UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

|                                |                                                                                           
|------------------------------- | ------------------------------------------------------------------------------------------
|x                               | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934    
|                                |                                                                                           
|                                | For the
  fiscal year ended December 31, 2007                                             
|                                |                                                                                           
|OR                             
|                               
|o                               | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
  EXCHANGE ACT OF 1934
|                                |                                                                                           
|                                | For the transition period from _____________ to _____________                             
|                                |                                                                                           
|Commission File Number: 1-33476

|                                                      
|------------------------------------------------------
|BENEFICIAL MUTUAL BANCORP, INC.                       
|                                                      
|(Exact name of registrant as specified in its charter)



|                                                                  |  |                                     
|----------------------------------------------------------------- |  | ------------------------------------
|United States                                                     |  | 56-2480744                          
|                                                                  |  |                                     
|(State or other jurisdiction of 
  incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                                  |  |                                     
|510 Walnut Street, Philadelphia,
  Pennsylvania                   |  | 19106                               
|                                                                  |  |                                     
|(Address of principal executive offices)                          |  | (Zip Code)                          

Registrants telephone number, including area
code: (215) 864-6000

Securities registered pursuant to Section
12(b) of the Act:

|                                        |                                          
|--------------------------------------- | -----------------------------------------
|Title of each class                     | Name of each exchange on which registered
|                                        |                                          
|Common Stock, par value $0.01 per share | Nasdaq Stock Market, LLC                 

Securities registered pursuant to Section
12(g) of the Act:          None

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes  o No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No x

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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

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
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 o        
|             |                             |                              
|             | Non-Accelerated
  Filer x   | Smaller
  Reporting Company o

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

The
aggregate market value of the voting and non-voting common equity held by
nonaffiliates as of June 30, 2007 was approximately $0.

The
number of shares outstanding of the registrants common stock as of March 21,
2008 was 82,264,600. Of such shares outstanding, 45,792,775 were held by
Beneficial Savings Bank MHC.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of
the Registrants 2007 Annual Report to Stockholders and Proxy Statement for the
2008 Annual Meeting of Stockholders are incorporated by reference into Part II
and III, respectively, of this Form 10-K.

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INDEX

|           |                                                                                                                  |  |     
|---------- | ---------------------------------------------------------------------------------------------------------------- |  | ----
|           |                                                                                                                  |  | Page
|           |                                                                                                                  |  |     
|Part I    
|          
|Item
  1.  | Business                                                                                                         |  | 1   
|           |                                                                                                                  |  |     
|Item
  1A. | Risk
  Factors                                                                                                   |  | 18  
|           |                                                                                                                  |  |     
|Item
  1B. | Unresolved
  Staff Comments                                                                                      |  | 20  
|           |                                                                                                                  |  |     
|Item
  2.  | Properties                                                                                                       |  | 21  
|           |                                                                                                                  |  |     
|Item
  3.  | Legal
  Proceedings                                                                                              |  | 21  
|           |                                                                                                                  |  |     
|Item
  4.  | Submission
  of Matters to a Vote of Security Holders                                                            |  | 21  
|           |                                                                                                                  |  |     
|Part II   
|          
|Item
  5.  | Market
  for Registrants Common Equity, Related Stockholder Matters and Issuer
  Purchases of Equity Securities |  | 21  
|           |                                                                                                                  |  |     
|Item 6.    | Selected Financial Data                                                                                          |  | 21  
|           |                                                                                                                  |  |     
|Item 7.    | Managements Discussion and Analysis of Financial Condition and
  Results of Operation                           |  | 21  
|           |                                                                                                                  |  |     
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk                                                       |  | 22  
|           |                                                                                                                  |  |     
|Item 8.    | Financial Statements and Supplementary Data                                                                      |  | 22  
|           |                                                                                                                  |  |     
|Item 9.    | Changes in and Disagreements With Accountants on Accounting and
  Financial Disclosure                           |  | 22  
|           |                                                                                                                  |  |     
|Item 9A.   | Controls and Procedures                                                                                          |  | 22  
|           |                                                                                                                  |  |     
|Item 9B.   | Other Information                                                                                                |  | 22  
|           |                                                                                                                  |  |     
|Part III  
|          
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                           |  | 22  
|           |                                                                                                                  |  |     
|Item 11.   | Executive Compensation                                                                                           |  | 23  
|           |                                                                                                                  |  |     
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and
  Related Stockholder Matters                 |  | 23  
|           |                                                                                                                  |  |     
|Item 13.   | Certain Relationships and Related Transactions, and Director
  Independence                                      |  | 24  
|           |                                                                                                                  |  |     
|Item 14.   | Principal Accounting Fees and Services                                                                           |  | 24  
|           |                                                                                                                  |  |     
|Part IV   
|          
|Item 15.   | Exhibits and Financial Statement Schedules                                                                       |  | 24  
|           |                                                                                                                  |  |     
|SIGNATURES |                                                                                                                  | 

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This
annual report contains forward-looking statements that are based on assumptions
and may describe future plans, strategies and expectations of Beneficial Mutual
Bancorp, Inc. These forward-looking statements are generally identified by use
of the words believe, expect, intend, anticipate, estimate, project
or similar expressions. Beneficial Mutual Bancorp, Inc.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 Beneficial Mutual Bancorp, Inc. and its subsidiary include, but are not
limited to, changes in interest rates, national and regional economic
conditions, legislative and regulatory changes, 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 Beneficial Mutual Bancorp, Inc.s market area, changes in
real estate market values in Beneficial Mutual Bancorp, Inc.s market area,
changes in relevant accounting principles and guidelines and inability of third
party service providers to perform. Additional factors that may affect our
results are discussed in Item 1A to this annual report titled Risk Factors
below.

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, Beneficial Mutual Bancorp, Inc.
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.

Unless
the context indicates otherwise, all references in this annual report to Company,
we, us and our refer to Beneficial Mutual Bancorp, Inc. and its
subsidiaries.

PART I

|        |         
|------- | --------
|Item 1. | BUSINESS

General

Beneficial Mutual Bancorp, Inc. (the
Company) was organized on August 24, 2004 under the laws of the United States
in connection with the mutual holding company reorganization of Beneficial Bank
(the Bank), a Pennsylvania chartered savings bank. In connection with the
reorganization, the Company became the wholly owned subsidiary of Beneficial
Savings Bank MHC (the MHC), a federally chartered mutual holding company. In
addition, the Company acquired 100% of the outstanding common stock of the
Bank.

On July 13,
2007, the Company completed its initial public offering in which it sold
23,606,625 shares, or 28.70%, of its outstanding common stock to the public,
including 3,224,772 shares purchased by the Beneficial Mutual Savings Bank
Employee Stock Ownership Plan Trust (the ESOP). In addition, 45,792,775
shares, or 55.67% of the Companys outstanding common stock, were issued to the
MHC. To further emphasize the Banks existing community activities, the Company
also contributed $500,000 in cash and issued 950,000 shares, or 1.15% of the
Companys outstanding common stock, to The Beneficial Foundation (the
Foundation), a Pennsylvania nonstock
charitable foundation organized by the Company in connection with the Companys
initial public offering.

In addition
to completing its initial public offering on July 13, 2007, the Company also
issued 11,915,200 shares, or 14.50% of its outstanding common stock, to
stockholders of FMS Financial Corporation (FMS Financial) in connection with
the Companys acquisition of FMS Financial. The merger was consummated pursuant
to an agreement and plan of merger whereby FMS Financial merged with and into
the Company and FMS Financials wholly owned subsidiary, Farmers &
Mechanics Bank, merged with and into the Bank.

The
Companys business activities are the ownership of the Banks capital stock and
the management of the proceeds it retained in connection with its initial
public offering. The Company does not own or lease any property but instead
uses the premises, equipment and other property of the Bank with the payment of
appropriate rental fees, as required by applicable law and regulations, under
the terms of an expense allocation agreement.

1

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The
Bank, which has also operated under the name Beneficial Mutual Savings Bank, is
a Pennsylvania chartered savings bank originally founded in 1853. We have
served the financial needs of our depositors and the local community since our
founding and are a community-minded, customer service-focused institution. We offer traditional financial services to consumers
and businesses in our market areas. We attract deposits from the general public
and use those funds to originate a variety of loans, including commercial real
estate loans, consumer loans, home equity loans, one-to-four family real estate loans, commercial business loans and
construction loans. We offer insurance brokerage and investment advisory services through our wholly owned subsidiaries, Beneficial Insurance
Services, LLC and Beneficial Advisors, LLC, respectively.
 We also maintain an investment portfolio. Our primary
market consists of Chester, Delaware, Montgomery, Philadelphia and Bucks
Counties, Pennsylvania and Burlington, Camden, and Gloucester Counties, New Jersey.
The acquisition of FMS Financial and its wholly owned subsidiary, Farmers &
Mechanics Bank, in July 2007 expanded our market presence in Burlington, Camden
and Gloucester Counties, New Jersey.

The
Companys and the Banks executive offices are located at 510 Walnut Street,
Philadelphia, Pennsylvania and our main telephone number is (215) 864-6000. Our
website address is www.thebeneficial.com. Information on our website should not
be considered part of this filing.

Market Area

The
Company is headquartered in Philadelphia, Pennsylvania. We operate 39 full-service banking offices in Chester, Delaware,
Montgomery, Philadelphia and Bucks Counties, Pennsylvania and 33 full-service
offices in Burlington, Camden and Gloucester Counties, New Jersey.

The
acquisition of FMS Financial has substantially enhanced our market share. On
July 13, 2007, the Company completed its merger with FMS Financial. In
connection with the merger, FMS Financials wholly owned subsidiary, Farmers
& Mechanics Bank, which had a network of 31 branch offices located
primarily in Burlington County, New Jersey and branches in parts of Camden
County, New Jersey, merged with and into the Bank. The merger solidified the Banks
position as the largest Philadelphia-based bank operating solely in the greater
Philadelphia metropolitan area, with more than $3.5 billion in assets and a
greatly expanded network of neighborhood banking offices throughout the region.

Our
retail market area is the greater Philadelphia metropolitan area and primarily
includes the area surrounding our 72 banking offices located in Bucks, Chester,
Delaware, Montgomery and Philadelphia Counties in Pennsylvania and Burlington
and Camden Counties in New Jersey, while our lending market also includes
Gloucester and Mercer Counties in New Jersey. In Pennsylvania, we serve our
customers through our four offices in Bucks County, seven offices in Delaware
County, eight offices in Montgomery County, 19 offices in Philadelphia County,
and one office in Chester County. In New Jersey, we serve our customers through
our 30 offices in Burlington County and three offices in Camden County. In
addition, Beneficial Insurance Services, LLC (Beneficial Insurance) operates
two offices in Pennsylvania, one in Philadelphia County and one in Delaware
County.

The
economy of our market area is predominated by the service sector. According to
published statistics, the 2007 population of the nine-county area served by our
branches totaled 5.6 million. The economy in the Philadelphia metropolitan area
has grown in recent years due to the presence of a highly-educated workforce
and the diversity of the local economy as traditional employers in the
manufacturing and financial services industry have been bolstered by growth in
the life services and health care industries, as well as the information
technology and communication sectors. The median household and per capita
income in our market area exceeds comparable national figures.

The
Company has sought to expand its franchise in recent years through acquisition
opportunities and by opening new branch offices and continues to evaluate
opportunities for further expansion. Our branch expansion has been within our existing
market area as we have sought to penetrate more of our primary market area. In
2005, we opened three new branch offices in Northeast Philadelphia. In 2006, we
opened one new branch in Bucks County, Pennsylvania and relocated two branches
within Philadelphia, Pennsylvania and  Delaware County, Pennsylvania.
We opened a new branch office in Camden County, New Jersey in January 2007 and
another in Montgomery County, Pennsylvania in March 2007. In January 2008, we
opened a new branch office in Montgomery County, Pennsylvania.

Overall,
the nine counties that comprise our market area provide attractive growth
potential by demonstrating relatively strong population, household and wealth
growth trends.

2

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Competition

We
face significant competition for the attraction of deposits and origination of
loans. Our most direct competition for deposits has historically come from the
many financial institutions operating in our market area and, to a lesser
extent, from other financial service companies such as brokerage firms, credit
unions and insurance companies. Several large holding companies operate banks
in our market area, including Bank of America, Wachovia, Commerce Bank and PNC
Bank. These institutions are significantly larger than us and, therefore, have
significantly greater resources. We also face competition for investors funds
from money market funds, mutual funds and other corporate and government
securities.

Our
competition for loans comes primarily from financial institutions in our market
area and, to a lesser extent, from other financial service providers, such as
mortgage companies and mortgage brokers. Competition for loans also comes from
the increasing number of non-depository financial service companies
participating in the mortgage market, such as insurance companies, securities
companies and specialty finance companies, although the recent credit market
disruptions stemming from the deterioration of sub-prime loans have reduced the
number of non-depository competitors in the residential mortgage market.

Notwithstanding
these recent credit market disruptions, we expect competition to remain intense
in the future as a result of legislative, regulatory and technological changes
and the continuing trend of consolidation in the financial services industry.
Technological advances, for example, have lowered barriers to entry, allowed
banks to expand their geographic reach by providing services over the Internet
and made it possible for non-depository institutions to offer products and
services that traditionally have been provided by banks. Changes in federal law
permit affiliation among banks, securities firms and insurance companies, which
promotes a competitive environment in the financial services industry.
Competition for deposits and the origination of loans could limit our growth in
the future.

Lending Activities

We
offer a variety of loans. Historically, we have had a substantial portion of
our loan portfolio concentrated in consumer loans, which have primarily
consisted of automobile loans and leases, and home equity loans and lines of
credit. In 2004, we stopped providing automobile lease financing and our
automobile loan portfolio has decreased in recent years. It is likely that our
automobile loan portfolio will continue to decline as we place greater emphasis
on originating commercial real estate and commercial business loans. Since
2002, our commercial real estate loan portfolio has grown steadily and at
December 31, 2007 and 2006 comprised 32.8% and 24.4% of our total loan
portfolio, respectively, which, at December 31, 2007 was greater than any other
loan category.

In
the future, we intend to continue to emphasize commercial real estate and
commercial business lending. We have added to our experienced staff of
commercial lenders and continue to seek participation opportunities with other
local lenders. Participation opportunities will be subject to our internal
underwriting guidelines, which are consistently applied. We will also continue
to proactively monitor and manage existing credit relationships. In addition,
we intend to increase our share of the local market for home equity loans, as a
result of recent additional investments in advertising, and the introduction of
home equity lending as a new product in our recently expanded New Jersey branch
network.

The
Bank does not engage in sub-prime lending, which is defined as mortgage loans
advanced to borrowers who do not qualify for market interest rates because of
problems with their credit history. The Bank focuses its lending efforts within
its market area.

One-to-Four
Family Residential Loans. We offer two types of
residential mortgage loans: fixed-rate loans and adjustable-rate loans. We
offer fixed-rate mortgage loans with terms of up to 40 years, although we
generally do not originate fixed-rate mortgages with terms in excess of 30
years. We offer adjustable-rate mortgage loans with interest rates and payments
that adjust annually after an initial fixed period of one, three or five years.
Interest rates and payments on our adjustable-rate loans generally are adjusted
to a rate equal to a percentage above the U.S. Treasury Security Index. The
Banks adjustable-rate single-family residential real estate loans generally
have a cap of 2% on any increase or decrease in the interest rate at any
adjustment date, and a maximum adjustment limit of 6% on any such increase or
decrease over the life of the loan. In order to increase the originations of adjustable-rate
loans, the Bank has been originating loans which bear a fixed interest rate for
a period of three to five years after which they convert to one-year
adjustable-rate loans. The Banks adjustable-rate loans require that any
payment adjustment resulting from a change in the interest rate of an
adjustable-rate loan be sufficient to result in full amortization of the loan
by the end of the loan term and, thus, do not permit any of the increased
payment to be added to the principal amount of the loan, creating negative
amortization. Although the Bank does offer adjustable-rate loans with initial
rates below the fully indexed rate, loans tied to the one-year constant
maturity treasury (CMT) are underwritten using methods approved by the
Federal Home Loan Mortgage Corporation (FHLMC) or the Federal National
Mortgage Association (FNMA), which require borrowers to be qualified at 2%
above the discounted loan rate under certain conditions.

3

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Borrower
demand for adjustable-rate loans compared to fixed-rate loans is a function of
the level of interest rates, the expectations of changes in the level of
interest rates, and the difference between the interest rates and loan fees
offered for fixed-rate mortgage loans as compared to the interest rates and
loan fees for adjustable-rate loans. The relative amount of fixed-rate and
adjustable-rate mortgage loans that can be originated at any time is largely
determined by the demand for each in a competitive environment. The loan fees,
interest rates and other provisions of mortgage loans are determined by us on
the basis of our own pricing criteria and competitive market conditions.

All
of our residential mortgage loans are consistently underwritten to standards
established by FNMA and FHLMC.

While
one-to-four family residential real estate loans are normally originated with
up to 30-year terms, such loans typically remain outstanding for substantially
shorter periods because borrowers often prepay their loans in full either upon
sale of the property pledged as security or upon refinancing the original loan.
Therefore, average loan maturity is a function of, among other factors, the
level of purchase and sale activity in the real estate market, prevailing
interest rates and the interest rates payable on outstanding loans. We do not
offer loans with negative amortization or interest only loans.

It
is our general policy not to make high loan-to-value loans (defined as loans
with a loan-to-value ratio of 80% or more) without private mortgage insurance;
however, we do offer loans with loan-to-value ratios of up to 90% under a
special low income loan program consisting of $15.4 million in loans as of
December 31, 2007. The maximum loan-to-value ratio we generally permit is 95% with
private mortgage insurance, although occasionally we do originate loans with
loan-to-value ratios as high as 97% under special loan programs, including our
first time home owner loan program. We require all properties securing mortgage
loans to be appraised by a board-approved independent appraiser. We generally
require title insurance on all first mortgage loans. Borrowers must obtain
hazard insurance, and flood insurance is required for loans on properties
located in a flood zone.

Commercial Real Estate Loans. At December 31, 2007, we
had commercial real estate loans totaling $693.7 million, or 32.8%, of our
total loan portfolio, which was greater than any other loan category, including
one-to-four family loans.

We
offer commercial real estate loans secured by real estate primarily with
adjustable rates. We originate a variety of commercial real estate loans
generally for terms up to 25 years and payments based on an amortization
schedule of up to 25 years. These loans are typically based on either the
Federal Home Loan Bank (FHLB) of Pittsburghs borrowing rate or U.S. Treasury
rate and adjust every five years. Commercial real estate loans also are
originated for the acquisition and development of land. Conditions of
acquisition and development loans we originate generally limit the number of
model homes and homes built on speculation, and draws are scheduled against
executed agreements of sale. Commercial real estate loans for the acquisition
and development of land are typically based upon the prime rate as published in
The Wall Street Journaland/or LIBOR. Commercial real estate loans for
developed real estate and for real estate acquisition and development are
originated with loan-to-value ratios of up to 75%, while loans for the acquisition
of land are originated with a maximum loan to value ratio of 65%.

As
of December 31, 2007, our largest commercial real estate loan was a $20.0
million non-revolving line of credit for the acquisition and development of
land into a development for 170 homes. The loan is secured by the land being
developed. The loan balance was $13.3 million at December 31, 2007. This loan
was performing in accordance with its original terms at December 31, 2007.

4

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Commercial
Loans.We offer commercial business loans to
professionals, sole proprietorships and small businesses in our market area. We
offer installment loans for capital improvements, equipment acquisition and
long-term working capital. These loans are typically based on the prime rate as
published in The Wall Street Journaland/or LIBOR. These loans are secured by
business assets other than real estate, such as business equipment and
inventory, or are backed by the personal guarantee of the borrower. We
originate lines of credit to finance the working capital needs of businesses to
be repaid by seasonal cash flows or to provide a period of time during which
the business can borrow funds for planned equipment purchases. We also offer
accounts receivable lines of credit.

When
making commercial business loans, we consider the financial statements of the
borrower, the borrowers payment history of both corporate and personal debt,
the debt service capabilities of the borrower, the projected cash flows of the
business, the viability of the industry in which the customer operates and the
value of the collateral.

At
December 31, 2007, our largest commercial business loan relationship was a $7.5
million loan secured by a mortgage on commercial real estate and general business
assets. This loan was performing in accordance with its original terms at
December 31, 2007.

Consumer
Loans. We offer a variety of consumer loans, including
home equity loans and lines of credit, automobile loans, including loans for
recreational vehicles, marine loans for the purchase of new and used boats,
guaranteed student loans and loans secured by passbook accounts and
certificates of deposit. We also offer unsecured lines of credit.

We
generally offer home equity loans and lines of credit with a maximum combined
loan-to-value ratio of 80%. Home equity loans have fixed-rates of interest and
are originated with terms of up to 20 years. Home equity lines of credit have
adjustable rates and are based upon the prime rate as published in The Wall
Street Journal. Home equity lines of credit require that 2.0% of the principal
and interest be paid each month. We hold a first mortgage position on the
majority of the homes that secure our home equity loans.

We
offer loans secured by new and used automobiles. These loans have fixed
interest rates and generally have terms up to six years. We offer automobile
loans with loan-to-value ratios of up to 100% of the purchase price of the
vehicle depending upon the credit history of the borrower and other factors. We
also offer loans on recreational vehicles, which we will originate for terms of
up to 20 years depending upon the loan amount and the loan-to-value ratio on
such loans generally does not exceed 90%. We also offer marine loans for up to
$500,000 for the purchase of new and used boats with terms up to 20 years. The
maximum loan-to-value ratio for such a loan is 85% for loans up to $249,999 and
80% for loans over $249,999. Although we continue to hold some automobile
leases, we no longer originate or purchase automobile lease financing. At
December 31, 2007, we had 113 leases totaling $1.7 million.

We
offer consumer loans secured by passbook accounts and certificates of deposit
held at the Bank based upon the prime rate as published in The Wall Street
Journalwith terms up to four years. We will offer such loans up to 100% of the
principal balance of the certificate of deposit or balance in the passbook
account. We also offer unsecured loans and lines of credit with terms up to
five years. Our unsecured loans and lines of credit bear a substantially higher
interest rate than our secured loans and lines of credit. For more information
on our loan commitments, see Managements
Discussion and Analysis of Financial Condition and Results of OperationsRisk
ManagementLiquidity Managementincluded as Item 7 to this Annual Report on
Form 10-K.

The
procedures for underwriting consumer loans include an assessment of the
applicants payment history on other debts and ability to meet existing
obligations and payments on the proposed loan. Although the applicants
creditworthiness is a primary consideration, the underwriting process also
includes a comparison of the value of the collateral, if any, to the proposed
loan amount.

5

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Loan Underwriting Risks.

Adjustable-Rate Loans.While we anticipate that
adjustable-rate loans will better offset the adverse effects of an increase in
interest rates as compared to fixed-rate mortgages, an increased monthly mortgage
payment required of adjustable-rate loan borrowers in a rising interest rate
environment could cause an increase in delinquencies and defaults. The
marketability of the underlying property also may be adversely affected in a
high interest rate environment. In addition, although adjustable-rate mortgage
loans make our asset base more responsive to changes in interest rates, the
extent of this interest sensitivity is limited by the annual and lifetime
interest rate adjustment limits.

Commercial
Real Estate Loans. Loans secured by commercial real
estate generally have larger balances and involve a greater degree of risk than
one-to-four family residential mortgage loans. Of primary concern in commercial
real estate lending is the borrowers creditworthiness and the feasibility and
cash flow potential of the project. Payments on loans secured by income
properties often depend on successful operation and management of the
properties. As a result, repayment of such loans may be subject to a greater extent
than residential real estate loans, to adverse conditions in the real estate
market or the economy. To monitor cash flows on income properties, we require
borrowers and loan guarantors, if any, to provide annual financial statements
on commercial real estate loans and rent rolls where applicable. In reaching a
decision on whether to make a commercial real estate loan, we consider and
review a global cash flow analysis of the borrower and consider the net
operating income of the property, the borrowers expertise, credit history and
profitability and the value of the underlying property. We have generally
required that the properties securing these real estate loans have debt service
coverage ratios (the ratio of earnings before debt service to debt service) of
at least 1.2x. An environmental report is obtained when the possibility exists
that hazardous materials may have existed on the site, or the site may have
been impacted by adjoining properties that handled hazardous materials.

Commercial
Business Loans. Unlike residential mortgage loans, which generally
are made on the basis of the borrowers ability to make repayment from his or
her employment or other income, and which are secured by real property, the
value of which tends to be more easily ascertainable, commercial business loans
are of higher risk and typically are made on the basis of the borrowers
ability to make repayment from the cash flow of the borrowers business. As a
result, the availability of funds for the repayment of commercial business
loans may depend substantially on the success of the business itself. Further,
any collateral securing such loans may depreciate over time, may be difficult
to appraise and may fluctuate in value.

Consumer
Loans. Consumer loans may entail greater risk than do residential
mortgage loans, particularly in the case of consumer loans that are unsecured
or secured by assets that depreciate rapidly, such as motor vehicles,
recreational vehicles and boats. In the latter case, repossessed collateral for
a defaulted consumer loan may not provide an adequate source of repayment for
the outstanding loan and a small remaining deficiency often does not warrant
further substantial collection efforts against the borrower. Consumer loan
collections depend on the borrowers continuing financial stability, and
therefore are likely to be adversely affected by various factors, including job
loss, divorce, illness or personal bankruptcy. Furthermore, the application of
various federal and state laws, including federal and state bankruptcy and
insolvency laws, may limit the amount that can be recovered on such loans.

Loan
Originations and Purchases. Loan originations come from a number of
sources. The primary source of loan originations are existing customers,
walk-in traffic, advertising and referrals from customers. We also purchase
home equity, automobile, recreational vehicle and marine loans.

We
will purchase participations in loans from local banks to supplement our
lending portfolio.Loan participations totaled $60.4
million at December 31, 2007. Loan participations are subject to the same
credit analysis and loan approvals as loans we originate. We are permitted to
review all of the documentation relating to any loan in which we participate.
However, in a purchased participation loan, we do not service the loan and thus
are subject to the policies and practices of the lead lender with regard to
monitoring delinquencies, pursuing collections and instituting foreclosure
proceedings.

Loan
Approval Procedures and Authority. Our lending activities follow
written, non-discriminatory, underwriting standards and loan origination
procedures established by our board of trustees and management. The Board of
Directors has granted loan approval authority to certain officers or groups of
officers up to prescribed limits, based on the officers experience and tenure.
Individual loans or lending relationships with aggregate exposure of $5.0
million must be approved by the senior loan committee, which is comprised of
senior bank officers and five non-employee directors. All loans in excess of
$20.0 million must be approved by the Senior Loan Committee of the Banks
Board, as well as the Executive Committee of the Board, which includes six non-employee
directors.

6

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Loans to One
Borrower. The maximum amount that we may lend to one borrower and
the borrowers related entities is limited, by regulation, to generally 15% of
our stated capital and reserves. At December 31, 2007, our regulatory limit on
loans to one borrower was $84.2 million. At that date, our largest lending
relationship was $13.3 million and was secured by real estate being developed
for 170 homes. This loan was performing in accordance with its original terms
at December 31, 2007.

Loan
Commitments. We issue commitments for fixed and adjustable-rate
mortgage loans conditioned upon the occurrence of certain events. Commitments
to originate mortgage loans are legally binding agreements to lend to our
customers. Generally, our loan commitments expire after 60 days.

Delinquent Loans. We identify loans that
may need to be charged off as a loss by reviewing all delinquent loans,
classified loans and other loans that management may have concerns about collectibility.
For individually reviewed loans, the borrowers inability to make payments
under the terms of the loan as well as a shortfall in collateral value may
result in a write down to managements estimate of net realizable value.
Personal loans are typically charged off at 120 days delinquent.

Investment Activities

We
have authority to invest in various types of  assets, including United
States Treasury obligations, securities of various U.S. government sponsored
enterprises, federal agencies and state and municipal governments,
mortgage-backed securities and certificates of deposit of federally insured
institutions. Within certain regulatory limits, we also may invest a portion of
our assets in corporate securities and mutual funds. As a member of the FHLB of Pittsburgh, we are required to acquire and
hold shares of capital stock in that FHLB. We assumed Farmers & Mechanics
Banks obligation to the FHLB of New York as part of our acquisition of FMS
Financial on July 13, 2007. The Bank is a non-member of the FHLB of New York,
but is required to hold shares of capital stock in the FHLB of New York as a
result of the FMS Financial acquisition. While we have the authority
under applicable law to invest in derivative instruments for hedging activities,
we had no such investments at December 31, 2007.

At
December 31, 2007, our investment portfolio excluding FHLB stock totaled $1.1
billion and consisted primarily of mortgage-backed securities, including
collateralized mortgage obligations (CMOs),  United States government and agency securities, including securities
issued by government sponsored enterprises, municipal and other bonds including collateralized debt obligations (CDOs) backed by bank trust preferred capital securities, equity
securities, and mutual funds.

Our
investment objectives are to provide and maintain liquidity, to establish an
acceptable level of interest rate and credit risk, to provide an alternate
source of low-risk investments when demand for loans is weak and to generate a
favorable return. The Companys Board of Directors approves the investment
policy and any revisions, at least annually.

Deposit Activities and Other Sources of Funds

General. Deposits, borrowings and loan repayments are
the major sources of our funds for lending and other investment purposes.
Scheduled loan repayments are a relatively stable source of funds, while
deposit inflows and outflows and loan prepayments are significantly influenced
by general interest rates and money market conditions.

Deposit Accounts. Deposits are primarily attracted from
within our market area through the offering of a broad selection of deposit
instruments, including non-interest bearing demand deposits (such as checking
accounts), interest-bearing demand accounts (such as NOW and money market
accounts), savings accounts and certificates of deposit. From time to time, we
solicit brokered time deposits as an alternative source of funds.

We
also offer a variety of deposit accounts designed for the businesses operating
in our market area. Our business banking deposit products include a commercial
checking account and a checking account specifically designed for small
businesses. Additionally, we offer cash management, including remote deposit, lockbox service
and sweep accounts.

Deposit
account terms vary according to the minimum balance required, the time periods
the funds must remain on deposit and the interest rate, among other factors. In
determining the terms of our deposit accounts, we consider the rates offered by
our competition, the rates on borrowings, brokered deposits, our liquidity
needs, profitability to us, and customer preferences and concerns. We generally
review our deposit mix and pricing bi-weekly. Our deposit pricing strategy has
generally been to offer competitive rates on all types of deposit products, and
to periodically offer special rates in order to attract deposits of a specific
type or term.

7

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Borrowings. We have the ability to utilize advances from
the FHLB of Pittsburgh to supplement our investable funds. The FHLB functions
as a central reserve bank providing credit for member financial institutions.
As a member, we are required to own capital stock in the FHLB and are
authorized to apply for advances on the security of such stock and certain of
our mortgage loans and other assets (principally securities which are
obligations of, or guaranteed by, the United States), provided certain
standards related to creditworthiness have been met. Advances are made under
several different programs, each having its own interest rate and range of
maturities. Depending on the program, limitations on the amount of advances are
based either on a fixed percentage of an institutions net worth or on the
FHLBs assessment of the institutions creditworthiness. We also utilize
securities sold under agreements to repurchase and overnight repurchase
agreements to supplement our supply of investable funds and to meet deposit
withdrawal requirements.

Personnel

As
of December 31, 2007, we had 728 full-time employees and 184 part-time
employees, none of whom is represented by a collective bargaining unit. We
believe our relationship with our employees is good.

Subsidiaries

Beneficial
Insurance Services, LLC is a Pennsylvania Limited Liability Company formed in
2004. In 2005, Beneficial Insurance Services LLC acquired the assets of a
Philadelphia-based insurance brokerage firm, Paul Hertel & Co., Inc., which
provides property, casualty, life, health and benefits insurance services to
individuals and businesses. Beneficial Insurance conducts business under the
trade name of Paul Hertel & Company. Beneficial Insurance also acquired a
majority interest in Graphic Arts Insurance Agency, Inc. through its
acquisition of the assets of Paul Hertel & Co. Inc. On October 5, 2007,
Beneficial Insurance acquired the business of CLA Agency, Inc., a full-service
property and casualty and professional liability insurance brokerage company headquartered
in Newtown Square, Pennsylvania. Beneficial Insurance also operates under the
trade name CLA Insurance Agency.

Beneficial
Advisors, LLC is a Pennsylvania Limited Liability Company formed in 2000 for
the purpose of offering investment and insurance related products, including,
but not limited to, fixed- and variable-rate annuities and the sale of mutual
funds and securities through INVEST, a third party broker dealer.

Neumann
Corporation, which was formed in 1990, is a Delaware Investment Holding Company
and holds title to various Bank securities and other investments. At December
31, 2007, Neumann Corporation held $433.7 million in assets.

BSB
Union Corporation was formed in 1994 for the purpose of engaging in the business
of owning and leasing automobiles. In 1998, BSB Union Corporation obtained
approval to hold an interest in a titling trust.

St.
Ignatius Senior Housing I, L.P. is a limited partnership formed in 2002 and
sponsored by St. Ignatius Nursing Home, a subsidiary of which is the general
partner. The Bank owns 99.99% of the partnership. The limited partnership was
sponsored as an affordable housing project providing low income housing tax
credits pursuant to Section 42 of the Internal Revenue Code.

St.
Ignatius Senior Housing II, L.P. is a limited partnership formed in 2007 and
sponsored by St. Ignatius Nursing Home, a subsidiary of which is the general
partner. The Bank owns 99.99% of the partnership. The limited partnership was
sponsored as an affordable housing project providing low income housing tax
credits pursuant to Section 42 of the Internal Revenue Code.

Graphic
Arts Insurance Agency is an insurance agency in which Beneficial Insurance
purchased a 51% ownership interest in 2005.

Beneficial
Abstract, LLC is a title insurance company in which the Bank purchased a 40%
ownership interest in 2006. Beneficial Abstract, LLC was inactive as of
December 31, 2007.

Beneficial
Equity Holdings, LLC was formed in 2004 and is currently inactive.

8

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REGULATION AND SUPERVISION

The
following discussion describes elements of an extensive regulatory framework
applicable to savings and loan holding companies and banks and specific
information about the Bank, the Company and the MHC. Federal and state
regulation of banks and bank holding companies is intended primarily for the
protection of depositors and the Deposit Insurance Fund, rather than for the
protection of potential shareholders and creditors.

General

The
Bank is a Pennsylvania-chartered savings bank that is subject to extensive
regulation, examination and supervision by the Pennsylvania Department of
Banking (the Department), as its primary regulator, and the Federal Deposit
Insurance Corporation (FDIC), as its deposits insurer. The Bank is a member
of the FHLB system and, with respect to deposit insurance, of the Deposit
Insurance Fund managed by the FDIC. The Bank must file reports with the
Department and the FDIC concerning its activities and financial condition, in
addition to obtaining regulatory approvals prior to entering into certain
transactions such as mergers with, or acquisitions of, other savings
institutions. The Department and/or the FDIC conduct periodic examinations to
test the Banks safety and soundness and compliance with various regulatory
requirements. This regulatory structure gives the regulatory authorities
extensive discretion in connection with their supervisory and enforcement
activities and examination policies, including policies with respect to the
classification of assets and the establishment of adequate loan loss reserves
for regulatory purposes. Any change in the regulatory requirements and
policies, whether by the Department, the FDIC or Congress, could have a
material adverse impact on the Bank, the Company, the MHC and their operations.

Certain
regulatory requirements applicable to the Bank, the Company and the MHC are
referred to below or elsewhere herein. This description of statutes and
regulations is not intended to be a complete explanation of such statutes and
regulations and their effects on the Bank, the Company and the MHC and is
qualified in its entirety by reference to the actual statutes and regulations.

Bank Regulation

Pennsylvania
Savings Bank Law. The Pennsylvania Banking Code of 1965, as
amended (the 1965 Code), and the Pennsylvania Department of Banking Code, as
amended (the Department Code, and collectively, the Codes), contain
detailed provisions governing the organization, location of offices, rights and
responsibilities of directors, officers and employees, as well as corporate
powers, savings and investment operations and other aspects of the Bank and its
affairs. The Codes delegate extensive rule-making power and administrative
discretion to the Department so that the supervision and regulation of
state-chartered savings banks may be flexible and readily responsive to changes
in economic conditions and in savings and lending practices. Specifically,
under the Department Code, the Department is given the authority to exercise
such supervision over state-chartered savings banks as to afford the greatest
safety to creditors, shareholders and depositors, ensure business safety and
soundness, conserve assets, protect the public interest and maintain public
confidence in such institutions.

The
1965 Code provides, among other powers, that state-chartered savings banks may
engage in any activity permissible for a national banking association or
federal savings association, subject to regulation by the Department (which
shall not be more restrictive than the regulation imposed upon a national
banking association or federal savings association, respectively). Before it
engages in such an activity allowable for a national banking association or federal
savings association, a state-chartered savings bank must either obtain prior
approval from the Department or provide at least 30 days prior written notice
to the Department. The authority of the Bank under Pennsylvania law, however,
may be constrained by federal law and regulation. See Investments and Activitiesbelow.

Regulatory Capital Requirements. Under
FDIC regulations, federally insured state-chartered banks that are not members
of the Federal Reserve System (state non-member banks), such as the Bank, are
required to comply with minimum leverage capital requirements. For an
institution determined by the FDIC to not be anticipating or experiencing
significant growth and to be in general a strong banking institution, rated
composite 1 under the Uniform Financial Institutions Rating System established
by the Federal Financial Institutions Examinations Council, the minimum capital
leverage requirement is a ratio of Tier 1 capital to total assets of 3%. For
all other institutions, the minimum leverage capital ratio is not less than 4%.
Tier 1 capital is the sum of common stockholders equity, noncumulative
perpetual preferred stock (including any related surplus) and minority
investments in certain subsidiaries, less intangible assets (except for certain
servicing rights and credit card relationships) and a percentage of certain
nonfinancial equity investments.

9

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The
Bank must also comply with the FDIC risk-based capital guidelines. The FDIC
guidelines require state non-member banks to maintain certain levels of
regulatory capital in relation to regulatory risk-weighted assets. Risk-based
capital ratios are determined by allocating assets and specified off-balance
sheet items to four risk-weighted categories ranging from 0% to 100%, with
higher levels of capital being required for the categories perceived as
representing greater risk.

State
non-member banks must maintain a minimum ratio of total capital to
risk-weighted assets of at least 8%, of which at least one-half must be Tier 1
capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary
capital items, which include allowances for loan losses in an amount of up to
1.25% of risk-weighted assets, cumulative preferred stock, long-term preferred
stock, hybrid capital instruments, including mandatory convertible debt
securities, term subordinated debt and certain other capital instruments and a
portion of the net unrealized gain on equity securities. The includable amount
of Tier 2 capital cannot exceed the amount of the institutions Tier 1 capital.
At December 31, 2007, the Bank met each of these capital requirements. As
savings and loan holding companies regulated by the Office of Thrift
Supervision (the OTS), the Company and the MHC are not subject to any
separate regulatory capital requirements.

Restrictions on Dividends. The
Companys ability to declare and pay dividends may depend in part on dividends
received from the Bank. The 1965 Code regulates the distribution of dividends
by savings banks and provides that dividends may be declared and paid only out
of accumulated net earnings and may be paid in cash or property other than its
own shares. Dividends may not be declared or paid unless stockholders equity
is at least equal to contributed capital.

Interstate Banking and Branching. Federal
law permits a bank, such as the Bank, to acquire an institution by merger in a
state other than Pennsylvania unless the other state has opted out. Federal law
also authorizes de novo branching into another state if the host state enacts a
law expressly permitting out of state banks to establish such branches within
its borders. The Bank currently has 33 full-service locations in Burlington and
Camden, New Jersey. At its interstate branches, the Bank may conduct any
activity that is authorized under Pennsylvania law that is permissible either
for a New Jersey savings bank (subject to applicable federal restrictions) or a
New Jersey branch of an out-of-state national bank. The New Jersey Department
of Banking and Insurance may exercise certain regulatory authority over the
Banks New Jersey branches.

Prompt Corrective Regulatory Action.
Federal law requires, among other things, that federal bank regulatory
authorities take prompt corrective action with respect to banks that do not
meet minimum capital requirements. For these purposes, the law establishes
three categories of capital deficient institutions: undercapitalized,
significantly undercapitalized and critically undercapitalized.

The
FDIC has adopted regulations to implement the prompt corrective action
legislation. An institution is deemed to be well capitalized if it has a
total risk-based capital ratio of 10% or greater, a Tier 1 risk-based capital
ratio of 6% or greater, and a leverage ratio of 5% or greater. An institution
is adequately capitalized if it has a total risk-based capital ratio of 8% or
greater, a Tier 1 risk-based capital ratio of 4% or greater and generally a
leverage ratio of 4% or greater. An institution is undercapitalized if it has
a total risk-based capital ratio of less than 8%, a Tier 1 risk-based capital
ratio of less than 4%, or generally a leverage ratio of less than 4% (3% or
less for institutions with the highest examination rating). An institution is
deemed to be significantly undercapitalized if it has a total risk-based
capital ratio of less than 6%, a Tier 1 risk-based capital ratio of less than
3%, or a leverage ratio of less than 3%. An institution is considered to be
critically undercapitalized if it has a ratio of tangible equity (as defined
in the regulations) to total assets that is equal to or less than 2%. As of
December 31, 2007, the Bank met the conditions to be classified as a well
capitalized institution.

Undercapitalized
banks must adhere to growth, capital distribution (including dividend) and
other limitations and are required to submit a capital restoration plan. No
institution may make a capital distribution, including payment as a dividend,
if it would be undercapitalized after the payment. A banks compliance with
such plans is required to be guaranteed by its parent holding company in an
amount equal to the lesser of 5% of the institutions total assets when deemed
undercapitalized or the amount needed to comply with regulatory capital
requirements. If an undercapitalized bank fails to submit an acceptable plan,
it is treated as if it is significantly undercapitalized. Significantly
undercapitalized banks must comply with one or more of a number of additional
restrictions, including but not limited to an order by the FDIC to sell
sufficient voting stock to become adequately capitalized, requirements to
reduce assets and cease receipt of deposits from correspondent banks or dismiss
directors or officers, and restrictions on interest rates paid on deposits,
compensation of executive officers and capital distributions by the parent
holding company. Critically undercapitalized institutions must comply with
additional sanctions including, subject to a narrow exception, the appointment
of a receiver or conservator within 270 days after it obtains such status.

10

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Investments and Activities. Under
federal law, all state-chartered FDIC-insured banks have generally been limited
to activities as principal and equity investments of the type and in the amount
authorized for national banks, notwithstanding state law. The FDIC Improvement
Act and the FDIC permit exceptions to these limitations. For example, state
chartered banks, such as the Bank, may, with FDIC approval, continue to
exercise grandfathered state authority to invest in common or preferred stocks
listed on a national securities exchange or the Nasdaq Global Select Market and
in the shares of an investment company registered under federal law. All
non-subsidiary equity investments, unless otherwise authorized or approved by
the FDIC, must have been divested by December 19, 1996, under an FDIC-approved
divesture plan, unless such investments were grandfathered by the FDIC. The
Bank received grandfathering authority from the FDIC to invest in listed stocks
and/or registered shares. The maximum permissible investment is 100% of Tier I
capital, as specified by the FDICs regulations, or the maximum amount
permitted by Pennsylvania Banking Law, whichever is less. Such grandfathering
authority may be terminated upon the FDICs determination that such investments
pose a safety and soundness risk to the Bank or if the Bank converts its
charter or undergoes a change in control. In addition, the FDIC is authorized
to permit such institutions to engage in other state authorized activities or
investments (other than non-subsidiary equity investments) that meet all
applicable capital requirements if it is determined that such activities or
investments do not pose a significant risk to the Deposit Insurance Fund. As of
December 31, 2007, the Bank held no marketable equity securities under such
grandfathering authority.

Transactions with Related Parties.
Federal law limits the Banks authority to lend to, and engage in certain other
transactions with (collectively, covered transactions), affiliates (e.g., any company that controls
or is
under common control with an institution, including the Company, the MHC and
their non-savings institution subsidiaries). The aggregate amount of covered
transactions with any individual affiliate is limited to 10% of the capital and
surplus of the savings institution. Certain transactions with affiliates are
required to be secured by collateral in an amount and of a type specified by
federal law. The purchase of low quality assets from affiliates is generally
prohibited. Transactions with affiliates must generally be on terms and under
circumstances, that are at least as favorable to the institution as those
prevailing at the time for comparable transactions with non-affiliated
companies. In addition, savings institutions are prohibited from lending to any
affiliate that is engaged in activities that are not permissible for bank
holding companies and no savings institution may purchase the securities of any
affiliate other than a subsidiary.

The
Sarbanes-Oxley Act of 2002 generally prohibits loans by the Bank to its
executive officers and directors. However, the law contains a specific
exception for loans by the Bank to its executive officers and directors in
compliance with federal banking laws. Under such laws, the Banks authority to
extend credit to executive officers, directors and 10% shareholders
(insiders), as well as entities such persons control, is limited. The law
limits both the individual and aggregate amount of loans the Company may make
to insiders based, in part, on the Companys capital position and requires
certain board approval procedures to be followed. Such loans are required to be
made on terms substantially the same as those offered to unaffiliated
individuals and not involve more than the normal risk of repayment. There is an
exception for loans made pursuant to a benefit or compensation program that is
widely available to all employees of the institution and does not give
preference to insiders over other employees. Loans to executives are subject to
further limitations based on the type of loan involved.

Enforcement. The FDIC has
extensive enforcement authority
over insured savings banks, including the Bank. This enforcement authority
includes, among other things, the ability to assess civil money penalties, to
issue cease and desist orders and to remove directors and officers. In general,
these enforcement actions may be initiated in response to violations of laws
and regulations and unsafe or unsound practices. The FDIC has authority under
federal law to appoint a conservator or receiver for an insured bank under
limited circumstances.

Standards for Safety and Soundness. As
required by statute, the federal banking
agencies have adopted Interagency Guidelines prescribing Standards for Safety
and Soundness. The guidelines set forth the safety and soundness standards that
the federal banking agencies use to identify and address problems at insured
depository institutions before capital becomes impaired. If the FDIC determines
that a savings institution fails to meet any standard prescribed by the
guidelines, the FDIC may require the institution to submit an acceptable plan
to achieve compliance with the standard.

11

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Insurance of Deposit Accounts. The
Banks deposits are insured up to applicable limits by the Deposit Insurance
Fund of the FDIC. The Deposit Insurance Fund is the successor to the Bank
Insurance Fund and the Savings Association Insurance Fund, which were merged in
2006. The FDIC recently amended its risk-based assessment system for 2007 to
implement authority granted by the Federal Deposit Insurance Reform Act of 2005
(the Reform Act). Under the revised system, insured institutions are assigned
to one of four risk categories based on supervisory evaluations, regulatory
capital levels and certain other factors by which institutions are assigned to
one of three categories based on their capitalization and one of three
subcategories based on examination ratings and other supervisory information.
An institutions assessment rate depends upon the category to which it is
assigned. Risk Category I, which contains the least risky depository institutions,
is expected to include more than 90% of all institutions. Unlike the other
categories, Risk Category I contains further risk differentiation based on the
FDICs analysis of financial ratios, examination component ratings and other
information. Assessment rates are determined semi-annually by the FDIC and
currently range from five to seven basis points for the healthiest institutions
(Risk Category I) to 43 basis points of assessable deposits for the riskiest
(Risk Category IV). The FDIC may adjust rates uniformly from one quarter to the
next, except that no single adjustment can exceed three basis points. No
institution may pay a dividend if in default of its FDIC assessment.

The
Reform Act also provides for a one-time credit for eligible institutions based
on their assessment base as of December 31, 1996. Subject to certain
limitations with respect to institutions that are exhibiting weaknesses,
credits can be used to offset assessments until exhausted. The Banks one-time
credit approximates $1.7 million. The Reform Act also provides for the
possibility that the FDIC may pay dividends to insured institutions once the
Deposit Insurance Fund reserve ratio equals or exceeds 1.35% of estimated
insured deposits.

In
addition to the assessment for deposit insurance, institutions are required to
make payments on bonds issued in the late 1980s by the Financing Corporation to
recapitalize a predecessor deposit insurance fund. This payment is established
quarterly and during the calendar year ending December 31, 2007 averaged 1.18
basis points of assessable deposits.

The
Reform Act provides the FDIC with authority to adjust the Deposit Insurance
Fund ratio to insured deposits within a range of 1.15% and 1.50%, in contrast
to the prior statutorily fixed ratio of 1.25%. The ratio, which is viewed by
the FDIC as the level that the fund should achieve, was established by the
agency at 1.25% for 2008, which is unchanged from 2007.

The
FDIC has authority to increase insurance assessments. A significant increase in
insurance premiums would likely have an adverse effect on the operating
expenses and results of operations of the Bank. Management cannot predict what
insurance assessment rates will be in the future.

Insurance
of deposits may be terminated by the FDIC upon a finding that the institution
has engaged in unsafe or unsound practices, is in an unsafe or unsound
condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC or the Office of
Thrift Supervision. The management of the Bank does not know of any practice,
condition or violation that might lead to termination of deposit insurance.

Federal Home Loan Bank System. The Bank
is a member of the FHLB system,
which consists of 12 regional Federal Home Loan Banks. The FHLB provides a
central credit facility primarily for member institutions. The Bank, as a
member of the FHLB of Pittsburgh, is required to acquire and hold shares of
capital stock in that FHLB. The Bank assumed Farmers & Mechanics Banks
obligation to the FHLB of New York as part of the Companys acquisition of FMS
Financial on July 13, 2007. The Bank is a non member of the FHLB of New York,
but is required to hold shares of capital stock in the FHLB of New York as a
result of the FMS Financial acquisition. The Bank was in compliance with these
requirements with a combined investment of $18.8 million in FHLB Bank of
Pittsburgh and New York stock at December 31, 2007.

12

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Community Reinvestment Act. Under the
Community Reinvestment Act, as
implemented by FDIC regulations, a state non-member bank has a continuing and
affirmative obligation consistent with its safe and sound operation to help
meet the credit needs of its entire community, including low and
moderate-income neighborhoods. The Community Reinvestment Act neither
establishes specific lending requirements or programs for financial
institutions nor limits an institutions discretion to develop the types of
products and services that it believes are best suited to its particular
community. The Community Reinvestment Act requires the FDIC, in connection with
its examination of an institution, to assess the institutions record of
meeting the credit needs of its community and to consider such record when it
evaluates applications made by such institution. The Community Reinvestment Act
requires public disclosure of an institutions Community Reinvestment Act
rating. The Banks latest Community Reinvestment Act rating received from the
FDIC was satisfactory.

Other Regulations

Interest
and other charges collected or contracted for by the Bank are subject to state
usury laws and federal laws concerning interest rates. The Banks operations
are also subject to federal laws applicable to credit transactions, such as
the:

|  |                                                                                                                                                                                                                                                                                     
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | Truth-In-Lending Act,
  governing disclosures of credit terms to consumer borrowers;                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                     
|· | Home Mortgage Disclosure
  Act of 1975, requiring financial institutions to provide information to enable
  the public and public officials to determine whether a financial institution
  is fulfilling its obligation to help meet the housing needs of the community
  it serves;
|  |                                                                                                                                                                                                                                                                                     
|· | Equal Credit Opportunity
  Act, prohibiting discrimination on the basis of race, creed or other
  prohibited factors in extending credit;                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                     
|· | Fair Credit Reporting Act
  of 1978, governing the use and provision of information to credit reporting
  agencies;                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                     
|· | Fair Debt Collection
  Practices Act, governing the manner in which consumer debts may be collected
  by collection agencies; and                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                     
|· | rules and regulations of
  the various federal agencies charged with the responsibility of implementing
  such federal laws.                                                                                                                                                        

The operations
of the Bank also are subject to the:

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | Right to Financial Privacy
  Act, which imposes a duty to maintain confidentiality of consumer financial
  records and prescribes procedures for complying with administrative subpoenas
  of financial records;                                                                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|· | Electronic Funds Transfer
  Act and Regulation E promulgated thereunder, which establishes the rights,
  liabilities and responsibilities of consumers who use electronic fund
  transfer (EFT) services and financial institutions that offer these services;
  its primary objective is the protection of individual consumers in their dealings
  with these services;                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|· | Check Clearing for the 21st
  Century Act (also known as Check 21), which allows banks to create and
  receive substitute checks (paper reproduction of the original check), and
  discloses the customers rights regarding substitute checks pertaining to
  these items having the same legal standing as the original paper check;                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|· | Title III of The Uniting
  and Strengthening America by Providing Appropriate Tools Required to
  Intercept and Obstruct Terrorism Act of 2001 (referred to as the USA PATRIOT
  Act), and the related regulations of the OTS, which require savings
  associations operating in the United States to develop new anti-money
  laundering compliance programs (including a customer identification program
  that must be incorporated into the AML compliance program), due diligence
  policies and controls to ensure the detection and reporting of money
  laundering; and
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|· | The Gramm-Leach-Bliley
  Act, which prohibits a financial institution from disclosing nonpublic
  personal information about a consumer to nonaffiliated third parties, unless
  the institution satisfies various notice and opt-out requirements.                                                                                                                                                                                                                                                                                                                              

13

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Holding
Company Regulation

General. The
Company and the MHC are savings and loan holding companies within the meaning
of federal law. As such, they are registered with the OTS and are subject to
OTS regulations, examinations, supervision, reporting requirements and
regulations concerning corporate governance and activities. In addition, the
OTS has enforcement authority over the Company and the MHC and their
non-savings institution subsidiaries. Among other things, this authority
permits the OTS to restrict or prohibit activities that are determined to be a
serious risk to the Bank.

The
OTS also takes the position that its capital distribution regulations apply to
state savings banks in savings and loan holding company structures. Those
regulations impose limitations upon all capital distributions by an
institution, including cash dividends, payments to repurchase its shares and
payments to shareholders of another institution in a cash-out merger. Under the
regulations, an application to and prior approval of the OTS is required prior
to any capital distribution if the institution does not meet the criteria for
expedited treatment of applications under OTS regulations (i.e.,
generally, examination and Community Reinvestment Act ratings in the two top
categories), the total capital distributions for the calendar year exceed net
income for that year plus the amount of retained net income for the preceding
two years, the institution would be undercapitalized following the distribution
or the distribution would otherwise be contrary to a statute, regulation or
agreement with the OTS. If an application is not required, the institution must
still provide prior notice to the OTS of the capital distribution if, like the
Bank, it is a subsidiary of a holding company. In the event the Banks capital
fell below its regulatory requirements or the OTS notified it that it was in
need of increased supervision, the Banks ability to make capital distributions
could be restricted. In addition, the OTS could prohibit a proposed capital
distribution by any institution, which would otherwise be permitted by the
regulation, if the OTS determines that such distribution would constitute an
unsafe or unsound practice.

To
be regulated as a savings and loan holding company by the OTS (rather than as a
bank holding company by the Federal Reserve Board), the Bank must qualify as a
Qualified Thrift Lender (QTL). To qualify as a QTL, the Bank must maintain
compliance with the test for a domestic building and loan association, as
defined in the Internal Revenue Code, or with a Qualified Thrift Test. Under
the QTL Test, a savings institution is required to maintain at least 65% of its
portfolio assets (total assets less: (1) specified liquid assets up to 20% of
total assets; (2) intangibles, including goodwill; and (3) the value of
property used to conduct business) in certain qualified thrift investments
(primarily residential mortgages and related investments, including
mortgage-backed and related securities, but also including education, credit
and small business loans) in at least nine months out of each 12-month period. At
year end 2007, the Bank maintained 78.06% of its portfolio assets in qualified
thrift investments. The Bank also met the QTL test in each of the prior four
quarters.

Restrictions Applicable to Mutual Holding
Companies. According to federal law and OTS regulations, a mutual
holding company, such as the MHC, may generally engage in the following
activities: (1) investing in the stock of a stock savings association; (2)
acquiring a mutual association through the merger of such association into a stock
savings association subsidiary of such holding company or an interim savings
association subsidiary of such holding company; (3) merging with or acquiring
another mutual or stock savings and loan holding company; (4) investing in a
corporation the capital stock of which could be purchased by a federal savings
association or a state savings association under Pennsylvania law; and (5) any
activity approved by the Federal Reserve Board for a bank holding company or
financial holding company or approved by the OTS for multiple savings and loan
holding companies.

Federal
law prohibits a savings and loan holding company, including a federal mutual
holding company, from directly or indirectly, or through one or more
subsidiaries, acquiring more than 5% of the voting stock of another savings
institution, or its holding company, without prior written approval of the
Office of Thrift Supervision. Federal law also prohibits a savings and loan
holding company from acquiring more than 5% of a company engaged in activities
other than those authorized for savings and loan holding companies by federal
law; or acquiring or retaining control of a depository institution that is not
insured by the FDIC. In evaluating applications by holding companies to acquire
savings institutions, the OTS must consider the financial and managerial
resources and future prospects of the company and institution involved the
effect of the acquisition on the risk to the insurance funds, the convenience
and needs of the community and competitive factors.

14

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The
OTS is prohibited from approving any acquisition that would result in a
multiple savings and loan holding company controlling savings institutions in
more than one state, except: (1) the approval of interstate supervisory
acquisitions by savings and loan holding companies, and (2) the
acquisition of a savings institution in another state if the laws of the state
of the target savings institution specifically permit such acquisitions. The
states vary in the extent to which they permit interstate savings and loan
holding company acquisitions.

If
the savings institution subsidiary of a savings and loan holding company fails
to meet the QTL test, the holding company must register with the Federal
Reserve Board as a bank holding company within one year of the savings
institutions failure to so qualify.

Stock Holding Company Subsidiary
Regulation. The OTS has adopted regulations governing the two-tier
mutual holding company form of organization and subsidiary stock holding
companies that are controlled by mutual holding companies. We have adopted this
form of organization, pursuant to which the Company is permitted to engage in
activities that are permitted for the MHC subject to the same restrictions and
conditions.

Waivers of Dividends by Beneficial Savings Bank
MHC. OTS regulations require the MHC to notify the OTS if
it proposes to waive receipt of dividends from the Company. The OTS reviews
dividend waiver notices on a case-by-case basis, and, in general, does not
object to a waiver if: (1) the waiver would not be detrimental to the safe and
sound operation of the savings association; and (2) the mutual holding
companys board of directors determines that such waiver is consistent with
such directors fiduciary duties to the mutual holding companys members. We
anticipate that the MHC will waive dividends that the Company may pay, if any.

Conversion of Beneficial Savings Bank MHC to
Stock
Form. OTS regulations permit the MHC to
convert from the mutual form of organization to the capital stock form of
organization. There can be no assurance when, if ever, a conversion transaction
will occur, and the board of directors has no current intention or plan to
undertake a conversion transaction. In a conversion transaction, a new holding
company would be formed as the successor to the Company, the MHCs corporate
existence would end, and certain depositors of the Bank would receive the right
to subscribe for additional shares of the new holding company. In a conversion
transaction, each share of common stock held by stockholders other than the MHC
would be automatically converted into a number of shares of common stock of the
new holding company based on an exchange ratio determined at the time of
conversion that ensures that stockholders other than the MHC own the same
percentage of common stock in the new holding company as they owned in the
Company immediately before conversion. The total number of shares held by
stockholders other than the MHC after a conversion transaction would be
increased by any purchases by such stockholders in the stock offering conducted
as part of the conversion transaction.

Acquisition of Control. Under
the federal Change in Bank Control Act, a notice must be submitted to the OTS
if any person (including a company), or group acting in concert, seeks to
acquire control of a savings and loan holding company. An acquisition of
control can occur upon the acquisition of 10% or more of the voting stock of
a savings and loan holding company or as otherwise defined by the OTS. Under
the Change in Bank Control Act, the OTS has 60 days from the filing of a
complete notice to act, taking into consideration certain factors, including
the financial and managerial resources of the acquirer and the anti-trust
effects of the acquisition. Any company that so acquires control would then be
subject to regulation as a savings and loan holding company.

Federal Income Taxation

General. We report
our income on a fiscal year basis using the accrual method of accounting. The
federal income tax laws apply to us in the same manner as to other corporations
with some exceptions, including particularly our reserve for bad debts
discussed below. The following discussion of tax matters is intended only as a
summary and does not purport to be a comprehensive description of the tax rules
applicable to us. Our federal income tax returns have been either audited or
closed under the statute of limitations through tax year 2003. For its 2007
fiscal year, the Banks maximum federal income tax rate was 35%.

The
Company and the Bank have entered into a tax allocation agreement. Because the
Company owns 100% of the issued and outstanding capital stock of the Bank, the
Company and the Bank are members of an affiliated group within the meaning of
Section 1504(a) of the Internal Revenue Code, of which group the Company is the
common parent corporation. As a result of this affiliation, the Bank may be
included in the filing of a consolidated federal income tax return with the
Company and, if a decision to file a consolidated tax return is made, the
parties agree to compensate each other for their individual share of the
consolidated tax liability and/or any tax benefits provided by them in the
filing of the consolidated federal income tax return.

15

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Bad Debt Reserves. For
fiscal years beginning before June 30, 1996, thrift institutions that qualified
under certain definitional tests and other conditions of the Internal Revenue
Code were permitted to use certain favorable provisions to calculate their
deductions from taxable income for annual additions to their bad debt reserve.
A reserve could be established for bad debts on qualifying real property loans,
generally secured by interests in real property improved or to be improved,
under the percentage of taxable income method or the experience method. The
reserve for nonqualifying loans was computed using the experience method.
Federal legislation enacted in 1996 repealed the reserve method of accounting
for bad debts and the percentage of taxable income method for tax years
beginning after 1995 and required savings institutions to recapture or take
into income certain portions of their accumulated bad debt reserves as of December
31, 1987. Approximately $2.3 million of our accumulated bad debt reserves would
not be recaptured into taxable income unless the Bank makes a non-dividend
distribution to the Company as described below.

Distributions. If
the Bank makes non-dividend distributions to the Company, the distributions
will be considered to have been made from the Banks unrecaptured tax bad debt
reserves, including the balance of its reserves as of December 31, 1987, to the
extent of the non-dividend distributions, and then from the Banks
supplemental reserve for losses on loans, to the extent of those reserves, and
an amount based on the amount distributed, but not more than the amount of
those reserves, will be included in the Banks taxable income. Non-dividend
distributions include distributions in excess of the Banks current and
accumulated earnings and profits, as calculated for federal income tax
purposes, distributions in redemption of stock, and distributions in partial or
complete liquidation. Dividends paid out of the Banks current or accumulated
earnings and profits will not be so included in the Banks taxable income.

The
amount of additional taxable income triggered by a non-dividend is an amount
that, when reduced by the tax attributable to the income, is equal to the
amount of the distribution. Therefore, if the Bank makes a non-dividend
distribution to the Company, approximately one and one-half times the amount of
the distribution not in excess of the amount of the reserves would be includable
in income for federal income tax purposes, assuming a 35% federal corporate
income tax rate. The Bank does not intend to pay dividends that would result in
a recapture of any portion of its bad debt reserves.

State Taxation

Pennsylvania Taxation. The
Bank, as a savings bank conducting business in Pennsylvania, is subject to tax
under the Pennsylvania Mutual Thrift Institutions Tax Act, as amended to
include thrift institutions having capital stock. Pursuant to the Mutual Thrift
Institutions Tax, the tax rate is 11.5%. The Mutual Thrift Institutions Tax
exempts the Bank from other taxes imposed by the Commonwealth of Pennsylvania
for state income tax purposes and from all local taxation imposed by political
subdivisions, except taxes on real estate and real estate transfers. The Mutual
Thrift Institutions Tax is a tax upon net income, determined in accordance with
generally accepted accounting principles with certain adjustments. The Mutual
Thrift Institutions Tax, in computing income according to generally accepted
accounting principles, allows for the deduction of interest earned on state,
federal and local obligations, while disallowing a portion of a thrifts
interest expense associated with tax-exempt income. Net operating losses, if any,
can be carried forward a maximum of three years for Mutual Thrift Institutions
Tax purposes.

Philadelphia Taxation. In
addition, as a savings bank conducting business in Philadelphia, the Bank is
also subject to the City of Philadelphia Business Privilege Tax. The City of
Philadelphia Business Privilege Tax is a tax upon net income or taxable
receipts imposed on persons carrying on or exercising for gain or profit
certain business activities within Philadelphia. Pursuant to the City of Philadelphia
Business Privilege Tax, the 2007 tax rate was 6.5% on net income and .154% on
gross receipts. For regulated industry taxpayers, the tax is the lesser of the
tax on net income or the tax on gross receipts. The City of Philadelphia
Business Privilege Tax allows for the deduction by financial businesses from
receipts of (a) the cost of securities and other intangible property and
monetary metals sold, exchanged, paid at maturity or redeemed, but only to the
extent of the total gross receipts from securities and other intangible
property and monetary metals sold, exchanged, paid out at maturity or redeemed;
(b) moneys or credits received in repayment of the principal amount of
deposits, advances, credits, loans and other obligations; (c) interest received
on account of deposits, advances, credits, loans and other obligations made to
persons resident or having their principal place of business outside
Philadelphia; (d) interest received on account of other deposits, advances,
credits, loans and other obligations but only to the extent of interest
expenses attributable to such deposits, advances, credits, loans and other
obligations; and (e) payments received on account of shares purchased by
shareholders. An apportioned net operating loss may be carried forward for
three tax years following the tax year for which it was first reported.

16

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New Jersey Taxation. The
Bank and BSB Union Corporation are subject to New Jerseys Corporation Business
Tax at the rate of 9.0% on their taxable income, before net operating loss
deductions and special deductions for federal income tax purposes. For this
purpose, taxable income generally means federal taxable income subject to
certain adjustments (including addition of interest income on state and
municipal obligations).

Executive Officers of the Registrant

The
Board of Directors annually elects the executive officers of MHC, the Company,
and the Bank, who serve at the Boards discretion. Our executive officers are:

|                    |  |                                                                                              
|------------------- |  | ---------------------------------------------------------------------------------------------
|Name                |  | Position                                                                                     
|                    |  |                                                                                              
|Gerard P. Cuddy     |  | President
  and Chief Executive Officer of the MHC, the Company and the Bank                 
|Joseph F.
  Conners |  | Executive
  Vice President and Chief Financial Officer of the MHC, the Company and the
  Bank
|Andrew J.
  Miller  |  | Executive
  Vice President and Chief Lending Officer of the MHC, the Company and the Bank    
|Robert J.
  Bush    |  | Executive
  Vice President of the MHC, the Company and the Bank                              

Below
is information regarding our executive officers who are not also directors.
Each executive officer has held his current position for at least the last five
years, unless otherwise stated. Ages presented are as of December 31, 2007.

Joseph F. Conners has
been Executive Vice President and Chief Financial Officer of Beneficial Bank
since 2000. He joined Beneficial Bank in 1994. Age 50.

Andrew J. Miller has
been Executive Vice President and Chief Lending Officer of Beneficial Bank
since 2000. He joined Beneficial Bank in 1973. Age 52.

Robert J. Bush was
a Senior Vice President of Beneficial Bank and President of Beneficial
Insurance Services LLC since our acquisition of Paul Hertel & Co., Inc. in
January 2005. Prior to that time, Mr. Bush served as the President and Chief
Executive Officer of Paul Hertel & Co., Inc. Age 49.

17

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|         |             
|-------- | ------------
|Item 1A. | RISK FACTORS

Our business is subject to interest rate risk and variations
in interest rates may negatively affect our financial performance.

Changes
in the interest rate environment may reduce profits. The primary source of our
income is the differential or spread between the interest earned on loans,
securities and other interest-earning assets, and interest paid on deposits,
borrowings and other interest-bearing liabilities. As prevailing interest rates
change, net interest spreads are affected by the difference between the
maturities and re-pricing characteristics of interest-earning assets and
interest-bearing liabilities. In addition, loan volume and yields are affected
by market interest rates on loans, and rising interest rates generally are
associated with a lower volume of loan originations. An increase in the general
level of interest rates may also adversely affect the ability of certain
borrowers to pay the interest on and principal of their obligations.
Accordingly, changes in levels of market interest rates could materially
adversely affect our net interest spread, asset quality, loan origination
volume and overall profitability.

Our
increased emphasis on commercial real estate loans and commercial business
loans may expose us to increased lending risks.

At
December 31, 2007, $693.7 million, or 32.80%, of our loan portfolio consisted
of commercial real estate loans, including loans for the acquisition and
development of property. Commercial real estate loans constitute a greater
percentage of our loan portfolio than any other loan category, including
one-to-four family loans, which totaled only $479.8 million, or 22.69%, of our
total loan portfolio at December 31, 2007. In addition, at December 31, 2007,
$136.3 million, or 6.45%, of our loan portfolio consisted of commercial
business loans. We have increased the percentage of commercial real estate and
commercial business loans in our loan portfolio in recent years and intend to
continue to emphasize these types of lending. Commercial real estate loans and
commercial business loans generally expose a lender to a greater risk of loss
than one-to-four family residential loans. Repayment of commercial real estate
and commercial business loans generally is dependent, in large part, on
sufficient income from the property to cover operating expenses and debt
service. Commercial real estate loans typically involve larger loan balances to
single borrowers or groups of related borrowers compared to one-to-four family
residential mortgage loans. Changes in economic conditions that are out of the
control of the borrower and lender could impact the value of the security for
the loan, the future cash flow of the affected property, or the marketability
of a construction project with respect to loans originated for the acquisition
and development of property. Additionally, any decline in real estate values
may be more pronounced with respect to commercial real estate properties than
residential properties.

At
December 31, 2007 there were a total of 143 land acquisition and development
loans totaling $161.3 million, which consist of 96 residential land acquisition and development loans totaling
$93.3 million and 47 commercial land acquisition and development loans totaling $68.0 million.

A
substantial portion of our loan portfolio consists of consumer loans secured by
rapidly depreciable assets.

At
December 31, 2007, our loan portfolio included $174.7 million in automobile
loans, which represented 8.26% of our total loan portfolio at that date. In
addition, at December 31, 2007, other consumer loans totaled $237.4 million, or
11.23%, of our loan portfolio. Included in other consumer loans is $1.7 million
in automobile lease financing, $7.6 million in loans secured by manufactured
housing and mobile homes, $67.2 million in loans secured by recreational
vehicles and $67.3 million in loans secured by boats. Consumer loans secured by
rapidly depreciable assets such as automobiles, recreational vehicles and
boats, may subject us to greater risk of loss than loans secured by real estate
because any repossessed collateral for a defaulted consumer loan may not
provide an adequate source of repayment of the outstanding loan balance.

A downturn in the local economy or a decline in real estate
values could hurt our profits.

A
majority of our loans, including our commercial real estate and commercial
loans are secured by real estate or made to businesses in areas where our
offices are located. As a result of this concentration, a downturn in the local
economy could cause significant increases in nonperforming loans, which would
hurt our profits. In recent years, there has been a significant increase in
real estate values in our market area. As a result of rising real estate prices
in recent years, our loans have been well collateralized. A decline in real
estate values could cause some of our mortgage loans to become inadequately
collateralized, which would expose us to a greater risk of loss. Additionally,
a decline in real estate values could adversely impact our portfolio of
commercial real estate loans and could result in a decline in the origination
of such loans.

18

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Strong competition within our market area could hurt our
profits and slow growth.

We face substantial competition in originating loans, both commercial and
consumer. This competition comes principally from other banks, savings
institutions, mortgage banking companies and other lenders. Many of our
competitors enjoy advantages that we do not, including greater financial
resources and higher lending limits, a wider geographic presence, more
accessible branch office locations, the ability to offer a wider array of
services or more favorable pricing alternatives, as well as lower origination
and operating costs. This competition could reduce our net income by decreasing
the number and size of loans that we originate and the interest rates we may
charge on these loans.

In
attracting business and consumer deposits, the Company faces substantial
competition from other insured depository institutions such as banks, savings
institutions and credit unions, as well as institutions offering uninsured
investment alternatives, including money market funds. Many of our competitors
enjoy advantages that we do not, including greater financial resources, more
aggressive marketing campaigns, better brand recognition and more branch
locations. These competitors may offer higher interest rates than we do, which
could decrease the deposits that we attract or require us to increase our rates
to retain existing deposits or attract new deposits. Increased deposit
competition could adversely affect our ability to generate the funds necessary
for lending operations. As a result, we may need to seek other sources of funds
that may be more expensive to obtain and could increase our cost of funds.

Our
banking and non-banking subsidiaries also compete with non-bank providers of
financial services, such as brokerage firms, consumer finance companies, credit
unions, insurance agencies and governmental organizations which may offer more
favorable terms. Some of our non-bank competitors are not subject to the same
extensive regulations that govern our banking operations. As a result, such
non-bank competitors may have advantages over our banking and non-banking
subsidiaries in providing certain products and services. This competition may
reduce or limit our margins on banking and non-banking services, reduce our
market share, and adversely affect our earnings and financial condition.

We operate in a highly regulated environment and we may be
adversely affected by changes in laws and regulations.

We
are subject to extensive regulation, supervision and examination by the FDIC,
as insurer of our deposits, and by the Department as our primary regulator. The
MHC and the Company are subject to regulation and supervision by the OTS. Such
regulation and supervision governs the activities in which an institution and
its holding company may engage and are intended primarily for the protection of
the insurance fund and the depositors and borrowers of the Bank rather than for
holders of the Company common stock. Regulatory authorities have extensive
discretion in their supervisory and enforcement activities, including the
imposition of restrictions on our operations, the classification of our assets
and determination of the level of our allowance for loan losses. Any change in
such regulation and oversight, whether in the form of regulatory policy,
regulations, legislation or supervisory action, may increase our costs of
operations and have a material impact on our operations.

Expenses from operating as a public company and from new
stock-based benefit plans will continue to adversely affect our profitability.

Our
non-interest expenses are impacted as a result of the financial, accounting,
and legal and various other additional expenses usually associated with
operating as a public company. We also recognize additional annual employee
compensation and benefit expenses stemming from the shares that are purchased
or granted to employees and executives under the employee stock ownership plan
and other new benefit plans. These additional expenses adversely affect our
profitability. We recognize expenses for our employee stock ownership plan when
shares are committed to be released to participants accounts and will
recognize expenses for restricted stock awards and stock options over the
vesting period of awards made to recipients.

19

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The issuance of shares for benefit programs may dilute your
ownership interest.

We
intend to adopt an equity incentive plan. If stockholders approve the new equity
incentive plan, we intend to issue shares to our officers and directors through
this plan. If the restricted stock awards under the equity incentive plan are
funded from authorized but unissued stock, or if the shares issued upon the
exercise of stock options under the equity incentive plan are issued from
authorized but unissued stock, your ownership interest in the shares issued to
persons other than the MHC could be diluted.

Our low return on equity may negatively affect our stock
price.

Net
income divided by average equity, known as return on equity, is a ratio many
investors use to compare the performance of a financial institution to its
peers. Our return on equity was reduced due to the large amount of capital that
we raised in our 2007 stock offering and to expenses we will incur in pursuing
our growth strategies, the costs of being a public company and added expenses
associated with our employee stock ownership plan and planned equity incentive
plan. Until we can increase our net interest income and non-interest income, we
expect our return on equity to be below the median return on equity for
publicly traded thrifts, which may negatively affect the value of our common
stock. For the twelve months ended December 31, 2007, our return on equity
was (.35%).

Beneficial
Savings Bank MHCs majority control of our common stock enables it to exercise
voting control over most matters put to a vote of stockholders and will prevent
stockholders from forcing a sale or a second-step conversion transaction they
may find advantageous.

The
MHC owns a majority of the Companys common stock and, through its board of
directors, exercises voting control over most matters put to a vote of
stockholders. The members of the boards of the Company, the MHC and the Bank are
the same. As a federally chartered mutual holding company, the board of
directors of MHC must ensure that the interests of depositors of the Bank are
represented and considered in matters put to a vote of stockholders of the
Company. Therefore, the votes cast by the MHC may not be in your personal best
interests as a stockholder. For example, the MHC may exercise its voting
control to defeat a stockholder nominee for election to the board of directors
of the Company. The MHCs ability to control the outcome of the election of the
board of directors of the Company restricts the ability of minority
stockholders to effect a change of management. In addition, stockholders will
not be able to force a merger or second-step conversion transaction without the
consent of the MHC, as such transactions require the approval of at least
two-thirds of all outstanding voting stock, which can only be achieved if the
MHC voted to approve such transactions. Some stockholders may desire a sale or
merger transaction, since stockholders typically receive a premium for their
shares, or a second-step conversion transaction, since fully converted
institutions tend to trade at higher multiples than mutual holding companies.

OTS
regulations and anti-takeover provisions in our charter restrict the
accumulation of our common stock, which may adversely affect our stock price.

OTS
regulations provide that for a period of three years following the date of the
completion of the stock offering, no person, acting alone, together with associates
or in a group of persons acting in concert, will directly or indirectly offer
to acquire or acquire the beneficial ownership of more than 10% of our common
stock without the prior written approval of the OTS. In addition, the Companys
charter provides that, for a period of five years from the date of the stock
offering, no person, other than the MHC may acquire directly or indirectly the
beneficial ownership of more than 10% of any class of any equity security of
the Company. In the event a person acquires shares in violation of this charter
provision, all shares beneficially owned by such person in excess of 10% will
be considered excess shares and will not be counted as shares entitled to
vote or counted as voting shares in connection with any matters submitted to
the stockholders for a vote. These restrictions make it more difficult and less
attractive for stockholders to acquire a significant amount of our common
stock, which may adversely affect our stock price.

|           |                            
|---------- | ---------------------------
|Item
  1B. | UNRESOLVED
  STAFF COMMENTS

None.

20

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|          |           
|--------- | ----------
|ITEM
  2. | PROPERTIES

We
conduct our business through our main office and branch offices. During fiscal
2007, we opened two new branch offices, one in Camden County, New Jersey and
one in Montgomery County, Pennsylvania. We also acquired an additional 31
branch offices as a result of our acquisition of FMS Financial. Our retail
market area primarily includes all of the area surrounding our 72 banking
offices located in Bucks, Chester, Delaware, Montgomery and Philadelphia
Counties in Pennsylvania and Burlington and Camden Counties in New Jersey,
while our lending market also includes Gloucester, Camden, Burlington and
Mercer Counties in New Jersey. The Company owns 43 properties and leases 29
other properties. In Pennsylvania, we serve our customers through our four
offices in Bucks County, seven offices in Delaware County, eight offices in
Montgomery County, 19 offices in Philadelphia County, and one office in Chester
County. In New Jersey, we serve our customers through our 30 offices in Burlington
County and three offices in Camden County. In addition, Beneficial Insurance
operates two offices in Pennsylvania, one in Philadelphia County and one in
Delaware County. All branches and offices are adequate for business operation.

|        |                  
|------- | -----------------
|Item 3. | LEGAL PROCEEDINGS

Periodically,
there have been various claims and lawsuits against us, such as claims to
enforce liens, condemnation proceedings on properties in which we hold security
interests, claims involving the making and servicing of real property loans and
other issues incident to our business. We are not a party to any pending legal
proceedings that we believe would have a material adverse effect on our
financial condition, results of operations or cash flows.

|        |                                                        
|------- | -------------------------------------------------------
|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF
  SECURITIES HOLDERS

None.

PART II

|        |                                                                                                               
|------- | --------------------------------------------------------------------------------------------------------------
|Item 5. | MARKET FOR REGISTRANTS COMMON
  EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market
for Common Equity and Related Stockholder Matters

The
information regarding the market for the Companys common equity and related
stockholder matters is incorporated herein by reference to the section
captioned Investor and Corporate Information in the Companys 2007 Annual
Report to Stockholders.

Purchases
of Equity Securities

The
Company did not repurchase any shares of its common stock during the quarter
ended December 31, 2007.

|        |                                                 
|------- | ------------------------------------------------
|Item 6. | SELECTED CONSOLIDATED FINANCIAL AND
  OTHER DATA

The
information required by this item is incorporated herein by reference to the
section captioned Selected Consolidated Financial and Other Data in the 2007
Annual Report to Stockholders.

|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | MANAGEMENTS DISCUSSION AND
  ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The
information required by this item is incorporated herein by reference to the
section captioned Managements Discussion and Analysis of Results of
Operations and Financial Condition in the 2007 Annual Report to the
Stockholders.

21

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|         |                                                             
|-------- | ------------------------------------------------------------
|Item 7A. | QUANTITATIVE AND QUALITATIVE
  DISCLOSURES ABOUT MARKET RISK

The
information required by this item is incorporated herein by reference to the
section captioned Managements Discussion and Analysis of Results of
Operations and Financial Condition in the 2007 Annual Report to Stockholders.

|        |                                              
|------- | ---------------------------------------------
|Item 8. | FINANCIAL STATEMENTS AND
  SUPPLEMENTARY DATA

The
information required by this item is incorporated herein by reference to the
section captioned Consolidated Financial Statements in the 2007 Annual Report
to Stockholders.

|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 9. | CHANGES IN AND DISAGREEMENTS WITH
  ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

|         |                        
|-------- | -----------------------
|Item 9A. | 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(e)
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 quarter or year ended December 31,
2007 that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting.

This
Annual Report on Form 10-K does not include a report of managements assessment
regarding internal controls over financial reporting or an attestation report
of the Companys registered public accounting firm due to a transition period
established by rules of the SEC for newly public companies.

|         |                  
|-------- | -----------------
|Item 9B. | OTHER INFORMATION

None.

PART III

|         |                                                         
|-------- | --------------------------------------------------------
|Item 10. | DIRECTORS, EXECUTIVE OFFICERS AND
  CORPORATE GOVERNANCE

Board of
Directors

For
information relating to the directors of Beneficial Mutual Bancorp, Inc., the
section captioned Items to be Voted on by StockholdersItem 1Election of Directors
in Beneficial Mutual Bancorp, Inc.s Proxy Statement for the 2008 Annual
Meeting of Stockholders is incorporated herein by reference.

Executive
Officers

For
information relating to officers of Beneficial Mutual Bancorp, Inc., see Part
I, Item 1, BusinessExecutive Officers of
the Registrant to this Annual Report on Form 10-K.

22

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Compliance
with Section 16(a) of the Securities Exchange Act of 1934

For
information regarding compliance with Section 16(a) of the Securities Exchange
Act of 1934, the cover page to this Annual Report on Form 10-K and the section
captioned Other
Information Relating to Directors and Executive OfficersSection 16(a)
Beneficial Ownership Reporting Compliance in Beneficial Mutual
Bancorp, Inc.s Proxy Statement for the 2008 Annual Meeting of Stockholders are
incorporated herein by reference.

Disclosure
of Code of Ethics

For
information concerning Beneficial Mutual Bancorp, Inc.s Code of Ethics, the
information contained under the section captioned Corporate GovernanceCode of Ethics
and Business Conductin Beneficial Mutual Bancorp, Inc.s Proxy
Statement for the 2008 Annual Meeting of Stockholders is incorporated by
reference. A copy of the Code of Ethics and Business Conduct is available to
stockholders on Beneficial Mutual Bancorp, Inc.s website at www.thebeneficial.com.

Corporate
Governance

For
information regarding the Audit Committee and its composition and the audit
committee financial expert, the section captioned Corporate Governance  Committees of
the Board of Directors  Audit Committee in Beneficial Mutual
Bancorp, Inc.s Proxy Statement for the 2008 Annual Meeting of Stockholders is
incorporated herein by reference.

|         |                       
|-------- | ----------------------
|Item 11. | EXECUTIVE COMPENSATION

Executive
Compensation

For
information regarding executive compensation, the sections captioned Compensation
Discussion and Analysis, Executive CompensationandDirector
Compensation in Beneficial Mutual Bancorp, Inc.s Proxy Statement
for the 2008 Annual Meeting of Stockholders are incorporated herein by
reference.

Corporate Governance

For
information regarding the compensation committee report, the section captioned Report of
the Compensation Committee in Beneficial Mutual Bancorp, Incs
Proxy Statement for the 2008 Annual Meeting of Stockholders is incorporated
herein by reference.

|         |                                                                                                  
|-------- | -------------------------------------------------------------------------------------------------
|Item 12. | SECURITY OWNERSHIP OF CERTAIN
  BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | Security Ownership of Certain
  Beneficial Owners                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| |     | Information required by this item is incorporated
  herein by reference to the section captioned Stock Ownership in
  Beneficial Mutual Bancorp, Inc.s Proxy Statement for the 2008 Annual Meeting
  of Stockholders.                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (b) | Security Ownership of Management                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| |     | Information required by this item is incorporated
  herein by reference to the section captioned Stock Ownership in
  Beneficial Mutual Bancorp, Inc.s Proxy Statement for the 2008 Annual Meeting
  of Stockholders.                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | Changes
  in Control                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| |     | Management of the Company
  knows of no arrangements, including any pledge by any person or securities of
  the Company the operation of which may at a subsequent date result in a
  change in control of the registrant.                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| | (d) | Equity
  Compensation Plan Information                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                         
| |     | Information required by this item is incorporated
  herein by reference to the section captioned Items to be Voted on by StockholdersItem
  2Approval of the Beneficial Mutual
  Bancorp, Inc. 2008 Equity Incentive PlanEquity Compensation Plan
  Information in Beneficial Mutual Bancorp, Inc.s Proxy
  Statement for the 2008 Annual Meeting of Stockholders.

23

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|         |                                                                            
|-------- | ---------------------------------------------------------------------------
|Item 13. | CERTAIN RELATIONSHIPS AND RELATED
  TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Certain
Relationships and Related Transactions

For
information regarding certain relationships and related transactions, the
section captioned Other Information
Relating to Directors and Executive OfficersTransactions with Related Persons
in Beneficial Mutual Bancorp, Inc.s Proxy Statement for the 2008 Annual
Meeting of Stockholders is incorporated herein by reference.

Corporate
Governance

For
information regarding director independence, the section captioned Corporate
GovernanceDirector Independence in Beneficial Mutual Bancorp,
Inc.s Proxy Statement for the 2008 Annual Meeting of Stockholders is
incorporated herein by reference.

|         |                                         
|-------- | ----------------------------------------
|Item 14. | PRINCIPAL ACCOUNTANT FEES AND
  SERVICES

For
information regarding the principal accountant fees and expenses, the section
captioned Items
to Be Voted on By StockholdersItem 3Ratification of Independent Registered
Public Accounting Firm in Beneficial Mutual Bancorp Inc.s Proxy
Statement for the 2008 Annual Meeting of Stockholders is incorporated herein by
reference.

PART IV

|         |                                             
|-------- | --------------------------------------------
|Item 15. | EXHIBITS AND FINANCIAL STATEMENT
  SCHEDULES

|    |                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The financial statements required in response to
  this item are incorporated herein by reference from Item 8 of this Annual
  Report on Form 10-K.                                               
|    |                                                                                                                                                                                                   
|(2) | All financial statement schedules are omitted
  because they are not required or applicable, or the required information is
  shown in the consolidated financial statements or the notes thereto.
|    |                                                                                                                                                                                                   
|(3) | Exhibits                                                                                                                                                                                          

| |      |  |                                                                                                        
| | ---- |  | -------------------------------------------------------------------------------------------------------
| | No.  |  | Description                                                                                            
| |      |  |                                                                                                        
| |      |  |                                                                                                        
| | 3.1  |  | Charter of Beneficial Mutual Bancorp, Inc. (1)                                                         
| | 3.2  |  | Bylaws of Beneficial Mutual Bancorp, Inc. (1)                                                          
| | 4.1  |  | Stock Certificate of Beneficial Mutual Bancorp, Inc.
  (1)                                             
| | 10.1 |  | Employment Agreement between Beneficial Mutual
  Bancorp, Inc., Beneficial Bank and Gerard P. Cuddy *  
| | 10.2 |  | Employment Agreement between Beneficial Mutual
  Bancorp, Inc., Beneficial Bank and Joseph F. Conners *
| | 10.3 |  | Employment Agreement between Beneficial Mutual
  Bancorp, Inc., Beneficial Bank and Andrew J. Miller * 
| | 10.4 |  | Employment Agreement between Beneficial Mutual
  Bancorp, Inc., Beneficial Bank and Robert J. Bush *   
| | 10.5 |  | Supplemental Pension and Retirement Plan of
  Beneficial Bank * (1)                                    
| | 10.6 |  | Beneficial Bank Board of Trustees Non-vested
  Deferred Compensation Plan * (1)                       
| | 10.7 |  | Beneficial Bank Stock-Based Deferral Plan * (1)                                                        
| | 10.8 |  | Severance Pay Plan for Eligible Employees of
  Beneficial Mutual Savings Bank * (2)                    

24

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| |      |  |                                                                                                                                                                                                                             
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.9 |  | Separation Agreement and General Release Between
  Beneficial Mutual Bancorp, Inc., Beneficial Mutual Savings Bank and Paul R.
  Driscoll * (3)                                                                             
| | 13.0 |  | Annual Report to Stockholders                                                                                                                                                                                               
| | 21.0 |  | Subsidiary information is incorporated herein by
  reference to Part I, Item 1  Subsidiaries                                                                                                                             
| | 23.1 |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                            
| | 31.1 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief
  Executive Officer                                                                                                                                                         
| | 31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief
  Financial Officer                                                                                                                                                         
| | 32.0 |  | Section 1350 Certification of Chief Executive
  Officer and Chief Financial Officer                                                                                                                                         
| |      |  |                                                                                                                                                                                                                             
| |     
| | *    |  | Management contract or compensatory plan, contract
  or arrangement.                                                                                                                                                        
| |      |  |                                                                                                                                                                                                                             
| | (1)  |  | Incorporated herein by reference to the exhibits to
  the Companys Registration Statement on Form S-1 (File No. 333-141289), as
  amended, initially filed with the Securities and Exchange Commission on March
  14, 2007.
| |      |  |                                                                                                                                                                                                                             
| | (2)  |  | Incorporated herein by reference to the Companys
  Current Report on Form 8-K filed with the Securities and Exchange Commission
  on October 12, 2007.                                                                     
| |      |  |                                                                                                                                                                                                                             
| | (3)  |  | Incorporated herein by reference to the Companys
  Current Report on Form 8-K filed with the Securities and Exchange Commission
  on November 28, 2007.                                                                    

25

---



SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) 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 MUTUAL BANCORP, INC.                          | 
|Date: March 31, 2008 | By: | /s/ Gerard P. Cuddy                                      | 
|                     |     |                                                          | 
|                     |     | Gerard P. Cuddy 
  President and Chief Executive Officer | 

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|                         |  |                                                      |  |               
|------------------------ |  | ---------------------------------------------------- |  | --------------
|Name                     |  | Title                                                |  | Date          
|                         |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Gerard P. Cuddy      |  | President, Chief Executive Officer and Director      |  | March 31, 2008
|                         |  | (principal executive officer)                        |  |               
|Gerard P. Cuddy          |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Joseph F. Conners    |  | Executive Vice President and Chief Financial Officer |  | March 31, 2008
|                         |  | (principal financial and accounting officer)         |  |               
|Joseph F. Conners        |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Edward G. Boehne     |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Edward G. Boehne         |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Frank A. Farnesi     |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Frank A. Farnesi         |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Elizabeth H. Gemmill |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Elizabeth H. Gemmill     |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Thomas F. Hayes      |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Thomas F. Hayes          |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Charles Kahn, Jr.    |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Charles Kahn, Jr.        |  |                                                      |  |               
|                         |  |                                                      |  |               
|/s/ Thomas J. Lewis      |  | Director                                             |  | March 31, 2008
|                         |  |                                                      |  |               
|Thomas J. Lewis          |  |                                                      |  |               

---



|                         |  |          |  |               
|------------------------ |  | -------- |  | --------------
|                         |  |          |  |               
|/s/ Joseph J. McLaughlin |  | Director |  | March 31, 2008
|                         |  |          |  |               
|Joseph J. McLaughlin     |  |          |  |               
|                         |  |          |  |               
|/s/ Michael J. Morris    |  | Director |  | March 31, 2008
|                         |  |          |  |               
|Michael J. Morris        |  |          |  |               
|                         |  |          |  |               
|/s/ George W. Nise       |  | Director |  | March 31, 2008
|                         |  |          |  |               
|George W. Nise           |  |          |  |               
|                         |  |          |  |               
|                         |  | Director |  |               
|                         |  |          |  |               
|Donald F. ONeill        |  |          |  |               
|                         |  |          |  |               
|/s/ Craig W. Yates       |  | Director |  | March 31, 2008
|                         |  |          |  |               
|Craig W. Yates           |  |          |  |               
|                         |  |          |  |               
|/s/ Roy D. Yates         |  | Director |  | March 31, 2008
|                         |  |          |  |               
|Roy D. Yates             |  |          |  |               

---