WILMINGTON, Del., May 10, 2012 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, announced today the implementation of selected asset strategies and an update to its reported earnings for the quarter ended March 31, 2012.
Selected Asset Strategies
The Company has been monitoring the market for distressed asset sales over the course of the economic recovery and from time to time has conducted small bulk sales of problem assets. The Board of Directors recently approved the marketing of approximately $52 million in unpaid principal balances of problem and nonperforming loans in bulk sale transactions. These loans were reclassified as loans held for sale in the second quarter of 2012 and will result in a charge to earnings in the second quarter. Upon receipt of acceptable bids, the Company anticipates that the closing of a sale will be on or around June 30, 2012. If successful, this transaction will improve certain asset quality statistics, including the nonperforming assets ratio.
Furthermore, in recent quarters, the Company has sold mortgage backed securities (MBS) as part of its portfolio management, and has recorded gains on sale of these securities. In the second quarter of 2012, the Company anticipates selling approximately $300 million in high quality MBS and reinvesting the proceeds in high quality securities but with a shorter duration, reducing the prepayment and interest-rate risk in the overall portfolio. Because the securities to be sold carry higher yields, the Company expects to record a gain which will be added to earnings and bank capital. This gain may offset all, or a large part, of the loss to be incurred in the bulk sale transaction, described above; however, there are no assurances that this will be the case.
While future earnings will be negatively impacted by the decreased securities portfolio yield, the Company expects that the impact on 2012 earnings will be offset by an improvement in total credit costs from the bulk sales.
Mark A. Turner, President and CEO commented, "Leveraging existing investments, increasing our bottom line, improving asset quality, and reducing the risk of rising rates on our securities portfolio are important outcomes for us this year. If the two asset sales are successful, the Company anticipates that the transactions combined will be relatively neutral to overall earnings and capital in 2012, will reduce prepayment and interest rate risk in our investment portfolio, and will reduce problem assets, freeing up management to focus on other productive activities."
Updated Earnings for First Quarter of 2012
The Company also announced a decrease in net income of $726,000, or $0.08 per diluted common share for the first quarter of 2012. This revision is related to adoption of a new loan risk rating system and is the result of $1.6 million in additional provision for loan losses offset by a reduction in incentive accruals and net of taxes. As a result, updated net income for the first quarter of 2012 is $6.4 million, or $0.66 per diluted common share as compared to $7.2 million or $0.74 per diluted common share, indicated earlier. Updated summary financials are included in this release. The updated results were reported officially in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012.
On March 1, 2012, the Company adopted a new loan risk-rating system for its commercial loans incorporating recommendations from industry experts. Following this implementation, the Company undertook an extensive internal review, validated by outside consultants, covering loans in its last pass grade and its problem loan grades. As a result of its review, the Company downgraded an incremental $62 million in loans, increasing the provision for loan losses as mentioned. Revised earnings of $0.66 per common share were stronger than earnings in the fourth quarter of 2011 of $0.63 per common share and earnings of $0.40 per common share for the first quarter of 2011.
About WSFS Financial Corporation
WSFS Financial Corporation is a multi-billion dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest, locally-managed bank and trust company headquartered in Delaware with $4.3 billion in assets on its balance sheet and $11.8 billion in fiduciary assets, including approximately $1.0 billion in assets under management. WSFS operates from 49 offices located in Delaware (39), Pennsylvania (8), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking and trust and wealth management. Other subsidiaries or divisions include Christiana Trust, WSFS Investment Group, Inc., Cypress Capital Management, LLC and Cash Connect. Serving the Delaware Valley since 1832, WSFS is the seventh oldest bank in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.
This press release contains estimates, predictions, opinions, projections and other statements that may be interpreted as "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to our financial goals, management's plans and objectives for future operations, financial and business trends, business prospects, and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to, the results of the Company's proposed bulk sale and investment securities transactions, those related to the economic environment, particularly in the market areas in which the Company operates; the volatility of the financial and securities markets, including changes with respect to the market value of financial assets; changes in market interest rates, changes in government regulation affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules being issued in accordance with this statute and potential expenses associated therewith; and the costs associated with resolving any problem loans and other risks and uncertainties, discussed in documents filed by WSFS Financial Corporation with the Securities and Exchange Commission from time to time. Forward looking statements are as of the date they are made, and the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.
| WSFS FINANCIAL CORPORATION | |||
| FINANCIAL HIGHLIGHTS | |||
| STATEMENT OF OPERATIONS | |||
| (Dollars in thousands, except per share data) | |||
| (Unaudited) | Three months ended | ||
| Mar 31, | Dec 31, | Mar 31, | |
| 2012 | 2011 | 2011 | |
| Interest income: | |||
| Interest and fees on loans | $ 33,395 | $ 33,223 | $ 31,956 |
| Interest on mortgage-backed securities | 5,718 | 6,196 | 7,026 |
| Interest and dividends on investment securities | 101 | 150 | 170 |
| Other interest income | 9 | 16 | -- |
| 39,223 | 39,585 | 39,152 | |
| Interest expense: | |||
| Interest on deposits | 4,015 | 4,255 | 5,223 |
| Interest on Federal Home Loan Bank advances | 1,937 | 2,106 | 2,727 |
| Interest on trust preferred borrowings | 375 | 360 | 336 |
| Interest on other borrowings | 366 | 448 | 612 |
| 6,693 | 7,169 | 8,898 | |
| Net interest income | 32,530 | 32,416 | 30,254 |
| Provision for loan losses | 8,245 | 6,948 | 5,908 |
| Net interest income after provision for loan losses | 24,285 | 25,468 | 24,346 |
| Noninterest income: | |||
| Credit/debit card and ATM income | 5,422 | 5,477 | 4,740 |
| Deposit service charges | 4,014 | 4,396 | 3,564 |
| Fiduciary & investment management income | 3,031 | 3,004 | 2,827 |
| Securities gains, net | 2,036 | 1,925 | 415 |
| Loan fee income | 610 | 589 | 685 |
| Mortgage banking activities, net | 516 | 489 | 547 |
| Bank-owned life insurance income | 185 | 240 | 179 |
| Other income | 944 | 876 | 682 |
| 16,758 | 16,996 | 13,639 | |
| Noninterest expenses: | |||
| Salaries, benefits and other compensation | 16,235 | 15,257 | 14,816 |
| Occupancy expense | 3,048 | 3,110 | 2,838 |
| Loan workout and OREO expense | 836 | 2,907 | 2,483 |
| Equipment expense | 1,667 | 1,720 | 1,614 |
| Marketing expense | 779 | 856 | 951 |
| FDIC expenses | 1,437 | 1,471 | 1,764 |
| Data processing and operations expense | 1,322 | 1,314 | 1,417 |
| Professional fees | 1,164 | 1,855 | 1,123 |
| Acquisition integration costs | -- | -- | 334 |
| Other operating expenses | 4,501 | 4,536 | 4,047 |
| 30,989 | 33,026 | 31,387 | |
| Income before taxes | 10,054 | 9,438 | 6,598 |
| Income tax provision | 3,610 | 3,276 | 2,392 |
| Net income | 6,444 | 6,162 | 4,206 |
| Dividends on preferred stock and accretion of discount | 692 | 693 | 692 |
| Net income allocable to common stockholders | $ 5,752 | $ 5,469 | $ 3,514 |
| Diluted earnings per common share: | |||
| Net income allocable to common stockholders | $ 0.66 | $ 0.63 | $ 0.40 |
| Weighted average common shares outstanding for diluted EPS | 8,760,397 | 8,714,731 | 8,730,043 |
| Performance Ratios: | |||
| Return on average assets (a) | 0.61% | 0.59% | 0.43% |
| Return on average equity (a) | 6.47 | 6.30 | 4.54 |
| Return on tangible common equity (a) | 8.26 | 7.41 | 5.18 |
| Net interest margin (a)(b) | 3.57 | 3.61 | 3.56 |
| Efficiency ratio (c) | 62.43 | 66.47 | 71.07 |
| Noninterest income as a percentage of total net revenue (b) | 33.76 | 34.21 | 30.88 |
| See "Notes" | |||
| WSFS FINANCIAL CORPORATION | |||
| FINANCIAL HIGHLIGHTS (Continued) | |||
| SUMMARY STATEMENT OF CONDITION | |||
| (Dollars in thousands) | |||
| (Unaudited) | Mar 31, | Dec 31, | Mar 31, |
| 2012 | 2011 | 2011 | |
| Assets: | |||
| Cash and due from banks | $ 67,517 | $ 70,889 | $ 65,215 |
| Cash in non-owned ATMs | 391,939 | 397,119 | 328,837 |
| Investment securities (d)(e) | 48,054 | 42,569 | 38,594 |
| Other investments | 34,207 | 35,765 | 35,880 |
| Mortgage-backed securities (d) | 855,276 | 829,225 | 696,051 |
| Net loans (f)(g)(m) | 2,732,036 | 2,712,774 | 2,592,127 |
| Bank owned life insurance | 63,577 | 63,392 | 64,422 |
| Other assets | 134,548 | 137,275 | 130,425 |
| Total assets | $ 4,327,154 | $ 4,289,008 | $ 3,951,551 |
| Liabilities and Stockholders' Equity: | |||
| Noninterest-bearing deposits | $ 542,176 | $ 525,444 | $ 505,154 |
| Interest-bearing deposits | 2,350,228 | 2,322,050 | 2,150,945 |
| Total customer deposits | 2,892,404 | 2,847,494 | 2,656,099 |
| Brokered deposits | 297,104 | 287,810 | 164,267 |
| Total deposits | 3,189,508 | 3,135,304 | 2,820,366 |
| Federal Home Loan Bank advances | 527,973 | 538,682 | 498,165 |
| Other borrowings | 175,124 | 184,938 | 235,438 |
| Other liabilities | 38,011 | 37,951 | 26,665 |
| Total liabilities | 3,930,616 | 3,896,875 | 3,580,634 |
| Stockholders' equity | 396,538 | 392,133 | 370,917 |
| Total liabilities and stockholders' equity | $ 4,327,154 | $ 4,289,008 | $ 3,951,551 |
| Capital Ratios: | |||
| Equity to asset ratio | 9.16% | 9.14% | 9.39% |
| Tangible equity to asset ratio | 8.44 | 8.41 | 8.61 |
| Tangible common equity to asset ratio | 7.22 | 7.18 | 7.27 |
| Tier 1 leverage (h) (required: 4.00%; well-capitalized: 5.00%) | 9.34 | 9.29 | 9.61 |
| Tier 1 risk-based capital (h) (required: 4.00%; well-capitalized: 6.00%) | 12.31 | 12.18 | 12.44 |
| Total risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%) | 13.57 | 13.43 | 13.69 |
| Asset Quality Indicators: | |||
| Nonperforming Assets: | |||
| Nonaccruing loans | $ 74,065 | $ 71,093 | $ 85,874 |
| Troubled debt restructuring (accruing) | 8,837 | 8,887 | 7,646 |
| Assets acquired through foreclosure | 6,708 | 11,695 | 8,311 |
| Total nonperforming assets | $ 89,610 | $ 91,675 | $ 101,831 |
| Past due loans (i) | $ 965 | $ 965 | $ 1,000 |
| Allowance for loan losses | $ 55,798 | $ 53,080 | $ 56,000 |
| Ratio of nonperforming assets to total assets | 2.07% | 2.14% | 2.58% |
| Ratio of allowance for loan losses to total gross loans (j) | 2.01 | 1.92 | 2.11 |
| Ratio of allowance for loan losses to nonaccruing loans | 75 | 75 | 65 |
| Ratio of quarterly net charge-offs to average gross loans (a)(f) | 0.80 | 1.04 | 1.56 |
| See "Notes" |
| WSFS FINANCIAL CORPORATION | |||||||||
| FINANCIAL HIGHLIGHTS (Continued) | |||||||||
| AVERAGE BALANCE SHEET | |||||||||
| (Dollars in thousands) | |||||||||
| (Unaudited) | Three months ended | ||||||||
| Mar 31, 2012 | Dec 31, 2011 | Mar 31, 2011 | |||||||
| Average | Interest & | Yield/ | Average | Interest & | Yield/ | Average | Interest & | Yield/ | |
| Balance | Dividends | Rate (a)(b) | Balance | Dividends | Rate (a)(b) | Balance | Dividends | Rate (a)(b) | |
| Assets: | |||||||||
| Interest-earning assets: | |||||||||
| Loans: (f) (k) | |||||||||
| Commercial real estate loans | $ 739,158 | $ 8,931 | 4.83% | $ 723,029 | $ 8,741 | 4.84% | $ 755,256 | $ 8,860 | 4.69% |
| Residential real estate loans (m) | 279,480 | 3,199 | 4.58 | 290,316 | 3,326 | 4.58 | 314,677 | 3,862 | 4.91 |
| Commercial loans | 1,468,048 | 17,775 | 4.88 | 1,416,787 | 17,465 | 4.90 | 1,253,433 | 15,381 | 4.99 |
| Consumer loans | 289,230 | 3,490 | 4.85 | 294,679 | 3,691 | 4.97 | 307,873 | 3,853 | 5.08 |
| Total loans (m) | 2,775,916 | 33,395 | 4.86 | 2,724,811 | 33,223 | 4.92 | 2,631,239 | 31,956 | 4.90 |
| Mortgage-backed securities (d) | 826,088 | 5,718 | 2.77 | 809,732 | 6,196 | 3.06 | 711,852 | 7,026 | 3.95 |
| Investment securities (d)(e) | 47,276 | 101 | 0.96 | 48,175 | 150 | 1.25 | 47,806 | 170 | 1.42 |
| Other interest-earning assets (n) | 35,290 | 9 | 0.10 | 35,866 | 16 | 0.18 | 37,596 | -- | -- |
| Total interest-earning assets | 3,684,570 | 39,223 | 4.30 | 3,618,584 | 39,585 | 4.41 | 3,428,493 | 39,152 | 4.60 |
| Allowance for loan losses | (53,776) | (54,028) | (61,883) | ||||||
| Cash and due from banks | 68,354 | 71,936 | 59,527 | ||||||
| Cash in non-owned ATMs | 361,508 | 364,297 | 312,580 | ||||||
| Bank owned life insurance | 63,458 | 63,229 | 64,303 | ||||||
| Other noninterest-earning assets | 127,835 | 132,658 | 124,166 | ||||||
| Total assets | $ 4,251,949 | $ 4,196,676 | $ 3,927,186 | ||||||
| Liabilities and Stockholders' Equity: | |||||||||
| Interest-bearing liabilities: | |||||||||
| Interest-bearing deposits: | |||||||||
| Interest-bearing demand | $ 379,315 | $ 60 | 0.06% | $ 366,364 | $ 105 | 0.11% | $ 301,563 | $ 120 | 0.16% |
| Money market | 768,666 | 519 | 0.27 | 759,454 | 604 | 0.32 | 729,072 | 842 | 0.47 |
| Savings | 383,294 | 173 | 0.18 | 375,848 | 250 | 0.26 | 298,442 | 306 | 0.42 |
| Customer time deposits | 763,802 | 2,984 | 1.57 | 754,023 | 3,056 | 1.61 | 781,955 | 3,729 | 1.93 |
| Total interest-bearing customer deposits | 2,295,077 | 3,736 | 0.65 | 2,255,689 | 4,015 | 0.71 | 2,111,032 | 4,997 | 0.96 |
| Brokered deposits | 270,814 | 279 | 0.41 | 234,922 | 240 | 0.41 | 198,233 | 226 | 0.46 |
| Total interest-bearing deposits | 2,565,891 | 4,015 | 0.63 | 2,490,611 | 4,255 | 0.68 | 2,309,265 | 5,223 | 0.92 |
| FHLB of Pittsburgh advances | 530,518 | 1,937 | 1.44 | 567,969 | 2,106 | 1.45 | 515,600 | 2,727 | 2.12 |
| Trust preferred borrowings | 67,011 | 375 | 2.21 | 67,011 | 359 | 2.10 | 67,011 | 336 | 2.01 |
| Other borrowed funds | 136,480 | 366 | 1.07 | 124,282 | 449 | 1.45 | 175,726 | 612 | 1.39 |
| Total interest-bearing liabilities | 3,299,900 | 6,693 | 0.81 | 3,249,873 | 7,169 | 0.88 | 3,067,602 | 8,898 | 1.16 |
| Noninterest-bearing demand deposits | 520,044 | 515,428 | 468,022 | ||||||
| Other noninterest-bearing liabilities | 33,571 | 40,229 | 20,911 | ||||||
| Stockholders' equity | 398,434 | 391,146 | 370,651 | ||||||
| Total liabilities and stockholders' equity | $ 4,251,949 | $ 4,196,676 | $ 3,927,186 | ||||||
| Excess of interest-earning assets over interest-bearing liabilities | $ 384,670 | $ 368,711 | $ 360,891 | ||||||
| Net interest and dividend income | $ 32,530 | $ 32,416 | $ 30,254 | ||||||
| Interest rate spread | 3.49% | 3.53% | 3.44% | ||||||
| Net interest margin | 3.57% | 3.61% | 3.56% | ||||||
| See "Notes" | |||||||||
| WSFS FINANCIAL CORPORATION | |||
| FINANCIAL HIGHLIGHTS (Continued) | |||
| (Dollars in thousands, except per share data) | |||
| (Unaudited) | Three months ended | ||
| Mar 31, | Dec 31, | Mar 31, | |
| Stock Information: | 2012 | 2011 | 2011 |
| Market price of common stock: | |||
| High | $ 43.74 | $ 40.92 | $ 49.57 |
| Low | 36.02 | 30.22 | 40.01 |
| Close | 41.00 | 35.96 | 47.10 |
| Book value per common share | 45.55 | 45.19 | 43.16 |
| Tangible book value per common share | 41.64 | 41.24 | 39.22 |
| Tangible common book value per common share | 35.62 | 35.20 | 33.15 |
| Number of common shares outstanding (000s) | 8,705 | 8,678 | 8,595 |
| Other Financial Data: | |||
| One-year repricing gap to total assets (l) | (0.04)% | 1.54% | 5.90% |
| Weighted average duration of the MBS portfolio | 3.3 years | 3.6 years | 2.5 years |
| Unrealized gains (losses) on securities available-for-sale, net of taxes | $ 10,728 | $ 11,673 | $ 6,826 |
| Number of Associates (FTEs) (o) | 758 | 767 | 707 |
| Number of offices (branches, LPO's and operations centers) | 49 | 49 | 42 |
| Number of WSFS owned ATMs | 410 | 415 | 380 |
| Notes: | |||
| (a) Annualized. | |||
| (b) Computed on a fully tax-equivalent basis. | |||
| (c) Noninterest expense divided by (tax-equivalent) net interest income and noninterest income. | |||
| (d) Includes securities available-for-sale at fair value. | |||
| (e) Includes reverse mortgages. | |||
| (f) Net of unearned income. | |||
| (g) Net of allowance for loan losses. | |||
| (h) Represents capital ratios of Wilmington Savings Fund Society, FSB and subsidiaries. | |||
| (i) Accruing loans which are contractually past due 90 days or more as to principal or interest. | |||
| (j) Excludes loans held-for-sale. | |||
| (k) Nonperforming loans are included in average balance computations. | |||
| (l) The difference between projected amounts of interest-sensitive assets and interest-sensitive liabilities repricing within one year divided by total assets, based on a current interest rate scenario. | |||
| (m) Includes loans held-for-sale. | |||
| (n) The FHLB of Pittsburgh has suspended dividend payments from December 31, 2008 until February 22, 2012. | |||
| (o) Includes summer Associates, when applicable. | |||