495		8.00	%
Total Capital (to risk weighted assets)	797,250		30.74	%	207,495		8.00	%	259,369		10.00	%
As of December 31, 2014:
Tier 1 Capital (to average assets)	$	480,795	11.05	%	$	130,520	3.00	%	$	217,534	5.00	%
Tier 1 Capital (to risk weighted assets)	480,795		21.17	%	90,842		4.00	%	136,262		6.00	%
Total Capital (to risk weighted assets)	509,460		22.43	%	181,683		8.00	%	227,104		10.00	%

NOTE 12 — INCOME TAXES

For the three months ended June 30, 2015, we recorded a provision for income taxes of $3.0 million, reflecting an effective tax rate of 29.5%, compared to a provision for income taxes of $1.5 million, reflecting an effective tax benefit of 24.7%, for the three months ended June 30, 2014.  For the six months ended June 30, 2015, the Company recorded a provision for income taxes of $5.0 million, reflecting an effective tax benefit of 28.7% compared to a provision for income taxes of $1.4 million, reflecting an effective tax rate of 16.9% for the six months ended June 30, 2014. The increase in income

28

tax expense and the effective tax rate during these periods is due to higher profitability levels for the three and six months ended June 30, 2015 as compared to the same periods in 2014.

The effective income tax rates differ from the statutory rate of 35% principally because of tax-exempt investments, non-taxable income related to bank-owned life insurance, state and local income taxes and tax credits received on affordable housing partnerships. Tax-exempt income, state and local income taxes and federal income tax credits (reduced) increased the effective tax rates by (3.6%), 2.5% and (3.7%) in the effective income tax rate calculation as of June 30, 2015, respectively, and (9.8%), 2.2% and (8.0%) in the effective income tax rate calculation as of June 30, 2014, respectively.

As of June 30, 2015, the Company had net deferred tax assets totaling $43.4 million. These deferred tax assets can only be realized if the Company generates sufficient taxable income in the future.  If it cannot, a valuation allowance is established. The Company regularly evaluates the reliability of deferred tax asset positions. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carry backs are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. The Company currently maintains a valuation allowance for certain state net operating losses and other-than-temporary impairments that management believes it is more likely than not that such deferred tax assets will not be realized. The Company expects to realize the remaining deferred tax assets over the allowable carry back and/or carry forward periods. Therefore, no valuation allowance is deemed necessary against its remaining federal or remaining state deferred tax assets as June 30, 2015. However, if an unanticipated event occurs that materially changes pre-tax and taxable income in future periods, an increase in the valuation allowance may become necessary and it could be material to the Company’s financial statements.

NOTE 13 — PENSION AND OTHER POSTRETIREMENT BENEFITS

The Bank has noncontributory defined benefit pension plans covering many of its employees.  Additionally, the Company sponsors nonqualified supplemental employee retirement plans for certain participants.  The Bank also provides certain postretirement benefits to qualified former employees.  These postretirement benefits principally pertain to certain health and life insurance coverage. Information relating to these employee benefits program are included in the tables that follow.

Effective June 30, 2008, the defined pension benefits for Bank employees were frozen at the current levels. Additionally, the Bank enhanced its 401(k) Plan and combined it with its Employee Stock Ownership Plan to fund employer contributions. As part of the second-step conversion, the Bank’s employee stock ownership plan purchased 2,015,352 shares to be used to fund future contributions into the plan.

The components of net pension cost are as follows:

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
(Dollars in thousands)	2015			2014			2015			2014
Service cost	$	—		$	—		$	43		$	19
Interest cost	958			950			214			210
Expected return on assets	(1,655		)	(1,516		)	—			—
Amortization of loss	616			320			90			1
Amortization of prior service cost	—			—			(129		)	(131		)
Amortization of transition obligation	—			—			—			41
Net periodic pension (benefit) cost	$	(81	)	$	(246	)	$	218		$	140

29

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Service cost	$	—		$	—		$	87		$	64
Interest cost	1,916			1,910			429			450
Expected return on assets	(3,310		)	(3,028		)	—			—
Amortization of loss	1,231			671			180			43
Amortization of prior service cost	—			—			(259		)	(263		)
Amortization of transition obligation	—			—			—			82
Net periodic pension (benefit) cost	$	(163	)	$	(447	)	$	437		$	376

NOTE 14 — STOCK BASED COMPENSATION

Stock-based compensation is accounted for in accordance with FASB ASC Topic 718 for Compensation — Stock Compensation. The Company establishes fair value for its equity awards to determine their cost. The Company recognizes the related expense for employees over the appropriate vesting period, or when applicable, service period, using the straight-line method. However, consistent with the guidance, the amount of stock-based compensation recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date. As a result, it may be necessary to recognize the expense using a ratable method.

The Company’s 2008 Equity Incentive Plan (“EIP”) authorizes the issuance of shares of common stock pursuant to awards that may be granted in the form of stock options to purchase common stock (“options”) and awards of shares of common stock (“stock awards”). The purpose of the Company’s stock-based incentive plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors and employees. In order to fund grants of stock awards under the EIP, the Equity Incentive Plan Trust (the “EIP Trust”) purchased 1,773,463 shares of Company common stock in the open market for approximately $19.0 million during the year ended December 31, 2008. The Company funded the stock purchases. The acquisition of these shares by the EIP Trust reduced the Company’s outstanding additional paid in capital. The EIP shares will generally vest at a rate of 20% over five years. As of June 30, 2015, 926,558 shares were fully vested and 491,723 shares were forfeited. All grants that were issued contain a service condition in order for the shares to vest. Awards of common stock include awards to certain officers of the Company that will vest only if the Company achieves a return on average assets of 1% or if the Company achieves a return on average assets within the top 25% of the SNL index of nationwide thrifts with total assets between $1.0 billion and $10.0 billion nationwide in the fifth full year subsequent to the grant.  As a result of the second-step conversion, the 2014 period shares disclosed in this footnote were adjusted to reflect the 1.0999 exchange ratio.

Compensation expense related to the stock awards is recognized ratably over the five-year vesting period in an amount which totals the market price of the Company’s stock at the grant date. The expense recognized for the three and six months ended June 30, 2015 was $340 thousand and $613 thousand, respectively, as compared to $287 thousand and $501 thousand, respectively, for the three and six months ended June 30, 2014.

The following table summarizes the non-vested stock award activity for the six months ended June 30, 2015:

30

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2015	534,738		$	8.89
Issued	238,900		11.41
Vested	(108,327	)	8.33
Forfeited	(46,211	)	8.48
Non-vested Stock Awards outstanding, June 30, 2015	619,100		10.00

The following table summarizes the non-vested stock award activity for the six months ended June 30, 2014:

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2014	566,668		$	8.37
Issued	150,136		10.77
Vested	(108,230	)	7.89
Forfeited	(67,314	)	10.31
Non-vested Stock Awards outstanding, June 30, 2014	541,260		8.90

The fair value of the 108,327 shares that vested during the six months ended June 30, 2015 was $1.2 million. The fair value of the 108,230 shares that vested during the six months ended June 30, 2014 was $1.3 million.

The EIP authorizes the grant of options to officers, employees, and directors of the Company to acquire shares of common stock with an exercise price equal to the fair value of the common stock at the grant date. Options expire ten years after the date of grant, unless terminated earlier under the option terms. Options are granted at the then fair market value of the Company’s stock. The options were valued using the Black-Scholes option pricing model. During the six months ended June 30, 2015, the Company granted 166,075 options compared to 741,882 options granted during the six months ended June 30, 2014. All options issued contain vesting conditions that require the participant’s continued service. The options generally vest and are exercisable over five years. Compensation expense for the options totaled $379 thousand and $816 thousand, for the three and six months ended June 30, 2015, respectively, compared to $399 thousand and $765 thousand for the three months and six months ended June 30, 2014, respectively.

A summary of option activity as of June 30, 2015 and changes during the six month period ended June 30, 2015 is presented below:

31

	Number of Options		Weighted Exercise Price per Shares
January 1, 2015	3,568,887		$	9.51
Granted	166,075		11.41
Exercised	(137,644	)	9.39
Forfeited	(78,865	)	9.14
Expired	(88	)	8.90
June 30, 2015	3,518,365		9.61

A summary of option activity as of June 30, 2014 and changes during the six month period ended June 30, 2015 is presented below:

	Number of Options		Weighted Exercise Price per Shares
January 1, 2014	3,164,247		$	9.20
Granted	741,882		10.77
Exercised	(210,850	)	9.72
Forfeited	(24,693	)	8.07
Expired	—		—
June 30, 2014	3,670,586		9.50

The weighted average remaining contractual term was approximately 6.12 years and the aggregate intrinsic value was $10.1 million for options outstanding as of June 30, 2015.  As of June 30, 2015, exercisable options totaled 2,141,808 with an average weighted exercise price of $9.57 per share, a weighted average remaining contractual term of approximately 4.88 years, and an aggregate intrinsic value of $6.3 million.  The weighted average remaining contractual term was approximately 6.93 years and the aggregate intrinsic value was $10.4 million for options outstanding as of June 30, 2014.  As of June 30, 2014, exercisable options totaled 1,876,341 with an average weighted exercise price of $9.67 per share, a weighted average remaining contractual term of approximately 5.27 years, and an aggregate intrinsic value of $5.0 million.

Significant weighted average assumptions used to calculate the fair value of the options for the six months ended June 30, 2015 and 2014 are as follows:

	For the Six Months Ended June 30,
	2015			2014
Weighted average fair value of options granted	$	3.98		$	3.97
Weighted average risk-free rate of return	1.74		%	2.04		%
Weighted average expected option life in months	78			78
Weighted average expected volatility	31.19		%	32.67		%
Expected dividends	$	—		$	—

As of June 30, 2015, there was $4.4 million of total unrecognized compensation cost related to options and $4.8 million in unrecognized compensation cost related to non-vested stock awards granted under the EIP.  As of June 30, 2014, there was $5.7 million of total unrecognized compensation cost related to options and $3.5 million in unrecognized compensation cost related to non-vested stock awards granted under the EIP.  The average weighted lives for the option expense were 3.18 and 3.79 years as of June

32

30, 2015 and June 30, 2014, respectively. The average weighted lives for the stock award expense were 3.77 and 3.62 years at June 30, 2015 and June 30, 2014, respectively.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

At June 30, 2015 and December 31, 2014, the Company had outstanding commitments to purchase or originate loans aggregating $27.5 million and $32.0 million, respectively, commitments to customers on available lines of credit of $206.1 million and $188.4 million, respectively, and standby letters of credit of $6.5 million and $8.0 million, respectively.  Commitments are issued in accordance with the same policies and underwriting procedures as settled loans.  The Bank had a reserve for its unfunded commitments of $244 thousand and $211 thousand at June 30, 2015 and December 31, 2014, respectively.

Periodically, there have been various claims and lawsuits against the Company, such as claims to enforce liens, condemnation proceedings on properties in which it holds security interests, claims involving the making and servicing of real property loans and other issues incident to its business.  The Company is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, results of operations or cash flows.

NOTE 16 — RECENT ACCOUNTING PRONOUNCEMENTS

In June 2015, the FASB issued ASU 2015-10: Technical Corrections and Improvements.  This update contains amendments that will affect a wide variety of Topics in the Codification. The amendments in this update will apply to all reporting entities within the scope of the affected accounting guidance.  The amendments generally fall into one of the types of amendments: (i) amendments related to differences between original guidance and the Codification, (ii) guidance clarification and reference corrections, (iii) simplification, and (iv) minor improvements. The amendments in this update represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification. Transition guidance varies based on the amendments in this update. The amendments in this update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments were effective upon the issuance of the update. The Company does not anticipate a material impact to the consolidated financial statements at this time.

In April 2015, the FASB issued ASU 2015-5: Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts.  For public business entities, the amendments in this update will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015.  Early adoption is permitted for all entities.  The Company is in the process of evaluating the impact of this guidance and does not anticipate a material impact to the consolidated financial statements at this time.

In February 2015, the FASB issued ASU 2015-02: Consolidation.  The amendments in this update respond to concerns about the current accounting for consolidation of certain legal entities. Entities expressed concerns that current generally accepted accounting principles might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic

33

benefits or obligations. Financial statement users asserted that in certain of those situations in which consolidation is ultimately required, deconsolidated financial statements are necessary to better analyze the reporting entity’s economic and operational results. Previously, the FASB issued an indefinite deferral for certain entities to partially address those concerns. However, the amendments in this update rescind that deferral and address those concerns by making changes to the consolidation guidance. The amendments in this update impact all reporting entities involved with limited partnerships or similar entities and require reporting entities to re-evaluate these entities for consolidation. In some cases, consolidation conclusion may change.  In other cases, a reporting entity will need to provide additional disclosures if an entity that currently isn’t considered a variable interest entity is considered a variable interest entity under the new guidance. For public business entities, the guidance is effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The Company is in the process of evaluating the impact of this guidance and does not anticipate a material impact to the consolidated financial statements at this time.

In January 2015, the FASB issued ASU 2015-01: Income Statement: Extraordinary and Unusual Items.  The amendment in this update eliminates from GAAP the concept of extraordinary items and the associated disclosure requirements. Subtopic 225-20, Income Statement—Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. Paragraph 225-20-45-2 includes the following two criteria that must both be met for extraordinary classification: (i) unusual nature, and (ii) infrequency of occurrence. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. As the Company has not entered into any transactions that would require extraordinary or unusual item disclosure, the Company does not anticipate an impact to the consolidated financial statements related to this guidance.

In August 2014, the FASB issued ASU 2014-15: Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update apply to all entities. The amendments in this update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The term probable is used consistently with its use in Topic 450, Contingencies. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not anticipate a material impact to the consolidated financial statements related to this guidance.

Also in August 2014, the FASB issued ASU 2014-14, Receivables — Troubled Debt Restructurings by Creditors: Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The amendments in this update affect creditors that hold government guaranteed mortgage loans, including those guaranteed by the Federal Housing Administration and the U.S. Department of Veterans Affairs. The amendments in this update require that a mortgage loan be derecognized and that a separate other

34

receivable be recognized upon foreclosure if the following conditions are met (i) the loan has a government guarantee that is not separable from the loan before foreclosure, (ii) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (iii) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company adopted the provisions of this guidance during the six months ended June 30, 2015 and noted no material impact to the consolidated financial statements related to this guidance as the Company has no foreclosed government guaranteed mortgage loans.

In June 2014, the FASB issued ASU 2014-12 — Compensation — Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period: Current U.S. GAAP does not contain explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the grant-date fair value of an award.  The amendments in this update provide explicit guidance for those awards.  For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Early adoption is permitted.  At this time, the Company does not believe that it is probable that the performance conditions for any of the outstanding performance based awards will be met.  The Company does not anticipate an impact to the consolidated financial statements related to this guidance.

Also in June 2014, the FASB issued ASU 2014-11 - Transfers and Servicing: Repurchase-to-Maturity Transaction, Repurchase Financings, and Disclosures: The amendments affect all entities that enter into repurchase-to-maturity transactions or repurchase financings. The amendments change the current accounting outcome by requiring repurchase-to-maturity transactions to be accounted for as secured borrowings.  Additionally, the amendments require that in a repurchase financing arrangement the repurchase agreement be accounted for separately from the initial transfer of the financial asset.  ASU 2014-11 requires a new disclosure for certain transactions that involve (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction.  The accounting changes in this update are effective for public business entities for the first interim or annual period beginning after December 15, 2014.  The Company adopted the provisions of this guidance during the six months ended June 30, 2015 and noted no material impact to the consolidated financial statements related to this guidance as the Company has no such transactions.

In May 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers: The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS.  This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are in the scope of other standards.  This update, as issued, was effective for public companies beginning with the first fiscal year beginning after December 15, 2016, and the interim periods within that fiscal year. On April 1, 2015, the FASB approved proposing a one-year deferral and giving public companies the option to “early” adopt using the original effective dates.  The FASB is targeting finalization of this proposal for near the middle of this year.  The Company does not anticipate a material impact to the consolidated financial statements related to this guidance.

35

NOTE 17 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows authoritative guidance under FASB ASC Topic 820 for Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  The definition of fair value under ASC 820 is the exchange price. The guidance clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).  The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

Fair value is based on quoted market prices, when available.  If listed prices or quotes are not available, fair value is based on fair value models that use market participant or independently sourced market data which include: discount rate, interest rate yield curves, credit risk, default rates and expected cash flow assumptions.  In addition, valuation adjustments may be made in the determination of fair value.  These fair value adjustments may include amounts to reflect counter party credit quality, creditworthiness, liquidity and other unobservable inputs that are applied consistently over time.  These adjustments are estimated and, therefore, subject to significant management judgment, and at times, may be necessary to mitigate the possibility of error or revision in the model-based estimate of the fair value provided by the model.  The methods described above may produce fair value calculations that may not be indicative of the net realizable value.  While the Company believes its valuation methods are consistent with other financial institutions, the use of different methods or assumptions to determine fair values could result in different estimates of fair value. FASB ASC Topic 820 for Fair Value Measurements and Disclosures describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt securities, equity securities and derivative contracts that are traded in an active exchange market as well as certain U.S. Treasury securities that are highly liquid and actively traded in over-the-counter markets.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange traded assets and liabilities. The values of these items are determined using pricing models with inputs observable in the market or can be corroborated from observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, corporate debt securities and derivative contracts.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Those assets which will continue to be measured at fair value on a recurring basis are as follows at June 30, 2015:

36

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,412	$	1,412
Investment securities available for sale:
U.S. GSE and agency notes	—		7,350		—		7,350
GNMA guaranteed mortgage certificates	—		4,918		—		4,918
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		38,231		—		38,231
GSE mortgage-backed securities	—		597,672		—		597,672
Municipal bonds
General obligation municipal bonds	—		16,231		—		16,231
Revenue municipal bonds	—		16,693		—		16,693
Corporate securities	—		5,045		—		5,045
Money market funds	2,908		—		—		2,908
Mutual funds	727		—		—		727
Interest rate swap agreements	—		157		—		157
Total Assets	$	3,635	$	686,297	$	1,412	$	691,344
Liabilities:
Interest rate swap agreements
Total Liabilities	$	—	$	163	$	—	$	163
	$	—	$	163	$	—	$	163

Those assets which will continue to be measured at fair value on a recurring basis are as follows at December 31, 2014:

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,403	$	1,403
Investment securities available for sale:
U.S. GSE and agency notes	—		8,614		—		8,614
GNMA guaranteed mortgage certificates	—		5,232		—		5,232
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		45,270		—		45,270
GSE mortgage-backed securities	—		648,948		—		648,948
Municipal bonds
General obligation municipal bonds	—		29,580		—		29,580
Revenue municipal bonds	—		16,784		—		16,784
Money market funds	2,510		—		—		2,510
Mutual funds	896		—		—		896
Interest rate swap agreements	—		152		—		152
Total Assets	$	3,406	$	754,580	$	1,403	$	759,389
Liabilities:
Interest rate swap agreements	$	—	$	160	$	—	$	160
Total Liabilities	$	—	$	160	$	—	$	160

Level 1 Valuation Techniques and Inputs

Included in this category are money market funds, mutual funds and certificates of deposit.  To estimate the fair value of these securities, the Company utilizes observable quotations for the indicated security.

Level 2 Valuation Techniques and Inputs

The majority of the Company’s investment securities are reported at fair value utilizing Level 2 inputs. Prices of these securities are obtained through independent, third-party pricing services. Prices obtained through these sources include market derived quotations and matrix pricing and may include both observable and unobservable inputs. Fair market values take into consideration data such as dealer quotes, new issue pricing, trade prices for similar issues, prepayment estimates, cash flows, market credit spreads and other factors. The Company reviews the output from the third-party providers for reasonableness by considering the pricing consistency among securities with similar characteristics, where available, and comparing values with other pricing sources available to the Company. In general,

37

the Level 2 valuation process uses the following significant inputs in determining the fair value of the different classes of investments:

U.S. Government Sponsored Enterprise (GSE) and Agency Notes. Pricing evaluations are generated on either a price or spread basis as determined by the observed market data.  For spread-based evaluations, a non-call spread scale is created or an Option Adjusted Spread (OAS) model is incorporated to adjust spreads of issues that have early redemption features.  Spreads are calculated continuously throughout the day, as well as “end of day.”

GNMA Guaranteed Mortgage Certificates. Pricing evaluations are based on issuer type, coupon and maturity. The Pool specific evaluation model takes into account pool level information supplied directly by the agency.  For adjustable rate mortgages, the model takes into account indices, margin, periodic and life caps, next coupon adjustment date and the convertibility of the bond.

GSE CMOs.  For pricing evaluations, the pricing service, obtains and applies available direct market color (trades, covers, bids, offers and price talk) along with market color for similar bonds and GSE/Agency CMOs in general (including market research).  Evaluations of tranches (non-volatile and volatile) are based on IDC’s interpretation of accepted market modeling, trading, and pricing conventions.

GSE Mortgage-backed Securities. Included in this category are Fannie Mae and Freddie Mac fixed rate residential mortgage backed securities and Fannie Mae and Freddie Mac Adjustable Rate residential mortgage backed securities. Pricing evaluations are based on issuer type, coupon and maturity. The Pool specific evaluation model takes into account pool level information supplied directly by the GSE.  For adjustable rate mortgages, the model takes into account indices, margin, periodic and life caps, next coupon adjustment date and the convertibility of the bond.

Tax Exempt General Obligation and Revenue Municipal Bonds. For pricing, the pricing service’s evaluators build internal yield curves, which are adjusted throughout the day based on trades and other pertinent market information. Evaluators apply this information to bond sectors, and individual bond evaluations are then extrapolated. Within a given sector, evaluators have the ability to make daily spread adjustments for various attributes that include, but are not limited to, discounts, premiums, credit, alternative minimum tax (AMT), use of proceeds, and callability.

Corporate Securities. Pricing evaluations are generated on either a price or spread basis as determined by observed market data.  For spread-based evaluations, a non-call spread scale is created or an Option Adjusted Spread (OAS) model is incorporated to adjust spreads of issues that have early redemption features.  Spreads are calculated continuously throughout the day, as well as “end of day.”

Interest Rate Swaps. The Company’s valuation methodology for over-the-counter (“OTC”) derivatives includes an analysis of discount cash flows based on Overnight Index Swap (“OIS”) rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially-collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk.

Level 3 Valuation Techniques and Inputs

Mortgage Servicing Rights. The Company determines the fair value of its MSRs by estimating the amount and timing of future cash flows associated with the servicing rights and discounting the cash flows using market discount rates. The valuation includes the application of certain assumptions made by management of the Company, including prepayment projections, and prevailing assumptions used in the marketplace at the time of the valuation.

The table below presents all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015 and 2014.

38

	Six Months Ended
	June 30, 2015			June 30, 2014
Level 3 Investments Only (Dollars in thousands)	Mortgage Servicing Rights			Mortgage Servicing Rights
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Payments	(81		)	(73		)
Increase (Decrease) in fair value due to changes in valuation inputs or assumptions	5			(47		)
Balance, June 30,	$	1,412		$	1,439

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These include assets that are measured at the lower of cost or market value and had a fair value below cost at the end of the period as summarized below. A loan is impaired when, based on current information, the Company determines that it is probable that the Company will be unable to collect amounts due according to the terms of the loan agreement. The Company’s impaired loans are measured based on the estimated fair value of the collateral if the loans are collateral dependent or based on a discounted cash flow analysis if the loans are not collateral dependent. Assets measured at fair value on a nonrecurring basis are as follows:

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2015		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	3,153	$	—	$	—	$	3,153	$	(399	)
Other real estate owned	$	125	—		—		$	125	(4		)

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2014		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	2,588	$	—	$	—	$	2,588	$	(819	)
Other real estate owned	45		—		—		45		—
Loans held for sale	6,270		—		6,270		—		(2,049		)

In accordance with FASB ASC Topic 825 for Financial Instruments, Disclosures about Fair Value of Financial Instruments, the Company is required to disclose the fair value of financial instruments.  The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a distressed sale.  Fair value is best determined using observable market prices; however for many of the Company’s financial instruments no quoted market prices are readily available.  In instances where quoted market prices are not readily available, fair value is determined using present value or other techniques appropriate for the particular instrument.  These techniques involve some degree of judgment, and as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.  Different assumptions or estimation techniques may have a material effect on the estimated fair value.

The following table sets forth the carrying and estimated fair value of the Company’s financial assets and liabilities for the periods indicated:

39

	Fair Value of Financial Instruments
		At June 30, 2015				At December 31, 2014
				Estimated				Estimated
	Fair Value	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Hierarchy Level	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	Level 1	$	286,303	$	286,303	$	534,015	$	534,015
Securities available for sale	See previous table	689,775		689,775		757,834		757,834
Securities held to maturity	Level 2	745,730		745,602		727,755		731,589
FHLB stock	Level 3	8,786		8,786		8,830		8,830
Loans, net	Level 3	2,659,325		2,693,594		2,369,630		2,418,826
Loans held for sale	Level 2	1,391		1,430		1,461		1,538
Mortgage servicing rights	Level 3	1,412		1,412		1,403		1,403
Interest rate swaps	Level 2	157		157		152		152
Accrued interest receivable	Level 3	13,657		13,657		13,383		13,383
Liabilities:
Deposits	Level 2	3,375,131		3,378,107		3,879,709		3,884,644
Borrowed funds	Level 2	190,396		191,489		190,388		187,864
Interest rate swaps	Level 2	163		163		160		160
Accrued interest payable	Level 2	1,681		1,681		1,743		1,743

Cash and Cash Equivalents - For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Securities Available for Sale and Held to Maturity - The fair value of investment securities, mortgage-backed securities and collateralized mortgage obligations is based on quoted market prices, dealer quotes, yield curve analysis, and prices obtained from independent pricing services.

FHLB Stock - The fair value of FHLB stock is estimated at its carrying value and redemption price of $100 per share.

Loans, Net - The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit and for the same remaining maturities.  Additionally, to be consistent with the requirements under FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the loans were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.

Loans Held for Sale - The fair value of loans held for sale is estimated using the current rate at which similar loans would be made to borrowers with similar credit risk and the same remaining maturities.  Loans held for sale are carried at the lower of cost or estimated fair value.

Mortgage Servicing Rights - The Company determines the fair value of its MSRs by estimating the amount and timing of future cash flows associated with the servicing rights and discounting the cash flows using market discount rates. The valuation included the application of certain assumptions made by management of the Bank, including prepayment projections, and prevailing assumptions used in the marketplace at the time of the valuation.

Interest Rate Swaps - The Company’s valuation methodology for OTC derivatives includes an analysis of discount cash flows based on OIS rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value.  Uncollateralized or partially-collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a

40

LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. Beginning January 1, 2013, the Company made the changes to better align its inputs, assumptions, and pricing methodologies with those used in its principal market by most dealers and major market participants.  These changes in valuation methodology were applied prospectively as a change in accounting estimate and were immaterial to the Company’s financial statements.

Accrued Interest Receivable/Payable - The carrying amounts of interest receivable/payable approximate fair value.

Deposits - The fair value of checking and money market deposits and savings accounts is the amount reported in the consolidated financial statements.  The carrying amount of checking, savings and money market accounts is the amount that is payable on demand at the reporting date.  The fair value of time deposits is generally based on a present value estimate using rates currently offered for deposits of similar remaining maturity.

Borrowed Funds - The fair value of borrowed funds is based on a present value estimate using rates currently offered.

Commitments to Extend Credit and Letters of Credit - The majority of the Company’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans and are not included in the table above.  Because commitments to extend credit and letters of credit are generally unassignable by either the Company or the borrower, they only have value to the Company and the borrower.  The estimated fair value approximates the recorded net deferred fee amounts, which are not significant.

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2015 and December 31, 2014.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since June 30, 2015 and December 31, 2014 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

NOTE 18 — MORTGAGE SERVICING RIGHTS

The Company follows the authoritative guidance under ASC 860-50 - Servicing Assets and Liabilities to account for its MSRs.  The Company has elected the fair value measurement method to value its existing mortgage servicing assets at fair value in accordance with ASC 860-50.  Under the fair value measurement method, the Company records its MSRs on its consolidated statements of financial condition as a component of other assets at fair value with changes in fair value recorded as a component of mortgage banking income in the Company’s consolidated statements of income for each period.  As of June 30, 2015 and June 30, 2014, the Company serviced $148.7 million and $153.6 million of residential mortgage loans, respectively.  During the three and six months ended June 30, 2015, the Company recognized servicing fee income of $93 thousand and $188 thousand, respectively, compared to $96 thousand and $194 thousand for the same periods in 2014.

The following is an analysis of the activity in the Company’s residential MSRs for the six months ended June 30, 2015 and 2014:

41

	Residential
	Mortgage Servicing Rights
	For the Six Months Ended June 30,
Dollars in thousands	2015			2014
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Increases (decreases) in fair value due to:
Changes in valuation input or assumptions	5			(47		)
Paydowns	(81		)	(73		)
Balance, June 30,	$	1,412		$	1,439

The Company uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds, discount rates, escrow earnings rates and other assumptions.  The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge.  At June 30, 2015, the key assumptions used to determine the fair value of the Company’s MSRs included a lifetime constant prepayment rate equal to 9.72%, a discount rate equal to 9.75% and an escrow earnings credit rate equal to 1.66%.  At June 30, 2014, the key assumptions used to determine the fair value of the Company’s MSRs included a lifetime constant prepayment rate equal to 10.47%, a discount rate equal to 9.88% and an escrow earnings credit rate equal to 1.74%.

At June 30, 2015 and June 30, 2014, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.

	Mortgage Servicing Rights			Mortgage Servicing Rights
(Dollars in thousands)	June 30, 2015			June 30, 2014
Fair value of residential mortgage servicing rights	$	1,412		$	1,439
Weighted average life (years)	5.7 years			5.6 years
Prepayment speed	9.72		%	10.47		%
Effect on fair value of a 20% increase	$	(98	)	$	(103	)
Effect on fair value of a 10% increase	(50		)	(52		)
Effect on fair value of a 10% decrease	55			58
Effect on fair value of a 20% decrease	112			118
Discount rate	9.75		%	9.88		%
Effect on fair value of a 20% increase	$	(93	)	$	(95	)
Effect on fair value of a 10% increase	(49		)	(49		)
Effect on fair value of a 10% decrease	52			54
Effect on fair value of a 20% decrease	108			111
Escrow earnings credit	1.66		%	1.74		%
Effect on fair value of a 20% increase	$	36		$	35
Effect on fair value of a 10% increase	18			17
Effect on fair value of a 10% decrease	(16		)	(15		)
Effect on fair value of a 20% decrease	(34		)	(34		)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance.  As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear.  Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in

42

one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

NOTE 19 — DERIVATIVE FINANCIAL INSTRUMENTS

The Company is a party to derivative financial instruments in the normal course of business to meet the needs of commercial banking customers. These financial instruments have been limited to interest rate swap agreements, which are entered into with counterparties that meet established credit standards and, where appropriate, contain master netting and collateral provisions protecting the party at risk. The Company believes that the credit risk inherent in all of the derivative contracts is minimal based on the credit standards and the netting and collateral provisions of the interest rate swap agreements.

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.  These derivatives are not designated as hedges and are not speculative.  Rather, these derivatives result from a service the Company provides to certain customers. As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of June 30, 2015, the Company had six interest rate swaps with an aggregate notional amount of $24.7 million related to this program. During the three and six months ended June 30, 2015, the Company recognized a gain of $10 thousand and of $2 thousand, respectively, compared to a loss of $7 thousand and $26 thousand for the same periods in 2014 related to interest rate swap agreements that are included as a component of services charges and other non-interest income in the Company’s consolidated statements of income.

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of financial condition as of June 30, 2015 and December 31, 2014:

	Asset derivatives				Liability derivatives
As of June 30, 2015 (Dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,337	$	157	$	12,337	$	163
Total derivatives	$	12,337	$	157	$	12,337	$	163

(1)Included in other assets in our Consolidated Statements of Financial Condition.

(2)Included in other liabilities in our Consolidated Statements of Financial Condition.

	Asset derivatives				Liability derivatives
As of December 31, 2014 (dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,608	$	152	$	12,608	$	160
Total derivatives	$	12,608	$	152	$	12,608	$	160

(1)Included in other assets in our Consolidated Statements of Financial Condition.

(2)Included in other liabilities in our Consolidated Statements of Financial Condition.

The following displays offsetting interest rate swap assets and liabilities for the dates presented:

43

Offsetting of Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Assets (1)		Statementa of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	173	$	—	$	173	$	—	$	—	$	173

Offsetting of Derivative Liabilities

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	179	$	—	$	179	$	—	$	380	$	(201	)

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

Offsetting of Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Assets (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	170	$	—	$	170	$	—	$	—	$	170

Offsetting of Derivative Liabilities

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	178	$	—	$	178	$	—	$	317	$	(139	)

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

The Company has agreements with certain of its derivative counterparties that provide that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.  The Company also has agreements with certain of its derivative counterparties that provide that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of June 30, 2015, the termination value of the interest rate swaps in a liability position was $179 thousand.  The Company has minimum collateral posting thresholds with its counterparty. At June 30, 2015, the Company had $380 thousand of securities pledged as collateral on interest rate swaps. If the Company had breached any of these provisions at June 30, 2015 it would have been required to settle its obligation under the agreement at the termination value and could have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the counterparty. The Company had not breached any provisions at June 30, 2015.

44

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company.  These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in interest rates, national and regional economic conditions, legislative or regulatory changes or regulatory actions, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in real estate market values in the Company’s market area, changes in relevant accounting principles and guidelines and the inability of third party service providers to perform. Additional factors that may affect our results are disclosed in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and its other reports filed with the U.S. Securities and Exchange Commission.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

EXECUTIVE SUMMARY

Beneficial Bancorp is a Maryland corporation and owns 100% of the outstanding common stock of the Bank, a Pennsylvania chartered bank.  The Bank offers a variety of consumer and commercial banking services to individuals, businesses, and nonprofit organizations through 56 offices throughout the Philadelphia and Southern New Jersey area.

On January 12, 2015, we completed our stock offering conducted in connection with our second-step conversion, in which 50,383,817 shares of common stock were sold, at a price of $10.00 per share, for gross proceeds of $503.8 million.

Our profitability is generally a function of the revenues we earn from our interest bearing assets less the cost of our interest bearing liabilities plus revenues we receive from non-interest income less our provision for loan losses and non-interest expenses.

Our primary source of revenue is net interest income. Net interest income, which comprises 73.3% of our revenue for the six months ended June 30, 2015, is the difference between the income we earn on our loans and investments and the interest we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income.

A secondary source of revenue is non-interest income, which is income we receive from providing products and services. Traditionally, the majority of our non-interest income has come from service charges (mostly on deposit accounts), interchange income, mortgage banking and from fee income from our insurance and wealth management services.

Provision for loan losses is the expense we incur to cover the estimated inherent losses in our portfolio at each reporting period.

The non-interest expense represents our operating costs and consists of salaries and employee benefits expenses, the cost of our equity plans, occupancy expenses, depreciation, amortization and maintenance expenses and other miscellaneous expenses, such as loan and owned real estate expenses, advertising, insurance, professional services and printing and supplies expenses. Our largest non-interest expense is

45

salaries and employee benefits, which consist primarily of salaries and wages paid to our employees, payroll taxes, and expenses for health insurance, retirement plans and other employee benefits.

We are focused on deploying the second-step conversion proceeds to support growth and improve our financial performance.  During the six months ended June 30, 2015, we entered into a $200.1 million participation in a portfolio of multi-family loans. We also purchased $35.4 million of residential real estate loans and experienced organic loan growth. These loans all met our underwriting standards and are located within our market area. These loans should improve interest income levels in future periods.

Our business results continue to be impacted by slow economic growth in our markets. To stimulate economic growth, the Federal Reserve Board continues to hold short-term interest rates at historic lows and expects rates to remain low throughout 2015. The low rate environment has impacted the yield on our investment and loan portfolios. Slow economic growth and continued economic uncertainty has resulted in a slow recovery and limited consumer consumption. Additionally, capital spending and investing by businesses has remained sluggish given the slow and uneven economic recovery, which has resulted in low loan demand. This has resulted in increased competition among banks to secure new loans often with risky terms and lower pricing. We continue to adhere to our prudent underwriting standards and are committed to originating quality loans. As the economy continues to slowly improve, we have seen reductions in our non-performing assets, past due loans and charge-off levels.

We recorded net income for the three and six months ended June 30, 2015 of $7.1 million, or $0.09 per diluted share, and $12.3 million, or $0.16 per diluted share, compared to net income of $4.6 million, or $0.06 per diluted share, and $7.0 million, or $0.09 per diluted share, for the three and six months ended June 30, 2014.

For the three and six months ended June 30, 2015, net interest income totaled $31.2 million and $61.4 million, respectively, an increase of $2.0 million, or 6.9%, from the three months ended June 30, 2014 and $2.6 million, or 4.4%, from the six months ended June 30, 2014.  The increase in net interest income was primarily due to higher interest earning assets as a result of the second-step conversion proceeds. During 2015, these proceeds were utilized to increase the loan portfolio, which resulted in an increase in the average balance of loans. Net interest income was also positively impacted by a reduction in the average cost of liabilities primarily due to reductions in higher-cost time deposits and borrowings, which offset the decline in yields on loans and investments.

Net interest margin totaled 2.83% and 2.79% for the three and six months ended June 30, 2015 as compared to 2.81% for each of the same periods in 2014. Loan growth and reductions in higher-cost time deposits and borrowings during 2015 has offset the pressure of the low interest rate environment, which has reduced average yields the on loan portfolio, and has helped stabilize net interest margin.  During the three and six months ended June 30, 2015, we maintained high levels of cash, as a result of not yet deploying all of the second-step proceeds, which put pressure on the net interest margin.  We intend to use the cash in future periods to fund loan growth.

For the six months ended June 30, 2015, our loan portfolio increased $286.8 million, or 11.8%, primarily due to purchases of multi-family and residential loans, as well as organic growth primarily in our commercial lending groups.

Asset quality metrics continued to improve in 2015 as non-performing loans, excluding government guaranteed student loans, decreased to $12.8 million at June 30, 2015, compared to $27.8 million at June 30, 2014.  The $15.0 million, or 53.9%, decrease from June 30, 2014 in non-performing loans, was a function of our continued work out of non-performing assets as well as $12.3 million of non-performing commercial loan sales during the second half of 2014.

As a result of the improvement in our asset quality metrics and net recoveries received during the three months ended June 30, 2015, we recorded a $1.6 million negative provision for loan losses for the three months ended June 30, 2015 compared to recording a $250 thousand provision for loan losses for the

46

three months ended June 30, 2014. Net recoveries totaled $248 thousand during the three months ended June 30, 2015 compared to net charge-offs of $1.7 million during the three months ended June 30, 2014.

At June 30, 2015, the Bank’s allowance for loan losses totaled $47.8 million, or 1.76% of total loans, compared to $50.7 million, or 2.09% of total loans, at December 31, 2014, and $52.6 million, or 2.22% of total loans, at June 30, 2014.

We continue to maintain strong levels of capital and our capital ratios are well in excess of the levels required to be considered well-capitalized under applicable federal regulations. Following the second-step conversion, our capital levels increased and are strong with tangible capital to tangible assets totaling 21.14% at June 30, 2015 compared to 10.44% at December 31, 2014. Our capital levels were significantly augmented by the $503.8 million public offering that we completed on January 12, 2015.

We believe in working with our customers to help them save and use credit wisely. We dedicate financial and human capital to support organizations that share our sense of responsibility to do what’s right for the communities we serve. We remain committed to the financial responsibility we have practiced throughout our 161-year history, and we are dedicated to providing financial education opportunities to our customers by providing the tools necessary to make wise financial decisions.

To further improve our operating returns, we continue to leverage our position as one of the largest and oldest banks headquartered in the Philadelphia metropolitan area. We are focused on acquiring and retaining customers, and then educating them by aligning our products and services to their financial needs. We also intend to deploy some of our excess capital to grow Beneficial Bank in our markets.

CRITICAL ACCOUNTING POLICIES

In the preparation of our condensed consolidated financial statements, we have adopted various accounting policies that govern the application of accounting principles generally accepted in the United States and that conform to general practices within the banking industry. Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. We consider these accounting policies, which are discussed below, to be critical accounting policies. The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of operations.

Allowance for Loan Losses. We consider the allowance for loan losses to be a critical accounting policy. The allowance for loan losses is determined by management based upon portfolio segment, past experience, evaluation of estimated loss and impairment in the loan portfolio, current economic conditions and other pertinent factors. Management also considers risk characteristics by portfolio segments including, but not limited to, renewals and real estate valuations. The allowance for loan losses is maintained at a level that management considers adequate to provide for estimated losses and impairment based upon an evaluation of known and inherent risk in the loan portfolio. Loan impairment is evaluated based on the fair value of collateral or estimated net realizable value. While management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluations.

The allowance for loan losses is established through a provision for loan losses charged to expense, which is based upon past loan loss experience and an evaluation of estimated losses in the current loan portfolio, including the evaluation of impaired loans. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are: overall economic conditions; value of collateral; strength of guarantors; loss exposure at default; the amount and timing of future cash flows on impaired loans; and determination of loss factors to be applied to the various elements of the portfolio. All of these estimates are susceptible to significant change. Management regularly reviews the level of loss experience, current economic

47

conditions and other factors related to the collectability of the loan portfolio. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic conditions differ substantially from the assumptions used in making the evaluation. In addition, the Federal Deposit Insurance Corporation and the Pennsylvania Department of Banking and Securities, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on judgments about information available to them at the time of their examination.

Our financial results are affected by the changes in and the level of the allowance for loan losses. This process involves our analysis of complex internal and external variables, and it requires that we exercise judgment to estimate an appropriate allowance for loan losses. As a result of the uncertainty associated with this subjectivity, we cannot assure the precision of the amount reserved, should we experience sizeable loan or lease losses in any particular period. For example, changes in the financial condition of individual borrowers, economic conditions, or the condition of various markets in which collateral may be sold could require us to significantly decrease or increase the level of the allowance for loan losses. Such an adjustment could materially affect net income as a result of the change in provision for credit losses. For example, a change in the estimate resulting in a 10% to 20% difference in the allowance would have resulted in an additional provision for credit losses of $4.8 million to $9.6 million for the six months ended June 30, 2015. We also have approximately $39.6 million in non-performing assets consisting of non-performing loans and other real estate owned. Most of these assets are collateral dependent loans where we have incurred significant credit losses to write the assets down to their current appraised value less selling costs. We continue to assess the realizability of these loans and update our appraisals on these loans each year. To the extent the property values continue to decline, there could be additional losses on these non-performing assets which may be material. For example, a 10% decrease in the collateral value supporting the non-performing assets could result in additional credit losses of $4.0 million. During the first half of 2015 and during 2014 and 2013, levels of delinquencies, net charge-offs and non-performing assets declined. Management considered market conditions in deriving the estimated allowance for loan losses; however, given the continued economic difficulties, the ultimate amount of loss could vary from that estimate. For additional discussion related to the determination of the allowance for loan losses, see “—Risk Management—Analysis and Determination of the Allowance for Loan Losses” and the notes to the consolidated financial statements included in this Annual Report.

Goodwill and Intangible Assets. The acquisition method of accounting for business combinations requires us to record assets acquired, liabilities assumed and consideration paid at their estimated fair values as of the acquisition date. The excess of consideration paid over the fair value of net assets acquired represents goodwill. Goodwill totaled $122.0 million at both June 30, 2015 and December 31, 2014.

Goodwill and other indefinite lived intangible assets are not amortized on a recurring basis, but rather are subject to periodic impairment testing. We have adopted the amendments included in Accounting Standards Update 2011-08, which allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test.

During 2014, management reviewed qualitative factors for the banking unit, which represented $112.7 million of our goodwill balance, including financial performance, market changes and general economic conditions and noted there was not a significant change in any of these factors as compared to 2013. Accordingly, it was determined that it was more likely than not that the fair value of the banking unit continued to be in excess of its carrying amount as of December 31, 2014. Additionally during 2014, we assessed the qualitative factors related to Beneficial Insurance Services, LLC, which represented $9.3 million of our goodwill balance and determined that the two-step quantitative goodwill impairment test was warranted. We performed a two-step quantitative goodwill impairment for Beneficial Insurance Services, LLC based on estimates of the fair value of equity using discounted cash flow analyses as well as guideline company information. The inputs and assumptions are incorporated in the valuations including projections of future cash flows, discount rates, the fair value of tangible and intangible assets and liabilities, and applicable valuation multiples based on the guideline information. Based on our latest annual impairment assessment of Beneficial Insurance Services, LLC and their current and projected

48

financial results, we believe that the fair value is in excess of the carrying amount. As a result, management concluded that there was no impairment of goodwill during the year ended December 31, 2014. Although we concluded that no impairment of goodwill existed for Beneficial Insurance Services, LLC for 2014, Beneficial Insurance Services, LLC has experienced declining revenues and profitability over the past few years and further declines in financial performance for Beneficial Insurance Services, LLC could result in potential goodwill impairment in future periods. We did not note any negative trends in the financial performance or general market conditions for Beneficial Insurance Services, LLC for the six months ended June 30, 2015 that would indicate potential goodwill impairment.

Other intangible assets subject to amortization are evaluated for impairment in accordance with authoritative guidance. An impairment loss will be recognized if the carrying amount of the intangible asset is not recoverable and exceeds fair value. The carrying amount of the intangible is not considered recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use of the asset. During 2014, management reviewed qualitative factors for its intangible assets and determined that it was more likely than not that the fair value of the intangible assets was greater than their carrying amount.

During the six months ended June 30, 2015, the Company noted no indicators of impairment as it relates to goodwill and other intangibles.

Income Taxes. We are subject to the income tax laws of the various jurisdictions where we conduct business and estimate income tax expense based on amounts expected to be owed to these various tax jurisdictions. The estimated income tax expense (benefit) is reported in the Consolidated Statements of Operations. The evaluation pertaining to the tax expense and related tax asset and liability balances involves a high degree of judgment and subjectivity around the ultimate measurement and resolution of these matters.

Accrued taxes represent the net estimated amount due to or to be received from tax jurisdictions either currently or in the future and are reported in other assets on our consolidated statements of financial condition. We assess the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent and other pertinent information and maintain tax accruals consistent with our evaluation. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws, the status of examinations by the tax authorities and newly enacted statutory, judicial and regulatory guidance that could impact the relative merits of tax positions. These changes, when they occur, impact accrued taxes and can materially affect our operating results. We regularly evaluate our uncertain tax positions and estimate the appropriate level of reserves related to each of these positions.

As of June 30, 2015, we had net deferred tax assets totaling $43.4 million. We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If currently available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax assets and liabilities. These judgments require us to make projections of future taxable income. Management believes, based upon current facts, that it is more likely than not that there will be sufficient taxable income in future years to realize the deferred tax assets.  The judgments and estimates we make in determining our deferred tax assets are inherently subjective and are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. A valuation allowance that results in additional income tax expense in the period in which it is recognized would negatively affect earnings. The Company currently maintains a valuation allowance for certain state net operating losses and other-than-temporary impairments that management believes it is more likely than not that such deferred tax

49

assets will not be realized. No valuation allowance is deemed necessary against our remaining federal or remaining state deferred tax assets as of June 30, 2015.

Postretirement Benefits. Several variables affect the annual cost for our defined benefit retirement programs. The main variables are: (1) size and characteristics of the employee population, (2) discount rate, (3) expected long-term rate of return on plan assets, (4) recognition of actual asset returns and (5) other actuarial assumptions. Below is a brief description of these variables and the effect they have on our pension costs.

Size and Characteristics of the Employee Population. Pension cost is directly related to the number of employees covered by the plans, and other factors including salary, age, years of employment and benefit terms. Effective June 30, 2008, plan participants ceased to accrue additional benefits under the existing pension benefit formula and their accrued benefits were frozen.

Discount Rate. The discount rate is used to determine the present value of future benefit obligations. The discount rate for each plan is determined by matching the expected cash flows of each plan to a yield curve based on long-term, high-quality fixed income debt instruments available as of the measurement date. The discount rate for each plan is reset annually or upon occurrence of a triggering event on the measurement date to reflect current market conditions.

Expected Long-term Rate of Return on Plan Assets. Based on historical experience, market projections, and the target asset allocation set forth in the investment policy for the retirement plans, the pre-tax expected rate of return on plan assets was 7.25% for 2014 compared to 7.45% for 2013. This expected rate of return is dependent upon the asset allocation decisions made with respect to plan assets. Annual differences, if any, between expected and actual returns are included in the unrecognized net actuarial gain or loss amount. We generally amortize any unrecognized net actuarial gain or loss in excess of 10% in net periodic pension expense over the average future service of active employees, which is approximately seven years, or the average future lifetime for plans with no active participants that are frozen.

Recognition of Actual Asset Returns. Accounting guidance allows for the use of an asset value that “smoothes” investment gains and losses over a period up to five years. However, we have elected to use an alternative method in determining pension cost that uses the actual market value of the plan assets. Therefore, we will experience more variability in the annual pension cost, as the asset values will be more volatile than companies who elected to smooth their investment experience.

Other Actuarial Assumptions. To estimate the projected benefit obligation, actuarial assumptions are required with respect to factors such as mortality rate, turnover rate, retirement rate and disability rate. These factors do not tend to change significantly over time, so the range of assumptions, and their impact on pension cost, is generally limited. We annually review the assumptions used based on historical and expected future experience.

In addition to our defined benefit programs, we offer a defined contribution plan (the “401(k) Plan”) covering substantially all of our employees. During 2008, in conjunction with freezing benefit accruals under the defined benefit program, we enhanced our 401(k) Plan and combined it with our employee stock ownership plan (the “ESOP”) to form the Beneficial Bank Employee Savings and Stock Ownership Plan. While the employee savings and stock ownership plan is one plan, the two separate components of the 401(k) Plan and ESOP remain. Under the employee savings and stock ownership plan, we make basic and matching contributions as well as additional contributions for certain employees based on age and years of service. We may also make discretionary contributions. Each participant’s account is credited with shares of the Company’s stock or cash based on compensation earned during the year.

50

Comparison of Financial Condition at June 30, 2015 and December 31, 2014

Total assets decreased $15.0 million, or 0.3%, to $4.74 billion at June 30, 2015 compared to $4.75 billion at December 31, 2014.  Cash and cash equivalents decreased $247.7 million to $286.3 million at June 30, 2015 from $534.0 million at December 31, 2014.  The decrease in cash and cash equivalents was primarily driven by the deployment of a portion of the second-step conversion offering proceeds through the participation in a portfolio of multi-family loans during the first quarter and the purchase of residential real estate loans during the year as well as organic loan growth.

Investments decreased $50.1 million, or 3.4%, to $1.44 billion at June 30, 2015 compared to $1.49 billion at December 31, 2014.  We continue to focus on maintaining a high quality investment portfolio that provides a steady stream of cash flows both in the current and in rising interest rate environments. We are also focused on improving our balance sheet mix by reducing the percentage of our assets in cash and investments and growing our loan portfolio.

Loans increased $286.8 million, or 11.8%, to $2.71 billion at June 30, 2015 from $2.42 billion at December 31, 2014.  The increase was primarily due to a $200.1 million participation in a portfolio of multi-family loans and the purchase of $35.4 million of residential real estate loans. The remaining increase was due to growth in our commercial real estate and commercial business loans, which include shared national credits.

Deposits decreased $504.6 million, or 13.0%, to $3.38 billion at June 30, 2015 from $3.88 billion at December 31, 2014.  Deposits at December 31, 2014 included $482.1 million of subscription funds held in deposit accounts in connection with the second-step conversion offering that were reclassified into stockholders’ equity in the first quarter of 2015. Excluding the $482.1 million of subscription funds, deposits decreased $22.5 million during the six months ended June 30, 2015. The $22.5 million decrease in deposits during the six months ended June 30, 2015 was primarily due to a $70.8 million decrease in municipal deposits, which resulted from our planned run-off of higher-cost, non-relationship-based accounts.  The decrease in deposits was partially offset by increases in savings deposits, as well as interest and non-interest bearing checking deposits.

Stockholders’ equity increased $490.9 million, or 80.4%, to $1.10 billion at June 30, 2015 from $610.9 million at December 31, 2014.  The increase in stockholders’ equity was primarily due to net proceeds received in connection with the second-step conversion that was completed during the first quarter of 2015 as well as net income during the first six months of 2015.

Comparison of Operating Results for the Three Months Ended June 30, 2015 and June 30, 2014

General — For the three months ended June 30, 2015, net income was $7.1 million, or $0.09 per diluted share, compared to $4.6 million, or $0.06 per diluted share, for the three months ended June 30, 2014.

Net Interest Income — For the three months ended June 30, 2015, net interest income was $31.2 million, an increase of $2.0 million, or 6.9%, from the three months ended June 30, 2014. The increase in net interest income was primarily due to higher interest earning assets as a result of the second-step conversion proceeds. During 2015, these proceeds were utilized to increase the loan portfolio, which resulted in an increase in the average balance of loans. Net interest income was also positively impacted by a reduction in the average cost of liabilities primarily due to reductions in higher-cost time deposits and borrowings, which offset the decline in yields on loans and investments. The net interest margin totaled 2.83% for the three months ended June 30, 2015 as compared to 2.81% for the same period in 2014. We expect that the continued low interest rate environment will put pressure on the net interest margin in future periods but we are focused on growing our loan portfolio and improving our balance sheet mix to help stabilize our net interest margin.

Provision for Loan Losses — As a result of the improvement in our asset quality metrics and net recoveries recorded during the three months ended June 30, 2015, we recorded a $1.6 million negative provision for loan losses for the three months ended June 30, 2015 compared to recording a $250

51

thousand provision for loan losses for the three months ended June 30, 2014.  Non-performing loans, excluding government guaranteed student loans, decreased to $12.8 million at June 30, 2015, compared to $44.6 million at June 30, 2014.  The $15.0 million, or 53.9%, decrease from June 30, 2014 in non-performing loans, was a function of our continued work out of non-performing assets as well as $12.3 million of non-performing commercial loan sales during the second half of 2014.  Net recoveries during the three months ended June 30, 2015 were $248 thousand compared to net charge-offs of $1.7 million during the three months ended June 30, 2014.

At June 30, 2015, the Bank’s allowance for loan losses totaled $47.8 million, or 1.76% of total loans, compared to $50.7 million, or 2.09% of total loans at December 31, 2014.

Non-interest Income — For the three months ended June 30, 2015, non-interest income totaled $7.2 million, an increase of $853 thousand, or 13.5%, from the three months ended June 30, 2014. Service charges and other income increased $922 thousand during the three months ended June 30, 2015 compared to the same period a year ago primarily due to increases of $754 thousand in limited partnership income and $223 thousand in foreign ATM fees.

Non-interest Expense — For the three months ended June 30, 2015, non-interest expense totaled $30.0 million, an increase of $785 thousand, or 2.7% from the three months ended June 30, 2014.  The increase in non-interest expense was primarily driven by a $1.1 million increase in salaries and employee benefits due to merit increases and other retirement benefits, a $412 thousand increase in marketing expenses due to current year initiatives to continue rebranding and drive future growth and a $263 thousand increase in professional fees.  These increases were partially offset by a $225 thousand decrease in occupancy expense, a $293 thousand decrease in Federal Deposit Insurance Corporation (“FDIC”) insurance expense due to lower assessments, and a $420 thousand decrease in debit card rewards expense due to changes in the program parameters.

Income Taxes — For the three months ended June 30, 2015, we recorded a provision for income taxes of $2.9 million, reflecting an effective tax rate of 29.5%, compared to a provision for income taxes of $1.5 million, reflecting an effective tax benefit of 24.7%, for the three months ended June 30, 2014. The increase in income tax expense and the effective tax rate was due to higher profitability levels and ratio of taxable income compared to tax exempt income for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014. The effective 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.

52

The following table summarizes average balances and average yields and costs for the three months ended June 30, 2015 and June 30, 2014.  Yields are not presented on a tax-equivalent basis.  Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

Average Balance Tables

	Three Months Ended June 30,						Three Months Ended June 30,
	2015						2014
	Average		Interest &		Yield /		Average		Interest &		Yield /
(Dollars in thousands)	Balance		Dividends		Cost		Balance		Dividends		Cost
Interest Earning Assets:
Investment Securities:
Overnight Investments	$	248,284	$	157	0.25	%	$	301,195	$	190	0.25	%
Stock	8,793		108		4.78	%	15,902		219		5.45	%
Other Investment securities	1,465,485		7,501		2.05	%	1,509,566		8,175		2.17	%
Total Investment securities	1,722,562		7,766		1.80	%	1,826,663		8,584		1.88	%
Loans:
Real estate loans
Residential	702,994		7,546		4.29	%	673,668		7,522		4.47	%
Non-residential	848,740		8,950		4.19	%	584,285		7,307		4.96	%
Total real estate	1,551,734		16,496		4.24	%	1,257,953		14,829		4.70	%
Business loans	211,745		2,537		4.75	%	215,778		2,316		4.26	%
Shared National Credits	207,228		1,463		2.79	%	105,039		655		2.47	%
Small Business loans	87,149		1,218		5.54	%	102,930		1,430		5.51	%
Total Business & Small Business loans	506,122		5,218		4.09	%	423,747		4,401		4.12	%
Total Business loans	1,354,862		14,168		4.15	%	1,008,032		11,708		4.61	%
Personal loans	623,577		6,481		4.17	%	640,460		6,972		4.37	%
Total loans, net of discount	2,681,433		28,195		4.19	%	2,322,160		26,202		4.50	%
Total interest earning assets	4,403,995		35,961		3.26	%	4,148,823		34,786		3.35	%
Non-interest earning assets	341,527						342,182
Total assets	$	4,745,522					$	4,491,005
Interest Bearing Liabilities:
Interest bearing savings and demand deposits:
Savings and club accounts	$	1,144,825	$	988	0.35	%	$	1,155,229	$	998	0.35	%
Money market accounts	421,801		346		0.33	%	440,830		350		0.32	%
Demand deposits	652,839		345		0.21	%	677,371		346		0.20	%
Demand deposits - Municipals	125,558		36		0.11	%	272,803		77		0.11	%
Certificates of deposit	660,907		1,762		1.07	%	714,301		1,988		1.12	%
Total interest-bearing deposits	3,005,930		3,477		0.46	%	3,260,534		3,759		0.46	%
Borrowings	190,395		1,261		2.66	%	250,376		1,810		2.90	%
Total interest-bearing liabilities	3,196,325		4,738		0.59	%	3,510,910		5,569		0.64	%
Non-interest-bearing deposits	379,221						314,569
Other non-interest-bearing liabilities	73,056						53,387
Total liabilities	3,648,602						3,878,866
Total stockholders’ equity	1,096,920						612,139
Total liabilities and stockholders’ equity	$	4,745,522					$	4,491,005
Net interest income			$	31,223					$	29,217
Interest rate spread					2.67	%					2.71	%
Net interest margin					2.83	%					2.81	%
Average interest-earning assets to average interest-bearing liabilities					137.78	%					118.17	%

53

Comparison of Operating Results for the Six Months Ended June 30, 2015 and June 30, 2014

General — For the six months ended June 30, 2015, net income was $12.3 million, or $0.16 per diluted share, compared to net income of $7.0 million, or $0.09 per diluted share, for the six months ended June 30, 2014.

Net Interest Income — For the six months ended June 30, 2015, Beneficial reported net interest income of $61.4 million, an increase of $2.6 million, or 4.4%, from the six months ended June 30, 2014. The increase in net interest income was primarily due to higher interest earning assets as a result of the second-step conversion proceeds. During 2015, these proceeds were utilized to increase the loan portfolio, which resulted in an increase in the average balance of loans. Net interest income was also positively impacted by a reduction in the average cost of liabilities and a $169.8 million decrease in the average balance of municipal deposits, partially offset by a decline in yields on loans and investments.  Our net interest margin decreased to 2.79% for the six months ended June 30, 2015 from 2.81% for the same period in 2014.

Provision for Loan Losses — As a result of the improvement in our asset quality metrics and net recoveries recorded during the six months ended June 30, 2015, we recorded a $3.6 million negative provision for loan losses for the six months ended June 30, 2015 compared to recording a $1.8 million provision for loan losses for the same period in 2014.

At June 30, 2015, our allowance for loan losses totaled $47.8 million, or 1.76% of total loans, compared to an allowance for loan losses of $50.7 million, or 2.09% of total loans at December 31, 2014.

Non-interest Income — For the six months ended June 30, 2015, non-interest income totaled $12.8 million, an increase of $857 thousand, or 7.2%, from the six months ended June 30, 2014. Service charges and other income increased $1.2 million during the six months ended June 30, 2015 compared to the same period a year ago as a result of increases of $958 thousand in limited partnerships income and $448 thousand in foreign ATM fees. These increases were partially offset by a $306 thousand decrease in the net gain on the sale of investment securities.

Non-interest Expense — For the six months ended June 30, 2015, non-interest expense remained relatively consistent at $60.5 million, an increase of $41 thousand, or 0.1%, from the six months ended June 30, 2014. The slight increase in non-interest expense was primarily driven by a $1.5 million increase in salaries and employee benefits due to merit increases and other retirement benefits, an $843 thousand increase in marketing expenses due to current year initiatives to continue rebranding and drive future growth and a $463 thousand increase in professional fees. These increases were partially offset by a $1.3 million decrease in operating expenses related to the headquarters move in the first quarter of 2014, a $528 thousand decrease in FDIC insurance expense due to lower assessments, and a $642 thousand decrease in debit card rewards expense due to changes in the program parameters.

Income Taxes — For the six months ended June 30, 2015, the provision for income taxes was $5.0 million, reflecting an effective tax rate of 28.7% compared to a provision for income taxes of $1.4 million, reflecting an effective tax rate of 16.9%, for the six months ended June 30, 2014.  The increase in income tax expense and the effective tax rate was due to higher profitability levels and ratio of taxable income compared to tax exempt income for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014. 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 Company 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.

54

The following table summarizes average balances and average yields and costs for the six months ended June 30, 2015 and June 30, 2014. Yields are not presented on a tax-equivalent basis.  Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

Average Balance Tables

	Six Months Ended June 30,						Six Months Ended June 30,
	2015						2014
	Average		Interest &		Yield /		Average		Interest &		Yield /
(Dollars in thousands)	Balance		Dividends		Cost		Balance		Dividends		Cost
Interest Earning Assets:
Investment Securities:
Overnight Investments	$	338,834	$	426	0.25	%	$	302,731	$	379	0.25	%
Stock	8,813		565		12.76	%	16,653		372		4.44	%
Other Investment securities	1,480,184		15,453		2.09	%	1,529,659		16,479		2.15	%
Total Investment securities	1,827,831		16,444		1.80	%	1,849,043		17,230		1.86	%
Loans:
Real estate loans
Residential	689,588		14,870		4.31	%	676,014		15,247		4.51	%
Non-residential	750,260		16,414		4.36	%	566,769		13,890		4.88	%
Total real estate	1,439,848		31,284		4.34	%	1,242,783		29,137		4.68	%
Business loans	211,813		4,936		4.64	%	247,399		5,555		4.47	%
Shared National Credits	198,997		2,779		2.78	%	80,790		921		2.27	%
Small Business loans	89,669		2,431		5.40	%	104,811		2,998		5.70	%
Total Business & Small Business loans	500,479		10,146		4.04	%	433,000		9,474		4.36	%
Total Business loans	1,250,739		26,560		4.23	%	999,769		23,364		4.66	%
Personal loans	625,753		13,031		4.20	%	645,104		14,049		4.39	%
Total loans, net of discount	2,566,080		54,461		4.25	%	2,320,887		52,660		4.54	%
Total interest earning assets	4,393,911		$	70,905	3.23	%	4,169,930		69,890		3.35	%
Non-interest earning assets	345,758						345,648
Total assets	$	4,739,669					$	4,515,578
Interest Bearing Liabilities:
Interest bearing savings and demand deposits:
Savings and club accounts	$	1,133,524	$	1,952	0.35	%	$	1,143,677	$	1,979	0.35	%
Money market accounts	424,283		689		0.33	%	443,381		699		0.32	%
Demand deposits	724,268		729		0.20	%	676,264		687		0.20	%
Demand deposits - Municipals	135,378		76		0.11	%	305,171		178		0.12	%
Certificates of deposit	667,829		3,595		1.09	%	721,359		3,989		1.12	%
Total interest-bearing deposits	3,085,282		7,041		0.46	%	3,289,852		7,532		0.46	%
Borrowings	190,425		2,508		2.66	%	250,408		3,611		2.91	%
Total interest-bearing liabilities	3,275,707		9,549		0.59	%	3,540,260		11,143		0.63	%
Non-interest-bearing deposits	372,988						309,452
Other non-interest-bearing liabilities	73,480						52,032
Total liabilities	3,722,175						3,901,744
Total stockholders’ equity	1,017,494						613,834
Total liabilities and stockholders’ equity	$	4,739,669					$	4,515,578
Net interest income			$	61,356					$	58,747
Interest rate spread					2.64	%					2.72	%
Net interest margin					2.79	%					2.81	%
Average interest-earning assets to average interest-bearing liabilities					134.14	%					117.79	%

55

Asset Quality

Non-performing assets decreased $1.9 million to $39.6 million at June 30, 2015 from $41.5 million at December 31, 2014. The ratio of non-performing assets to total assets decreased to 0.84% at June 30, 2015 from 0.87% at December 31, 2014.

ASSET QUALITY INDICATORS

	June 30,			March 31,			December 31,			June 30,
(Dollars in thousands)	2015			2015			2014			2014
Non-performing assets:
Non-accruing loans	$	12,812		$	14,112		$	14,615		$	27,782
Accruing loans past due 90 days or more	25,460			24,072			25,296			16,819
Total non-performing loans	38,272			38,184			39,911			44,601
Real estate owned	1,359			1,406			1,578			2,008
Total non-performing assets	$	39,631		$	39,590		$	41,489		$	46,609
Non-performing loans to total loans	1.41		%	1.43		%	1.65		%	1.88		%
Non-performing assets to total assets	0.84		%	0.83		%	0.87		%	1.05		%
Non-performing assets less accruing government guaranteed student loans past due 90 days or more to total assets	0.30		%	0.33		%	0.34		%	0.67		%
ALLL to total loans	1.76		%	1.84		%	2.09		%	2.22		%
ALLL to non-performing loans	124.87		%	128.70		%	126.92		%	117.99		%
ALLL to non-performing loans, excluding government guaranteed student loans	373.03		%	348.24		%	346.59		%	189.42		%

With the exception of government guaranteed student loans, we place loans on non-performing status at 90 days delinquent or sooner if management believes the loan has become impaired (unless return to current status is expected imminently). The accrual of interest is discontinued and reversed once an account becomes past due 90 days or more. The uncollectible portion including any cash flow or collateral deficiency of all loans is charged-off at 90 days past due or when we have confirmed there is a loss. Non-performing consumer loans include $25.5 million and $25.3 million in government guaranteed student loans as of June 30, 2015 and December 31, 2014, respectively.

Non-performing loans are evaluated under authoritative guidance in FASB ASC Topic 310 for Receivables and Topic 450 for Contingencies and are included in the determination of the allowance for loan losses. The Company charges-off the collateral or discounted cash flow deficiency on all loans at 90 days past due, and as a result, no specific valuation allowance was maintained at June 30, 2015 or December 31, 2014 for non-performing loans. If necessary, specific reserves are established for estimated losses in determination of the allowance for loan loss.

56

Allowance for Loan Losses

The following table sets forth the breakdown of the allowance for loan losses by loan category at the dates indicated:

	June 30, 2015						December 31, 2014
(Dollars in thousands)	Loan Balance		ALLL		Coverage		Loan Balance		ALLL		Coverage
Commercial	$	1,374,981	$	35,955	2.61	%	$	1,120,976	$	38,623	3.45	%
Residential	711,475		1,519		0.21	%	668,068		1,960		0.29	%
Consumer	622,052		9,841		1.58	%	632,701		9,521		1.50	%
Unallocated	—		477		—		—		550		—
Total	$	2,708,508	$	47,792	1.76	%	$	2,421,745	$	50,654	2.09	%

The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio.  We evaluate the appropriateness of the allowance for loan losses balance on loans on a quarterly basis.  When additional allowances are necessary, a provision for loan losses is charged to earnings and, when less allowances are necessary, a credit is taken. Our methodology for assessing the appropriateness of the allowance for loan losses consists of:  (1) a specific valuation allowance on identified problem loans; (2) a general valuation allowance on the remainder of the loan portfolio; and (3) an unallocated component.  Management established an unallocated reserve to cover uncertainties that the Company believes have resulted in losses that have not yet been allocated to specific elements of the general component. Such factors include uncertainties in economic conditions and in identifying triggering events that directly correlate to subsequent loss rates, changes in the appraised value of underlying collateral, risk factors that have not yet manifested themselves in loss allocation factors and historical loss experience data that may not precisely correspond to the current portfolio or economic conditions. The appropriate allowance level is estimated based upon factors and trends identified by the Company at the time the consolidated financial statements are prepared.

Management regularly monitors the condition of borrowers and assesses both internal and external factors in determining whether any relationships have deteriorated considering factors such as historical loss experience, trends in delinquency and non-performing loans, changes in risk composition and underwriting standards, the experience and ability of staff and regional and national economic conditions and trends.

Our Chief Credit Officer supervises the workout department and identifies, manages and works through non-performing assets. Our credit officers and workout group identify and manage potential problem loans for our commercial loan portfolios. Changes in management, financial and operating performance, company behavior, industry factors and external events and circumstances are evaluated on an ongoing basis to determine whether potential impairment is evident and additional analysis is needed. For our commercial loan portfolios, risk ratings are assigned to each individual loan to differentiate risk within the portfolio and are reviewed on an ongoing basis by credit risk management and revised, if needed, to reflect the borrowers’ current risk profiles and the related collateral positions. The risk ratings consider factors such as financial condition, debt capacity and coverage ratios, market presence and quality of management. When a credit’s risk rating is downgraded to a certain level, the relationship must be reviewed and detailed reports completed that document risk management strategies for the credit going forward, and the appropriate accounting actions to take in accordance with generally accepted accounting principles in the United States. When credits are downgraded beyond a certain level, our workout department becomes responsible for managing the credit risk.

Risk rating actions are generally reviewed formally by one or more credit committees depending on the size of the loan and the type of risk rating action being taken. Our commercial, consumer and residential loans are monitored for credit risk and deterioration considering factors such as delinquency, loan to value ratios, and credit scores.

When problem loans are identified that are secured with collateral, management examines the loan files to evaluate the nature and type of collateral supporting the loans. Management documents the collateral

57

type, date of the most recent valuation, and whether any liens exist, to determine the value to compare against the committed loan amount. If a loan is identified as impaired and is collateral dependent, an updated appraisal is obtained to provide a baseline in determining the property’s fair market value. We also consider costs to sell the property and use the appraisal less selling costs to determine if a charge-off is required for the collateral dependent problem loan. If the collateral value is subject to significant volatility (due to location of asset, obsolescence, etc.) an appraisal is obtained more frequently. In-house revaluations are typically performed on a quarterly basis and updated appraisals are obtained annually, if determined necessary.

When we determine that the value of an impaired loan is less than its carrying amount, we recognize impairment through a charge-off to the allowance. We perform these assessments on at least a quarterly basis. For commercial loans, a charge-off is recorded when management determines we will not collect 100% of a loan based on the fair value of the collateral, less costs to sell the property, or the net present value of expected future cash flows. Charge-offs are recorded on a monthly basis and partially charged-off loans continue to be evaluated on a monthly basis. The collateral deficiency on consumer loans and residential loans are generally charged-off when deemed to be uncollectible or delinquent 90 days or more, whichever comes first, unless it can be clearly demonstrated that repayment will occur regardless of the delinquency status. Examples that would demonstrate repayment include a loan that is secured by adequate collateral and is in the process of collection, a loan supported by a valid guarantee or insurance, or a loan supported by a valid claim against a solvent estate.  Consumer loan delinquency includes $25.5 million and $25.3 million in government guaranteed student loans at June 30, 2015 and December 31, 2014, respectively.

Additionally, we reserve for certain inherent, but undetected, losses that are probable within the loan portfolio. This is due to several factors, such as, but not limited to, inherent delays in obtaining information regarding a customer’s financial condition or changes in their unique business conditions and the interpretation of economic trends. While this analysis is conducted at least quarterly, we have the ability to revise the allowance factors whenever necessary to address improving or deteriorating credit quality trends or specific risks associated with a given loan pool classification.

Regardless of the extent of our analysis of customer performance, portfolio evaluations, trends or risk management processes established, a level of imprecision will always exist due to the subjective nature of the loan portfolio and/or individual loan evaluations. Management established an unallocated reserve to cover uncertainties that Beneficial Bancorp believes have resulted in losses that have not yet been allocated to specific elements of the general component. Such factors include uncertainties in economic conditions and in identifying triggering events that directly correlate to subsequent loss rates, changes in the appraised value of underlying collateral, risk factors that have not yet manifested themselves in loss allocation factors and historical loss experience data that may not precisely correspond to the current portfolio or economic conditions. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodology for estimating general losses in the portfolio.

A comprehensive analysis of the allowance for loan losses is performed on a quarterly basis. The factors supporting the allowance for loan losses do not diminish that the entire allowance for loan losses is available to absorb losses in the loan portfolio. Our principal focus, therefore, is on the adequacy of the total allowance for loan losses.

The allowance for loan losses is subject to review by banking regulators. Our primary bank regulators regularly conduct examinations of the allowance for loan losses and make assessments regarding their adequacy and the methodology employed in their determination. Our regulators may require the allowance for loan losses to be increased based on their review of information available to them at the time of their examination.

Commercial Loan Portfolio. The portion of the allowance for loan losses related to the commercial portfolio totaled $36.0 million at June 30, 2015 compared to $38.6 million at December 31, 2014. We experienced a decrease in commercial delinquencies and net charge-offs during the six months ended

58

June 30, 2015, with net recoveries on commercial loans of $1.9 million for the six months ended June 30, 2015 compared to net charge-offs of $2.8 million for the six months ended June 30, 2014. The allowance for loan losses related to the commercial portfolio was 2.6% of commercial loans at June 30, 2015 compared to 3.4% of commercial loans at December 31, 2014.  The decrease is the commercial reserve percentage was due to a $254.0 million increase in commercial loans during the six months ended June 30, 2015, primarily as a result of the previously discussed $200.1 million participation in a portfolio of multi-family loans that occurred during the first quarter of 2015.  We believe the commercial reserves are adequate given the decrease in delinquencies and the net recoveries experienced during the six months ended June 30, 2015.

Residential Loans. The allowance for the residential loan portfolio was $1.5 million, or 0.21% of residential loans, at June 30, 2015 compared to $2.0 million, or 0.29% of residential loans, at December 31, 2014. Asset quality metrics on this portfolio continue to improve.  Our residential loan delinquencies decreased $914 thousand, or 16.2%, to $4.7 million at June 30, 2015 from $5.6 million at December 31, 2014 and net charge-offs decreased to $76 thousand, reflecting a 0.03% annualized loss rate, for the six months ended June 30, 2015 compared to $315 thousand, reflecting a 0.10% annualized loss rate, for the six months ended June 30, 2014.  We believe the balance of residential reserves was appropriate given the decrease in delinquencies and continued low charge-off levels.

Consumer Loans. The allowance for the consumer loan portfolio was $9.8 million, or 1.6% of consumer loans, at June 30, 2015 compared to $9.5 million, or 1.5% of consumer loans, at December 31, 2014. Our consumer loan delinquencies (excluding government guaranteed student loans) decreased $961 thousand, or 16.2%, to $5.0 million at June 30, 2015 from $5.9 million at December 31, 2014 and net charge-offs increased to $746 thousand, reflecting a 0.25% annualized loss rate, for the six months ended June 30, 2015 compared to $575 thousand, reflecting a 0.19% annualized loss rate, for the six months ended June 30, 2014.  We believe the balance of consumer reserves was appropriate given the decrease in delinquencies and the increase in net charge-offs.

The allowance for loan losses is maintained at levels that management considers appropriate to provide for losses based upon an evaluation of known and inherent risks in the loan portfolio. Management’s evaluation takes into consideration the risks inherent in the loan portfolio, past loan loss experience, specific loans with loss potential, geographic and industry concentrations, delinquency trends, economic conditions, the level of originations and other relevant factors. While management uses the best information available to make such evaluations, future adjustments to the allowance for credit losses may be necessary if conditions differ substantially from the assumptions used in making the evaluations. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be sufficient should the quality of loans deteriorate as a result of the factors described above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Liquidity, Contractual Obligations, Capital and Credit Management

Liquidity Management — Liquidity is the ability to meet current and future financial obligations of a short-term nature. The Bank’s primary investing activities are the origination and purchase of loans and the purchase of securities. The Bank’s primary sources of funds consist of deposits, loan repayments, maturities of and payments on investment securities and borrowings from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposits and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. We generally manage the pricing of our deposits to be competitive. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, (4) repayment of borrowings and (5) the objectives of our asset/liability management program. Excess liquid

59

assets are invested generally in short to intermediate-term U.S. Government Sponsored Enterprise (“GSE”) obligations.

The Bank’s most liquid assets are cash and cash equivalents.  The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. During the six months ended June 30, 2015, we raised $474.4 million of cash proceeds, net of offering costs, in connection with our second-step conversion.  We used a portion of that cash to fund a $200.1 million participation in a portfolio of multi-family loans and to fund the purchase of $35.4 million of residential real estate loans during the first half of 2015. At June 30, 2015, cash and cash equivalents totaled $286.3 million, including overnight investments of $238.2 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $689.8 million at June 30, 2015. At June 30, 2015, we had $165.0 million in Federal Home Loan Bank advances outstanding. In addition, if Beneficial Bank requires funds beyond its ability to generate them internally, it can borrow funds from the Federal Home Loan Bank up to Beneficial Bank’s maximum borrowing capacity.

Our primary sources of funds include a large, stable deposit base. Core deposits, primarily gathered from our retail branch network, are our largest and most cost-effective source of funding. Core deposits totaled $2.72 billion at June 30, 2015, compared to $3.20 billion at December 31, 2014. The decrease in core deposits was driven by $463.0 million of subscription funds held in an interest-bearing deposit account at December 31, 2014 in connection with the second-step conversion offering that were reclassified into stockholders’ equity in the first quarter of 2015. We also maintain access to a diversified base of wholesale funding sources. These uncommitted sources include fed funds purchased from other banks, securities sold under agreements to repurchase, brokered certificates of deposit, and FHLB advances. As of June 30, 2015 and December 31, 2014, aggregate wholesale funding totaled $308.1 million and $306.2 million, respectively. In addition, at June 30, 2015, we had arrangements to borrow up to $1.4 billion from the FHLB of Pittsburgh and the Federal Reserve Bank of Philadelphia.  On June 30, 2015, we had $165.0 million of advances outstanding and $175.0 million of future dated advances outstanding with the FHLB.

A significant use of our liquidity is the funding of loan originations.  At June 30, 2015, the Bank had $27.5 million in loan commitments outstanding, which consisted of $19.1 million and $8.4 million in commercial and consumer commitments to fund loans, respectively, $206.1 million in commercial and consumer unused lines of credit, and $6.5 million in standby letters of credit.  Another significant use of Beneficial Bank’s liquidity is the funding of deposit withdrawals.  Certificates of deposit due within one year of June 30, 2015 totaled $394.0 million, or 60.0% of certificates of deposit. The large percentage of certificates of deposit that mature within one year reflects customers’ hesitancy to invest their funds for long periods in the current low interest rate environment.  If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit, brokered deposits and borrowings.  Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30, 2016.  We have the ability to attract and retain deposits by adjusting the interest rates offered.

60

Contractual Obligations — The following table presents certain of our contractual obligations at June 30, 2015:

			Payments due by period
			Less than		One to		Three to		More than
(Dollars in thousands)	Total		One Year		Three Years		Five Years		Five Years
Borrowed Funds	$	190,396	$	70,000	$	95,000	$	—	$	25,396
Commitments to fund loans	27,503		27,503		—		—		—
Unused lines of credit	206,070		109,136		15,618		23,069		58,247
Standby letters of credit	6,457		4,845		572		20		1,020
Operating lease obligations	61,857		5,322		10,685		10,182		35,668
Total	$	492,283	$	216,806	$	121,875	$	33,271	$	120,331

The Bank’s primary investing activities are the origination and purchase of loans and the purchase of securities. The Bank’s primary financing activities consist of activity in deposit accounts, repurchase agreements and FHLB advances. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our competitors and other factors. We generally manage the pricing of our deposits to be competitive. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

The Company is a separate legal entity from the Bank and must provide for its own liquidity.  In addition to its operating expenses, the Company is responsible for paying any dividends declared to its shareholders. The Company has not paid any dividends to shareholders in the past.  The Company has repurchased shares of its common stock, although under current Federal Reserve Board regulations the Company is precluded from repurchasing its stock in the first year following its second-step conversion. The amount of dividends that the Bank may declare and pay to the Company is generally restricted under Pennsylvania law to the retained earnings of the Bank. At June 30, 2015, the Company (stand-alone) had liquid assets of $247.5 million.  The majority of the cash held by the Company (stand-alone) as of June 30, 2015 includes net proceeds received in connection with the second-step conversion.

Capital Management — The Company and Bank are subject to various regulatory capital requirements administered by the Federal banking regulators, including a risk-based capital measure.  The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories.  At June 30, 2015, the Company and Bank exceeded all of our regulatory capital requirements and were considered “well capitalized” under the regulatory guidelines.

Credit Risk Management.  The objective of our credit risk management strategy is to quantify and manage credit risk and to limit the risk of loss resulting from an individual customer default. Our credit risk management strategy focuses on conservatism, diversification within the loan portfolio and monitoring. Our lending practices include conservative exposure limits and underwriting, documentation and collection standards. Our credit risk management strategy also emphasizes diversification on an industry and customer level as well as regular credit examinations and monthly management reviews of large credit exposures and credits experiencing deterioration of credit quality. Underwriting activities are centralized. Our credit risk review function provides objective assessments of the quality of underwriting and documentation, the accuracy of risk grades and the charge-off, non-accrual and reserve analysis process. Our credit review process and overall assessment of required allowances is based on quarterly assessments of the probable estimated losses inherent in the loan portfolio. We use these assessments to identify potential problem loans within the portfolio, maintain an adequate reserve and take any necessary charge-offs. Further, we have strengthened our oversight of problem assets through the formation of a special assets committee. The committee, which consists of our Chief Credit Officer, Chief Financial Officer and other members of senior management, increase the frequency with which classified and watch list credits are reviewed and aggressively acts to resolve problem assets.

61

When a borrower fails to make a required payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status. Generally, our collection department follows the guidelines for servicing loans as prescribed by the appropriate investor, state or federal law. Collection activities include, but are not limited to, phone calls to borrowers and collection letters, which include a late charge notice based on the contractual requirements of the specific loan. Additional calls and notices are mailed in compliance with state and federal regulations including, but not limited to, the Fair Debt Collection Practices Act. After the 90th day of delinquency, or on a different date as allowable by state law, the collection department will forward the account to counsel and begin the foreclosure proceedings. If a foreclosure action is instituted and the loan is not in at least the early stages of a workout by the scheduled sale date, the real property securing the loan generally is sold at a foreclosure sale. If we determine that there is a possibility of a settlement, pay-off or reinstatement, the foreclosure sale may be postponed. If there is a failure to cure the delinquency, the foreclosure sale would proceed.

We charge off the collateral or cash flow deficiency on all loans once they become 90 days delinquent. Generally, all consumer loans are charged-off once they become 90 days delinquent except for education loans as they are guaranteed by the government and there is little risk of loss. In addition to the individual review of larger commercial loans that exhibit probable or observed credit weaknesses, the commercial credit review process includes the use of an enhanced risk grading system. This risk grading system is consistent with Basel II expectations and allows for precision in the analysis of commercial credit risk. Historical portfolio performance metrics, current economic conditions and delinquency monitoring are factors used to assess the credit risk in our homogenous commercial, residential and consumer loan portfolio.

In order to mitigate the credit risk related to the Company’s held-to-maturity and available-for-sale portfolios, the Company monitors the ratings of its securities. As of June 30, 2015, approximately 96.5% of the Company’s portfolio consisted of direct government obligations, government sponsored enterprise obligations or securities rated AAA by Moody’s and/or S&P. In addition, at June 30, 2015, approximately 2.8% of the investment portfolio was non-agency securities, rated below AAA but rated investment grade by Moody’s and/or S&P and approximately 0.7% of the investment portfolio was not rated. Securities not rated consist primarily of private placement municipal bonds, FHLB stock and mutual funds.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles, are not recorded in our consolidated financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.  See “Liquidity Management” for further discussion regarding loan commitments and unused lines of credit.

During the second quarter of 2015, the Bank entered into two future borrowing arrangements with the FHLB of Pittsburgh to borrow $100.0 million and $75.0 million, respectively, at a fixed interest rate during the period from April 2016 through April 2019 and the period from March 2017 through March 2020, respectively, to replace existing borrowings that will mature during these periods, as well as, to manage future interest rate volatility by locking into fixed borrowing rates.  There was no impact to the Company’s financial condition, results of operations or cash flows for the period ended June 30, 2015.

For the six months ended June 30, 2015, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Qualitative Aspects of Market Risk

Interest rate risk is defined as the exposure of current and future earnings and capital that arises from adverse movements in interest rates. Depending on a bank’s asset/liability structure, either rising or

62

declining interest rates can negatively affect the institution’s financial condition and results of operations.  For example, a bank with predominantly long-term fixed-rate assets, and short-term liabilities could have an adverse earnings exposure to a rising rate environment.  Conversely, a short-term or variable-rate asset base funded by longer-term liabilities could be negatively affected by falling rates.  This is referred to as re-pricing or maturity mismatch risk.

Interest rate risk also arises from changes in the slope of the yield curve (yield curve risk); from imperfect correlations in the adjustment of rates earned and paid on different instruments with otherwise similar re-pricing characteristics (basis risk); and from interest rate related options imbedded in the bank’s assets and liabilities (option risk).

Our goal is to manage our interest rate risk by determining whether a given movement in interest rates affects our net income and the market value of our portfolio equity in a positive or negative way, and to execute strategies to maintain interest rate risk within established limits.

Quantitative Aspects of Market Risk

We view interest rate risk from two different perspectives. The traditional accounting perspective, which defines and measures interest rate risk as the change in net interest income and earnings caused by a change in interest rates, provides the best view of short-term interest rate risk exposure.  We also view interest rate risk from an economic perspective, which defines and measures interest rate risk as the change in the market value of portfolio equity caused by changes in the values of assets and liabilities, which have been caused by changes in interest rates. The market value of portfolio equity, also referred to as the economic value of equity, is defined as the present value of future cash flows from existing assets, minus the present value of future cash flows from existing liabilities.

These two perspectives give rise to income simulation and economic value simulation, each of which presents a unique picture of our risk from any movement in interest rates.  Income simulation identifies the timing and magnitude of changes in income resulting from changes in prevailing interest rates over a short-term time horizon (usually one year).  Economic value simulation captures more information and reflects the entire asset and liability maturity spectrum. Economic value simulation reflects the interest rate sensitivity of assets and liabilities in a more comprehensive fashion, reflecting all future time periods.  It can identify the quantity of interest rate risk as a function of the changes in the economic values of assets and liabilities, and the equity of the Company. Both types of simulation assist in identifying, measuring, monitoring and controlling interest rate risk and are employed by management to ensure that variations in interest rate risk exposure will be maintained within policy guidelines.

The Bank’s Asset/Liability Management Committee produces reports on a quarterly basis, which compare current baseline positions (no interest rate change) showing forecasted net income, the economic value of equity and the duration of individual asset and liability classes, and of equity. Duration is defined as the weighted average time to the receipt of the present value of future cash flows. These baseline forecasts are subjected to a series of interest rate changes in order to demonstrate or model the specific impact of the interest rate scenario tested on income, equity and duration.  The model, which incorporates all asset and liability rate information, simulates the effect of various interest rate movements on income and equity value. The reports identify and measure the interest rate risk exposure present in our current asset/liability structure.

The tables below set forth an approximation of our interest rate risk exposure. The simulation uses projected re-pricing of assets and liabilities at June 30, 2015.  The primary interest rate exposure measurement applied to the entire balance sheet is the effect on net interest income and earnings of a gradual change in market interest rates of plus or minus 200 basis points over a one-year time horizon, and the effect on economic value of equity of a gradual change in market rates of plus or minus 200 basis points for all projected future cash flows.  Various assumptions are made regarding the prepayment speed and optionality of loans, investments and deposits, which are based on analysis, market information and in-house studies. The assumptions regarding optionality, such as prepayments of loans

63

and the effective maturity of non-maturity deposit products are documented periodically through evaluation under varying interest rate scenarios.

Because the prospective effects of hypothetical interest rate changes are based on a number of assumptions, these computations should not be relied upon as indicative of actual results.  While we believe such assumptions to be reasonable, there can be no assurance that assumed prepayment rates will approximate actual future mortgage-backed security, collateralized mortgage obligation and loan repayment activity. Further the computation does not reflect any actions that management may undertake in response to changes in interest rates. Management periodically reviews its rate assumptions based on existing and projected economic conditions.

As of June 30, 2015:

Basis point change in rates	-200			Base Forecast		+200
(Dollars in thousands)
Net Interest Income at Risk:
Net Interest Income	$	106,091		$	119,769	$	125,470
% change	(11.42		)%			4.76		%
Economic Value at Risk:
Equity	$	1,174,057		$	1,238,249	$	1,183,972
% change	(5.18		)%			(4.38		)%

As of June 30, 2015, based on the scenarios above, net interest income at risk would be positively affected in a one-year time horizon in a rising rate environment and negatively affected over a one-year time horizon in a declining rate environment. Economic value at risk would be negatively affected over a one-year time horizon in both a rising and a declining rate environment.

The current historically low interest rate environment reduces the reliability of the measurement of a 200 basis point decline in interest rates, as such a decline would result in negative interest rates.  We have established an interest rate floor of zero percent for purposes of measuring interest rate risk. Such a floor in our income simulation results in a reduction in our net interest margin as more of our liabilities than our assets are impacted by the zero percent floor.  In addition, economic value of equity is also reduced in a declining rate environment due to the negative impact to deposit premium values.

Overall, our June 30, 2015 results indicate that we are adequately positioned with limited net interest income and economic value at risk and that all interest rate risk results continue to be within our policy guidelines.

Item 4.  Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).  Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the three and six months ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

64

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

The Company is involved in routine legal proceedings in the ordinary course of business.  Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company’s financial condition, results of operations and cash flows.

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition or future results. The risk factors of the Company have not changed materially from those reported in the Company’s Annual Report Form 10-K for the year ended December 31, 2014.  The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information regarding the Company’s repurchases of its common stock during the three months ended June 30, 2015.  The Company is no longer repurchasing shares due to the second-step stock offering.

Period	Total Number of Shares Purchased		Average Price Paid Per Share	Total Number Of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
April 1-30	—		—	—	1,070,029
May 1-31	5,835	(1)	12.21	—	1,070,029
June 1-30	267	(1)	12.63	—	1,070,029

(1)Represents shares that were withheld subject to restricted stock awards, under the Beneficial Bancorp, Inc. 2008 Equity Incentive Plans, as payment of taxes due upon the vesting of the restricted awards.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits

3.1Articles of Incorporation of Beneficial Bancorp, Inc. (1)

3.2Bylaws of Beneficial Bancorp, Inc. (1)

4.1Stock Certificate of Beneficial Bancorp, Inc. (1)

65

31.1Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

31.2Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer

32.0Section 1350 Certification of Chief Executive Officer and Chief Financial Officer

101.0The following materials from the Company’s Quarterly Report on Form 10-Q for the three and six  months ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Consolidated Financial Statements.

(1)Incorporated herein by reference to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-198282), as amended, initially filed with the Securities and Exchange Commission on August 21, 2014.

66

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BENEFICIAL BANCORP, INC.
Dated: July 30, 2015	By:	/s/ Gerard P. Cuddy
		Gerard P. Cuddy
		President and Chief Executive Officer
		(principal executive officer)
Dated: July 30, 2015	By:	/s/ Thomas D. Cestare
		Thomas D. Cestare
		Executive Vice President and
		Chief Financial Officer
		(principal financial officer)

67

EX-31.1

Exhibit 31.1

Certification

I, Gerard P. Cuddy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Beneficial Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 30, 2015
	/s/ Gerard P. Cuddy
	Gerard P. Cuddy
	President and Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

Certification

I, Thomas D. Cestare, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Beneficial Bancorp, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

July 30, 2015
	/s/ Thomas D. Cestare
	Thomas D. Cestare
	Executive Vice President and
	Chief Financial Officer
	(principal financial officer)

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Beneficial Bancorp, Inc. (the “Company”) for the three months ended June 30, 2015, as filed with the Securities and Exchange Commission (the “Report”), the undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by the Report.

	By:	/s/ Gerard P. Cuddy
		Gerard P. Cuddy
		President and Chief Executive Officer
`		(principal executive officer)
		July 30, 2015
	By:	/s/ Thomas D. Cestare
		Thomas D. Cestare
		Executive Vice President and
		Chief Financial Officer
		(principal financial officer)
		July 30, 2015

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Tables)

6 Months Ended

Jun. 30, 2015

PENSION AND OTHER POSTRETIREMENT BENEFITS

Schedule of components of net pension cost

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
(Dollars in thousands)	2015			2014			2015			2014
Service cost	$	—		$	—		$	43		$	19
Interest cost	958			950			214			210
Expected return on assets	(1,655		)	(1,516		)	—			—
Amortization of loss	616			320			90			1
Amortization of prior service cost	—			—			(129		)	(131		)
Amortization of transition obligation	—			—			—			41
Net periodic pension (benefit) cost	$	(81	)	$	(246	)	$	218		$	140

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Service cost	$	—		$	—		$	87		$	64
Interest cost	1,916			1,910			429			450
Expected return on assets	(3,310		)	(3,028		)	—			—
Amortization of loss	1,231			671			180			43
Amortization of prior service cost	—			—			(259		)	(263		)
Amortization of transition obligation	—			—			—			82
Net periodic pension (benefit) cost	$	(163	)	$	(447	)	$	437		$	376

XML

INVESTMENT SECURITIES (Details 4) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Available-for-sale, amortized cost
Due in one year or less, amortized cost	$ 352	$ 347
Due after one year through five years, amortized cost	4,685	8,268
Due after five years through ten years, amortized cost	23,515	28,870
Due after ten years, amortized cost	15,046	15,431
Mortgage-backed securities, amortized cost	634,552	692,484
Money market and mutual funds, amortized cost	3,669	3,458
Investment securities available-for-sale, amortized cost	681,819	748,858
Available-for-sale, fair value
Due in one year or less, fair value	354	352
Due after one year through five years, fair value	4,865	8,531
Due after five years through ten years, fair value	24,152	29,666
Due after ten years, fair value	15,948	16,429
Mortgage-backed securities, fair value	640,821	699,450
Money market and mutual funds, fair value	3,635	3,406
Investment securities available-for-sale, estimated fair value	689,775	757,834
Held-to-maturity, amortized cost
Due in one year or less, amortized cost	120	1,620
Due after one year through five years, amortized cost	2,495	995
Due after five years through ten years, amortized cost	255	255
Mortgage-backed securities, amortized cost	742,860	724,885
lnvestment securities held-to-maturity, amortized cost	745,730	727,755
Held-to-maturity, fair value
Due in one year or less, fair value	121	1,623
Due after one year through five years, fair value	2,571	1,052
Due after five years through ten years, fair value	294	297
Mortgage-backed securities, fair value	742,616	728,617
Investment securities held-to-maturity, estimated fair value	$ 745,602	$ 731,589

XML

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Reclassifications out of AOCI by component
Net loss (gain) on sale of investment securities	$ 4	$ (94)	$ 9	$ (297)
Income before income taxes	(10,003)	(6,078)	(17,260)	(8,485)
Income tax expense	2,948	1,502	4,954	1,437
Net of tax	$ (7,055)	$ (4,576)	(12,306)	(7,048)
Net unrealized holding gains (losses) on available-for-sale securities | Amount reclassified from accumulated other comprehensive loss
Reclassifications out of AOCI by component
Net loss (gain) on sale of investment securities			9	(297)
Income tax expense			(3)	109
Net of tax			6	(188)
Defined benefit pension plan items | Amount reclassified from accumulated other comprehensive loss
Reclassifications out of AOCI by component
Income before income taxes			1,152	533
Income tax expense			(490)	(265)
Net of tax			662	268
Defined benefit pension plan items | Amount reclassified from accumulated other comprehensive loss | Other non-interest expense
Reclassifications out of AOCI by component
Transition obligation				82
Prior service costs			(259)	(263)
Net recognized actuarial losses			$ 1,411	$ 714

XML

INVESTMENT SECURITIES (Details 5) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investment disclosures
Federal Home Loan Bank stock	$ 8,786	$ 8,830
Interest rate swaps
Investment disclosures
Securities pledged as collateral	380	317
Municipal Deposits
Investment disclosures
Securities pledged as collateral	$ 89,600	$ 127,100

XML

STOCK BASED COMPENSATION (Details 3) - $ / shares	3 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Schedule of Fair Value Option Award
Weighted average fair value of options granted (in dollars per share)	$ 3.98	$ 3.97
Weighted average risk-free rate of return (as a percent)	1.74%	2.04%
Weighted average expected option life	78 months	78 months
Weighted average expected volatility (as a percent)	31.19%	32.67%

XML

NATURE OF OPERATIONS (Details 2) - Jun. 30, 2015 - The Bank - item	Total
Percentage of outstanding common stock	100.00%
Number of offices	56

XML

LOANS (Tables)

6 Months Ended

Jun. 30, 2015

Loans disclosures

Summary of loans

(Dollars in thousands)	June 30, 2015			December 31, 2014
Commercial:
Commercial real estate	$	831,831		$	609,646
Commercial business loans	477,385			442,190
Commercial construction	65,765			69,140
Total commercial loans	1,374,981			1,120,976
Residential:
Residential real estate	711,213			667,800
Residential construction	262			268
Total residential loans	711,475			668,068
Consumer loans:
Home equity & lines of credit	226,706			227,055
Personal	24,583			28,668
Education	189,409			195,185
Automobile	181,354			181,793
Total consumer loans	622,052			632,701
Total loans	2,708,508			2,421,745
Allowance for losses	(47,792		)	(50,654		)
Loans, net	$	2,660,716		$	2,371,091

Summary of activity in the allowance for loan losses

	Six Months Ended						Year Ended
	June 30,						December 31,
(Dollars in thousands)	2015			2014			2014
Balance, beginning of year	$	50,654		$	55,649		$	55,649
Provision for loan losses	(3,600		)	1,750			200
Charge-offs	(2,502		)	(8,506		)	(14,529		)
Recoveries	3,240			3,731			9,334
Balance, end of period	$	47,792		$	52,624		$	50,654

Summary of activity in the allowance for loans and recorded investment by loan portfolio

	COMMERCIAL									RESIDENTIAL					CONSUMER
June 30, 2015 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550		$	50,654
Charge-offs	(320		)	(637		)	—			(107		)	—		(239		)	(239		)	(39		)	(921		)	—			(2,502		)
Recoveries	303			2,170			57			15			—		102			94			—			499			—			3,240
Provision (credit)	1,412			(4,741		)	(912		)	(349		)	—		25			(299		)	25			1,312			(73		)	(3,600		)
Allowance endingbalance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated for impairment	19,411			15,056			1,488			1,519			—		2,557			1,513			271			5,500			477			47,792
Total Allowance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Loans receivable:
Ending balance
Individually evaluated for impairment	$	18,002		$	3,514		$	207		$	11,103		$	262	$	2,117		$	10		$	—		$	—		$	—		$	35,215
Collectively evaluated for impairment	813,829			473,871			65,558			700,110			—		224,589			24,573			189,409			181,354			—			2,673,293
Total Portfolio	$	831,831		$	477,385		$	65,765		$	711,213		$	262	$	226,706		$	24,583		$	189,409		$	181,354		$	—		$	2,708,508

	COMMERCIAL									RESIDENTIAL					CONSUMER
December 31, 2014 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated		Total
Allowance for credit losses:
Beginning balance	$	22,089		$	19,301		$	3,188		$	2,200		$	—	$	3,133		$	2,687		$	306		$	2,195		$	550	$	55,649
Charge-offs	(5,804		)	(5,338		)	—			(702		)	—		(180		)	(724		)	(99		)	(1,682		)	—		(14,529		)
Recoveries	3,112			4,499			733			88			—		198			103			—			601			—		9,334
Provision (credit)	(1,381		)	(198		)	(1,578		)	374			—		(482		)	(109		)	78			3,496			—		200
Allowance endingbalance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—
Collectively evaluated for impairment	18,016			18,264			2,343			1,960			—		2,669			1,957			285			4,610			550		50,654
Total Allowance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Financing receivable:
Ending balance
Individually evaluated for impairment	$	17,984		$	4,172		$	1,419		$	12,003		$	268	$	2,184		$	122		$	—		$	—		$	—	$	38,152
Collectively evaluated for impairment	591,662			438,018			67,721			655,797			—		224,871			28,546			195,185			181,793			—		2,383,593
Total Portfolio	$	609,646		$	442,190		$	69,140		$	667,800		$	268	$	227,055		$	28,668		$	195,185		$	181,793		$	—	$	2,421,745

Schedule of delinquent and non-accrual loans in the Company's portfolio

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of June 30, 2015

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	792	4	%	$	—	—	%	$	821	3	%	$	1,613	3	%	$	830,218	31	%	$	831,831	31	%	$	—	$	1,912	15	%
Commercial business loans	1,262		6	%	—		—	%	418		1	%	1,680		3	%	475,705		18	%	477,385		18	%	—		1,114		9	%
Commercial construction	—		—	%	—		—	%	207		1	%	207		—	%	65,558		2	%	65,765		2	%	—		207		2	%
Total commercial	$	2,054	10	%	$	—	—	%	$	1,446	5	%	$	3,500	6	%	$	1,371,481	51	%	$	1,374,981	51	%	$	—	$	3,233	26	%
Residential:
Residential real estate	$	1,871	9	%	$	144	1	%	$	3,330	11	%	$	5,345	8	%	$	705,868	27	%	$	711,213	26	%	$	—	$	7,584	59	%
Residential construction	—		—	%	—		—	%	262		1	%	262		0	%	—		—	%	262		—	%	—		262		2	%
Total residential	$	1,871	9	%	$	144	1	%	$	3,592	12	%	$	5,607	8	%	$	705,868	27	%	$	711,475	26	%	$	—	$	7,846	61	%
Consumer loans:
Home equity & lines of credit	$	819	4	%	$	211	2	%	$	1,026	3	%	$	2,056	3	%	$	224,650	8	%	$	226,706	8	%	$	—	$	1,733	13	%
Personal	138		1	%	31		—	%	—		—	%	169		—	%	24,414		1	%	24,583		1	%	—		—		—	%
Education	13,737		64	%	9,787		95	%	25,460		80	%	48,984		79	%	140,425		6	%	189,409		7	%	—		—		—	%
Automobile	2,544		12	%	206		2	%	—		—	%	2,750		4	%	178,604		7	%	181,354		7	%	—		—		—	%
Total consumer	$	17,238	81	%	$	10,235	99	%	$	26,486	83	%	$	53,959	86	%	$	568,093	22	%	$	622,052	23	%	$	—	$	1,733	13	%
Total	$	21,163	100	%	$	10,379	100	%	$	31,524	100	%	$	63,066	100	%	$	2,645,442	100	%	$	2,708,508	100	%	$	—	$	12,812	100	%

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of December 31, 2014

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	202	1	%	$	—	—	%	$	966	3	%	$	1,168	2	%	$	608,478	26	%	$	609,646	25	%	$	—	$	1,721	12	%
Commercial business loans	755		4	%	—		—	%	1,012		3	%	1,767		3	%	440,423		18	%	442,190		18	%	—		1,755		12	%
Commercial construction	—		—	%	—		—	%	402		1	%	402		1	%	68,738		3	%	69,140		3	%	—		402		3	%
Total commercial	$	957	5	%	$	—	—	%	$	2,380	7	%	$	3,337	6	%	$	1,117,639	47	%	$	1,120,976	46	%	$	—	$	3,878	27	%
Residential:
Residential real estate	$	1,843	8	%	$	356	3	%	$	3,414	11	%	$	5,613	9	%	$	662,187	28	%	$	667,800	28	%	$	—	$	8,500	58	%
Residential construction	—		—	%	—		—	%	268		1	%	268		—	%	—		—	%	268		—	%	—		268		2	%
Total residential	$	1,843	8	%	$	356	3	%	$	3,682	12	%	$	5,881	9	%	$	662,187	28	%	$	668,068	28	%	$	—	$	8,768	60	%
Consumer loans:
Home equity & lines of credit	$	755	4	%	$	635	6	%	$	979	3	%	$	2,369	3	%	$	224,686	10	%	$	227,055	9	%	$	—	$	1,858	12	%
Personal	308		1	%	134		1	%	—		—	%	442		1	%	28,226		1	%	28,668		1	%	—		111		1	%
Education	14,743		69	%	8,918		85	%	25,296		78	%	48,957		76	%	146,228		6	%	195,185		8	%	25,296		—		—	%
Automobile	2,811		13	%	481		5	%	—		—	%	3,292		5	%	178,501		8	%	181,793		8	%	—		—		—	%
Total consumer	$	18,617	87	%	$	10,168	97	%	$	26,275	81	%	$	55,060	85	%	$	577,641	25	%	$	632,701	26	%	$	25,296	$	1,969	13	%
Total	$	21,417	100	%	$	10,524	100	%	$	32,337	100	%	$	64,278	100	%	$	2,357,467	100	%	$	2,421,745	100	%	$	25,296	$	14,615	100	%

Summary of loans whose terms were modified in a manner that met the definition of a TDR

	June 30,			June 30,
	2015			2014
(Dollars in thousands)	No. of Loans	Balance		No. of Loans	Balance
Commercial:
Commercial real estate	2	$	821	3	$	1,012
Commercial business loans	—	—		2	3,673
Commercial construction	—	—		2	725
Total commercial	2	821		7	5,410
Residential:
Residential real estate	3	365		2	129
Residential construction	—	—		—	—
Total real estate loans	3	365		2	129
Consumer loans:
Home equity & lines of credit	1	221		3	447
Automobile	—	—		1	15
Total consumer loans	1	221		4	462
Total loans	6	$	1,407	13	$	6,001

Summary of Troubled Debt Restructured Loans

	For the Six Months Ended June 30, 2015
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	3	$	972
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	3	972
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	3	1,292
Outstanding principal balance immediately after modification	3	972
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	—	—
Outstanding principal balance at period end	6	1,407
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	2	821

	For the Six Months Ended June 30, 2014
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	—	$	—
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	—	—
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	—	—
Outstanding principal balance immediately after modification	—	—
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	8	2,789
Outstanding principal balance at period end	13	6,001
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	3	1,534

Summary of components of impaired loans

Impaired Loans

Year to date June 30, 2015

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,912	$	1,977	$	—	$	1,788	$	—	$	—
Commercial Business	1,114		1,448		—		1,862		—		—
Commercial Construction	207		207		—		429		—		—
Residential Real Estate	7,735		8,291		—		8,263		—		—
Residential Construction	262		470		—		265		—		—
Home Equity and Lines of Credit	1,733		1,743		—		1,737		—		—
Personal	—		—		—		18		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		1		—		—
Total Impaired Loans:	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—
Commercial	$	3,233	$	3,632	$	—	$	4,079	$	—	$	—
Residential	7,997		8,761		—		8,528		—		—
Consumer	1,733		1,743		—		1,756		—		—
Total	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—

Impaired Loans

For the Year Ended December 31, 2014

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,721	$	2,337	$	—	$	10,858	$	—	$	—
Commercial Business	3,255		4,691		—		9,061		—		—
Commercial Construction	1,362		1,362		—		1,399		—		—
Residential Real Estate	8,500		9,037		—		9,517		—		—
Residential Construction	268		476		—		195		—		—
Home Equity and Lines of Credit	1,908		1,935		—		1,335		—		—
Personal	111		111		—		108		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		151		—		—
Total Impaired Loans:	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—
Commercial	$	6,338	$	8,390	$	—	$	21,318	—		—
Residential	8,768		9,513		—		9,712		—		—
Consumer	2,019		2,046		—		1,594		—		—
Total	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—

Commercial and residential loans

Loans disclosures

Schedule of amounts and percentage of the portfolio of classified asset categories

Commercial and Residential Loans

Credit Risk Internally Assigned

	June 30, 2015
	Commercial				Commercial				Commercial				Residential				Residential
(Dollars in thousands)	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	812,418	98	%	$	446,328	93	%	$	65,558	100	%	$	706,393	99	%	$	132	50	%	$	2,030,829	97	%
Special Mention	7,470		1	%	12,894		3	%	—		—	%	—		—	%	—		—	%	20,364		1	%
Substandard	11,943		1	%	18,163		4	%	207		—	%	4,820		1	%	130		50	%	35,263		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	831,831	100	%	$	477,385	100	%	$	65,765	100	%	$	711,213	100	%	$	262	100	%	$	2,086,456	100	%

	December 31, 2014
	Commercial				Commercial				Commercial				Residential				Residential
	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	579,847	95	%	$	419,316	95	%	$	66,191	96	%	$	662,394	99	%	$	138	51	%	$	1,727,886	97	%
Special Mention	13,795		2	%	5,628		1	%	—		—	%	—		—	%	—		—	%	19,423		1	%
Substandard	16,004		3	%	17,246		4	%	2,949		4	%	5,406		1	%	130		49	%	41,735		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	609,646	100	%	$	442,190	100	%	$	69,140	100	%	$	667,800	100	%	$	268	100	%	$	1,789,044	100	%

Consumer - Personal

Loans disclosures

Schedule of amounts and percentage of the portfolio of classified asset categories

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2015
(Dollars in thousands)	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	224,973	99	%	$	24,583	100	%	$	163,949	87	%	$	181,354	100	%	$	594,859	96	%
Non-performing	1,733		1	%	—		—	%	25,460		13	%	—		—	%	27,193		4	%
Total	$	226,706	100	%	$	24,583	100	%	$	189,409	100	%	$	181,354	100	%	$	622,052	100	%

	December 31, 2014
	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	225,197	99	%	$	28,557	100	%	$	169,889	87	%	$	181,793	100	%	$	605,436	96	%
Non-performing	1,858		1	%	111		—	%	25,296		13	%	—		—	%	27,265		4	%
Total	$	227,055	100	%	$	28,668	100	%	$	195,185	100	%	$	181,793	100	%	$	632,701	100	%

XML

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Commitments disclosures
Outstanding commitments to purchase or originate loans	$ 27,500	$ 32,000
Commitments to customers on available lines of credit	206,100	188,400
Commitments to customer on standby letters of credit	6,500	8,000
Reserve for unfunded commitments	$ 244	$ 211

XML

INCOME TAXES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
INCOME TAXES
Net deferred tax assets	$ 43,416	$ 43,685

XML

LOANS (Details 2) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Jun. 30, 2015	Dec. 31, 2014
Allowance for credit losses:
Balance, beginning of year	$ 50,654	$ 55,649	$ 55,649
Provision (credit) for loan losses	(3,600)	1,750	200
Charge-offs	(2,502)	(8,506)	(14,529)
Recoveries	3,240	3,731	9,334
Balance, end of period	47,792	52,624	50,654
Allowance for credit losses:
Collectively evaluated for impairment				$ 47,792	$ 50,654
Total Allowance	$ 50,654	55,649	55,649	47,792	50,654
Financing receivables:
Individually evaluated for impairment				35,215	38,152
Collectively evaluated for impairment				2,673,293	2,383,593
Total Portfolio				2,708,508	2,421,745
Collateral or discounted cash flow deficiency for loans, period when charged off	90 days
Unallocated
Allowance for credit losses:
Balance, beginning of year	$ 550	550	550
Provision (credit) for loan losses	(73)
Balance, end of period	477		550
Allowance for credit losses:
Collectively evaluated for impairment				477	550
Total Allowance	550	550	550	477	550
Commercial
Financing receivables:
Total Portfolio				1,374,981	1,120,976
Commercial | Commercial real estate
Allowance for credit losses:
Balance, beginning of year	18,016	22,089	22,089
Provision (credit) for loan losses	1,412		(1,381)
Charge-offs	(320)		(5,804)
Recoveries	303		3,112
Balance, end of period	19,411		18,016
Allowance for credit losses:
Collectively evaluated for impairment				19,411	18,016
Total Allowance	18,016	22,089	22,089	19,411	18,016
Financing receivables:
Individually evaluated for impairment				18,002	17,984
Collectively evaluated for impairment				813,829	591,662
Total Portfolio				831,831	609,646
Commercial | Commercial business loans
Allowance for credit losses:
Balance, beginning of year	18,264	19,301	19,301
Provision (credit) for loan losses	(4,741)		(198)
Charge-offs	(637)		(5,338)
Recoveries	2,170		4,499
Balance, end of period	15,056		18,264
Allowance for credit losses:
Collectively evaluated for impairment				15,056	18,264
Total Allowance	18,264	19,301	19,301	15,056	18,264
Financing receivables:
Individually evaluated for impairment				3,514	4,172
Collectively evaluated for impairment				473,871	438,018
Total Portfolio				477,385	442,190
Commercial | Commercial construction
Allowance for credit losses:
Balance, beginning of year	2,343	3,188	3,188
Provision (credit) for loan losses	(912)		(1,578)
Recoveries	57		733
Balance, end of period	1,488		2,343
Allowance for credit losses:
Collectively evaluated for impairment				1,488	2,343
Total Allowance	2,343	3,188	3,188	1,488	2,343
Financing receivables:
Individually evaluated for impairment				207	1,419
Collectively evaluated for impairment				65,558	67,721
Total Portfolio				65,765	69,140
Residential
Financing receivables:
Total Portfolio				711,475	668,068
Residential | Residential real estate
Allowance for credit losses:
Balance, beginning of year	1,960	2,200	2,200
Provision (credit) for loan losses	(349)		374
Charge-offs	(107)		(702)
Recoveries	15		88
Balance, end of period	1,519		1,960
Allowance for credit losses:
Collectively evaluated for impairment				1,519	1,960
Total Allowance	1,960	2,200	2,200	1,519	1,960
Financing receivables:
Individually evaluated for impairment				11,103	12,003
Collectively evaluated for impairment				700,110	655,797
Total Portfolio				711,213	667,800
Residential | Residential construction
Financing receivables:
Individually evaluated for impairment				262	268
Total Portfolio				262	268
Consumer
Financing receivables:
Total Portfolio				622,052	632,701
Consumer | Consumer - Home equity and lines of credit
Allowance for credit losses:
Balance, beginning of year	2,669	3,133	3,133
Provision (credit) for loan losses	25		(482)
Charge-offs	(239)		(180)
Recoveries	102		198
Balance, end of period	2,557		2,669
Allowance for credit losses:
Collectively evaluated for impairment				2,557	2,669
Total Allowance	2,669	3,133	3,133	2,557	2,669
Financing receivables:
Individually evaluated for impairment				2,117	2,184
Collectively evaluated for impairment				224,589	224,871
Total Portfolio				226,706	227,055
Consumer | Consumer - Personal
Allowance for credit losses:
Balance, beginning of year	1,957	2,687	2,687
Provision (credit) for loan losses	(299)		(109)
Charge-offs	(239)		(724)
Recoveries	94		103
Balance, end of period	1,513		1,957
Allowance for credit losses:
Collectively evaluated for impairment				1,513	1,957
Total Allowance	1,957	2,687	2,687	1,513	1,957
Financing receivables:
Individually evaluated for impairment				10	122
Collectively evaluated for impairment				24,573	28,546
Total Portfolio				24,583	28,668
Consumer | Consumer - Education
Allowance for credit losses:
Balance, beginning of year	285	306	306
Provision (credit) for loan losses	25		78
Charge-offs	(39)		(99)
Balance, end of period	271		285
Allowance for credit losses:
Collectively evaluated for impairment				271	285
Total Allowance	285	306	306	271	285
Financing receivables:
Collectively evaluated for impairment				189,409	195,185
Total Portfolio				189,409	195,185
Consumer | Consumer -Automobile
Allowance for credit losses:
Balance, beginning of year	4,610	2,195	2,195
Provision (credit) for loan losses	1,312		3,496
Charge-offs	(921)		(1,682)
Recoveries	499		601
Balance, end of period	5,500		4,610
Allowance for credit losses:
Collectively evaluated for impairment				5,500	4,610
Total Allowance	$ 4,610	$ 2,195	$ 2,195	5,500	4,610
Financing receivables:
Collectively evaluated for impairment				181,354	181,793
Total Portfolio				$ 181,354	$ 181,793

XML

STOCK BASED COMPENSATION (Details) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 12, 2015	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares shares	Jun. 30, 2015 USD ($) $ / shares shares	Jun. 30, 2014 USD ($) $ / shares shares	Dec. 31, 2008 USD ($) shares
Summary of Non-vested Stock Award Activity
Non-vested Stock Awards outstanding, Beginning balance (in shares)				534,738	566,668
Non-vested Stock Awards outstanding Weighted Average Grant Price, Beginning (in dollars per share) | $ / shares				$ 8.89	$ 8.37
Number of Shares, issued				238,900	150,136
Weighted Average Grant Price, issued (in dollars per share) | $ / shares				$ 11.41	$ 10.77
Number of Shares, vested				(108,327)	(108,230)
Weighted Average Grant Price, vested (in dollars per share) | $ / shares				$ 8.33	$ 7.89
Number of Shares, forfeited				(46,211)	(67,314)
Weighted Average Grant Price, forfeited (in dollars per share) | $ / shares				$ 8.48	$ 10.31
Non-vested Stock Awards outstanding, Ending balance (in shares)		619,100	541,260	619,100	541,260
Non-vested Stock Awards outstanding Weighted Average Grant Price, Ending (in dollars per share) | $ / shares		$ 10.00	$ 8.90	$ 10.00	$ 8.90
Fair value of shares vested | $				$ 1,200	$ 1,300
Second-step conversion and stock offering
Summary of Non-vested Stock Award Activity
Exchange ratio	1.0999			1.0999
Stock awards
Stock Based Compensation
Award vesting period				5 years
Award vesting criteria, return on average assets percentage				1.00%
Award vesting criteria, return on average assets percentage ranking compared to SNL index				25.00%
Award vesting criteria, minimum total assets of SNL index entities included | $		$ 1,000,000		$ 1,000,000
Award vesting criteria, maximum total assets of SNL index entities included | $		10,000,000		10,000,000
Compensation expense | $		$ 340	$ 287	$ 613	$ 501
Equity Incentive Plan Trust
Stock Based Compensation
Common stock subscriptions, shares						1,773,463
Common stock subscriptions, value | $						$ 19,000
Equity Incentive Plan Trust | Restricted Stock
Stock Based Compensation
Annual vesting percentage				20.00%
Award vesting period				5 years
Common stock shares, vested		926,558		926,558
Common stock shares, forfeited		491,723		491,723

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) instrument	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) instrument	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Other assets
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition
Notional amount, asset derivatives	$ 12,337		$ 12,337		$ 12,608
Fair value of asset derivatives	157		157		152
Other liabilities
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition
Notional amount, liability derivatives	12,337		12,337		12,608
Fair value of liability derivatives	163		163		160
Interest rate swaps
Derivative disclosures
Interest rate swap agreements net gain (loss)	10	$ (7)	2	$ (26)
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition
Fair value of asset derivatives	173		173		170
Posted collateral	380		380
Interest rate swaps | Other assets
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition
Notional amount, asset derivatives	12,337		12,337		12,608
Fair value of asset derivatives	157		157		152
Interest rate swaps | Other liabilities
Fair value of the Company's derivative financial instruments as well as their classification on the consolidated statements of condition
Notional amount, liability derivatives	12,337		12,337		12,608
Fair value of liability derivatives	163		163		$ 160
Termination value of the interest rate swaps	$ 179		$ 179
Interest rate swaps | Not designated as hedging instruments
Derivative disclosures
Interest rate swaps | instrument	6		6
Notional amount of Interest rate swap	$ 24,700		$ 24,700

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) - Mortgage servicing rights - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Summary of fair value on a recurring basis using unobservable units
Balance at the beginning of the period	$ 1,403	$ 1,524
Additions	85	35
Payments	(81)	(73)
Increase (decrease) in fair value due to changes in valuation inputs or assumptions	5	(47)
Balance at the end of the period	$ 1,412	$ 1,439

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) - Interest rate swaps - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivatives
Gross Amounts of Recognized Assets	$ 173	$ 170
Net Amounts of Assets presented in the Statement of Financial Condition	173	170
Gross Amounts Not Offset in the Statement of Financial Condition
Net Amount	$ 173	$ 170

XML

STOCK BASED COMPENSATION (Details 2) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Stock Options
Share - based compensation disclosures
Award expiration period			10 years
Award vesting period			5 years
Compensation expense	$ 379	$ 399	$ 816	$ 765
Summary of stock option activity
Number of Options, Beginning balance (in shares)			3,568,887	3,164,247
Weighted Exercise Price per Shares, Beginning balance (in dollars per share)			$ 9.51	$ 9.20
Options, granted (in shares)			166,075	741,882
Weighted Exercise Price per Shares, granted (in dollars per share)			$ 11.41	$ 10.77
Number of Options, exercised (in shares)			(137,644)	(210,850)
Weighted Exercise Price per Shares, exercised (in dollars per share)			$ 9.39	$ 9.72
Number of Options, forfeited (in shares)			(78,865)	(24,693)
Weighted Exercise Price per Shares, forfeited (in dollars per share)			$ 9.14	$ 8.07
Number of Options, expired (in shares)			(88)
Weighted Exercise Price per Shares, expired (in dollars per share)			$ 8.90
Number of Options, Ending balance (in shares)	3,518,365	3,670,586	3,518,365	3,670,586
Weighted Exercise Price per Shares, Ending balance (in dollars per share)	$ 9.61	$ 9.50	$ 9.61	$ 9.50
Options, additional disclosures
Weighted average remaining contractual term of options outstanding			6 years 1 month 13 days	6 years 11 months 5 days
Aggregate intrinsic value of options outstanding	$ 10,100	$ 10,400	$ 10,100	$ 10,400
Exercisable options (in shares)	2,141,808	1,876,341	2,141,808	1,876,341
Average weighted exercise price of exercisable options (in dollars per share)	$ 9.57	$ 9.67	$ 9.57	$ 9.67
Weighted average remaining contractual term of exercisable options			4 years 10 months 17 days	5 years 3 months 7 days
Aggregate intrinsic value of exercisable options	$ 6,300	$ 5,000	$ 6,300	$ 5,000
Unrecognized compensation cost related to options	4,400	5,700	$ 4,400	$ 5,700
Period for recognizing unrecognized compensation			3 years 2 months 5 days	3 years 9 months 15 days
Stock awards
Share - based compensation disclosures
Award vesting period			5 years
Compensation expense	340	287	$ 613	$ 501
Options, additional disclosures
Unrecognized compensation cost related non-vested stock awards granted under EIP	$ 4,800	$ 3,500	$ 4,800	$ 3,500
Period for recognizing unrecognized compensation			3 years 9 months 7 days	3 years 7 months 13 days

XML

REGULATORY CAPITAL REQUIREMENTS (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Tier 1 Leverage
Tier 1 Leverage, actual, capital amount	$ 1,016,523
Tier 1 Leverage (to average assets), actual, ratio (as a percent)	22.07%
Tier 1 Leverage, for capital adequacy purposes, capital amount	$ 184,203
Tier 1 Leverage (to average assets), for capital adequacy purposes, ratio (as a percent)	4.00%
Tier 1 Leverage, to be well capitalized under prompt corrective action provisions, capital amount	$ 230,254
Tier 1 Leverage (to average assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	5.00%
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital, actual, capital amount	$ 996,520
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent)	38.35%
Common Equity Tier 1 Capital, for capital adequacy, capital amount	$ 116,924
Common Equity Tier 1 Capital (to risk weighted assets, for capital adequacy purposes, ratio (as a percent)	4.50%
Common Equity Tier 1 Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 168,890
Common Equity Tier 1 Capital (to risk weighted assets), to be well capitalized under prompt corrective action, ratio (as a percent)	6.50%
Tier 1 Capital
Tier 1 Capital, actual, capital amount	$ 1,016,523
Tier 1 Capital (to risk weighted assets), actual, ratio (as a percent)	39.12%
Tier 1 Capital, for capital adequacy purposes, capital amount	$ 155,899
Tier 1 Capital (to risk weighted assets), for capital adequacy purposes, ratio (as a percent)	6.00%
Tier 1 Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 207,865
Tier 1 Capital (to risk weighted assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	8.00%
Total Capital
Total Capital, actual, capital amount	$ 1,049,261
Total Capital (to risk weighted assets), actual, ratio (as a percent)	40.38%
Total Capital, for capital adequacy purposes, capital amount	$ 207,865
Total Capital (to risk weighted assets), for capital adequacy purposes, ratio (as a percent)	8.00%
Total Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 259,831
Total Capital (to risk weighted assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	10.00%
The Bank
Tier 1 Leverage
Tier 1 Leverage, actual, capital amount	$ 764,570	$ 480,795
Tier 1 Leverage (to average assets), actual, ratio (as a percent)	16.62%	11.05%
Tier 1 Leverage, for capital adequacy purposes, capital amount	$ 184,043	$ 130,520
Tier 1 Leverage (to average assets), for capital adequacy purposes, ratio (as a percent)	4.00%	3.00%
Tier 1 Leverage, to be well capitalized under prompt corrective action provisions, capital amount	$ 230,053	$ 217,534
Tier 1 Leverage (to average assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	5.00%	5.00%
Common Equity Tier 1 Capital
Common Equity Tier 1 Capital, actual, capital amount	$ 764,570
Common Equity Tier 1 Capital (to risk weighted assets), ratio (as a percent)	29.48%
Common Equity Tier 1 Capital, for capital adequacy, capital amount	$ 116,716
Common Equity Tier 1 Capital (to risk weighted assets, for capital adequacy purposes, ratio (as a percent)	4.50%
Common Equity Tier 1 Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 168,590
Common Equity Tier 1 Capital (to risk weighted assets), to be well capitalized under prompt corrective action, ratio (as a percent)	6.50%
Tier 1 Capital
Tier 1 Capital, actual, capital amount	$ 764,570	$ 480,795
Tier 1 Capital (to risk weighted assets), actual, ratio (as a percent)	29.48%	21.17%
Tier 1 Capital, for capital adequacy purposes, capital amount	$ 155,622	$ 90,842
Tier 1 Capital (to risk weighted assets), for capital adequacy purposes, ratio (as a percent)	6.00%	4.00%
Tier 1 Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 207,495	$ 136,262
Tier 1 Capital (to risk weighted assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	8.00%	6.00%
Total Capital
Total Capital, actual, capital amount	$ 797,250	$ 509,460
Total Capital (to risk weighted assets), actual, ratio (as a percent)	30.74%	22.43%
Total Capital, for capital adequacy purposes, capital amount	$ 207,495	$ 181,683
Total Capital (to risk weighted assets), for capital adequacy purposes, ratio (as a percent)	8.00%	8.00%
Total Capital, to be well capitalized under prompt corrective action provisions, capital amount	$ 259,369	$ 227,104
Total Capital (to risk weighted assets), to be well capitalized under prompt corrective action provisions, ratio (as a percent)	10.00%	10.00%

XML

RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2015

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 16 — RECENT ACCOUNTING PRONOUNCEMENTS

In June 2015, the FASB issued ASU 2015-10: Technical Corrections and Improvements.  This update contains amendments that will affect a wide variety of Topics in the Codification. The amendments in this update will apply to all reporting entities within the scope of the affected accounting guidance.  The amendments generally fall into one of the types of amendments: (i) amendments related to differences between original guidance and the Codification, (ii) guidance clarification and reference corrections, (iii) simplification, and (iv) minor improvements. The amendments in this update represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Additionally, some of the amendments will make the Codification easier to understand and easier to apply by eliminating inconsistencies, providing needed clarifications, and improving the presentation of guidance in the Codification. Transition guidance varies based on the amendments in this update. The amendments in this update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments were effective upon the issuance of the update. The Company does not anticipate a material impact to the consolidated financial statements at this time.

In April 2015, the FASB issued ASU 2015-5: Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement. The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change GAAP for a customer’s accounting for service contracts.  For public business entities, the amendments in this update will be effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015.  Early adoption is permitted for all entities.  The Company is in the process of evaluating the impact of this guidance and does not anticipate a material impact to the consolidated financial statements at this time.

In February 2015, the FASB issued ASU 2015-02: Consolidation.  The amendments in this update respond to concerns about the current accounting for consolidation of certain legal entities. Entities expressed concerns that current generally accepted accounting principles might require a reporting entity to consolidate another legal entity in situations in which the reporting entity’s contractual rights do not give it the ability to act primarily on its own behalf, the reporting entity does not hold a majority of the legal entity’s voting rights, or the reporting entity is not exposed to a majority of the legal entity’s economic benefits or obligations. Financial statement users asserted that in certain of those situations in which consolidation is ultimately required, deconsolidated financial statements are necessary to better analyze the reporting entity’s economic and operational results. Previously, the FASB issued an indefinite deferral for certain entities to partially address those concerns. However, the amendments in this update rescind that deferral and address those concerns by making changes to the consolidation guidance. The amendments in this update impact all reporting entities involved with limited partnerships or similar entities and require reporting entities to re-evaluate these entities for consolidation. In some cases, consolidation conclusion may change.  In other cases, a reporting entity will need to provide additional disclosures if an entity that currently isn’t considered a variable interest entity is considered a variable interest entity under the new guidance. For public business entities, the guidance is effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. The Company is in the process of evaluating the impact of this guidance and does not anticipate a material impact to the consolidated financial statements at this time.

In January 2015, the FASB issued ASU 2015-01: Income Statement: Extraordinary and Unusual Items.  The amendment in this update eliminates from GAAP the concept of extraordinary items and the associated disclosure requirements. Subtopic 225-20, Income Statement—Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. Paragraph 225-20-45-2 includes the following two criteria that must both be met for extraordinary classification: (i) unusual nature, and (ii) infrequency of occurrence. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. As the Company has not entered into any transactions that would require extraordinary or unusual item disclosure, the Company does not anticipate an impact to the consolidated financial statements related to this guidance.

In August 2014, the FASB issued ASU 2014-15: Presentation of Financial Statements — Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update apply to all entities. The amendments in this update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The term probable is used consistently with its use in Topic 450, Contingencies. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not anticipate a material impact to the consolidated financial statements related to this guidance.

Also in August 2014, the FASB issued ASU 2014-14, Receivables — Troubled Debt Restructurings by Creditors: Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure. The amendments in this update affect creditors that hold government guaranteed mortgage loans, including those guaranteed by the Federal Housing Administration and the U.S. Department of Veterans Affairs. The amendments in this update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met (i) the loan has a government guarantee that is not separable from the loan before foreclosure, (ii) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (iii) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company adopted the provisions of this guidance during the six months ended June 30, 2015 and noted no material impact to the consolidated financial statements related to this guidance as the Company has no foreclosed government guaranteed mortgage loans.

In June 2014, the FASB issued ASU 2014-12 — Compensation — Stock Compensation: Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period: Current U.S. GAAP does not contain explicit guidance on whether to treat a performance target that could be achieved after the requisite service period as a performance condition that affects vesting or as a nonvesting condition that affects the grant-date fair value of an award.  The amendments in this update provide explicit guidance for those awards.  For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015.  Early adoption is permitted.  At this time, the Company does not believe that it is probable that the performance conditions for any of the outstanding performance based awards will be met.  The Company does not anticipate an impact to the consolidated financial statements related to this guidance.

Also in June 2014, the FASB issued ASU 2014-11 - Transfers and Servicing: Repurchase-to-Maturity Transaction, Repurchase Financings, and Disclosures: The amendments affect all entities that enter into repurchase-to-maturity transactions or repurchase financings. The amendments change the current accounting outcome by requiring repurchase-to-maturity transactions to be accounted for as secured borrowings.  Additionally, the amendments require that in a repurchase financing arrangement the repurchase agreement be accounted for separately from the initial transfer of the financial asset.  ASU 2014-11 requires a new disclosure for certain transactions that involve (1) a transfer of a financial asset accounted for as a sale and (2) an agreement with the same transferee entered into in contemplation of the initial transfer that results in the transferor retaining substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction.  The accounting changes in this update are effective for public business entities for the first interim or annual period beginning after December 15, 2014.  The Company adopted the provisions of this guidance during the six months ended June 30, 2015 and noted no material impact to the consolidated financial statements related to this guidance as the Company has no such transactions.

In May 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers: The objective of this amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS.  This update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are in the scope of other standards.  This update, as issued, was effective for public companies beginning with the first fiscal year beginning after December 15, 2016, and the interim periods within that fiscal year. On April 1, 2015, the FASB approved proposing a one-year deferral and giving public companies the option to “early” adopt using the original effective dates.  The FASB is targeting finalization of this proposal for near the middle of this year.  The Company does not anticipate a material impact to the consolidated financial statements related to this guidance.

XML

EARNINGS PER SHARE (Details 2)		3 Months Ended		6 Months Ended
	Jan. 12, 2015	Jun. 30, 2015 shares	Jun. 30, 2014 shares	Jun. 30, 2015 shares	Jun. 30, 2014 shares
Second-step conversion and stock offering
Anti-dilutive securities disclosures
Stockholders' Equity Note, Stock Split, Conversion Ratio	1.0999			1.0999
Stock Options
Anti-dilutive securities disclosures
Antidilutive securities excluded from computation of earnings per share amount		861,961	741,882	861,961	741,882

XML

MORTGAGE SERVICING RIGHTS (Tables)

6 Months Ended

Jun. 30, 2015

MORTGAGE SERVICING RIGHTS

Schedule of residential MSRs

	Residential
	Mortgage Servicing Rights
	For the Six Months Ended June 30,
Dollars in thousands	2015			2014
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Increases (decreases) in fair value due to:
Changes in valuation input or assumptions	5			(47		)
Paydowns	(81		)	(73		)
Balance, June 30,	$	1,412		$	1,439

Schedule of residential MSRs' favorable and unfavorable changes in key economic assumptions

	Mortgage Servicing Rights			Mortgage Servicing Rights
(Dollars in thousands)	June 30, 2015			June 30, 2014
Fair value of residential mortgage servicing rights	$	1,412		$	1,439
Weighted average life (years)	5.7 years			5.6 years
Prepayment speed	9.72		%	10.47		%
Effect on fair value of a 20% increase	$	(98	)	$	(103	)
Effect on fair value of a 10% increase	(50		)	(52		)
Effect on fair value of a 10% decrease	55			58
Effect on fair value of a 20% decrease	112			118
Discount rate	9.75		%	9.88		%
Effect on fair value of a 20% increase	$	(93	)	$	(95	)
Effect on fair value of a 10% increase	(49		)	(49		)
Effect on fair value of a 10% decrease	52			54
Effect on fair value of a 20% decrease	108			111
Escrow earnings credit	1.66		%	1.74		%
Effect on fair value of a 20% increase	$	36		$	35
Effect on fair value of a 10% increase	18			17
Effect on fair value of a 10% decrease	(16		)	(15		)
Effect on fair value of a 20% decrease	(34		)	(34		)

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Pension Benefits
Components of net pension cost
Interest cost	$ 958	$ 950	$ 1,916	$ 1,910
Expected return on assets	(1,655)	(1,516)	(3,310)	(3,028)
Amortization of loss	616	320	1,231	671
Net periodic pension (benefit) cost	(81)	(246)	(163)	(447)
Other Postretirement Benefits
Components of net pension cost
Service cost	43	19	87	64
Interest cost	214	210	429	450
Amortization of loss	90	1	180	43
Amortization of prior service cost	(129)	(131)	(259)	(263)
Amortization of transition obligation		41		82
Net periodic pension (benefit) cost	$ 218	$ 140	$ 437	$ 376

XML

BORROWED FUNDS (Tables)

6 Months Ended

Jun. 30, 2015

BORROWED FUNDS

Schedule of borrowed funds

(Dollars in thousands)	June 30, 2015		December 31, 2014
FHLB advances	$	165,000	$	165,000
Statutory trust debenture	25,396		25,388
Total borrowed funds	$	190,396	$	190,388

XML

INVESTMENT SECURITIES (Details 2) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Temporarily impaired securities
Fair value of securities in a continuous unrealized loss position less than twelve months	$ 521,210	$ 70,236
Unrealized losses less than twelve months	5,038	370
Fair value of securities in a continuous unrealized loss position twelve months or longer	249,671	420,377
Unrealized losses twelve months or longer	2,535	5,684
Fair value of securities in a continuous unrealized loss position	770,881	490,613
Total unrealized losses	7,573	6,054
Mortgage-backed securities
Temporarily impaired securities
Fair value of securities in a continuous unrealized loss position less than twelve months	521,193	38,246
Unrealized losses less than twelve months	5,037	200
Fair value of securities in a continuous unrealized loss position twelve months or longer	206,180	396,600
Unrealized losses twelve months or longer	2,132	5,292
Fair value of securities in a continuous unrealized loss position	727,373	434,846
Total unrealized losses	7,169	5,492
Collateralized mortgage obligations
Temporarily impaired securities
Fair value of securities in a continuous unrealized loss position less than twelve months	17	31,990
Unrealized losses less than twelve months	1	170
Fair value of securities in a continuous unrealized loss position twelve months or longer	42,764	22,881
Unrealized losses twelve months or longer	369	340
Fair value of securities in a continuous unrealized loss position	42,781	54,871
Total unrealized losses	370	510
Debt securities
Temporarily impaired securities
Fair value of securities in a continuous unrealized loss position less than twelve months	521,210	70,236
Unrealized losses less than twelve months	5,038	370
Fair value of securities in a continuous unrealized loss position twelve months or longer	248,944	419,481
Unrealized losses twelve months or longer	2,501	5,632
Fair value of securities in a continuous unrealized loss position	770,154	489,717
Total unrealized losses	7,539	6,002
Mutual funds
Temporarily impaired securities
Fair value of securities in a continuous unrealized loss position twelve months or longer	727	896
Unrealized losses twelve months or longer	34	52
Fair value of securities in a continuous unrealized loss position	727	896
Total unrealized losses	$ 34	$ 52

XML

DEPOSITS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
DEPOSITS
Non-interest bearing deposits	$ 381,667	$ 369,683
Interest-earning checking accounts	659,645	632,345
Stock subscription proceeds deposited in interest bearing account		463,036
Municipal checking accounts	108,604	179,439
Money market accounts	422,916	424,789
Savings accounts	1,145,543	1,126,848
Certificates of deposit	656,756	683,569
Total deposits	$ 3,375,131	$ 3,879,709
Non-interest bearing deposits, percentage	11.30%	9.50%
Interest-earning checking accounts, percentage	19.50%	16.30%
Percentage Of Stock Subscription Deposits Received		11.90%
Municipal checking accounts, percentage	3.20%	4.60%
Money market accounts, percentage	12.50%	11.00%
Savings accounts, percentage	34.00%	29.10%
Certificates of deposit, percentage	19.50%	17.60%
Total deposits, percentage	100.00%	100.00%
Additional stock subscription proceeds held in escrow in various deposit accounts		$ 19,100

XML

LOANS (Details 6) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($) item
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Period of sustained performance based on the restructured terms	6 months
Number of accruing TDRs modified during the period | item	1
Value of accruing TDRs modified during the period	$ 151
Number of TDR loans at period end | item	6	13
Outstanding principal balance of TDR loans at period end	$ 1,407	$ 6,001
Commercial
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	2	7
Outstanding principal balance of TDR loans at period end	$ 821	$ 5,410
Commercial | Commercial real estate
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	2	3
Outstanding principal balance of TDR loans at period end	$ 821	$ 1,012
Commercial | Commercial business loans
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item		2
Outstanding principal balance of TDR loans at period end		$ 3,673
Commercial | Commercial construction
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item		2
Outstanding principal balance of TDR loans at period end		$ 725
Residential
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	3	2
Outstanding principal balance of TDR loans at period end	$ 365	$ 129
Residential | Residential real estate
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	3	2
Outstanding principal balance of TDR loans at period end	$ 365	$ 129
Consumer
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	1	4
Outstanding principal balance of TDR loans at period end	$ 221	$ 462
Consumer | Consumer - Home equity and lines of credit
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item	1	3
Outstanding principal balance of TDR loans at period end	$ 221	$ 447
Consumer | Consumer -Automobile
Summary of loans whose terms were modified in a manner that met the definition of a TDR
Number of TDR loans at period end | item		1
Outstanding principal balance of TDR loans at period end		$ 15

XML

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Changes in the balances of each component of accumulated other comprehensive income
Beginning balance	$ (22,663)	$ (21,354)
Changes in other comprehensive loss before reclassifications
Unrealized holding (losses) gains on AFS securities	(652)	11,644
Unrealized losses on AFS securities transferred to HTM		(3,426)
Accretion of unrealized losses on AFS securities transferred to HTM	265	189
Amount reclassified from accumulated other comprehensive loss	668	80
Total other comprehensive income	281	8,487
Ending balance	(22,382)	(12,867)
Net unrealized holding gains (losses) on available-for-sale securities
Changes in the balances of each component of accumulated other comprehensive income
Beginning balance	2,711	(5,078)
Changes in other comprehensive loss before reclassifications
Unrealized holding (losses) gains on AFS securities	(652)	11,644
Unrealized losses on AFS securities transferred to HTM		(3,426)
Accretion of unrealized losses on AFS securities transferred to HTM	265	189
Amount reclassified from accumulated other comprehensive loss	6	(188)
Total other comprehensive income	(381)	8,219
Ending balance	2,330	3,141
Defined benefit pension plan items
Changes in the balances of each component of accumulated other comprehensive income
Beginning balance	(25,374)	(16,276)
Changes in other comprehensive loss before reclassifications
Amount reclassified from accumulated other comprehensive loss	662	268
Total other comprehensive income	662	268
Ending balance	$ (24,712)	$ (16,008)

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES:
Net Income	$ 12,306	$ 7,048
Adjustment to reconcile net income to net cash (used in) provided by operating activities:
Provision for loan losses	(3,600)	1,750
Depreciation and amortization	3,018	3,092
Intangible amortization	933	934
Net loss (gain) on sale of investments	9	(297)
Accretion of discount on investments	(280)	(210)
Amortization of premium on investments	3,076	2,880
Gain on sale of loans	(175)	(103)
Deferred income taxes		2,212
Net loss from disposition of premises and equipment	8	26
Proceeds from sale of fixed assets held for sale	(83)
Other real estate impairment	4	376
Net gain on sale of other real estate	(117)	(995)
Amortization of KSOP	1,548	1,142
Increase in bank owned life insurance	(1,298)	(636)
Stock based compensation	1,429	1,266
Origination of loans held for sale	(11,171)	(6,162)
Proceeds from sale of loans	9,955	17,065
Changes in assets and liabilities:
Accrued interest receivable	(274)	603
Accrued interest payable	(62)	(122)
Income taxes receivable	3,987	1,632
Other liabilities	(156)	6
Other assets	(4,053)	273
Net cash provided by operating activities	15,004	31,780
INVESTING ACTIVITIES:
Loans originated or acquired	(575,349)	(332,839)
Principal repayment on loans	290,591	289,431
Purchases of investment securities available for sale	(4,985)	(30,999)
Proceeds from sales of investment securities available for sale		3,088
Proceeds from maturities, calls or repayments of investment securities available for sale	70,926	67,075
Purchases of investment securities held to maturity	(70,247)
Proceeds from maturities, calls or repayments of investment securities held to maturity	51,205	36,144
Net (purchases) proceeds from sales of money market and mutual funds	(220)	13,711
Redemption of Federal Home Loan Bank stock	44	1,811
Proceeds from sale other real estate owned	462	4,778
Purchases of premises and equipment	(3,245)	(10,515)
Proceeds from sale of premises and equipment	17	24
Cash used in other investing activities	(386)	(232)
Net cash (used in) provided by investing activities	(241,187)	41,477
FINANCING ACTIVITIES:
Increase in borrowed funds	6,000	6,000
Repayment of borrowed funds	(5,992)	(5,991)
Net increase (decrease) in checking, savings and demand accounts	4,324	(127,345)
Net decrease in time deposits	(26,813)	(27,206)
Proceeds from the exercise of stock options	1,292	2,050
Purchase of treasury stock	(340)	(22,480)
Net cash used in financing activities	(21,529)	(174,972)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(247,712)	(101,715)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	534,015	534,015
CASH AND CASH EQUIVALENTS, END OF PERIOD	286,303	253,968
SUPPLEMENTAL DISCLOSURES OF CASH FLOW AND NON-CASH INFORMATION:
Cash payments for interest	9,611	11,265
Cash payments (refunds) for income taxes	969	(2,410)
Transfers of loans to other real estate owned	125	306
Transfers of securities at fair value from available for sale to held to maturity		152,200
Transfers of bank branches to fixed assets held for sale		36
Loans transferred from held in portfolio to held for sale		$ 6,270
Issuance of common stock funded by stock subscriptions received prior to January 1, 2015, net of offering costs	$ 474,398

XML

LOANS (Details 7) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($) item
Summary of troubled debt restructured loans
Number of loans modified | item	3
Outstanding principal balance of loans modified	$ 972
No. of Loans immediately before modification | item	3
Outstanding principal balance immediately before modification	$ 1,292
No. of Loans immediately after modification | item	3
Outstanding principal balance immediately after modification	$ 972
Aggregate number of loans charge-off recognized on TDRs outstanding at period end since origination | item		8
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination		$ 2,789
Number of TDR loans at period end | item	6	13
Outstanding principal balance of TDR loans at period end	$ 1,407	$ 6,001
Number of loans that re-defaulted subsequent to being modified (in the past twelve months) | item	2	3
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	$ 821	$ 1,534
Deferral of principal amounts due
Summary of troubled debt restructured loans
Number of loans modified | item	3
Outstanding principal balance of loans modified	$ 972

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2015

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value of derivative financial instruments and classification on the consolidated statements of condition

	Asset derivatives				Liability derivatives
As of June 30, 2015 (Dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,337	$	157	$	12,337	$	163
Total derivatives	$	12,337	$	157	$	12,337	$	163

(1) Included in other assets in our Consolidated Statements of Financial Condition.

(2) Included in other liabilities in our Consolidated Statements of Financial Condition.

	Asset derivatives				Liability derivatives
As of December 31, 2014 (dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,608	$	152	$	12,608	$	160
Total derivatives	$	12,608	$	152	$	12,608	$	160

(1) Included in other assets in our Consolidated Statements of Financial Condition.

(2) Included in other liabilities in our Consolidated Statements of Financial Condition.

Schedule of offsetting of derivative assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Assets (1)		Statementa of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	173	$	—	$	173	$	—	$	—	$	173

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Assets (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	170	$	—	$	170	$	—	$	—	$	170

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

Schedule of offsetting of derivative liabilities

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	179	$	—	$	179	$	—	$	380	$	(201	)

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	178	$	—	$	178	$	—	$	317	$	(139	)

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Annual Report on Form 10-K filed by Beneficial Bancorp, Inc. (the “Company” or “Beneficial”) with the U.S. Securities and Exchange Commission on February 26, 2015.  The results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015 or any other period.

Principles of Consolidation

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  Specifically, the financial statements include the accounts of Beneficial Bank (the “Bank”), the Company’s wholly owned subsidiary, and the Bank’s wholly owned subsidiaries. The Bank’s wholly owned subsidiaries are: (i) Beneficial Advisors, LLC, which offers wealth management services and non-deposit investment products, (ii) Neumann Corporation, a Delaware corporation formed to manage certain investments, (iii) Beneficial Insurance Services, LLC, which provides insurance services to individual and business customers and (iv) BSB Union Corporation, a leasing company. Additionally, the Company has subsidiaries that hold other real estate acquired in foreclosure or transferred from the real estate loan portfolio. All significant intercompany accounts and transactions have been eliminated.

Management makes significant operating decisions based upon the analysis of the entire Company and financial performance is evaluated on a company-wide basis. Accordingly, the various financial services and products offered are included in one reportable operating segment: community banking as outlined under guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC” or “codification”) Topic 280 for Segment Reporting.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements

These unaudited interim condensed consolidated financial statements are prepared in conformity with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates include the allowance for loan losses, goodwill, other intangible assets, income taxes, postretirement benefits, and the fair value of investment securities.  Actual results could differ from those estimates and assumptions.

XML

DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2015

DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

NOTE 19 — DERIVATIVE FINANCIAL INSTRUMENTS

The Company is a party to derivative financial instruments in the normal course of business to meet the needs of commercial banking customers. These financial instruments have been limited to interest rate swap agreements, which are entered into with counterparties that meet established credit standards and, where appropriate, contain master netting and collateral provisions protecting the party at risk. The Company believes that the credit risk inherent in all of the derivative contracts is minimal based on the credit standards and the netting and collateral provisions of the interest rate swap agreements.

The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions.  These derivatives are not designated as hedges and are not speculative.  Rather, these derivatives result from a service the Company provides to certain customers. As the interest rate swaps associated with this program do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings.  As of June 30, 2015, the Company had six interest rate swaps with an aggregate notional amount of $24.7 million related to this program. During the three and six months ended June 30, 2015, the Company recognized a gain of $10 thousand and of $2 thousand, respectively, compared to a loss of $7 thousand and $26 thousand for the same periods in 2014 related to interest rate swap agreements that are included as a component of services charges and other non-interest income in the Company’s consolidated statements of income.

The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated statements of financial condition as of June 30, 2015 and December 31, 2014:

	Asset derivatives				Liability derivatives
As of June 30, 2015 (Dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,337	$	157	$	12,337	$	163
Total derivatives	$	12,337	$	157	$	12,337	$	163

(1) Included in other assets in our Consolidated Statements of Financial Condition.

(2) Included in other liabilities in our Consolidated Statements of Financial Condition.

	Asset derivatives				Liability derivatives
As of December 31, 2014 (dollars in thousands)	Notional amount		Fair value (1)		Notional amount		Fair value (2)
Interest rate swap agreements	$	12,608	$	152	$	12,608	$	160
Total derivatives	$	12,608	$	152	$	12,608	$	160

(1) Included in other assets in our Consolidated Statements of Financial Condition.

(2) Included in other liabilities in our Consolidated Statements of Financial Condition.

The following displays offsetting interest rate swap assets and liabilities for the dates presented:

Offsetting of Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Assets (1)		Statementa of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	173	$	—	$	173	$	—	$	—	$	173

Offsetting of Derivative Liabilities

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of June 30, 2015	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	179	$	—	$	179	$	—	$	380	$	(201	)

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

Offsetting of Derivative Assets

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Assets presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Assets (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Received		Net Amount
Interest rate swaps	$	170	$	—	$	170	$	—	$	—	$	170

Offsetting of Derivative Liabilities

	Gross Amounts of		Gross Amounts Offset in the		Net Amounts of Liabilities presented in		Gross Amounts Not Offset in the Statement of Financial Condition
As of December 31, 2014	Recognized Liabilities (1)		Statement of Financial Condition		the Statement of Financial Condition		Financial Instruments		Collateral Posted		Net Amount
Interest rate swaps	$	178	$	—	$	178	$	—	$	317	$	(139	)

(1) - Balance includes accrued interest receivable/payable and credit valuation adjustments.

The Company has agreements with certain of its derivative counterparties that provide that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations.  The Company also has agreements with certain of its derivative counterparties that provide that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.

As of June 30, 2015, the termination value of the interest rate swaps in a liability position was $179 thousand.  The Company has minimum collateral posting thresholds with its counterparty. At June 30, 2015, the Company had $380 thousand of securities pledged as collateral on interest rate swaps. If the Company had breached any of these provisions at June 30, 2015 it would have been required to settle its obligation under the agreement at the termination value and could have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the counterparty. The Company had not breached any provisions at June 30, 2015.

XML

LOANS (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) item	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Loans disclosures
Total loans	$ 2,708,508		$ 2,708,508		$ 2,421,745
Allowance for loan losses	(47,792)	$ (52,624)	(47,792)	$ (52,624)	(50,654)	$ (55,649)
Net loans	2,660,716		2,660,716		2,371,091
Loans activity
Mortgage banking income	267	$ 115	394	$ 240
Shared national credits
Loans disclosures
Total loans	216,800		216,800
Loans activity
Minimum loan commitment amount shared by banks	20,000		20,000
Amount of leveraged lending transactions	131,100		$ 131,100
Shared national credits | Minimum
Loans activity
Number of banks which shares amount of loan commitments | item			3
Term of variable rate loans			1 year
Shared national credits | Maximum
Loans activity
Total amount of leveraged loans			$ 150,000
Single obligor leveraged loans amount			$ 15,000
Single industry concentrations (as a percent)			30.00%
Term of variable rate loans			7 years
Commercial
Loans disclosures
Total loans	1,374,981		$ 1,374,981		1,120,976
Commercial | Commercial real estate
Loans disclosures
Total loans	831,831		831,831		609,646
Allowance for loan losses	(19,411)		(19,411)		(18,016)	(22,089)
Loans activity
Amount of loans held that relate to a participation in a portfolio of multi-family loans	200,100		200,100
Commercial | Commercial business loans
Loans disclosures
Total loans	477,385		477,385		442,190
Allowance for loan losses	(15,056)		(15,056)		(18,264)	(19,301)
Commercial | Commercial construction
Loans disclosures
Total loans	65,765		65,765		69,140
Allowance for loan losses	(1,488)		(1,488)		(2,343)	(3,188)
Residential
Loans disclosures
Total loans	711,475		711,475		668,068
Loans activity
Loans held for sale	1,400		1,400		1,500
Residential mortgage loans sold	4,300		9,800
Mortgage banking income	267		$ 394
Servicing fee (as a percent)			0.25%
Residential | Residential real estate
Loans disclosures
Total loans	711,213		$ 711,213		667,800
Allowance for loan losses	(1,519)		(1,519)		(1,960)	(2,200)
Loans activity
Purchase of loans			35,400
Residential | Residential construction
Loans disclosures
Total loans	262		262		268
Consumer
Loans disclosures
Total loans	622,052		622,052		632,701
Consumer | Consumer - Home equity and lines of credit
Loans disclosures
Total loans	226,706		226,706		227,055
Allowance for loan losses	(2,557)		(2,557)		(2,669)	(3,133)
Consumer | Consumer - Personal
Loans disclosures
Total loans	24,583		24,583		28,668
Allowance for loan losses	(1,513)		(1,513)		(1,957)	(2,687)
Consumer | Consumer - Education
Loans disclosures
Total loans	189,409		189,409		195,185
Allowance for loan losses	(271)		(271)		(285)	(306)
Consumer | Consumer -Automobile
Loans disclosures
Total loans	181,354		181,354		181,793
Allowance for loan losses	$ (5,500)		$ (5,500)		$ (4,610)	$ (2,195)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	6 Months Ended
	Jun. 30, 2015 item
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of reportable operating segments	1

XML

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2015

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Schedule of changes in the balances of each component of accumulated other comprehensive income

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2015	$	2,711		$	(25,374	)	$	(22,663	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding losses on AFS securities	(652		)	—			(652		)
Accretion of unrealized losses on AFS securities transferred to HTM	265			—			265
Amount reclassified from accumulated other comprehensive loss	6			662			668
Net current-period other comprehensive income	(381		)	662			281
Ending balance, June 30, 2015	$	2,330		$	(24,712	)	$	(22,382	)

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2014	$	(5,078	)	$	(16,276	)	$	(21,354	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding gains on AFS securities	11,644			—			11,644
Unrealized losses on AFS securities transferred to HTM	(3,426		)	—			(3,426		)
Accretion of unrealized losses on AFS securities transferred to HTM	189			—			189
Amount reclassified from accumulated other comprehensive loss	(188		)	268			80
Net current-period other comprehensive income	8,219			268			8,487
Ending balance, June 30, 2014	$	3,141		$	(16,008	)	$	(12,867	)

Schedule of reclassifications out of AOCI by component

For the Six Months Ended June 30, 2015

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
Components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	9		Net loss on sale of investment securities
	(3		)	Income tax benefit
	$	6		Net of tax
Amortization of defined benefit pension items
Prior service costs	$	(259	)(1)	Other non-interest expense
Net recognized actuarial losses	1,411		(1)	Other non-interest expense
	$	1,152		Total before tax
	(490		)	Income tax benefit
	$	662		Net of tax

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

For the Six Months Ended June 30, 2014

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	(297	)	Net gain on sale of investment securities
	109			Income tax expense
	$	(188	)	Net of tax
Amortization of defined benefit pension items
Transition obligation	$	82	(1)	Other non-interest expense
Prior service costs	(263		)(1)	Other non-interest expense
Net recognized actuarial losses	714		(1)	Other non-interest expense
	$	533		Total before tax
	(265		)	Income tax benefit
	$	268		Net of tax

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

XML

EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2015

EARNINGS PER SHARE

EARNINGS PER SHARE

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except share and per share amounts)	2015		2014		2015		2014
Basic and diluted earnings per share:
Net income	$	7,055	$	4,576	$	12,306	$	7,048
Basic average common shares outstanding	78,374,704		80,907,413		78,414,226		81,280,507
Effect of dilutive securities	683,770		696,419		653,170		658,777
Dilutive average shares outstanding	79,058,474		81,603,832		79,067,396		81,939,284
Net earnings per share
Basic	$	0.09	$	0.06	$	0.16	$	0.09
Diluted	$	0.09	$	0.06	$	0.16	$	0.09

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) $ in Thousands		6 Months Ended
	Jan. 12, 2015 shares	Jun. 30, 2015 USD ($) shares	Jun. 30, 2014 USD ($)
Net unrealized losses on AFS securities arising during the period, deferred tax		$ 377	$ 6,765
Unrealized losses on available-for-sale securities transferred to held-to-maturity during the period, deferred tax			1,990
Accretion of unrealized losses on available-for-sale securities transferred to held-to-maturity, deferred tax		153	109
Reclassification adjustment for net losses on AFS securities included in net income, tax		3	109
Pension, other post retirement and postemployment benefit plan adjustments, tax		$ 490	$ 265
Second-step conversion and stock offering
Issuance of common shares (in shares) | shares	50,383,817
Exchange ratio	1.0999	1.0999
Second-step conversion and stock offering | Bank's employee savings and stock ownership plan
Issuance of common shares (in shares) | shares	2,015,352	2,015,352
Exchange ratio		1.0999

XML

INVESTMENT SECURITIES (Tables)

6 Months Ended

Jun. 30, 2015

INVESTMENT SECURITIES.

Amortized cost and estimated fair value of investments in debt and equity securities

	June 30, 2015
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	7,293	$	57	$	—	$	7,350
GNMA guaranteed mortgage certificates	4,737		181		—		4,918
GSE mortgage-backed securities	591,450		8,072		1,850		597,672
GSE collateralized mortgage obligations	38,365		53		187		38,231
Municipal bonds	31,319		1,605		—		32,924
Corporate securities	4,986		59		—		5,045
Money market and mutual funds	3,669		—		34		3,635
Total	$	681,819	$	10,027	$	2,071	$	689,775

	June 30, 2015
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	699,907	$	4,701	$	5,319	$	699,289
GSE collateralized mortgage obligations	42,953		557		183		43,327
Municipal bonds	870		80		—		950
Foreign bonds	2,000		36		—		2,036
Total	$	745,730	$	5,374	$	5,502	$	745,602

	December 31, 2014
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	8,538	$	76	$	—	$	8,614
Ginnie Mae guaranteed mortgage certificates	5,038		194		—		5,232
GSE mortgage-backed securities	641,952		9,981		2,985		648,948
Collateralized mortgage obligations	45,494		59		283		45,270
Municipal bonds	44,378		1,986		—		46,364
Money market, mutual funds and certificates of deposit	3,458		—		52		3,406
Total	$	748,858	$	12,296	$	3,320	$	757,834

	December 31, 2014
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	677,501	$	6,202	$	2,507	$	681,196
Collateralized mortgage obligations	47,384		264		227		47,421
Municipal bonds	870		91		—		961
Foreign bonds	2,000		11		—		2,011
Total	$	727,755	$	6,568	$	2,734	$	731,589

Summary of continuous unrealized loss position for periods of less than 12 months and 12 months or longer

	At June 30, 2015
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	521,193	$	5,037	$	206,180	$	2,132	$	727,373	$	7,169
Collateralized mortgage obligations	17		1		42,764		369		42,781		370
Subtotal, debt securities	$	521,210	$	5,038	$	248,944	$	2,501	$	770,154	$	7,539
Mutual Funds	—		—		727		34		727		34
Total temporarily impaired securities	$	521,210	$	5,038	$	249,671	$	2,535	$	770,881	$	7,573

	At December 31, 2014
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	38,246	$	200	$	396,600	$	5,292	$	434,846	$	5,492
Collateralized mortgage obligations	31,990		170		22,881		340		54,871		510
Subtotal, debt securities	$	70,236	$	370	$	419,481	$	5,632	$	489,717	$	6,002
Mutual Funds	—		—		896		52		896		52
Total temporarily impaired securities	$	70,236	$	370	$	420,377	$	5,684	$	490,613	$	6,054

Summary of maturities investment securities

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
(Dollars are in thousands)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Due in one year or less	$	352	$	354	$	347	$	352
Due after one year through five years	4,685		4,865		8,268		8,531
Due after five years through ten years	23,515		24,152		28,870		29,666
Due after ten years	15,046		15,948		15,431		16,429
Mortgage-backed securities	634,552		640,821		692,484		699,450
Money market and mutual funds	3,669		3,635		3,458		3,406
Total	$	681,819	$	689,775	$	748,858	$	757,834
Held-to-maturity:
Due in one year or less	$	120	$	121	$	1,620	$	1,623
Due after one year through five years	2,495		2,571		995		1,052
Due after five years through ten years	255		294		255		297
Due after ten years	—		—		—		—
Mortgage-backed securities	742,860		742,616		724,885		728,617
Total	$	745,730	$	745,602	$	727,755	$	731,589

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Assets:
Securities available for sale	$ 689,775	$ 757,834
Securities held to maturity	745,602	731,589
Mortgage servicing rights	1,412	1,403
Accrued interest receivable	$ 13,657	13,383
Fair value of Financial instruments - other disclosures
Redemption price of FHLB (in dollars per share)	$ 100
Carrying Amount
Assets:
Securities available for sale	$ 689,775	757,834
Carrying Amount | Level 1
Assets:
Cash and cash equivalents	286,303	534,015
Carrying Amount | Level 2
Assets:
Securities held to maturity	745,730	727,755
Loans held for sale	1,391	1,461
Interest rate swaps	157	152
Liabilities:
Deposits.	3,375,131	3,879,709
Borrowed funds	190,396	190,388
Interest rate swaps	163	160
Accrued interest payable	1,681	1,743
Carrying Amount | Level 3
Assets:
FHLB stock	8,786	8,830
Loans, net	2,659,325	2,369,630
Mortgage servicing rights	1,412	1,403
Accrued interest receivable	13,657	13,383
Estimated Fair Value
Assets:
Securities available for sale	689,775	757,834
Estimated Fair Value | Level 1
Assets:
Cash and cash equivalents	286,303	534,015
Estimated Fair Value | Level 2
Assets:
Securities held to maturity	745,602	731,589
Loans held for sale	1,430	1,538
Interest rate swaps	157	152
Liabilities:
Deposits.	3,378,107	3,884,644
Borrowed funds	191,489	187,864
Interest rate swaps	163	160
Accrued interest payable	1,681	1,743
Estimated Fair Value | Level 3
Assets:
FHLB stock	8,786	8,830
Loans, net	2,693,594	2,418,826
Mortgage servicing rights	1,412	1,403
Accrued interest receivable	$ 13,657	$ 13,383

XML

STOCK BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2015

STOCK BASED COMPENSATION

Summary of non-vested stock award activity

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2015	534,738		$	8.89
Issued	238,900		11.41
Vested	(108,327	)	8.33
Forfeited	(46,211	)	8.48
Non-vested Stock Awards outstanding, June 30, 2015	619,100		10.00

The following table summarizes the non-vested stock award activity for the six months ended June 30, 2014:

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2014	566,668		$	8.37
Issued	150,136		10.77
Vested	(108,230	)	7.89
Forfeited	(67,314	)	10.31
Non-vested Stock Awards outstanding, June 30, 2014	541,260		8.90

Summary of stock option activity

	Number of Options		Weighted Exercise Price per Shares
January 1, 2015	3,568,887		$	9.51
Granted	166,075		11.41
Exercised	(137,644	)	9.39
Forfeited	(78,865	)	9.14
Expired	(88	)	8.90
June 30, 2015	3,518,365		9.61

	Number of Options		Weighted Exercise Price per Shares
January 1, 2014	3,164,247		$	9.20
Granted	741,882		10.77
Exercised	(210,850	)	9.72
Forfeited	(24,693	)	8.07
Expired	—		—
June 30, 2014	3,670,586		9.50

Schedule of weighted average assumptions used to calculate the fair value of the options

	For the Six Months Ended June 30,
	2015			2014
Weighted average fair value of options granted	$	3.98		$	3.97
Weighted average risk-free rate of return	1.74		%	2.04		%
Weighted average expected option life in months	78			78
Weighted average expected volatility	31.19		%	32.67		%
Expected dividends	$	—		$	—

XML

INVESTMENT SECURITIES (Details 3)	Jun. 30, 2015
GSE mortgage-backed securities
Summary of the significant inputs used in estimating potential credit losses for pooled trust preferred securities
Percentage of unrealized loss for securities in unrealized loss position for greater than 12 months	1.00%
Percentage of unrealized loss for securities in unrealized loss position for less than 12 months	1.00%
GSE Collateralized Mortgage Obligations (CMOs)
Summary of the significant inputs used in estimating potential credit losses for pooled trust preferred securities
Percentage of unrealized loss for securities in unrealized loss position for greater than 12 months	0.90%
Percentage of unrealized loss for securities in unrealized loss position for less than 12 months	0.30%

XML

INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
INCOME TAXES
Income tax (benefit) expense	$ 2,948	$ 1,502	$ 4,954	$ 1,437
Effective income tax rate (as a percent)	29.50%	(24.70%)	(28.70%)	16.90%
Tax at statutory rate (as a percent)			35.00%	35.00%
Increase/(reduction) in taxes resulting from:
Change in tax rate due to Tax-exempt income (as a percent)			(3.60%)	(9.80%)
Change in tax rate due to State and local income taxes (as a percent)			2.50%	2.20%
Change in tax rate due to Federal income tax credits (as a percent)			(3.70%)	(8.00%)

XML

Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
CASH AND CASH EQUIVALENTS:
Cash and due from banks	$ 48,114	$ 40,684
Overnight Investments	238,189	493,331
Total cash and cash equivalents	286,303	534,015
INVESTMENT SECURITIES:
Available-for-sale, at fair value (amortized cost of $681,819 and $748,858 at June 30, 2015 and December 31, 2014, respectively)	689,775	757,834
Held-to-maturity (estimated fair value of $745,602 and $731,589 at June 30, 2015 and December 31, 2014, respectively)	745,730	727,755
Federal Home Loan Bank stock, at cost	8,786	8,830
Total investment securities	1,444,291	1,494,419
LOANS:	2,708,508	2,421,745
Allowance for loan losses	(47,792)	(50,654)
Net loans	2,660,716	2,371,091
ACCRUED INTEREST RECEIVABLE	13,657	13,383
BANK PREMISES AND EQUIPMENT, Net	79,159	78,957
OTHER ASSETS:
Goodwill	121,973	121,973
Bank owned life insurance	64,647	63,349
Other intangibles	5,203	6,136
Other assets	60,550	68,199
Total other assets	252,373	259,657
TOTAL ASSETS	4,736,499	4,751,522
Deposits:
Non-interest bearing deposits	381,667	369,683
Interest-bearing deposits	2,993,464	3,510,026
Total deposits	3,375,131	3,879,709
Borrowed funds	190,396	190,388
Other liabilities	69,162	70,531
Total liabilities	$ 3,634,689	$ 4,140,628
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY:
Preferred Stock - $.01 par value; 100,000,000 shares authorized, None issued or outstanding as of June 30, 2015 and December 31, 2014, respectively
Common Stock - $.01 par value 500,000,000 shares authorized, 82,850,317 and 90,809,621 issued and 82,820,428 and 82,698,392 outstanding, as of June 30, 2015 and December 31, 2014, respectively	$ 829	$ 826
Additional paid-in capital	784,587	362,685
Unearned common stock held by employee savings and stock ownership plan	(33,248)	(14,306)
Retained earnings (partially restricted)	372,364	360,058
Accumulated other comprehensive loss	(22,382)	(22,663)
Treasury Stock at cost, 29,889 shares and 8,111,229 shares at June 30, 2015 and December 31, 2014, respectively	(340)	(75,706)
Total stockholders' equity	1,101,810	610,894
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 4,736,499	$ 4,751,522

XML

NATURE OF OPERATIONS (Details) $ / shares in Units, $ in Millions		6 Months Ended
	Jan. 12, 2015 USD ($) $ / shares shares	Jun. 30, 2015 shares	Dec. 31, 2014 shares
Existing outstanding common stock shares for conversion		82,820,428	82,698,392
Second-step conversion and stock offering
Gross proceeds from common stock | $	$ 503.8
Issuance of common shares (in shares)	50,383,817
Price per share (in dollars per share) | $ / shares	$ 10.00
Existing outstanding common stock shares for conversion	29,394,417
Exchange ratio	1.0999	1.0999
Second-step conversion and stock offering | Bank's employee savings and stock ownership plan
Issuance of common shares (in shares)	2,015,352	2,015,352
Exchange ratio		1.0999

XML

Condensed Consolidated Statemend of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Condensed Consolidated Statements of Comprehensive Income
Unrealized holding (losses)gains on available-for-sale securities arising during the period, deferred tax	$ 377	$ 6,765
Unrealized losses on available-for-sale securities transferred to held-to-maturity during the period, deferred tax		1,990
Accretion of unrealized losses on available-for-sale securities transferred to held-to-maturity, deferred tax	153	109
Reclassification adjustment for net losses (gains) on available-for-sale securities included in net income, tax	3	109
Pension gains, other postretirement and postemployment benefit plan adjustments, tax	$ 490	$ 265

XML

LOANS (Details 4) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Amounts and percentage of portfolio
Amount of portfolio	$ 2,708,508	$ 2,421,745
Consumer
Amounts and percentage of portfolio
Amount of portfolio	$ 622,052	$ 632,701
Percentage of portfolio	100.00%	100.00%
Collateral deficiency for loans, period when charged off	90 days
Consumer | Consumer - Home equity and lines of credit
Amounts and percentage of portfolio
Amount of portfolio	$ 226,706	$ 227,055
Percentage of portfolio	100.00%	100.00%
Consumer | Consumer - Personal
Amounts and percentage of portfolio
Amount of portfolio	$ 24,583	$ 28,668
Percentage of portfolio	100.00%	100.00%
Consumer | Consumer - Education
Amounts and percentage of portfolio
Amount of portfolio	$ 189,409	$ 195,185
Percentage of portfolio	100.00%	100.00%
Consumer | Consumer -Automobile
Amounts and percentage of portfolio
Amount of portfolio	$ 181,354	$ 181,793
Percentage of portfolio	100.00%	100.00%
Performing | Consumer
Amounts and percentage of portfolio
Amount of portfolio	$ 594,859	$ 605,436
Percentage of portfolio	96.00%	96.00%
Performing | Consumer | Consumer - Home equity and lines of credit
Amounts and percentage of portfolio
Amount of portfolio	$ 224,973	$ 225,197
Percentage of portfolio	99.00%	99.00%
Performing | Consumer | Consumer - Personal
Amounts and percentage of portfolio
Amount of portfolio	$ 24,583	$ 28,557
Percentage of portfolio	100.00%	100.00%
Performing | Consumer | Consumer - Education
Amounts and percentage of portfolio
Amount of portfolio	$ 163,949	$ 169,889
Percentage of portfolio	87.00%	87.00%
Performing | Consumer | Consumer -Automobile
Amounts and percentage of portfolio
Amount of portfolio	$ 181,354	$ 181,793
Percentage of portfolio	100.00%	100.00%
Nonperforming | Consumer
Amounts and percentage of portfolio
Amount of portfolio	$ 27,193	$ 27,265
Percentage of portfolio	4.00%	4.00%
Nonperforming | Consumer | Consumer - Home equity and lines of credit
Amounts and percentage of portfolio
Amount of portfolio	$ 1,733	$ 1,858
Percentage of portfolio	1.00%	1.00%
Nonperforming | Consumer | Consumer - Personal
Amounts and percentage of portfolio
Amount of portfolio		$ 111
Nonperforming | Consumer | Consumer - Education
Amounts and percentage of portfolio
Amount of portfolio	$ 25,460	$ 25,296
Percentage of portfolio	13.00%	13.00%

XML

OTHER ASSETS (Tables)

6 Months Ended

Jun. 30, 2015

OTHER ASSETS.

Schedule of other assets

	June 30,		December 31,
(Dollars in thousands)	2015		2014
Investments in affordable housing and other partnerships	$	10,113	$	10,131
Prepaid assets	2,775		2,197
Net deferred tax assets	43,416		43,685
Other real estate	1,359		1,578
Fixed assets held for sale	179		391
Mortgage servicing rights	1,412		1,403
All other assets	1,296		8,814
Total other assets	$	60,550	$	68,199

XML

GOODWILL AND OTHER INTANGIBLES (Details 2) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Total
Goodwill and Other Intangibles
Impairment	$ 0
Summary of intangible assets
Balance at the beginning of the period	6,136
Amortization	(933)
Balance at the end of the period	$ 5,203
Core deposit
Goodwill and Other Intangibles
Estimated useful life	10 years
Summary of intangible assets
Balance at the end of the period	$ 3,200
Customer relationships and other
Goodwill and Other Intangibles
Estimated useful life	6 years

XML

PENSION AND OTHER POSTRETIREMENT BENEFITS

6 Months Ended

Jun. 30, 2015

PENSION AND OTHER POSTRETIREMENT BENEFITS

PENSION AND OTHER POSTRETIREMENT BENEFITS

NOTE 13 — PENSION AND OTHER POSTRETIREMENT BENEFITS

The Bank has noncontributory defined benefit pension plans covering many of its employees.  Additionally, the Company sponsors nonqualified supplemental employee retirement plans for certain participants.  The Bank also provides certain postretirement benefits to qualified former employees.  These postretirement benefits principally pertain to certain health and life insurance coverage. Information relating to these employee benefits program are included in the tables that follow.

Effective June 30, 2008, the defined pension benefits for Bank employees were frozen at the current levels. Additionally, the Bank enhanced its 401(k) Plan and combined it with its Employee Stock Ownership Plan to fund employer contributions. As part of the second-step conversion, the Bank’s employee stock ownership plan purchased 2,015,352 shares to be used to fund future contributions into the plan.

The components of net pension cost are as follows:

	Pension Benefits						Other Postretirement Benefits
	Three Months Ended June 30,						Three Months Ended June 30,
(Dollars in thousands)	2015			2014			2015			2014
Service cost	$	—		$	—		$	43		$	19
Interest cost	958			950			214			210
Expected return on assets	(1,655		)	(1,516		)	—			—
Amortization of loss	616			320			90			1
Amortization of prior service cost	—			—			(129		)	(131		)
Amortization of transition obligation	—			—			—			41
Net periodic pension (benefit) cost	$	(81	)	$	(246	)	$	218		$	140

	Pension Benefits						Other Postretirement Benefits
	Six Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Service cost	$	—		$	—		$	87		$	64
Interest cost	1,916			1,910			429			450
Expected return on assets	(3,310		)	(3,028		)	—			—
Amortization of loss	1,231			671			180			43
Amortization of prior service cost	—			—			(259		)	(263		)
Amortization of transition obligation	—			—			—			82
Net periodic pension (benefit) cost	$	(163	)	$	(447	)	$	437		$	376

XML

DEPOSITS (Tables)

6 Months Ended

Jun. 30, 2015

DEPOSITS

Schedule of major classifications of deposits

	June 30,		% of Total		December 31,		% of Total
(Dollars in thousands)	2015		Deposits		2014		Deposits
Non-interest bearing deposits	$	381,667	11.3	%	$	369,683	9.5	%
Interest-earning checking accounts	659,645		19.5	%	632,345		16.3	%
Stock subscription proceeds deposited in interest bearing account (1)	—		—		463,036		11.9	%
Municipal checking accounts	108,604		3.2	%	179,439		4.6	%
Money market accounts	422,916		12.5	%	424,789		11.0	%
Savings accounts	1,145,543		34.0	%	1,126,848		29.1	%
Certificates of deposit	656,756		19.5	%	683,569		17.6	%
Total deposits	$	3,375,131	100.0	%	$	3,879,709	100.0	%

(1) Additional stock subscription proceeds of $19.1 million were held in escrow in various deposit accounts at December 31, 2014.

XML

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2015

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 15 — COMMITMENTS AND CONTINGENCIES

At June 30, 2015 and December 31, 2014, the Company had outstanding commitments to purchase or originate loans aggregating $27.5 million and $32.0 million, respectively, commitments to customers on available lines of credit of $206.1 million and $188.4 million, respectively, and standby letters of credit of $6.5 million and $8.0 million, respectively.  Commitments are issued in accordance with the same policies and underwriting procedures as settled loans.  The Bank had a reserve for its unfunded commitments of $244 thousand and $211 thousand at June 30, 2015 and December 31, 2014, respectively.

Periodically, there have been various claims and lawsuits against the Company, such as claims to enforce liens, condemnation proceedings on properties in which it holds security interests, claims involving the making and servicing of real property loans and other issues incident to its business.  The Company is not a party to any pending legal proceedings that it believes would have a material adverse effect on its financial condition, results of operations or cash flows.

XML

BORROWED FUNDS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Summary of borrowed funds
FHLB advances	$ 165,000	$ 165,000
Statutory trust debenture	25,396	25,388
Borrowed funds	$ 190,396	$ 190,388

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Second-step conversion and stock offering Common Stock	Second-step conversion and stock offering Additional Paid In Capital	Second-step conversion and stock offering Common Stock held by KSOP	Second-step conversion and stock offering Treasury Stock	Second-step conversion and stock offering	Common Stock	Additional Paid In Capital	Common Stock held by KSOP	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total
BALANCE at Dec. 31, 2014						$ 826	$ 362,685	$ (14,306)	$ 360,058	$ (75,706)	$ (22,663)	$ 610,894
BALANCE (in shares) at Dec. 31, 2014						90,809,621
Increase (Decrease) in Stockholders' Equity
Net Income									12,306			12,306
KSOP shares committed to be released							337	1,211				1,548
Stock option expense							816					816
Restricted stock expense							613					613
Stock options exercised						$ 2	1,292					1,292
Stock options exercised (in shares)						137,644
Purchase of treasury stock										(340)		(340)
Net unrealized losses on AFS securities arising during the period (net of deferred tax of $377)											(652)	(652)
Accretion of unrealized losses on AFS securities transferred to HTM during the period (net of deferred tax of $153)											265	265
Reclassification adjustment for net losses on AFS securities included in net income (net of tax of $3)											6	6
Pension, other postretirement and postemployment benefit plan adjustments (net of tax of $490)											662	662
Issuance of common shares	$ 1	$ 494,550	$ (20,153)		$ 474,400
Issuance of common shares (in shares)	50,383,817
Retirement of MHC shares (in shares)	(50,367,473)
Conversion of existing shares at 1.0999 exchange ratio, net of fractional shares (in shares)	(2,063)
Treasury stock retired		$ (75,706)		$ 75,706
Treasury stock retired (in shares)	(8,111,229)
BALANCE at Jun. 30, 2015						$ 829	$ 784,587	$ (33,248)	$ 372,364	$ (340)	$ (22,382)	$ 1,101,810
BALANCE (in shares) at Jun. 30, 2015						82,850,317

XML

Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Condensed Consolidated Statements of Financial Condition
Available-for-sale, amortized cost (in dollars)	$ 681,819	$ 748,858
Investment securities held-to-maturity, estimated fair value	$ 745,602	$ 731,589
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, shares authorized	100,000,000	100,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, shares authorized	500,000,000	500,000,000
Common Stock, shares issued	82,850,317	90,809,621
Common Stock, shares outstanding	82,820,428	82,698,392
Treasury Stock, shares	29,889	8,111,229

XML

OTHER ASSETS

6 Months Ended

Jun. 30, 2015

OTHER ASSETS.

OTHER ASSETS

NOTE 8 — OTHER ASSETS

The following table provides selected information on other assets at June 30, 2015 and December 31, 2014:

	June 30,		December 31,
(Dollars in thousands)	2015		2014
Investments in affordable housing and other partnerships	$	10,113	$	10,131
Prepaid assets	2,775		2,197
Net deferred tax assets	43,416		43,685
Other real estate	1,359		1,578
Fixed assets held for sale	179		391
Mortgage servicing rights	1,412		1,403
All other assets	1,296		8,814
Total other assets	$	60,550	$	68,199

The Company follows the authoritative guidance under ASC 860-50 - Servicing Assets and Liabilities to account for its mortgage servicing rights (“MSRs”). The Company utilizes the fair value measurement method to value its existing mortgage servicing assets at fair value in accordance with ASC 860-50.  Under the fair value measurement method, the Company measures its MSRs at fair value at each reporting date and reports changes in the fair value of its MSRs in earnings in the period in which the changes occur.  See Note 18 for further discussion of MSRs.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 30, 2015
Document and Entity Information
Entity Registrant Name	Beneficial Bancorp Inc.
Entity Central Index Key	0001615418
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		82,824,449
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2

XML

DEPOSITS

6 Months Ended

Jun. 30, 2015

DEPOSITS

DEPOSITS

NOTE 9 — DEPOSITS

Deposits consisted of the following major classifications at June 30, 2015 and December 31, 2014:

	June 30,		% of Total		December 31,		% of Total
(Dollars in thousands)	2015		Deposits		2014		Deposits
Non-interest bearing deposits	$	381,667	11.3	%	$	369,683	9.5	%
Interest-earning checking accounts	659,645		19.5	%	632,345		16.3	%
Stock subscription proceeds deposited in interest bearing account (1)	—		—		463,036		11.9	%
Municipal checking accounts	108,604		3.2	%	179,439		4.6	%
Money market accounts	422,916		12.5	%	424,789		11.0	%
Savings accounts	1,145,543		34.0	%	1,126,848		29.1	%
Certificates of deposit	656,756		19.5	%	683,569		17.6	%
Total deposits	$	3,375,131	100.0	%	$	3,879,709	100.0	%

(1) Additional stock subscription proceeds of $19.1 million were held in escrow in various deposit accounts at December 31, 2014.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets:
Mortgage servicing rights	$ 1,412	$ 1,403
Investment securities available-for-sale, estimated fair value	689,775	757,834
U. S. GSE and agency notes
Assets:
Investment securities available-for-sale, estimated fair value	7,350	8,614
GNMA guaranteed mortgage certificates
Assets:
Investment securities available-for-sale, estimated fair value	4,918	5,232
GSE Collateralized Mortgage Obligations (CMOs)
Assets:
Investment securities available-for-sale, estimated fair value	38,231
GSE mortgage-backed securities
Assets:
Investment securities available-for-sale, estimated fair value	597,672	648,948
Corporate securities
Assets:
Investment securities available-for-sale, estimated fair value	5,045
Recurring
Assets:
Mortgage servicing rights	1,412	1,403
Total Assets	691,344	759,389
Liabilities:
Total Liabilities	163	160
Recurring | Interest rate swaps
Assets:
Interest rate swap agreements	157	152
Liabilities:
Interest rate swap agreements	163	160
Recurring | U. S. GSE and agency notes
Assets:
Investment securities available-for-sale, estimated fair value	7,350	8,614
Recurring | GNMA guaranteed mortgage certificates
Assets:
Investment securities available-for-sale, estimated fair value	4,918	5,232
Recurring | GSE Collateralized Mortgage Obligations (CMOs)
Assets:
Investment securities available-for-sale, estimated fair value	38,231	45,270
Recurring | GSE mortgage-backed securities
Assets:
Investment securities available-for-sale, estimated fair value	597,672	648,948
Recurring | General obligation municipal bonds
Assets:
Investment securities available-for-sale, estimated fair value	16,231	29,580
Recurring | Revenue municipal bonds
Assets:
Investment securities available-for-sale, estimated fair value	16,693	16,784
Recurring | Corporate securities
Assets:
Investment securities available-for-sale, estimated fair value	5,045
Recurring | Money market funds
Assets:
Investment securities available-for-sale, estimated fair value	2,908	2,510
Recurring | Mutual funds
Assets:
Investment securities available-for-sale, estimated fair value	727	896
Recurring | Level 1
Assets:
Total Assets	3,635	3,406
Recurring | Level 1 | Money market funds
Assets:
Investment securities available-for-sale, estimated fair value	2,908	2,510
Recurring | Level 1 | Mutual funds
Assets:
Investment securities available-for-sale, estimated fair value	727	896
Recurring | Level 2
Assets:
Total Assets	686,297	754,580
Liabilities:
Total Liabilities	163	160
Recurring | Level 2 | Interest rate swaps
Assets:
Interest rate swap agreements	157	152
Liabilities:
Interest rate swap agreements	163	160
Recurring | Level 2 | U. S. GSE and agency notes
Assets:
Investment securities available-for-sale, estimated fair value	7,350	8,614
Recurring | Level 2 | GNMA guaranteed mortgage certificates
Assets:
Investment securities available-for-sale, estimated fair value	4,918	5,232
Recurring | Level 2 | GSE Collateralized Mortgage Obligations (CMOs)
Assets:
Investment securities available-for-sale, estimated fair value	38,231	45,270
Recurring | Level 2 | GSE mortgage-backed securities
Assets:
Investment securities available-for-sale, estimated fair value	597,672	648,948
Recurring | Level 2 | General obligation municipal bonds
Assets:
Investment securities available-for-sale, estimated fair value	16,231	29,580
Recurring | Level 2 | Revenue municipal bonds
Assets:
Investment securities available-for-sale, estimated fair value	16,693	16,784
Recurring | Level 2 | Corporate securities
Assets:
Investment securities available-for-sale, estimated fair value	5,045
Recurring | Level 3
Assets:
Mortgage servicing rights	1,412	1,403
Total Assets	$ 1,412	$ 1,403

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
INTEREST INCOME:
Interest and fees on loans	$ 28,196	$ 26,202	$ 54,461	$ 52,660
Interest on overnight investments	157	190	426	379
Interest and dividends on investment securities:
Taxable	7,215	7,736	15,126	15,530
Tax-exempt	394	658	892	1,321
Total interest income	35,962	34,786	70,905	69,890
Interest on deposits:
Interest bearing checking accounts	381	422	805	865
Money market and savings deposits	1,334	1,349	2,641	2,678
Time deposits	1,762	1,988	3,595	3,989
Total	3,477	3,759	7,041	7,532
Interest on borrowed funds	1,261	1,810	2,508	3,611
Total interest expense	4,738	5,569	9,549	11,143
Net interest income	31,224	29,217	61,356	58,747
Provision for loan losses	(1,600)	250	(3,600)	1,750
Net interest income after provision for loan losses	32,824	28,967	64,956	56,997
NON-INTEREST INCOME:
Insurance and advisory commission and fee income	1,486	1,609	3,472	3,690
Service charges and other income	5,425	4,503	8,932	7,705
Mortgage banking income	267	115	394	240
Net (loss) gain on sale of investment securities	(4)	94	(9)	297
Total non-interest income	7,174	6,321	12,789	11,932
NON-INTEREST EXPENSE:
Salaries and employee benefits	15,845	14,783	31,337	29,793
Occupancy expense	2,211	2,436	5,008	6,054
Depreciation, amortization and maintenance	2,174	2,117	4,475	4,594
Marketing expense	1,148	736	2,464	1,621
Intangible amortization expense	467	467	933	934
FDIC insurance	512	805	1,060	1,588
Professional fees	1,297	1,034	2,852	2,389
Classified loan & other real estate owned related expense	799	627	1,091	969
Other	5,542	6,205	11,265	12,502
Total non-interest expense	29,995	29,210	60,485	60,444
Income before income taxes	10,003	6,078	17,260	8,485
Income tax expense	2,948	1,502	4,954	1,437
Net Income	$ 7,055	$ 4,576	$ 12,306	$ 7,048
EARNINGS PER SHARE - Basic (in dollars per share)	$ 0.09	$ 0.06	$ 0.16	$ 0.09
EARNINGS PER SHARE - Diluted (in dollars per share)	$ 0.09	$ 0.06	$ 0.16	$ 0.09
Average common shares outstanding - Basic (in shares)	78,374,704	80,907,413	78,414,226	81,280,507
Average common shares outstanding - Diluted (in shares)	79,058,474	81,603,832	79,067,396	81,939,284

XML

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2015

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 3 — CHANGES IN AND RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following tables present the changes in the balances of each component of accumulated other comprehensive income (“AOCI”) for the six months ended June 30, 2015 and June 30, 2014.  All amounts are presented net of tax.

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2015	$	2,711		$	(25,374	)	$	(22,663	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding losses on AFS securities	(652		)	—			(652		)
Accretion of unrealized losses on AFS securities transferred to HTM	265			—			265
Amount reclassified from accumulated other comprehensive loss	6			662			668
Net current-period other comprehensive income	(381		)	662			281
Ending balance, June 30, 2015	$	2,330		$	(24,712	)	$	(22,382	)

	Net unrealized
	holding gains on
	available-for-sale			Defined benefit
(Dollars in thousands)	securities			pension plan items			Total
Beginning balance, January 1, 2014	$	(5,078	)	$	(16,276	)	$	(21,354	)
Changes in other comprehensive loss before reclassifications:
Unrealized holding gains on AFS securities	11,644			—			11,644
Unrealized losses on AFS securities transferred to HTM	(3,426		)	—			(3,426		)
Accretion of unrealized losses on AFS securities transferred to HTM	189			—			189
Amount reclassified from accumulated other comprehensive loss	(188		)	268			80
Net current-period other comprehensive income	8,219			268			8,487
Ending balance, June 30, 2014	$	3,141		$	(16,008	)	$	(12,867	)

The following tables present reclassifications out of AOCI by component for the six months ended June 30, 2015 and June 30, 2014:

For the Six Months Ended June 30, 2015

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
Components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	9		Net loss on sale of investment securities
	(3		)	Income tax benefit
	$	6		Net of tax
Amortization of defined benefit pension items
Prior service costs	$	(259	)(1)	Other non-interest expense
Net recognized actuarial losses	1,411		(1)	Other non-interest expense
	$	1,152		Total before tax
	(490		)	Income tax benefit
	$	662		Net of tax

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

For the Six Months Ended June 30, 2014

(Dollars in thousands)

Details about accumulated	Amount reclassified			Affected line item in
other comprehensive loss	from accumulated other			the consolidated statements
components	comprehensive loss			of operations
Unrealized gains and losses on available-for-sale securities
	$	(297	)	Net gain on sale of investment securities
	109			Income tax expense
	$	(188	)	Net of tax
Amortization of defined benefit pension items
Transition obligation	$	82	(1)	Other non-interest expense
Prior service costs	(263		)(1)	Other non-interest expense
Net recognized actuarial losses	714		(1)	Other non-interest expense
	$	533		Total before tax
	(265		)	Income tax benefit
	$	268		Net of tax

(1) These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost.  See Note 13 - Pension and Other Postretirement Benefits for additional details.

XML

NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2015

NATURE OF OPERATIONS

NATURE OF OPERATIONS

NOTE 2 — NATURE OF OPERATIONS

The Company is a Maryland corporation that was incorporated in August 2014 to be the successor to Beneficial Mutual Bancorp, Inc. (“Beneficial Mutual Bancorp”) upon completion of the second-step conversion of the Bank from the two-tier mutual holding company structure to the stock holding company structure. Beneficial Savings Bank MHC was the former mutual holding company for Beneficial Mutual Bancorp prior to completion of the second-step conversion. In conjunction with the second-step conversion, each of Beneficial Savings Bank MHC and Beneficial Mutual Bancorp ceased to exist. The second-step conversion was completed on January 12, 2015, at which time the Company sold, for gross proceeds of $503.8 million, a total of 50,383,817 shares of common stock at $10.00 per share, including 2,015,352 shares purchased by the Bank’s employee savings and stock ownership plan. As part of the second-step conversion, each of the existing 29,394,417 outstanding shares of Beneficial Mutual Bancorp common stock owned by persons other than Beneficial Savings Bank MHC was converted into 1.0999 of a share of Company common stock. As a result of the second-step conversion, all share information prior to January 12, 2015 has been subsequently revised to reflect the 1.0999 exchange ratio.

The consolidated financial statements include the accounts of the Company, the Bank, a Pennsylvania chartered savings bank, and the Bank’s subsidiaries. Because the Bank’s second-step conversion was completed on January 12, 2015, all financial and other information before that date that is included in this Quarterly Report on Form 10-Q is derived from the consolidated financial statements of Beneficial Mutual Bancorp.

The Company owns 100% of the issued and outstanding common stock of the Bank, a Pennsylvania chartered bank. The Bank offers a variety of consumer and commercial banking services to individuals, businesses, and nonprofit organizations through 56 offices throughout the Philadelphia and Southern New Jersey area. The Bank is supervised and regulated by the Pennsylvania Department of Banking and Securities Department and the Federal Deposit Insurance Corporation (the “FDIC”). The Company is regulated by the Board of Governors of the Federal Reserve System the Federal Reserve Board. The deposits of the Bank are insured up to the applicable legal limits by the Deposit Insurance Fund of the FDIC.

XML

STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2015

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE 14 — STOCK BASED COMPENSATION

Stock-based compensation is accounted for in accordance with FASB ASC Topic 718 for Compensation — Stock Compensation.  The Company establishes fair value for its equity awards to determine their cost. The Company recognizes the related expense for employees over the appropriate vesting period, or when applicable, service period, using the straight-line method. However, consistent with the guidance, the amount of stock-based compensation recognized at any date must at least equal the portion of the grant date value of the award that is vested at that date. As a result, it may be necessary to recognize the expense using a ratable method.

The Company’s 2008 Equity Incentive Plan (“EIP”) authorizes the issuance of shares of common stock pursuant to awards that may be granted in the form of stock options to purchase common stock (“options”) and awards of shares of common stock (“stock awards”). The purpose of the Company’s stock-based incentive plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors and employees. In order to fund grants of stock awards under the EIP, the Equity Incentive Plan Trust (the “EIP Trust”) purchased 1,773,463 shares of Company common stock in the open market for approximately $19.0 million during the year ended December 31, 2008. The Company funded the stock purchases. The acquisition of these shares by the EIP Trust reduced the Company’s outstanding additional paid in capital. The EIP shares will generally vest at a rate of 20% over five years. As of June 30, 2015, 926,558 shares were fully vested and 491,723 shares were forfeited. All grants that were issued contain a service condition in order for the shares to vest. Awards of common stock include awards to certain officers of the Company that will vest only if the Company achieves a return on average assets of 1% or if the Company achieves a return on average assets within the top 25% of the SNL index of nationwide thrifts with total assets between $1.0 billion and $10.0 billion nationwide in the fifth full year subsequent to the grant.  As a result of the second-step conversion, the 2014 period shares disclosed in this footnote were adjusted to reflect the 1.0999 exchange ratio.

Compensation expense related to the stock awards is recognized ratably over the five-year vesting period in an amount which totals the market price of the Company’s stock at the grant date. The expense recognized for the three and six months ended June 30, 2015 was $340 thousand and $613 thousand, respectively, as compared to $287 thousand and $501 thousand, respectively, for the three and six months ended June 30, 2014.

The following table summarizes the non-vested stock award activity for the six months ended June 30, 2015:

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2015	534,738		$	8.89
Issued	238,900		11.41
Vested	(108,327	)	8.33
Forfeited	(46,211	)	8.48
Non-vested Stock Awards outstanding, June 30, 2015	619,100		10.00

The following table summarizes the non-vested stock award activity for the six months ended June 30, 2014:

Summary of Non-vested Stock Award Activity	Number of Shares		Weighted Average Grant Price
Non-vested Stock Awards outstanding, January 1, 2014	566,668		$	8.37
Issued	150,136		10.77
Vested	(108,230	)	7.89
Forfeited	(67,314	)	10.31
Non-vested Stock Awards outstanding, June 30, 2014	541,260		8.90

The fair value of the 108,327 shares that vested during the six months ended June 30, 2015 was $1.2 million. The fair value of the 108,230 shares that vested during the six months ended June 30, 2014 was $1.3 million.

The EIP authorizes the grant of options to officers, employees, and directors of the Company to acquire shares of common stock with an exercise price equal to the fair value of the common stock at the grant date. Options expire ten years after the date of grant, unless terminated earlier under the option terms. Options are granted at the then fair market value of the Company’s stock. The options were valued using the Black-Scholes option pricing model. During the six months ended June 30, 2015, the Company granted 166,075 options compared to 741,882 options granted during the six months ended June 30, 2014. All options issued contain vesting conditions that require the participant’s continued service. The options generally vest and are exercisable over five years. Compensation expense for the options totaled $379 thousand and $816 thousand, for the three and six months ended June 30, 2015, respectively, compared to $399 thousand and $765 thousand for the three months and six months ended June 30, 2014, respectively.

A summary of option activity as of June 30, 2015 and changes during the six month period ended June 30, 2015 is presented below:

	Number of Options		Weighted Exercise Price per Shares
January 1, 2015	3,568,887		$	9.51
Granted	166,075		11.41
Exercised	(137,644	)	9.39
Forfeited	(78,865	)	9.14
Expired	(88	)	8.90
June 30, 2015	3,518,365		9.61

A summary of option activity as of June 30, 2014 and changes during the six month period ended June 30, 2015 is presented below:

	Number of Options		Weighted Exercise Price per Shares
January 1, 2014	3,164,247		$	9.20
Granted	741,882		10.77
Exercised	(210,850	)	9.72
Forfeited	(24,693	)	8.07
Expired	—		—
June 30, 2014	3,670,586		9.50

The weighted average remaining contractual term was approximately 6.12 years and the aggregate intrinsic value was $10.1 million for options outstanding as of June 30, 2015.  As of June 30, 2015, exercisable options totaled 2,141,808 with an average weighted exercise price of $9.57 per share, a weighted average remaining contractual term of approximately 4.88 years, and an aggregate intrinsic value of $6.3 million.  The weighted average remaining contractual term was approximately 6.93 years and the aggregate intrinsic value was $10.4 million for options outstanding as of June 30, 2014.  As of June 30, 2014, exercisable options totaled 1,876,341 with an average weighted exercise price of $9.67 per share, a weighted average remaining contractual term of approximately 5.27 years, and an aggregate intrinsic value of $5.0 million.

Significant weighted average assumptions used to calculate the fair value of the options for the six months ended June 30, 2015 and 2014 are as follows:

	For the Six Months Ended June 30,
	2015			2014
Weighted average fair value of options granted	$	3.98		$	3.97
Weighted average risk-free rate of return	1.74		%	2.04		%
Weighted average expected option life in months	78			78
Weighted average expected volatility	31.19		%	32.67		%
Expected dividends	$	—		$	—

As of June 30, 2015, there was $4.4 million of total unrecognized compensation cost related to options and $4.8 million in unrecognized compensation cost related to non-vested stock awards granted under the EIP.  As of June 30, 2014, there was $5.7 million of total unrecognized compensation cost related to options and $3.5 million in unrecognized compensation cost related to non-vested stock awards granted under the EIP.  The average weighted lives for the option expense were 3.18 and 3.79 years as of June 30, 2015 and June 30, 2014, respectively. The average weighted lives for the stock award expense were 3.77 and 3.62 years at June 30, 2015 and June 30, 2014, respectively.

XML

BORROWED FUNDS

6 Months Ended

Jun. 30, 2015

BORROWED FUNDS

BORROWED FUNDS

NOTE 10 — BORROWED FUNDS

Borrowed funds at June 30, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	June 30, 2015		December 31, 2014
FHLB advances	$	165,000	$	165,000
Statutory trust debenture	25,396		25,388
Total borrowed funds	$	190,396	$	190,388

The Company pledges loans to secure its borrowings at the Federal Reserve Bank of Philadelphia. At June 30, 2015 and December 31, 2014, loans in the amount of $217.1 million and $237.8 million, respectively, were pledged to secure the Company’s borrowing capacity at the Federal Reserve Bank of Philadelphia.

XML

MORTGAGE SERVICING RIGHTS (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
MORTGAGE SERVICING RIGHTS
Residential mortgages serviced	$ 148,700	$ 153,600	$ 148,700	$ 153,600
Servicing fee income	93	96	188	194
Residential MSR's
Balance at the beginning of the period			1,403
Increases/(decreases) in fair value due to
Balance at the end of the period	1,412		1,412
Residential real estate
Residential MSR's
Balance at the beginning of the period			1,403	1,524
Additions			85	35
Increases/(decreases) in fair value due to
Changes in valuation input or assumptions			5	(47)
Paydowns			(81)	(73)
Balance at the end of the period	$ 1,412	$ 1,439	$ 1,412	$ 1,439

XML

LOANS

6 Months Ended

Jun. 30, 2015

LOANS.

LOANS

NOTE 6 — LOANS

Loans at June 30, 2015 and December 31, 2014 are summarized as follows:

(Dollars in thousands)	June 30, 2015			December 31, 2014
Commercial:
Commercial real estate	$	831,831		$	609,646
Commercial business loans	477,385			442,190
Commercial construction	65,765			69,140
Total commercial loans	1,374,981			1,120,976
Residential:
Residential real estate	711,213			667,800
Residential construction	262			268
Total residential loans	711,475			668,068
Consumer loans:
Home equity & lines of credit	226,706			227,055
Personal	24,583			28,668
Education	189,409			195,185
Automobile	181,354			181,793
Total consumer loans	622,052			632,701
Total loans	2,708,508			2,421,745
Allowance for losses	(47,792		)	(50,654		)
Loans, net	$	2,660,716		$	2,371,091

As of June 30, 2015, commercial real estate loans include a $200.1 million participation in a portfolio of multi-family loans that was entered into during the first quarter of 2015.  The Company also purchased $35.4 million of residential real estate loans during the six months ended June 30, 2015. These loans all met the Company’s underwriting standards and are secured by real estate located within the Company’s market area.

Included in the balance of residential loans are approximately $1.4 million and $1.5 million of loans held for sale at June 30, 2015 and December 31, 2014, respectively. These loans are carried at the lower of cost or estimated fair value, on an aggregate basis. Loans held for sale are loans originated by the Bank to be sold to a third party who is under contractual obligation to purchase the loans from the Bank.  For the three and six months ended June 30, 2015, the Bank sold residential mortgage loans with an unpaid principal balance of approximately $4.3 million and $9.8 million, respectively, and recorded mortgage banking income of approximately $267 thousand and $394 thousand, respectively.  The Bank retained the related servicing rights for the loans that were sold to Fannie Mae and receives a 25 basis point servicing fee from the purchaser of the loans.

Commercial business loans include shared national credits, which are participations in loans or loan commitments of at least $20.0 million that are shared by three or more banks.  Included in the shared national credit portfolio are purchased participations and assignments in leveraged lending transactions.  Leveraged lending transactions are generally used to support a merger- or acquisition-related transaction, to back a recapitalization of a company’s balance sheet or to refinance debt.  When considering a participation in the leveraged lending market, the Company will participate only in first lien senior secured term loans that are highly rated (investment grade) by the rating agencies and that trade in active secondary markets.  The Company actively monitors the secondary market for these types of loans to ensure that it maintains flexibility to sell such loans in the event of deteriorating credit quality.  To further minimize risk and based on our current capital levels and loan portfolio, the Company has limited the total amount of leveraged loans to $150.0 million with no single obligor exceeding $15.0 million while maintaining single industry concentrations below 30% of the leveraged lending limit. The Company may reevaluate these limits in future periods.

The shared national credit loans are typically variable rate with terms ranging from one to seven years.  At June 30, 2015, shared national credits totaled $216.8 million, which included $131.1 million of leveraged lending transactions. All of these loans were classified as pass rated as of June 30, 2015 as all payments are current and the loans are performing in accordance with their contractual terms.

Allowance for Loan Losses

The allowance for loan losses is a valuation allowance for probable losses inherent in the loan portfolio.  The Company evaluates the appropriateness of the allowance for loan losses balance on loans on a quarterly basis.  When additional allowances are necessary, a provision for loan losses is charged to earnings and, when less allowances are necessary, a credit is taken. The Company’s methodology for assessing the appropriateness of the allowance for loan losses consists of:  (1) a specific valuation allowance on identified problem loans; (2) a general valuation allowance on the remainder of the loan portfolio; and (3) an unallocated component.  Management established an unallocated reserve to cover uncertainties that the Company believes have resulted in losses that have not yet been allocated to specific elements of the general component. Such factors include uncertainties in economic conditions and in identifying triggering events that directly correlate to subsequent loss rates, changes in appraised value of underlying collateral, risk factors that have not yet manifested themselves in loss allocation factors and historical loss experience data that may not precisely correspond to the current portfolio or economic conditions. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodology for estimating general losses in the portfolio. The appropriate allowance level is estimated based upon factors and trends identified by the Company at the time the consolidated financial statements are prepared. Management continuously evaluates its allowance methodology; however, the evaluation has determined that the relative minor unallocated allowance has not had significant changes in recent periods.

The Company charges-off the collateral or discounted cash flow deficiency on all loans at 90 days past due, except government guaranteed student loans, and all loans rated substandard or worse that are 90 days past due.  As a result, no specific valuation allowance was maintained at June 30, 2015 or December 31, 2014.

The summary activity in the allowance for loan losses for all portfolios for the six months ended June 30, 2015 and 2014, and for the year ended December 31, 2014, is as follows:

	Six Months Ended						Year Ended
	June 30,						December 31,
(Dollars in thousands)	2015			2014			2014
Balance, beginning of year	$	50,654		$	55,649		$	55,649
Provision for loan losses	(3,600		)	1,750			200
Charge-offs	(2,502		)	(8,506		)	(14,529		)
Recoveries	3,240			3,731			9,334
Balance, end of period	$	47,792		$	52,624		$	50,654

The following table sets forth the activity in the allowance for loan losses by portfolio for the six months ended June 30, 2015 and the year ended December 31, 2014:

	COMMERCIAL									RESIDENTIAL					CONSUMER
June 30, 2015 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated			Total
Allowance for credit losses:
Beginning balance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550		$	50,654
Charge-offs	(320		)	(637		)	—			(107		)	—		(239		)	(239		)	(39		)	(921		)	—			(2,502		)
Recoveries	303			2,170			57			15			—		102			94			—			499			—			3,240
Provision (credit)	1,412			(4,741		)	(912		)	(349		)	—		25			(299		)	25			1,312			(73		)	(3,600		)
Allowance endingbalance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—		$	—
Collectively evaluated for impairment	19,411			15,056			1,488			1,519			—		2,557			1,513			271			5,500			477			47,792
Total Allowance	$	19,411		$	15,056		$	1,488		$	1,519		$	—	$	2,557		$	1,513		$	271		$	5,500		$	477		$	47,792
Loans receivable:
Ending balance
Individually evaluated for impairment	$	18,002		$	3,514		$	207		$	11,103		$	262	$	2,117		$	10		$	—		$	—		$	—		$	35,215
Collectively evaluated for impairment	813,829			473,871			65,558			700,110			—		224,589			24,573			189,409			181,354			—			2,673,293
Total Portfolio	$	831,831		$	477,385		$	65,765		$	711,213		$	262	$	226,706		$	24,583		$	189,409		$	181,354		$	—		$	2,708,508

	COMMERCIAL									RESIDENTIAL					CONSUMER
December 31, 2014 (Dollars in thousands)	Real Estate			Business			Construction			Real Estate			Construction		Home Equity & Equity Lines			Personal			Education			Auto			Unallocated		Total
Allowance for credit losses:
Beginning balance	$	22,089		$	19,301		$	3,188		$	2,200		$	—	$	3,133		$	2,687		$	306		$	2,195		$	550	$	55,649
Charge-offs	(5,804		)	(5,338		)	—			(702		)	—		(180		)	(724		)	(99		)	(1,682		)	—		(14,529		)
Recoveries	3,112			4,499			733			88			—		198			103			—			601			—		9,334
Provision (credit)	(1,381		)	(198		)	(1,578		)	374			—		(482		)	(109		)	78			3,496			—		200
Allowance endingbalance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Allowance ending balance
Individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—	$	—		$	—		$	—		$	—		$	—	$	—
Collectively evaluated for impairment	18,016			18,264			2,343			1,960			—		2,669			1,957			285			4,610			550		50,654
Total Allowance	$	18,016		$	18,264		$	2,343		$	1,960		$	—	$	2,669		$	1,957		$	285		$	4,610		$	550	$	50,654
Financing receivable:
Ending balance
Individually evaluated for impairment	$	17,984		$	4,172		$	1,419		$	12,003		$	268	$	2,184		$	122		$	—		$	—		$	—	$	38,152
Collectively evaluated for impairment	591,662			438,018			67,721			655,797			—		224,871			28,546			195,185			181,793			—		2,383,593
Total Portfolio	$	609,646		$	442,190		$	69,140		$	667,800		$	268	$	227,055		$	28,668		$	195,185		$	181,793		$	—	$	2,421,745

The provision for loan losses charged to expense is based upon past loan loss experience and an evaluation of estimated losses in the current loan portfolio, including the evaluation of impaired loans under FASB ASC Topic 310 for Loans and Debt Securities.  Under FASB ASC Topic 310 for Receivables, for all loan segments a loan is considered to be impaired when, based upon current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan. An insignificant delay or insignificant shortfall in amount of payments does not necessarily result in the loan being identified as impaired. When all or a portion of the loan is deemed uncollectible, the uncollectible portion is charged-off. The measurement is based either on the fair value of the collateral if the loan is collateral dependent, the liquidation value, or the present value of expected future cash flows discounted at the loan’s effective interest rate.  Most of the Company’s commercial loans are collateral dependent and, therefore, the Company uses the value of the collateral to measure the loss. Any collateral or discounted cash flow deficiency for loans that are 90 days past due are charged-off. Impairment losses are included in the provision for loan losses.  Large groups of homogeneous loans are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring.

Classified Loans

The Bank’s credit review process includes a risk classification of all commercial and residential loans that includes pass, special mention, substandard and doubtful.  The classification of a loan may change based on changes in the creditworthiness of the borrower. The description of the risk classifications are as follows:

A loan is classified as pass when payments are current and it is performing under the original contractual terms. A loan is classified as special mention when the borrower exhibits potential credit weakness or a downward trend which, if not checked or corrected, will weaken the asset or inadequately protect the Bank’s position.  While potentially weak, the borrower is currently marginally acceptable; no loss of principal or interest is envisioned.  A loan is classified as substandard when the borrower has a well-defined weakness or weaknesses that jeopardize the orderly liquidation of the debt. A substandard loan is inadequately protected by the current net worth and paying capacity of the obligor, normal repayment from this borrower is in jeopardy, and there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. A loan is classified as doubtful when a borrower has all weaknesses inherent in a loan classified as substandard with the added provision that: (1) the weaknesses make collection of debt in full on the basis of currently existing facts, conditions and values highly questionable and improbable; (2) serious problems exist to the point where a partial loss of principal is likely; and (3) the possibility of loss is extremely high, but because of certain important, reasonably specific pending factors which may work to the advantage and strengthening of the assets, its classification as an estimated loss is deferred until its more exact status may be determined.  Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens and additional refinancing plans. The Company charges-off the collateral or discounted cash flow deficiency on all loans classified as substandard or worse. In all cases, loans are placed on non-accrual when 90 days past due or earlier if collection of principal or interest is considered doubtful.

The following tables set forth the amounts and percentage of the portfolio of classified asset categories for the commercial and residential loan portfolios at June 30, 2015 and December 31, 2014:

Commercial and Residential Loans

Credit Risk Internally Assigned

	June 30, 2015
	Commercial				Commercial				Commercial				Residential				Residential
(Dollars in thousands)	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	812,418	98	%	$	446,328	93	%	$	65,558	100	%	$	706,393	99	%	$	132	50	%	$	2,030,829	97	%
Special Mention	7,470		1	%	12,894		3	%	—		—	%	—		—	%	—		—	%	20,364		1	%
Substandard	11,943		1	%	18,163		4	%	207		—	%	4,820		1	%	130		50	%	35,263		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	831,831	100	%	$	477,385	100	%	$	65,765	100	%	$	711,213	100	%	$	262	100	%	$	2,086,456	100	%

	December 31, 2014
	Commercial				Commercial				Commercial				Residential				Residential
	Real Estate				Business				Construction				Real Estate				Construction				Total
Grade
Pass	$	579,847	95	%	$	419,316	95	%	$	66,191	96	%	$	662,394	99	%	$	138	51	%	$	1,727,886	97	%
Special Mention	13,795		2	%	5,628		1	%	—		—	%	—		—	%	—		—	%	19,423		1	%
Substandard	16,004		3	%	17,246		4	%	2,949		4	%	5,406		1	%	130		49	%	41,735		2	%
Doubtful	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%	—		—	%
Total	$	609,646	100	%	$	442,190	100	%	$	69,140	100	%	$	667,800	100	%	$	268	100	%	$	1,789,044	100	%

The Bank’s credit review process is based on payment history for all consumer loans.  The collateral deficiency on consumer loans is charged-off when they become 90 days delinquent with the exception of education loans which are guaranteed by the U.S. government.

The following tables set forth the consumer loan risk profile based on payment activity as of June 30, 2015 and December 31, 2014:

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity

	June 30, 2015
(Dollars in thousands)	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	224,973	99	%	$	24,583	100	%	$	163,949	87	%	$	181,354	100	%	$	594,859	96	%
Non-performing	1,733		1	%	—		—	%	25,460		13	%	—		—	%	27,193		4	%
Total	$	226,706	100	%	$	24,583	100	%	$	189,409	100	%	$	181,354	100	%	$	622,052	100	%

	December 31, 2014
	Home Equity & Lines of Credit				Personal				Education				Auto				Total
Performing	$	225,197	99	%	$	28,557	100	%	$	169,889	87	%	$	181,793	100	%	$	605,436	96	%
Non-performing	1,858		1	%	111		—	%	25,296		13	%	—		—	%	27,265		4	%
Total	$	227,055	100	%	$	28,668	100	%	$	195,185	100	%	$	181,793	100	%	$	632,701	100	%

Loan Delinquencies and Non-accrual Loans

The Company monitors the past due and non-accrual status of loans in determining the loss classification, impairment status and the allowance for loan losses.  Generally, all loans past due 90 days or more are put on non-accrual status.  Education loans greater than 90 days delinquent continue to accrue interest as they are U.S. government guaranteed with little risk of credit loss.

The following tables provide information about delinquent and non-accrual loans in the Company’s portfolio at the dates indicated:

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of June 30, 2015

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	792	4	%	$	—	—	%	$	821	3	%	$	1,613	3	%	$	830,218	31	%	$	831,831	31	%	$	—	$	1,912	15	%
Commercial business loans	1,262		6	%	—		—	%	418		1	%	1,680		3	%	475,705		18	%	477,385		18	%	—		1,114		9	%
Commercial construction	—		—	%	—		—	%	207		1	%	207		—	%	65,558		2	%	65,765		2	%	—		207		2	%
Total commercial	$	2,054	10	%	$	—	—	%	$	1,446	5	%	$	3,500	6	%	$	1,371,481	51	%	$	1,374,981	51	%	$	—	$	3,233	26	%
Residential:
Residential real estate	$	1,871	9	%	$	144	1	%	$	3,330	11	%	$	5,345	8	%	$	705,868	27	%	$	711,213	26	%	$	—	$	7,584	59	%
Residential construction	—		—	%	—		—	%	262		1	%	262		0	%	—		—	%	262		—	%	—		262		2	%
Total residential	$	1,871	9	%	$	144	1	%	$	3,592	12	%	$	5,607	8	%	$	705,868	27	%	$	711,475	26	%	$	—	$	7,846	61	%
Consumer loans:
Home equity & lines of credit	$	819	4	%	$	211	2	%	$	1,026	3	%	$	2,056	3	%	$	224,650	8	%	$	226,706	8	%	$	—	$	1,733	13	%
Personal	138		1	%	31		—	%	—		—	%	169		—	%	24,414		1	%	24,583		1	%	—		—		—	%
Education	13,737		64	%	9,787		95	%	25,460		80	%	48,984		79	%	140,425		6	%	189,409		7	%	—		—		—	%
Automobile	2,544		12	%	206		2	%	—		—	%	2,750		4	%	178,604		7	%	181,354		7	%	—		—		—	%
Total consumer	$	17,238	81	%	$	10,235	99	%	$	26,486	83	%	$	53,959	86	%	$	568,093	22	%	$	622,052	23	%	$	—	$	1,733	13	%
Total	$	21,163	100	%	$	10,379	100	%	$	31,524	100	%	$	63,066	100	%	$	2,645,442	100	%	$	2,708,508	100	%	$	—	$	12,812	100	%

Aged Analysis of Past Due and Non-accrual Financing Receivables

As of December 31, 2014

																									Recorded
	30-59				60-89				> 90																Investment
	Days				Days				Days				Total								Total				>90 Days
	Past				Past				Past				Past								Financing				And		Non-
(Dollars in thousands)	Due				Due				Due				Due				Current				Receivables				Accruing		Accruing
Commercial:
Commercial real estate	$	202	1	%	$	—	—	%	$	966	3	%	$	1,168	2	%	$	608,478	26	%	$	609,646	25	%	$	—	$	1,721	12	%
Commercial business loans	755		4	%	—		—	%	1,012		3	%	1,767		3	%	440,423		18	%	442,190		18	%	—		1,755		12	%
Commercial construction	—		—	%	—		—	%	402		1	%	402		1	%	68,738		3	%	69,140		3	%	—		402		3	%
Total commercial	$	957	5	%	$	—	—	%	$	2,380	7	%	$	3,337	6	%	$	1,117,639	47	%	$	1,120,976	46	%	$	—	$	3,878	27	%
Residential:
Residential real estate	$	1,843	8	%	$	356	3	%	$	3,414	11	%	$	5,613	9	%	$	662,187	28	%	$	667,800	28	%	$	—	$	8,500	58	%
Residential construction	—		—	%	—		—	%	268		1	%	268		—	%	—		—	%	268		—	%	—		268		2	%
Total residential	$	1,843	8	%	$	356	3	%	$	3,682	12	%	$	5,881	9	%	$	662,187	28	%	$	668,068	28	%	$	—	$	8,768	60	%
Consumer loans:
Home equity & lines of credit	$	755	4	%	$	635	6	%	$	979	3	%	$	2,369	3	%	$	224,686	10	%	$	227,055	9	%	$	—	$	1,858	12	%
Personal	308		1	%	134		1	%	—		—	%	442		1	%	28,226		1	%	28,668		1	%	—		111		1	%
Education	14,743		69	%	8,918		85	%	25,296		78	%	48,957		76	%	146,228		6	%	195,185		8	%	25,296		—		—	%
Automobile	2,811		13	%	481		5	%	—		—	%	3,292		5	%	178,501		8	%	181,793		8	%	—		—		—	%
Total consumer	$	18,617	87	%	$	10,168	97	%	$	26,275	81	%	$	55,060	85	%	$	577,641	25	%	$	632,701	26	%	$	25,296	$	1,969	13	%
Total	$	21,417	100	%	$	10,524	100	%	$	32,337	100	%	$	64,278	100	%	$	2,357,467	100	%	$	2,421,745	100	%	$	25,296	$	14,615	100	%

Troubled Debt Restructured Loans

The Bank determines whether a restructuring of debt constitutes a troubled debt restructuring (“TDR”) in accordance with guidance under FASB ASC Topic 310 Receivables. The Bank considers a loan a TDR when the borrower is experiencing financial difficulty and the Bank grants a concession that it would not otherwise consider but for the borrower’s financial difficulties.  A TDR includes a modification of debt terms or assets received in satisfaction of the debt (including a foreclosure or a deed in lieu of foreclosure) or a combination of types.  The Bank evaluates selective criteria to determine if a borrower is experiencing financial difficulty, including the ability of the borrower to obtain funds from sources other than the Bank at market rates.  The Bank considers all TDR loans as impaired loans and, generally, they are put on non-accrual status.  The Bank will not consider the loan a TDR if the loan modification was made for customer retention purposes and the modification reflects prevailing market conditions. The Bank’s policy for returning a loan to accruing status requires the preparation of a well-documented credit evaluation, which includes the following:

· A review of the borrower’s current financial condition in which the borrower must demonstrate sufficient cash flow to support the repayment of all principal and interest including any amounts previously charged-off;

· An updated appraisal or home valuation, which must demonstrate sufficient collateral value to support the debt;

· Sustained performance based on the restructured terms for at least six consecutive months; and

· Approval by the Special Assets Committee, which consists of the Chief Credit Officer, the Chief Financial Officer and other members of senior management.

The following table summarizes loans whose terms were modified in a manner that met the definition of a TDR as of June 30, 2015 and 2014.  The Company had one accruing TDR in the amount of $151 thousand that was modified during the six months ended June 30, 2015.

	June 30,			June 30,
	2015			2014
(Dollars in thousands)	No. of Loans	Balance		No. of Loans	Balance
Commercial:
Commercial real estate	2	$	821	3	$	1,012
Commercial business loans	—	—		2	3,673
Commercial construction	—	—		2	725
Total commercial	2	821		7	5,410
Residential:
Residential real estate	3	365		2	129
Residential construction	—	—		—	—
Total real estate loans	3	365		2	129
Consumer loans:
Home equity & lines of credit	1	221		3	447
Automobile	—	—		1	15
Total consumer loans	1	221		4	462
Total loans	6	$	1,407	13	$	6,001

The following tables summarize information about TDRs as of and for the six months ended June 30, 2015 and 2014:

	For the Six Months Ended June 30, 2015
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	3	$	972
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	3	972
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	3	1,292
Outstanding principal balance immediately after modification	3	972
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	—	—
Outstanding principal balance at period end	6	1,407
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	2	821

	For the Six Months Ended June 30, 2014
(Dollars in thousands, except number of loans)	No. of Loans	Balance
Loans modified during the period in a manner that met the definition of a TDR	—	$	—
Modifications granted:
Reduction of outstanding principal due	—	—
Deferral of principal amounts due	—	—
Temporary reduction in interest rate	—	—
Deferral of interest due	—	—
Below market interest rate granted	—	—
Outstanding principal balance immediately before modification	—	—
Outstanding principal balance immediately after modification	—	—
Aggregate principal charge-off recognized on TDRs outstanding at period end since origination	8	2,789
Outstanding principal balance at period end	13	6,001
TDRs that re-defaulted subsequent to being modified (in the past twelve months)	3	1,534

Impaired Loans

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures the extent of the impairment in accordance with guidance under FASB ASC Topic 310 for Receivables.  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value or discounted cash flows.  However, collateral value is predominantly used to assess the fair value of an impaired loan. Those impaired loans not requiring an allowance represent loans for which the fair value of the collateral or expected repayments exceed the recorded investments in such loans.

Components of Impaired Loans

Impaired Loans

Year to date June 30, 2015

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,912	$	1,977	$	—	$	1,788	$	—	$	—
Commercial Business	1,114		1,448		—		1,862		—		—
Commercial Construction	207		207		—		429		—		—
Residential Real Estate	7,735		8,291		—		8,263		—		—
Residential Construction	262		470		—		265		—		—
Home Equity and Lines of Credit	1,733		1,743		—		1,737		—		—
Personal	—		—		—		18		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		1		—		—
Total Impaired Loans:	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—
Commercial	$	3,233	$	3,632	$	—	$	4,079	$	—	$	—
Residential	7,997		8,761		—		8,528		—		—
Consumer	1,733		1,743		—		1,756		—		—
Total	$	12,963	$	14,136	$	—	$	14,363	$	—	$	—

The impaired loans table above includes a $151 thousand accruing TDR that was modified during the six months ended June 30, 2015 and is performing in accordance with its modified terms.

Impaired Loans

For the Year Ended December 31, 2014

(Dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized Using Cash Basis
Impaired loans with no related specific allowance recorded:
Commercial Real Estate	$	1,721	$	2,337	$	—	$	10,858	$	—	$	—
Commercial Business	3,255		4,691		—		9,061		—		—
Commercial Construction	1,362		1,362		—		1,399		—		—
Residential Real Estate	8,500		9,037		—		9,517		—		—
Residential Construction	268		476		—		195		—		—
Home Equity and Lines of Credit	1,908		1,935		—		1,335		—		—
Personal	111		111		—		108		—		—
Education	—		—		—		—		—		—
Auto	—		—		—		151		—		—
Total Impaired Loans:	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—
Commercial	$	6,338	$	8,390	$	—	$	21,318	—		—
Residential	8,768		9,513		—		9,712		—		—
Consumer	2,019		2,046		—		1,594		—		—
Total	$	17,125	$	19,949	$	—	$	32,624	$	—	$	—

The impaired loans table above includes $2.5 million of accruing TDRs that were modified during 2014 and are performing in accordance with their modified terms.

The Company charged-off the collateral or discounted cash flow deficiency on all impaired loans and, as a result, no specific valuation allowance was required for any impaired loans at June 30, 2015. Interest income that would have been recorded for the six months ended June 30, 2015, had impaired loans been current according to their original terms, amounted to $424 thousand.

Non-performing loans (which include non-accrual loans and loans past due 90 days or more and still accruing) at June 30, 2015 and December 31, 2014 amounted to $38.3 million and $39.9 million, respectively, and included $25.5 million and $25.3 million, respectively, of government guaranteed student loans.

XML

LOANS (Details 5) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 21,163	$ 21,417
30-59 Days Past Due, Percentage	100.00%	100.00%
60-89 Days Past Due	$ 10,379	$ 10,524
60-89 Days Past Due, Percentage	100.00%	100.00%
Greater Than 90 Days Past Due	$ 31,524	$ 32,337
Greater Than 90 Days Past Due, Percentage	100.00%	100.00%
Total Past Due	$ 63,066	$ 64,278
Total Past Due, Percentage	100.00%	100.00%
Current	$ 2,645,442	$ 2,357,467
Current, Percentage	100.00%	100.00%
Total Portfolio	$ 2,708,508	$ 2,421,745
Total Loans, Percentage	100.00%	100.00%
Recorded Investment Greater Than 90 Days And Accruing		$ 25,296
Non-Accruing	$ 12,812	$ 14,615
Non-Accruing, Percentage	100.00%	100.00%
Commercial
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 2,054	$ 957
30-59 Days Past Due, Percentage	10.00%	5.00%
Greater Than 90 Days Past Due	$ 1,446	$ 2,380
Greater Than 90 Days Past Due, Percentage	5.00%	7.00%
Total Past Due	$ 3,500	$ 3,337
Total Past Due, Percentage	6.00%	6.00%
Current	$ 1,371,481	$ 1,117,639
Current, Percentage	51.00%	47.00%
Total Portfolio	$ 1,374,981	$ 1,120,976
Total Loans, Percentage	51.00%	46.00%
Non-Accruing	$ 3,233	$ 3,878
Non-Accruing, Percentage	26.00%	27.00%
Commercial | Commercial real estate
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 792	$ 202
30-59 Days Past Due, Percentage	4.00%	1.00%
Greater Than 90 Days Past Due	$ 821	$ 966
Greater Than 90 Days Past Due, Percentage	3.00%	3.00%
Total Past Due	$ 1,613	$ 1,168
Total Past Due, Percentage	3.00%	2.00%
Current	$ 830,218	$ 608,478
Current, Percentage	31.00%	26.00%
Total Portfolio	$ 831,831	$ 609,646
Total Loans, Percentage	31.00%	25.00%
Non-Accruing	$ 1,912	$ 1,721
Non-Accruing, Percentage	15.00%	12.00%
Commercial | Commercial business loans
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 1,262	$ 755
30-59 Days Past Due, Percentage	6.00%	4.00%
Greater Than 90 Days Past Due	$ 418	$ 1,012
Greater Than 90 Days Past Due, Percentage	1.00%	3.00%
Total Past Due	$ 1,680	$ 1,767
Total Past Due, Percentage	3.00%	3.00%
Current	$ 475,705	$ 440,423
Current, Percentage	18.00%	18.00%
Total Portfolio	$ 477,385	$ 442,190
Total Loans, Percentage	18.00%	18.00%
Non-Accruing	$ 1,114	$ 1,755
Non-Accruing, Percentage	9.00%	12.00%
Commercial | Commercial construction
Summary of Aged Analysis of Past Due and Non-accrual Loans
Greater Than 90 Days Past Due	$ 207	$ 402
Greater Than 90 Days Past Due, Percentage	1.00%	1.00%
Total Past Due	$ 207	$ 402
Total Past Due, Percentage		1.00%
Current	$ 65,558	$ 68,738
Current, Percentage	2.00%	3.00%
Total Portfolio	$ 65,765	$ 69,140
Total Loans, Percentage	2.00%	3.00%
Non-Accruing	$ 207	$ 402
Non-Accruing, Percentage	2.00%	3.00%
Residential
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 1,871	$ 1,843
30-59 Days Past Due, Percentage	9.00%	8.00%
60-89 Days Past Due	$ 144	$ 356
60-89 Days Past Due, Percentage	1.00%	3.00%
Greater Than 90 Days Past Due	$ 3,592	$ 3,682
Greater Than 90 Days Past Due, Percentage	12.00%	12.00%
Total Past Due	$ 5,607	$ 5,881
Total Past Due, Percentage	8.00%	9.00%
Current	$ 705,868	$ 662,187
Current, Percentage	27.00%	28.00%
Total Portfolio	$ 711,475	$ 668,068
Total Loans, Percentage	26.00%	28.00%
Non-Accruing	$ 7,846	$ 8,768
Non-Accruing, Percentage	61.00%	60.00%
Residential | Residential real estate
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 1,871	$ 1,843
30-59 Days Past Due, Percentage	9.00%	8.00%
60-89 Days Past Due	$ 144	$ 356
60-89 Days Past Due, Percentage	1.00%	3.00%
Greater Than 90 Days Past Due	$ 3,330	$ 3,414
Greater Than 90 Days Past Due, Percentage	11.00%	11.00%
Total Past Due	$ 5,345	$ 5,613
Total Past Due, Percentage	8.00%	9.00%
Current	$ 705,868	$ 662,187
Current, Percentage	27.00%	28.00%
Total Portfolio	$ 711,213	$ 667,800
Total Loans, Percentage	26.00%	28.00%
Non-Accruing	$ 7,584	$ 8,500
Non-Accruing, Percentage	59.00%	58.00%
Residential | Residential construction
Summary of Aged Analysis of Past Due and Non-accrual Loans
Greater Than 90 Days Past Due	$ 262	$ 268
Greater Than 90 Days Past Due, Percentage	1.00%	1.00%
Total Past Due	$ 262	$ 268
Total Portfolio	262	268
Non-Accruing	$ 262	$ 268
Non-Accruing, Percentage	2.00%	2.00%
Consumer
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 17,238	$ 18,617
30-59 Days Past Due, Percentage	81.00%	87.00%
60-89 Days Past Due	$ 10,235	$ 10,168
60-89 Days Past Due, Percentage	99.00%	97.00%
Greater Than 90 Days Past Due	$ 26,486	$ 26,275
Greater Than 90 Days Past Due, Percentage	83.00%	81.00%
Total Past Due	$ 53,959	$ 55,060
Total Past Due, Percentage	86.00%	85.00%
Current	$ 568,093	$ 577,641
Current, Percentage	22.00%	25.00%
Total Portfolio	$ 622,052	$ 632,701
Total Loans, Percentage	23.00%	26.00%
Recorded Investment Greater Than 90 Days And Accruing		$ 25,296
Non-Accruing	$ 1,733	$ 1,969
Non-Accruing, Percentage	13.00%	13.00%
Consumer | Consumer - Home equity and lines of credit
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 819	$ 755
30-59 Days Past Due, Percentage	4.00%	4.00%
60-89 Days Past Due	$ 211	$ 635
60-89 Days Past Due, Percentage	2.00%	6.00%
Greater Than 90 Days Past Due	$ 1,026	$ 979
Greater Than 90 Days Past Due, Percentage	3.00%	3.00%
Total Past Due	$ 2,056	$ 2,369
Total Past Due, Percentage	3.00%	3.00%
Current	$ 224,650	$ 224,686
Current, Percentage	8.00%	10.00%
Total Portfolio	$ 226,706	$ 227,055
Total Loans, Percentage	8.00%	9.00%
Non-Accruing	$ 1,733	$ 1,858
Non-Accruing, Percentage	13.00%	12.00%
Consumer | Consumer - Personal
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 138	$ 308
30-59 Days Past Due, Percentage	1.00%	1.00%
60-89 Days Past Due	$ 31	$ 134
60-89 Days Past Due, Percentage		1.00%
Total Past Due	169	$ 442
Total Past Due, Percentage		1.00%
Current	$ 24,414	$ 28,226
Current, Percentage	1.00%	1.00%
Total Portfolio	$ 24,583	$ 28,668
Total Loans, Percentage	1.00%	1.00%
Non-Accruing		$ 111
Non-Accruing, Percentage		1.00%
Consumer | Consumer - Education
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 13,737	$ 14,743
30-59 Days Past Due, Percentage	64.00%	69.00%
60-89 Days Past Due	$ 9,787	$ 8,918
60-89 Days Past Due, Percentage	95.00%	85.00%
Greater Than 90 Days Past Due	$ 25,460	$ 25,296
Greater Than 90 Days Past Due, Percentage	80.00%	78.00%
Total Past Due	$ 48,984	$ 48,957
Total Past Due, Percentage	79.00%	76.00%
Current	$ 140,425	$ 146,228
Current, Percentage	6.00%	6.00%
Total Portfolio	$ 189,409	$ 195,185
Total Loans, Percentage	7.00%	8.00%
Recorded Investment Greater Than 90 Days And Accruing		$ 25,296
Consumer | Consumer -Automobile
Summary of Aged Analysis of Past Due and Non-accrual Loans
30-59 Days Past Due	$ 2,544	$ 2,811
30-59 Days Past Due, Percentage	12.00%	13.00%
60-89 Days Past Due	$ 206	$ 481
60-89 Days Past Due, Percentage	2.00%	5.00%
Total Past Due	$ 2,750	$ 3,292
Total Past Due, Percentage	4.00%	5.00%
Current	$ 178,604	$ 178,501
Current, Percentage	7.00%	8.00%
Total Portfolio	$ 181,354	$ 181,793
Total Loans, Percentage	7.00%	8.00%

XML

EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2015

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 4 — EARNINGS PER SHARE

The following table presents a calculation of basic and diluted earnings per share for the three and six months ended June 30, 2015 and 2014. Earnings per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding. The difference between common shares issued and basic average common shares outstanding, for purposes of calculating basic earnings per share, is a result of subtracting unallocated employee stock ownership plan (“ESOP”) shares and unvested restricted stock shares. See Note 14 for further discussion of stock grants.

	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except share and per share amounts)	2015		2014		2015		2014
Basic and diluted earnings per share:
Net income	$	7,055	$	4,576	$	12,306	$	7,048
Basic average common shares outstanding	78,374,704		80,907,413		78,414,226		81,280,507
Effect of dilutive securities	683,770		696,419		653,170		658,777
Dilutive average shares outstanding	79,058,474		81,603,832		79,067,396		81,939,284
Net earnings per share
Basic	$	0.09	$	0.06	$	0.16	$	0.09
Diluted	$	0.09	$	0.06	$	0.16	$	0.09

Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented. For the three and six months ended June 30, 2015, there were 861,961 outstanding options that were anti-dilutive and therefore excluded from the earnings per share calculation. For the three and six months ended June 30, 2014 there were 741,882 outstanding options that were anti-dilutive and therefore excluded from the earnings per share calculation.  As a result of the second-step conversion, the share and per share information for the 2014 periods have been adjusted to reflect the 1.0999 exchange ratio.

XML

INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2015

INVESTMENT SECURITIES.

INVESTMENT SECURITIES

NOTE 5 — INVESTMENT SECURITIES

The amortized cost and estimated fair value of investments in debt and equity securities at June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	7,293	$	57	$	—	$	7,350
GNMA guaranteed mortgage certificates	4,737		181		—		4,918
GSE mortgage-backed securities	591,450		8,072		1,850		597,672
GSE collateralized mortgage obligations	38,365		53		187		38,231
Municipal bonds	31,319		1,605		—		32,924
Corporate securities	4,986		59		—		5,045
Money market and mutual funds	3,669		—		34		3,635
Total	$	681,819	$	10,027	$	2,071	$	689,775

	June 30, 2015
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	699,907	$	4,701	$	5,319	$	699,289
GSE collateralized mortgage obligations	42,953		557		183		43,327
Municipal bonds	870		80		—		950
Foreign bonds	2,000		36		—		2,036
Total	$	745,730	$	5,374	$	5,502	$	745,602

	December 31, 2014
	Investment Securities Available-for-Sale
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
U.S. Government Sponsored Enterprise (“GSE”) and Agency Notes	$	8,538	$	76	$	—	$	8,614
Ginnie Mae guaranteed mortgage certificates	5,038		194		—		5,232
GSE mortgage-backed securities	641,952		9,981		2,985		648,948
Collateralized mortgage obligations	45,494		59		283		45,270
Municipal bonds	44,378		1,986		—		46,364
Money market, mutual funds and certificates of deposit	3,458		—		52		3,406
Total	$	748,858	$	12,296	$	3,320	$	757,834

	December 31, 2014
	Investment Securities Held-to-Maturity
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
GSE mortgage-backed securities	$	677,501	$	6,202	$	2,507	$	681,196
Collateralized mortgage obligations	47,384		264		227		47,421
Municipal bonds	870		91		—		961
Foreign bonds	2,000		11		—		2,011
Total	$	727,755	$	6,568	$	2,734	$	731,589

During the six months ended June 30, 2015, the Bank sold $180 thousand of money market and mutual funds that resulted in a loss of $9 thousand.

The following tables provide information on the gross unrealized losses and fair market value of the Company’s investments with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2015 and December 31, 2014:

	At June 30, 2015
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	521,193	$	5,037	$	206,180	$	2,132	$	727,373	$	7,169
Collateralized mortgage obligations	17		1		42,764		369		42,781		370
Subtotal, debt securities	$	521,210	$	5,038	$	248,944	$	2,501	$	770,154	$	7,539
Mutual Funds	—		—		727		34		727		34
Total temporarily impaired securities	$	521,210	$	5,038	$	249,671	$	2,535	$	770,881	$	7,573

	At December 31, 2014
	Less than 12 months				12 months or longer				Total
			Unrealized				Unrealized				Unrealized
(Dollars in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Mortgage-backed securities	$	38,246	$	200	$	396,600	$	5,292	$	434,846	$	5,492
Collateralized mortgage obligations	31,990		170		22,881		340		54,871		510
Subtotal, debt securities	$	70,236	$	370	$	419,481	$	5,632	$	489,717	$	6,002
Mutual Funds	—		—		896		52		896		52
Total temporarily impaired securities	$	70,236	$	370	$	420,377	$	5,684	$	490,613	$	6,054

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company determines whether the unrealized losses are temporary in accordance with guidance under FASB ASC Topic 320 for Investments - Debt and Equity Securities. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer. The likelihood of recovering the Company’s investment, whether the Company has the intent to sell the investment or that it is more likely than not that the Company will be required to sell the investment before recovery is also used to determine the nature of the decline in market value of the securities.

The Company records the credit portion of OTTI through earnings based on the credit impairment estimates generally derived from cash flow analyses. The remaining unrealized loss, due to factors other than credit, is recorded in other comprehensive income (“OCI”). The Company had an unrealized loss of $7.2 million related to its GSE mortgage-backed securities as of June 30, 2015.  Additionally, the Company had an unrealized loss of $370 thousand on GSE collateralized mortgage obligations and an unrealized loss of $34 thousand on mutual funds as of June 30, 2015.

Mortgage-Backed Securities

The Company’s investments that were in a loss position for greater than 12 months included GSE mortgage-backed securities with an unrealized loss of 1.0% as of June 30, 2015.  The Company’s investments that were in a loss position for less than 12 months included GSE mortgage-backed securities with an unrealized loss of 1.0% as of June 30, 2015. The unrealized loss is due to current interest rate levels relative to the Company’s cost. Because the unrealized losses are due to current interest rate levels relative to the Company’s cost and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell these investments before recovery of its amortized cost, which may be at maturity, the Company does not consider these investments to be other-than temporarily impaired at June 30, 2015.

Collateralized Mortgage Obligations (CMOs)

The Company’s investments that were in a loss position for greater than 12 months included GSE CMOs with an unrealized loss of 0.9% as of June 30, 2015. The Company’s investments that were in a loss position for less than 12 months included GSE CMOs with an unrealized loss of 0.3% as of June 30, 2015. The unrealized loss is due to current interest rate levels relative to the Company’s cost. Because the unrealized losses are due to current interest rate levels relative to the Company’s cost and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell these investments before recovery of its amortized cost, which may be at maturity, the Company does not consider these investments to be other-than temporarily impaired at June 30, 2015.

The following table sets forth the stated maturities of the investment securities at June 30, 2015 and December 31, 2014. Maturities for mortgage-backed securities are dependent upon the rate environment and prepayments of the underlying loans.  For purposes of this table they are presented separately.

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
(Dollars are in thousands)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Due in one year or less	$	352	$	354	$	347	$	352
Due after one year through five years	4,685		4,865		8,268		8,531
Due after five years through ten years	23,515		24,152		28,870		29,666
Due after ten years	15,046		15,948		15,431		16,429
Mortgage-backed securities	634,552		640,821		692,484		699,450
Money market and mutual funds	3,669		3,635		3,458		3,406
Total	$	681,819	$	689,775	$	748,858	$	757,834
Held-to-maturity:
Due in one year or less	$	120	$	121	$	1,620	$	1,623
Due after one year through five years	2,495		2,571		995		1,052
Due after five years through ten years	255		294		255		297
Due after ten years	—		—		—		—
Mortgage-backed securities	742,860		742,616		724,885		728,617
Total	$	745,730	$	745,602	$	727,755	$	731,589

At June 30, 2015 and December 31, 2014, $89.6 million and $127.1 million, respectively, of securities were pledged to secure municipal deposits.  At June 30, 2015 and December 31, 2014, the Company had $380 thousand and $317 thousand, respectively, of securities pledged as collateral on interest rate swaps.

At June 30, 2015 and December 31, 2014, the Company held stock in the Federal Home Loan Bank (“FHLB”) of Pittsburgh totaling $8.8 million.  The Company accounts for the stock based on guidance which requires that the investment be carried at cost and be evaluated for impairment based on the ultimate recoverability of the par value. The Company evaluated its holdings in FHLB stock at June 30, 2015 and believes its holdings in the stock are ultimately recoverable at par.

XML

GOODWILL AND OTHER INTANGIBLES

6 Months Ended

Jun. 30, 2015

GOODWILL AND OTHER INTANGIBLES

GOODWILL AND OTHER INTANGIBLES

NOTE 7 — GOODWILL AND OTHER INTANGIBLES

The goodwill and other intangible assets arising from the Company’s acquisitions of SE Financial Corp., FMS Financial Corporation, CLA Agency, Inc. and Paul Hertel & Company were accounted for in accordance with the accounting guidance in FASB ASC Topic 350 for Intangibles - Goodwill and Other.  The other intangibles are amortizing intangibles, which primarily consist of core deposit intangibles, which are amortized over an estimated useful life of ten years. As of June 30, 2015, the core deposit intangibles net of accumulated amortization totaled $3.2 million. The remaining balance of other amortizing intangibles includes a customer list intangible amortized over a remaining estimated useful life of six years.

Goodwill and other intangibles at June 30, 2015 are summarized below.

(Dollars in thousands)	Goodwill		Intangibles
Balance at January 1, 2015	$	121,973	$	6,136
Additions	—		—
Amortization	—		(933		)
Balance at June 30, 2015	$	121,973	$	5,203

During 2014, management reviewed qualitative factors for the Bank unit including financial performance, market changes and general economic conditions and noted there was not a significant change in any of these factors as compared to 2013. Accordingly, it was determined that it was more likely than not that the fair value of each reporting unit continued to be in excess of its carrying amount as of December 31, 2014. As it relates to Beneficial Insurance Services, LLC, the Company performed an impairment test which estimates the fair value of equity using discounted cash flow analyses as well as guideline company and guideline transaction information. The inputs and assumptions are incorporated in the valuations including projections of future cash flows, discount rates, the fair value of tangible and intangible assets and liabilities, and applicable valuation multiples based on the guideline information. Based on the Company’s latest annual impairment assessment of Beneficial Insurance Services, LLC, management believes that the fair value is in excess of the carrying amount. As a result, management concluded that there was no impairment of goodwill during the year ended December 31, 2014. During the six months ended June 30, 2015, the Company noted no indicators of impairment as it relates to goodwill or other intangibles.

XML

GOODWILL AND OTHER INTANGIBLES (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Summary of goodwill
Balance at the beginning of the period	$ 121,973
Balance at the end of the period	121,973	$ 121,973
Additional disclosures
Impairment	$ 0
Beneficial Insurance Services, LLC
Additional disclosures
Impairment		$ 0

XML

MORTGAGE SERVICING RIGHTS (Details 2) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
MORTGAGE SERVICING RIGHTS
Fair value of residential mortgage servicing rights	$ 1,412		$ 1,403
Residential real estate
MORTGAGE SERVICING RIGHTS
Fair value of residential mortgage servicing rights	$ 1,412	$ 1,439	$ 1,403	$ 1,524
Weighted average life	5 years 8 months 12 days	5 years 7 months 6 days
Prepayment speed assumption (as a percent)	9.72%	10.47%
Effect on fair value of a 20% increase	$ (98)	$ (103)
Effect on fair value of a 10% increase	(50)	(52)
Effect on fair value of a 10% decrease	55	58
Effect on fair value of a 20% decrease	$ 112	$ 118
Discount rate assumption (as a percent)	9.75%	9.88%
Effect on fair value of a 20% increase	$ (93)	$ (95)
Effect on fair value of a 10% increase	(49)	(49)
Effect on fair value of a 10% decrease	52	54
Effect on fair value of a 20% decrease	$ 108	$ 111
Escrow earnings credit assumption (as a percent)	1.66%	1.74%
Effect on fair value of a 20% increase	$ 36	$ 35
Effect on fair value of a 10% increase	18	17
Effect on fair value of a 10% decrease	(16)	(15)
Effect on fair value of a 20% decrease	$ (34)	$ (34)

XML

OTHER ASSETS (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
OTHER ASSETS:
Investments in affordable housing and other partnerships	$ 10,113	$ 10,131
Prepaid assets	2,775	2,197
Net deferred tax assets	43,416	43,685
Other real estate	1,359	1,578
Fixed assets held for sale	179	391
Mortgage servicing rights	1,412	1,403
All other assets	1,296	8,814
Total other assets	$ 60,550	$ 68,199

XML

LOANS (Details 8) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Components of Impaired Loans
Recorded investment	$ 12,963	$ 17,125
Unpaid principal balance	14,136	19,949
Average recorded investment	14,363	32,624
Value of impaired loans that were accruing TDRs that were modified	151,000	2,500
Interest income recognizable as per original terms	424
Nonperforming loans, both nonaccrual and accrual	38,300	39,900
Commercial
Components of Impaired Loans
Recorded investment	3,233	6,338
Unpaid principal balance	3,632	8,390
Average recorded investment	4,079	21,318
Commercial | Commercial real estate
Components of Impaired Loans
Recorded investment	1,912	1,721
Unpaid principal balance	1,977	2,337
Average recorded investment	1,788	10,858
Commercial | Commercial business loans
Components of Impaired Loans
Recorded investment	1,114	3,255
Unpaid principal balance	1,448	4,691
Average recorded investment	1,862	9,061
Commercial | Commercial construction
Components of Impaired Loans
Recorded investment	207	1,362
Unpaid principal balance	207	1,362
Average recorded investment	429	1,399
Residential
Components of Impaired Loans
Recorded investment	7,997	8,768
Unpaid principal balance	8,761	9,513
Average recorded investment	8,528	9,712
Residential | Residential real estate
Components of Impaired Loans
Recorded investment	7,735	8,500
Unpaid principal balance	8,291	9,037
Average recorded investment	8,263	9,517
Residential | Residential construction
Components of Impaired Loans
Recorded investment	262	268
Unpaid principal balance	470	476
Average recorded investment	265	195
Consumer
Components of Impaired Loans
Recorded investment	1,733	2,019
Unpaid principal balance	1,743	2,046
Average recorded investment	1,756	1,594
Consumer | Consumer - Home equity and lines of credit
Components of Impaired Loans
Recorded investment	1,733	1,908
Unpaid principal balance	1,743	1,935
Average recorded investment	1,737	1,335
Consumer | Consumer - Personal
Components of Impaired Loans
Recorded investment		111
Unpaid principal balance		111
Average recorded investment	18	108
Consumer | Education
Components of Impaired Loans
Nonperforming loans, both nonaccrual and accrual	25,500	25,300
Consumer | Auto
Components of Impaired Loans
Average recorded investment	$ 1	$ 151

XML

GOODWILL AND OTHER INTANGIBLES (Tables)

6 Months Ended

Jun. 30, 2015

GOODWILL AND OTHER INTANGIBLES

Schedule of goodwill and other intangibles

(Dollars in thousands)	Goodwill		Intangibles
Balance at January 1, 2015	$	121,973	$	6,136
Additions	—		—
Amortization	—		(933		)
Balance at June 30, 2015	$	121,973	$	5,203

XML

INVESTMENT SECURITIES (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	$ 681,819		$ 748,858
Investment securities available-for-sale , gross unrealized gain	10,027		12,296
Investment securities available-for-sale , gross unrealized losses	2,071		3,320
Investment securities available-for-sale, estimated fair value	689,775		757,834
lnvestment securities held-to-maturity, amortized cost	745,730		727,755
Investment securities held-to-maturity , gross unrealized gains	5,374		6,568
Investment securities held-to-maturity , gross unrealized losses	5,502		2,734
Investment securities held-to-maturity, estimated fair value	745,602		731,589
Gains and losses on investments
Gain (loss) on sale on investment	(9)	$ 297
U. S. GSE and agency notes
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	7,293		8,538
Investment securities available-for-sale , gross unrealized gain	57		76
Investment securities available-for-sale, estimated fair value	7,350		8,614
GNMA guaranteed mortgage certificates
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	4,737		5,038
Investment securities available-for-sale , gross unrealized gain	181		194
Investment securities available-for-sale, estimated fair value	4,918		5,232
GSE mortgage-backed securities
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	591,450		641,952
Investment securities available-for-sale , gross unrealized gain	8,072		9,981
Investment securities available-for-sale , gross unrealized losses	1,850		2,985
Investment securities available-for-sale, estimated fair value	597,672		648,948
lnvestment securities held-to-maturity, amortized cost	699,907		677,501
Investment securities held-to-maturity , gross unrealized gains	4,701		6,202
Investment securities held-to-maturity , gross unrealized losses	5,319		2,507
Investment securities held-to-maturity, estimated fair value	699,289		681,196
Gains and losses on investments
Gross unrealized losses, available-for-sale and held-to-maturity securities	7,200
GSE Collateralized Mortgage Obligations (CMOs)
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	38,365
Investment securities available-for-sale , gross unrealized gain	53
Investment securities available-for-sale , gross unrealized losses	187
Investment securities available-for-sale, estimated fair value	38,231
lnvestment securities held-to-maturity, amortized cost	42,953
Investment securities held-to-maturity , gross unrealized gains	557
Investment securities held-to-maturity , gross unrealized losses	183
Investment securities held-to-maturity, estimated fair value	43,327
Gains and losses on investments
Gross unrealized losses, available-for-sale and held-to-maturity securities	370
Collateralized mortgage obligations
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost			45,494
Investment securities available-for-sale , gross unrealized gain			59
Investment securities available-for-sale , gross unrealized losses			283
Investment securities available-for-sale, estimated fair value			45,270
lnvestment securities held-to-maturity, amortized cost			47,384
Investment securities held-to-maturity , gross unrealized gains			264
Investment securities held-to-maturity , gross unrealized losses			227
Investment securities held-to-maturity, estimated fair value			47,421
Municipal bonds
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	31,319		44,378
Investment securities available-for-sale , gross unrealized gain	1,605		1,986
Investment securities available-for-sale, estimated fair value	32,924		46,364
lnvestment securities held-to-maturity, amortized cost	870		870
Investment securities held-to-maturity , gross unrealized gains	80		91
Investment securities held-to-maturity, estimated fair value	950		961
Corporate securities
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	4,986
Investment securities available-for-sale , gross unrealized gain	59
Investment securities available-for-sale, estimated fair value	5,045
Money market, mutual funds and certificates of deposit
Amortized cost and estimated fair value of investments in debt and equity securities
Investment securities available-for-sale, amortized cost	3,669		3,458
Investment securities available-for-sale , gross unrealized losses	34		52
Investment securities available-for-sale, estimated fair value	3,635		3,406
Money market, mutual funds and certificates of deposit | The Bank
Gains and losses on investments
Proceeds from sale of marketable securities	180
Gain (loss) on sale on investment	(9)
Foreign bonds
Amortized cost and estimated fair value of investments in debt and equity securities
lnvestment securities held-to-maturity, amortized cost	2,000		2,000
Investment securities held-to-maturity , gross unrealized gains	36		11
Investment securities held-to-maturity, estimated fair value	2,036		$ 2,011
Mutual funds
Gains and losses on investments
Gross unrealized losses, available-for-sale and held-to-maturity securities	$ 34

XML

INCOME TAXES

6 Months Ended

Jun. 30, 2015

INCOME TAXES

INCOME TAXES

NOTE 12 — INCOME TAXES

For the three months ended June 30, 2015, we recorded a provision for income taxes of $3.0 million, reflecting an effective tax rate of 29.5%, compared to a provision for income taxes of $1.5 million, reflecting an effective tax benefit of 24.7%, for the three months ended June 30, 2014.  For the six months ended June 30, 2015, the Company recorded a provision for income taxes of $5.0 million, reflecting an effective tax benefit of 28.7% compared to a provision for income taxes of $1.4 million, reflecting an effective tax rate of 16.9% for the six months ended June 30, 2014. The increase in income tax expense and the effective tax rate during these periods is due to higher profitability levels for the three and six months ended June 30, 2015 as compared to the same periods in 2014.

The effective income tax rates differ from the statutory rate of 35% principally because of tax-exempt investments, non-taxable income related to bank-owned life insurance, state and local income taxes and tax credits received on affordable housing partnerships. Tax-exempt income, state and local income taxes and federal income tax credits (reduced) increased the effective tax rates by (3.6%), 2.5% and (3.7%) in the effective income tax rate calculation as of June 30, 2015, respectively, and (9.8%), 2.2% and (8.0%) in the effective income tax rate calculation as of June 30, 2014, respectively.

As of June 30, 2015, the Company had net deferred tax assets totaling $43.4 million. These deferred tax assets can only be realized if the Company generates sufficient taxable income in the future.  If it cannot, a valuation allowance is established. The Company regularly evaluates the reliability of deferred tax asset positions. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carry backs are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. The Company currently maintains a valuation allowance for certain state net operating losses and other-than-temporary impairments that management believes it is more likely than not that such deferred tax assets will not be realized. The Company expects to realize the remaining deferred tax assets over the allowable carry back and/or carry forward periods. Therefore, no valuation allowance is deemed necessary against its remaining federal or remaining state deferred tax assets as June 30, 2015. However, if an unanticipated event occurs that materially changes pre-tax and taxable income in future periods, an increase in the valuation allowance may become necessary and it could be material to the Company’s financial statements.

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 17 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows authoritative guidance under FASB ASC Topic 820 for Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  The definition of fair value under ASC 820 is the exchange price. The guidance clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability. The definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price).  The guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement.

Fair value is based on quoted market prices, when available.  If listed prices or quotes are not available, fair value is based on fair value models that use market participant or independently sourced market data which include: discount rate, interest rate yield curves, credit risk, default rates and expected cash flow assumptions.  In addition, valuation adjustments may be made in the determination of fair value.  These fair value adjustments may include amounts to reflect counter party credit quality, creditworthiness, liquidity and other unobservable inputs that are applied consistently over time.  These adjustments are estimated and, therefore, subject to significant management judgment, and at times, may be necessary to mitigate the possibility of error or revision in the model-based estimate of the fair value provided by the model.  The methods described above may produce fair value calculations that may not be indicative of the net realizable value.  While the Company believes its valuation methods are consistent with other financial institutions, the use of different methods or assumptions to determine fair values could result in different estimates of fair value. FASB ASC Topic 820 for Fair Value Measurements and Disclosures describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include debt securities, equity securities and derivative contracts that are traded in an active exchange market as well as certain U.S. Treasury securities that are highly liquid and actively traded in over-the-counter markets.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include debt securities with quoted market prices that are traded less frequently than exchange traded assets and liabilities. The values of these items are determined using pricing models with inputs observable in the market or can be corroborated from observable market data. This category generally includes U.S. Government and agency mortgage-backed debt securities, corporate debt securities and derivative contracts.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Those assets which will continue to be measured at fair value on a recurring basis are as follows at June 30, 2015:

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,412	$	1,412
Investment securities available for sale:
U.S. GSE and agency notes	—		7,350		—		7,350
GNMA guaranteed mortgage certificates	—		4,918		—		4,918
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		38,231		—		38,231
GSE mortgage-backed securities	—		597,672		—		597,672
Municipal bonds
General obligation municipal bonds	—		16,231		—		16,231
Revenue municipal bonds	—		16,693		—		16,693
Corporate securities	—		5,045		—		5,045
Money market funds	2,908		—		—		2,908
Mutual funds	727		—		—		727
Interest rate swap agreements	—		157		—		157
Total Assets	$	3,635	$	686,297	$	1,412	$	691,344
Liabilities:
Interest rate swap agreements
Total Liabilities	$	—	$	163	$	—	$	163
	$	—	$	163	$	—	$	163

Those assets which will continue to be measured at fair value on a recurring basis are as follows at December 31, 2014:

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,403	$	1,403
Investment securities available for sale:
U.S. GSE and agency notes	—		8,614		—		8,614
GNMA guaranteed mortgage certificates	—		5,232		—		5,232
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		45,270		—		45,270
GSE mortgage-backed securities	—		648,948		—		648,948
Municipal bonds
General obligation municipal bonds	—		29,580		—		29,580
Revenue municipal bonds	—		16,784		—		16,784
Money market funds	2,510		—		—		2,510
Mutual funds	896		—		—		896
Interest rate swap agreements	—		152		—		152
Total Assets	$	3,406	$	754,580	$	1,403	$	759,389
Liabilities:
Interest rate swap agreements	$	—	$	160	$	—	$	160
Total Liabilities	$	—	$	160	$	—	$	160

Level 1 Valuation Techniques and Inputs

Included in this category are money market funds, mutual funds and certificates of deposit.  To estimate the fair value of these securities, the Company utilizes observable quotations for the indicated security.

Level 2 Valuation Techniques and Inputs

The majority of the Company’s investment securities are reported at fair value utilizing Level 2 inputs. Prices of these securities are obtained through independent, third-party pricing services. Prices obtained through these sources include market derived quotations and matrix pricing and may include both observable and unobservable inputs. Fair market values take into consideration data such as dealer quotes, new issue pricing, trade prices for similar issues, prepayment estimates, cash flows, market credit spreads and other factors. The Company reviews the output from the third-party providers for reasonableness by considering the pricing consistency among securities with similar characteristics, where available, and comparing values with other pricing sources available to the Company. In general, the Level 2 valuation process uses the following significant inputs in determining the fair value of the different classes of investments:

U.S. Government Sponsored Enterprise (GSE) and Agency Notes. Pricing evaluations are generated on either a price or spread basis as determined by the observed market data.  For spread-based evaluations, a non-call spread scale is created or an Option Adjusted Spread (OAS) model is incorporated to adjust spreads of issues that have early redemption features.  Spreads are calculated continuously throughout the day, as well as “end of day.”

GNMA Guaranteed Mortgage Certificates. Pricing evaluations are based on issuer type, coupon and maturity. The Pool specific evaluation model takes into account pool level information supplied directly by the agency.  For adjustable rate mortgages, the model takes into account indices, margin, periodic and life caps, next coupon adjustment date and the convertibility of the bond.

GSE CMOs.  For pricing evaluations, the pricing service, obtains and applies available direct market color (trades, covers, bids, offers and price talk) along with market color for similar bonds and GSE/Agency CMOs in general (including market research).  Evaluations of tranches (non-volatile and volatile) are based on IDC’s interpretation of accepted market modeling, trading, and pricing conventions.

GSE Mortgage-backed Securities. Included in this category are Fannie Mae and Freddie Mac fixed rate residential mortgage backed securities and Fannie Mae and Freddie Mac Adjustable Rate residential mortgage backed securities. Pricing evaluations are based on issuer type, coupon and maturity. The Pool specific evaluation model takes into account pool level information supplied directly by the GSE.  For adjustable rate mortgages, the model takes into account indices, margin, periodic and life caps, next coupon adjustment date and the convertibility of the bond.

Tax Exempt General Obligation and Revenue Municipal Bonds. For pricing, the pricing service’s evaluators build internal yield curves, which are adjusted throughout the day based on trades and other pertinent market information. Evaluators apply this information to bond sectors, and individual bond evaluations are then extrapolated. Within a given sector, evaluators have the ability to make daily spread adjustments for various attributes that include, but are not limited to, discounts, premiums, credit, alternative minimum tax (AMT), use of proceeds, and callability.

Corporate Securities. Pricing evaluations are generated on either a price or spread basis as determined by observed market data.  For spread-based evaluations, a non-call spread scale is created or an Option Adjusted Spread (OAS) model is incorporated to adjust spreads of issues that have early redemption features.  Spreads are calculated continuously throughout the day, as well as “end of day.”

Interest Rate Swaps. The Company’s valuation methodology for over-the-counter (“OTC”) derivatives includes an analysis of discount cash flows based on Overnight Index Swap (“OIS”) rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value. Uncollateralized or partially-collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk.

Level 3 Valuation Techniques and Inputs

Mortgage Servicing Rights. The Company determines the fair value of its MSRs by estimating the amount and timing of future cash flows associated with the servicing rights and discounting the cash flows using market discount rates. The valuation includes the application of certain assumptions made by management of the Company, including prepayment projections, and prevailing assumptions used in the marketplace at the time of the valuation.

The table below presents all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six months ended June 30, 2015 and 2014.

	Six Months Ended
	June 30, 2015			June 30, 2014
Level 3 Investments Only (Dollars in thousands)	Mortgage Servicing Rights			Mortgage Servicing Rights
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Payments	(81		)	(73		)
Increase (Decrease) in fair value due to changes in valuation inputs or assumptions	5			(47		)
Balance, June 30,	$	1,412		$	1,439

The Company also has assets that, under certain conditions, are subject to measurement at fair value on a non-recurring basis. These include assets that are measured at the lower of cost or market value and had a fair value below cost at the end of the period as summarized below. A loan is impaired when, based on current information, the Company determines that it is probable that the Company will be unable to collect amounts due according to the terms of the loan agreement. The Company’s impaired loans are measured based on the estimated fair value of the collateral if the loans are collateral dependent or based on a discounted cash flow analysis if the loans are not collateral dependent. Assets measured at fair value on a nonrecurring basis are as follows:

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2015		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	3,153	$	—	$	—	$	3,153	$	(399	)
Other real estate owned	$	125	—		—		$	125	(4		)

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2014		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	2,588	$	—	$	—	$	2,588	$	(819	)
Other real estate owned	45		—		—		45		—
Loans held for sale	6,270		—		6,270		—		(2,049		)

In accordance with FASB ASC Topic 825 for Financial Instruments, Disclosures about Fair Value of Financial Instruments, the Company is required to disclose the fair value of financial instruments.  The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a distressed sale.  Fair value is best determined using observable market prices; however for many of the Company’s financial instruments no quoted market prices are readily available.  In instances where quoted market prices are not readily available, fair value is determined using present value or other techniques appropriate for the particular instrument.  These techniques involve some degree of judgment, and as a result, are not necessarily indicative of the amounts the Company would realize in a current market exchange.  Different assumptions or estimation techniques may have a material effect on the estimated fair value.

The following table sets forth the carrying and estimated fair value of the Company’s financial assets and liabilities for the periods indicated:

	Fair Value of Financial Instruments
		At June 30, 2015				At December 31, 2014
				Estimated				Estimated
	Fair Value	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Hierarchy Level	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	Level 1	$	286,303	$	286,303	$	534,015	$	534,015
Securities available for sale	See previous table	689,775		689,775		757,834		757,834
Securities held to maturity	Level 2	745,730		745,602		727,755		731,589
FHLB stock	Level 3	8,786		8,786		8,830		8,830
Loans, net	Level 3	2,659,325		2,693,594		2,369,630		2,418,826
Loans held for sale	Level 2	1,391		1,430		1,461		1,538
Mortgage servicing rights	Level 3	1,412		1,412		1,403		1,403
Interest rate swaps	Level 2	157		157		152		152
Accrued interest receivable	Level 3	13,657		13,657		13,383		13,383
Liabilities:
Deposits	Level 2	3,375,131		3,378,107		3,879,709		3,884,644
Borrowed funds	Level 2	190,396		191,489		190,388		187,864
Interest rate swaps	Level 2	163		163		160		160
Accrued interest payable	Level 2	1,681		1,681		1,743		1,743

Cash and Cash Equivalents - For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Securities Available for Sale and Held to Maturity - The fair value of investment securities, mortgage-backed securities and collateralized mortgage obligations is based on quoted market prices, dealer quotes, yield curve analysis, and prices obtained from independent pricing services.

FHLB Stock - The fair value of FHLB stock is estimated at its carrying value and redemption price of $100 per share.

Loans, Net - The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans would be made to borrowers with similar credit and for the same remaining maturities.  Additionally, to be consistent with the requirements under FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the loans were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.

Loans Held for Sale - The fair value of loans held for sale is estimated using the current rate at which similar loans would be made to borrowers with similar credit risk and the same remaining maturities.  Loans held for sale are carried at the lower of cost or estimated fair value.

Mortgage Servicing Rights - The Company determines the fair value of its MSRs by estimating the amount and timing of future cash flows associated with the servicing rights and discounting the cash flows using market discount rates. The valuation included the application of certain assumptions made by management of the Bank, including prepayment projections, and prevailing assumptions used in the marketplace at the time of the valuation.

Interest Rate Swaps - The Company’s valuation methodology for OTC derivatives includes an analysis of discount cash flows based on OIS rates.  Fully collateralized trades are discounted using OIS with no additional economic adjustments to arrive at fair value.  Uncollateralized or partially-collateralized trades are also discounted at OIS, but include appropriate economic adjustments for funding costs (i.e., a LIBOR-OIS basis adjustment to approximate uncollateralized cost of funds) and credit risk. Beginning January 1, 2013, the Company made the changes to better align its inputs, assumptions, and pricing methodologies with those used in its principal market by most dealers and major market participants.  These changes in valuation methodology were applied prospectively as a change in accounting estimate and were immaterial to the Company’s financial statements.

Accrued Interest Receivable/Payable - The carrying amounts of interest receivable/payable approximate fair value.

Deposits - The fair value of checking and money market deposits and savings accounts is the amount reported in the consolidated financial statements.  The carrying amount of checking, savings and money market accounts is the amount that is payable on demand at the reporting date.  The fair value of time deposits is generally based on a present value estimate using rates currently offered for deposits of similar remaining maturity.

Borrowed Funds - The fair value of borrowed funds is based on a present value estimate using rates currently offered.

Commitments to Extend Credit and Letters of Credit - The majority of the Company’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans and are not included in the table above.  Because commitments to extend credit and letters of credit are generally unassignable by either the Company or the borrower, they only have value to the Company and the borrower.  The estimated fair value approximates the recorded net deferred fee amounts, which are not significant.

The fair value estimates presented herein are based on pertinent information available to management as of June 30, 2015 and December 31, 2014.  Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these consolidated financial statements since June 30, 2015 and December 31, 2014 and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

XML

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic and diluted earnings per share:
Net income	$ 7,055	$ 4,576	$ 12,306	$ 7,048
Basic average common shares outstanding	78,374,704	80,907,413	78,414,226	81,280,507
Effect of dilutive securities	683,770	696,419	653,170	658,777
Dilutive average shares outstanding	79,058,474	81,603,832	79,067,396	81,939,284
Net earnings per share
Basic	$ 0.09	$ 0.06	$ 0.16	$ 0.09
Diluted	$ 0.09	$ 0.06	$ 0.16	$ 0.09

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2015

FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value of assets and liabilities measured on a recurring basis

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,412	$	1,412
Investment securities available for sale:
U.S. GSE and agency notes	—		7,350		—		7,350
GNMA guaranteed mortgage certificates	—		4,918		—		4,918
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		38,231		—		38,231
GSE mortgage-backed securities	—		597,672		—		597,672
Municipal bonds
General obligation municipal bonds	—		16,231		—		16,231
Revenue municipal bonds	—		16,693		—		16,693
Corporate securities	—		5,045		—		5,045
Money market funds	2,908		—		—		2,908
Mutual funds	727		—		—		727
Interest rate swap agreements	—		157		—		157
Total Assets	$	3,635	$	686,297	$	1,412	$	691,344
Liabilities:
Interest rate swap agreements
Total Liabilities	$	—	$	163	$	—	$	163
	$	—	$	163	$	—	$	163

	Category Used for Fair Value Measurement
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Mortgage servicing rights	$	—	$	—	$	1,403	$	1,403
Investment securities available for sale:
U.S. GSE and agency notes	—		8,614		—		8,614
GNMA guaranteed mortgage certificates	—		5,232		—		5,232
Collateralized mortgage obligations (“CMOs”) GSE CMOs	—		45,270		—		45,270
GSE mortgage-backed securities	—		648,948		—		648,948
Municipal bonds
General obligation municipal bonds	—		29,580		—		29,580
Revenue municipal bonds	—		16,784		—		16,784
Money market funds	2,510		—		—		2,510
Mutual funds	896		—		—		896
Interest rate swap agreements	—		152		—		152
Total Assets	$	3,406	$	754,580	$	1,403	$	759,389
Liabilities:
Interest rate swap agreements	$	—	$	160	$	—	$	160
Total Liabilities	$	—	$	160	$	—	$	160

Summary of assets measured at fair value on a recurring basis using significant unobservable inputs

	Six Months Ended
	June 30, 2015			June 30, 2014
Level 3 Investments Only (Dollars in thousands)	Mortgage Servicing Rights			Mortgage Servicing Rights
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Payments	(81		)	(73		)
Increase (Decrease) in fair value due to changes in valuation inputs or assumptions	5			(47		)
Balance, June 30,	$	1,412		$	1,439

Assets measured at fair value on a nonrecurring basis

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2015		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	3,153	$	—	$	—	$	3,153	$	(399	)
Other real estate owned	$	125	—		—		$	125	(4		)

	Balance Transferred YTD
(Dollars in thousands)	June 30, 2014		Level 1		Level 2		Level 3		Gains/(Losses)
Impaired loans	$	2,588	$	—	$	—	$	2,588	$	(819	)
Other real estate owned	45		—		—		45		—
Loans held for sale	6,270		—		6,270		—		(2,049		)

Schedule of carrying and estimated fair value of financial assets and liabilities

	Fair Value of Financial Instruments
		At June 30, 2015				At December 31, 2014
				Estimated				Estimated
	Fair Value	Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Hierarchy Level	Amount		Value		Amount		Value
Assets:
Cash and cash equivalents	Level 1	$	286,303	$	286,303	$	534,015	$	534,015
Securities available for sale	See previous table	689,775		689,775		757,834		757,834
Securities held to maturity	Level 2	745,730		745,602		727,755		731,589
FHLB stock	Level 3	8,786		8,786		8,830		8,830
Loans, net	Level 3	2,659,325		2,693,594		2,369,630		2,418,826
Loans held for sale	Level 2	1,391		1,430		1,461		1,538
Mortgage servicing rights	Level 3	1,412		1,412		1,403		1,403
Interest rate swaps	Level 2	157		157		152		152
Accrued interest receivable	Level 3	13,657		13,657		13,383		13,383
Liabilities:
Deposits	Level 2	3,375,131		3,378,107		3,879,709		3,884,644
Borrowed funds	Level 2	190,396		191,489		190,388		187,864
Interest rate swaps	Level 2	163		163		160		160
Accrued interest payable	Level 2	1,681		1,681		1,743		1,743

XML

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Condensed Consolidated Statements of Comprehensive Income
Net Income	$ 12,306	$ 7,048
Unrealized gains (losses) on securities:
Unrealized holding (losses) gains on available for sale securities arising during the period (net of deferred tax of $377 and $6,765 for the six months ended June 30, 2015 and 2014, respectively)	(652)	11,644
Unrealized losses on available-for-sale securities transferred to held-to-maturity during the period (net of deferred tax of $1,990 for the six months ended June 30, 2014)		(3,426)
Accretion of unrealized losses on available-for-sale securities transferred to held-to-maturity (net of deferred tax of $153 and $109 for the six months ended June 30, 2015 and 2014, respectively)	265	189
Reclassification adjustment for net losses (gains) on available for sale securities included in net income (net of tax of $3 and $109 for the six months ended June 30, 2015 and 2014, respectively)	6	(188)
Defined benefit pension plans:
Pension gains, other postretirement and postemployment benefit plan adjustments (net of tax of $490 and $265 for the six months ended June 30, 2015 and 2014, respectively)	662	268
Total other comprehensive income	281	8,487
Comprehensive income	$ 12,587	$ 15,535

XML

DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) - Interest rate swaps - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Derivatives
Gross Amounts of Recognized Liabilities	$ 179	$ 178
Net Amounts of Liabilities Presented in the Statement of Financial Condition	179	178
Gross Amounts Not Offset in the Statement of Financial Condition
Collateral Posted	380	317
Net Amount	$ (201)	$ (139)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2015

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto contained in the Annual Report on Form 10-K filed by Beneficial Bancorp, Inc. (the “Company” or “Beneficial”) with the U.S. Securities and Exchange Commission on February 26, 2015.  The results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015 or any other period.

Principles of Consolidation

The unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.  Specifically, the financial statements include the accounts of Beneficial Bank (the “Bank”), the Company’s wholly owned subsidiary, and the Bank’s wholly owned subsidiaries. The Bank’s wholly owned subsidiaries are: (i) Beneficial Advisors, LLC, which offers wealth management services and non-deposit investment products, (ii) Neumann Corporation, a Delaware corporation formed to manage certain investments, (iii) Beneficial Insurance Services, LLC, which provides insurance services to individual and business customers and (iv) BSB Union Corporation, a leasing company. Additionally, the Company has subsidiaries that hold other real estate acquired in foreclosure or transferred from the real estate loan portfolio. All significant intercompany accounts and transactions have been eliminated.

Management makes significant operating decisions based upon the analysis of the entire Company and financial performance is evaluated on a company-wide basis. Accordingly, the various financial services and products offered are included in one reportable operating segment: community banking as outlined under guidance in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC” or “codification”) Topic 280 for Segment Reporting.

Use of Estimates in the Preparation of Financial Statements

These unaudited interim condensed consolidated financial statements are prepared in conformity with GAAP. The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Significant estimates include the allowance for loan losses, goodwill, other intangible assets, income taxes, postretirement benefits, and the fair value of investment securities.  Actual results could differ from those estimates and assumptions.

XML

LOANS (Details 3) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Amounts and percentage of portfolio
Amount of portfolio	$ 2,708,508	$ 2,421,745
Commercial And Residential Loans
Amounts and percentage of portfolio
Amount of portfolio	$ 2,086,456	$ 1,789,044
Percentage of portfolio	100.00%	100.00%
Commercial
Amounts and percentage of portfolio
Amount of portfolio	$ 1,374,981	$ 1,120,976
Commercial | Commercial real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 831,831	$ 609,646
Percentage of portfolio	100.00%	100.00%
Commercial | Commercial business loans
Amounts and percentage of portfolio
Amount of portfolio	$ 477,385	$ 442,190
Percentage of portfolio	100.00%	100.00%
Commercial | Commercial construction
Amounts and percentage of portfolio
Amount of portfolio	$ 65,765	$ 69,140
Percentage of portfolio	100.00%	100.00%
Residential
Amounts and percentage of portfolio
Amount of portfolio	$ 711,475	$ 668,068
Residential | Residential real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 711,213	$ 667,800
Percentage of portfolio	100.00%	100.00%
Residential | Residential construction
Amounts and percentage of portfolio
Amount of portfolio	$ 262	$ 268
Percentage of portfolio	100.00%	100.00%
Pass | Commercial And Residential Loans
Amounts and percentage of portfolio
Amount of portfolio	$ 2,030,829	$ 1,727,886
Percentage of portfolio	97.00%	97.00%
Pass | Commercial | Commercial real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 812,418	$ 579,847
Percentage of portfolio	98.00%	95.00%
Pass | Commercial | Commercial business loans
Amounts and percentage of portfolio
Amount of portfolio	$ 446,328	$ 419,316
Percentage of portfolio	93.00%	95.00%
Pass | Commercial | Commercial construction
Amounts and percentage of portfolio
Amount of portfolio	$ 65,558	$ 66,191
Percentage of portfolio	100.00%	96.00%
Pass | Residential | Residential real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 706,393	$ 662,394
Percentage of portfolio	99.00%	99.00%
Pass | Residential | Residential construction
Amounts and percentage of portfolio
Amount of portfolio	$ 132	$ 138
Percentage of portfolio	50.00%	51.00%
Special Mention | Commercial And Residential Loans
Amounts and percentage of portfolio
Amount of portfolio	$ 20,364	$ 19,423
Percentage of portfolio	1.00%	1.00%
Special Mention | Commercial | Commercial real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 7,470	$ 13,795
Percentage of portfolio	1.00%	2.00%
Special Mention | Commercial | Commercial business loans
Amounts and percentage of portfolio
Amount of portfolio	$ 12,894	$ 5,628
Percentage of portfolio	3.00%	1.00%
Substandard | Commercial And Residential Loans
Amounts and percentage of portfolio
Amount of portfolio	$ 35,263	$ 41,735
Percentage of portfolio	2.00%	2.00%
Substandard | Commercial | Commercial real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 11,943	$ 16,004
Percentage of portfolio	1.00%	3.00%
Substandard | Commercial | Commercial business loans
Amounts and percentage of portfolio
Amount of portfolio	$ 18,163	$ 17,246
Percentage of portfolio	4.00%	4.00%
Substandard | Commercial | Commercial construction
Amounts and percentage of portfolio
Amount of portfolio	$ 207	$ 2,949
Percentage of portfolio		4.00%
Substandard | Residential | Residential real estate
Amounts and percentage of portfolio
Amount of portfolio	$ 4,820	$ 5,406
Percentage of portfolio	1.00%	1.00%
Substandard | Residential | Residential construction
Amounts and percentage of portfolio
Amount of portfolio	$ 130	$ 130
Percentage of portfolio	50.00%	49.00%

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) - Nonrecurring - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	$ 3,153	$ 2,588
Other real estate owned	125	45
Loans held for sale		6,270
Gains/(Losses) - Impaired Loans	(399)	(819)
Gains (Losses) - Other real estate owned	(4)
Gain/(Loss) - Loans held for sale		(2,049)
Level 2
Assets and Liabilities Measured on Nonrecurring Basis
Loans held for sale		6,270
Level 3
Assets and Liabilities Measured on Nonrecurring Basis
Impaired loans	3,153	2,588
Other real estate owned	$ 125	$ 45

XML

BORROWED FUNDS (Details 2) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Federal Reserve Bank borrowings | Federal Reserve Bank Of Philadelphia
Borrowed funds
Loans pledged to secure borrowing capacity	$ 217.1	$ 237.8

XML

MORTGAGE SERVICING RIGHTS

6 Months Ended

Jun. 30, 2015

MORTGAGE SERVICING RIGHTS

MORTGAGE SERVICING RIGHTS

NOTE 18 — MORTGAGE SERVICING RIGHTS

The Company follows the authoritative guidance under ASC 860-50 - Servicing Assets and Liabilities to account for its MSRs.  The Company has elected the fair value measurement method to value its existing mortgage servicing assets at fair value in accordance with ASC 860-50.  Under the fair value measurement method, the Company records its MSRs on its consolidated statements of financial condition as a component of other assets at fair value with changes in fair value recorded as a component of mortgage banking income in the Company’s consolidated statements of income for each period.  As of June 30, 2015 and June 30, 2014, the Company serviced $148.7 million and $153.6 million of residential mortgage loans, respectively.  During the three and six months ended June 30, 2015, the Company recognized servicing fee income of $93 thousand and $188 thousand, respectively, compared to $96 thousand and $194 thousand for the same periods in 2014.

The following is an analysis of the activity in the Company’s residential MSRs for the six months ended June 30, 2015 and 2014:

	Residential
	Mortgage Servicing Rights
	For the Six Months Ended June 30,
Dollars in thousands	2015			2014
Balance, January 1,	$	1,403		$	1,524
Additions	85			35
Increases (decreases) in fair value due to:
Changes in valuation input or assumptions	5			(47		)
Paydowns	(81		)	(73		)
Balance, June 30,	$	1,412		$	1,439

The Company uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds, discount rates, escrow earnings rates and other assumptions.  The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge.  At June 30, 2015, the key assumptions used to determine the fair value of the Company’s MSRs included a lifetime constant prepayment rate equal to 9.72%, a discount rate equal to 9.75% and an escrow earnings credit rate equal to 1.66%.  At June 30, 2014, the key assumptions used to determine the fair value of the Company’s MSRs included a lifetime constant prepayment rate equal to 10.47%, a discount rate equal to 9.88% and an escrow earnings credit rate equal to 1.74%.

At June 30, 2015 and June 30, 2014, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.

	Mortgage Servicing Rights			Mortgage Servicing Rights
(Dollars in thousands)	June 30, 2015			June 30, 2014
Fair value of residential mortgage servicing rights	$	1,412		$	1,439
Weighted average life (years)	5.7 years			5.6 years
Prepayment speed	9.72		%	10.47		%
Effect on fair value of a 20% increase	$	(98	)	$	(103	)
Effect on fair value of a 10% increase	(50		)	(52		)
Effect on fair value of a 10% decrease	55			58
Effect on fair value of a 20% decrease	112			118
Discount rate	9.75		%	9.88		%
Effect on fair value of a 20% increase	$	(93	)	$	(95	)
Effect on fair value of a 10% increase	(49		)	(49		)
Effect on fair value of a 10% decrease	52			54
Effect on fair value of a 20% decrease	108			111
Escrow earnings credit	1.66		%	1.74		%
Effect on fair value of a 20% increase	$	36		$	35
Effect on fair value of a 10% increase	18			17
Effect on fair value of a 10% decrease	(16		)	(15		)
Effect on fair value of a 20% decrease	(34		)	(34		)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance.  As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear.  Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

XML

PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS (Details) - Second-step conversion and stock offering - shares		6 Months Ended
	Jan. 12, 2015	Jun. 30, 2015
Pension and postretirement benefit plans
Issuance of common shares (in shares)	50,383,817
Bank's employee savings and stock ownership plan
Pension and postretirement benefit plans
Issuance of common shares (in shares)	2,015,352	2,015,352

XML

REGULATORY CAPITAL REQUIREMENTS (Tables)

6 Months Ended

Jun. 30, 2015

Summary of bank's actual capital amounts and ratios

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	1,016,523	22.07	%	$	184,203	4.00	%	$	230,254	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	996,520		38.35	%	116,924		4.50	%	168,890		6.50	%
Tier 1 Capital (to risk weighted assets)	1,016,523		39.12	%	155,899		6.00	%	207,865		8.00	%
Total Capital (to risk weighted assets)	1,049,261		40.38	%	207,865		8.00	%	259,831		10.00	%

The Bank

Summary of bank's actual capital amounts and ratios

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	764,570	16.62	%	$	184,043	4.00	%	$	230,053	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	116,716		4.50	%	168,590		6.50	%
Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	155,622		6.00	%	207,495		8.00	%
Total Capital (to risk weighted assets)	797,250		30.74	%	207,495		8.00	%	259,369		10.00	%
As of December 31, 2014:
Tier 1 Capital (to average assets)	$	480,795	11.05	%	$	130,520	3.00	%	$	217,534	5.00	%
Tier 1 Capital (to risk weighted assets)	480,795		21.17	%	90,842		4.00	%	136,262		6.00	%
Total Capital (to risk weighted assets)	509,460		22.43	%	181,683		8.00	%	227,104		10.00	%

XML

REGULATORY CAPITAL REQUIREMENTS

6 Months Ended

Jun. 30, 2015

REGULATORY CAPITAL REQUIREMENTS

REGULATORY CAPITAL REQUIREMENTS

NOTE 11 — REGULATORY CAPITAL REQUIREMENTS

The Bank is subject to various regulatory capital requirements administered by state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

The Dodd-Frank Act required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. In early July 2013, the Federal Reserve Board and the Office of the Comptroller of the Currency approved revisions to their capital adequacy guidelines and prompt corrective action rules that implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules text released in December 2010, and loss absorbency rules issued in January 2011, which include significant changes to bank capital, leverage and liquidity requirements.

In July 2013, the Federal Deposit Insurance Corporation and the Federal Reserve Board approved a new rule that substantially amended the regulatory risk-based capital rules applicable to Beneficial Bank and Beneficial Bancorp. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The rules include new risk-based capital and leverage ratios, which became effective on January 1, 2015, and revised the definition of what constitutes “capital” for purposes of calculating those ratios. The new minimum capital level requirements applicable to the Company and the Bank are: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from current rules); and (4) a Tier 1 leverage ratio of 4% for all institutions. The rules also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 capital ratio of 8.5%, and (3) a total capital ratio of 10.5%. The new capital conservation buffer requirement will be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase by that amount each year until fully implemented in January 2019. An institution is also subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

As of June 30, 2015, the Company’s and the Bank’s current capital levels exceed the required capital amounts to be considered “well capitalized” and we believe they also meet the fully-phased in minimum capital requirements, including the related capital conservation buffers, as required by the Basel III capital rules.

The following table summarizes the Company’s Regulatory Capital Requirements as of June 30, 2015:

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	1,016,523	22.07	%	$	184,203	4.00	%	$	230,254	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	996,520		38.35	%	116,924		4.50	%	168,890		6.50	%
Tier 1 Capital (to risk weighted assets)	1,016,523		39.12	%	155,899		6.00	%	207,865		8.00	%
Total Capital (to risk weighted assets)	1,049,261		40.38	%	207,865		8.00	%	259,831		10.00	%

The following table summarizes the Bank’s Regulatory Capital Requirements as of June 30, 2015 and December 31, 2014:

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(Dollars in thousands)	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
As of June 30, 2015:
Tier 1 Leverage (to average assets)	$	764,570	16.62	%	$	184,043	4.00	%	$	230,053	5.00	%
Common Equity Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	116,716		4.50	%	168,590		6.50	%
Tier 1 Capital (to risk weighted assets)	764,570		29.48	%	155,622		6.00	%	207,495		8.00	%
Total Capital (to risk weighted assets)	797,250		30.74	%	207,495		8.00	%	259,369		10.00	%
As of December 31, 2014:
Tier 1 Capital (to average assets)	$	480,795	11.05	%	$	130,520	3.00	%	$	217,534	5.00	%
Tier 1 Capital (to risk weighted assets)	480,795		21.17	%	90,842		4.00	%	136,262		6.00	%
Total Capital (to risk weighted assets)	509,460		22.43	%	181,683		8.00	%	227,104		10.00	%