WILMINGTON, Del., Oct. 24, 2013 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, reported net income of $14.2 million, or $1.54 per diluted share of common stock for the third quarter of 2013 compared to $10.9 million, or $1.16 per diluted share of common stock for the second quarter of 2013, and $10.0 million, or $1.06 per diluted share per common stock for the third quarter of 2012.
Net income for the first three quarters of 2013 was $34.8 million, up 47% from $23.8 million for the same period in 2012. Earnings per share were $3.72 per diluted share of common stock in the first nine months of 2013, a 51% increase over the $2.47 per diluted share of common stock reported for the same period in 2012.
Highlights for the third quarter of 2013:
- Return on assets (ROA) reached 1.29% and return on tangible common equity (ROTCE) grew to 16.8%. Core(q) ROA and ROTCE were 1.04% and 13.64%, respectively.
- Total core revenue(q) increased $1.4 million, or 11% annualized over the second quarter of 2013 on higher net interest income and steady fee income.
- Expense control continued with noninterest expense declining by $343,000 from second quarter 2013 levels despite growth in the franchise, improved performance and related incentive compensation.
- Customer funding increased at a 9% annualized rate with core deposits increasing at a 13% annualized rate. Demand accounts (checking) represent a robust 43% of total customer funding.
- Net loans grew at a 5% annualized rate; with 9% annualized growth in commercial and industrial (C&I) lending.
- WSFS completed the purchase of a mortgage banking company, Array Financial Group, Inc. (Array), and an abstract and title company, Arrow Land Transfer Company (Arrow) during the third quarter of 2013 adding fee income and management depth to its consumer lending platform.
- WSFS also completed the repurchase of its shares of preferred stock (formerly TARP) in the third quarter.
Notable items:
- WSFS realized $306,000, or $0.02 per diluted share of common stock (after tax), in net gains on securities sales, down from $906,000, or $0.07 per diluted share of common stock, in the second quarter of 2013 and $2.5 million, or $0.18 per diluted share of common stock, in the third quarter 2012.
- Preferred stock dividends were $332,000 or $0.04 per diluted share of common stock and will no longer be paid going forward as a result of the stock repurchase.
- WSFS recorded $3.8 million (pre-tax) in income related to its ownership of the equity tranche of a 2002 reverse mortgage securitization. The benefit of this holding in previous years was recorded partially as an adjustment to equity (AOCI), but was taken through earnings this quarter as the Company consolidated the assets and liabilities of the securitization trust on its balance sheet in accordance with GAAP. During the third quarter of 2013, the Company obtained the right to execute a clean-up call on the underlying collateral, which triggered this consolidation treatment. This income contributed $0.28 in diluted earnings per share, 0.23% to ROA and 3.0% to ROTCE in the third quarter of 2013.
CEO outlook and commentary:
Mark A. Turner, President and CEO, said, "We are pleased to show strong third quarter results for both reported and core earnings. In fact, it is our best quarter of earnings since before the financial crisis hit in late 2008.
"Our strong core operating results were the result of improvements in net interest income, growth in many of our fee businesses, careful expense management and continued moderation in our credit costs. We increased both net interest income and net interest margin from the second quarter and year-ago levels as loan and deposit market share gains improved the mix of our balance sheet. Core fee income, adjusted for securities and investment gains, improved at a healthy rate from last year's third quarter as we continued to build momentum in our wealth, ATM and traditional banking businesses. Even with this business growth and improved performance, we continually and prudently controlled our expenses to be essentially flat with this time last year and decreased from the previous quarter.
"Additionally, the acquisition of Array and Arrow and the reverse mortgage consolidation gains we recognized during the period reflect the success and continuation of our long history of well-timed and disciplined asset and business purchases.
"Our success is rooted in our strategy of 'Engaged Associates delivering Stellar Service building Customer Advocates and value for our Owners.' This strategy is demonstrated in the recognitions we continue to receive. For the eighth straight year, we were proud to be named a 'Top Workplace' in Delaware in a survey conducted for The News Journal and we were also voted the "Best Bank" in Delaware for the third consecutive year by that paper's readers. Executing on this strategy, we are building significant value for our owners."
Third Quarter 2013 Discussion of Financial Results
Net interest margin improves from prior quarter and year-ago levels
The net interest margin for the third quarter of 2013 was 3.61%, an 11 basis point increase from 3.50% for the second quarter of 2013. Net interest income for the third quarter of 2013 was $33.4 million, a $1.4 million improvement from the second quarter of 2013. Compared to the third quarter of 2012, the net interest margin increased 20 basis points and net interest income increased $2.5 million.
The third quarter of 2013 benefited from one-time net adjustments of $446,000, or 5 basis points in margin, largely related to prepayment and other fees on two loan relationships that were paid off at the end of the quarter. Without these adjustments, the margin increased by a meaningful 6 basis points as a result of securities portfolio yield improvement, prudent deposit and loan pricing and improved balance sheet mix. The significant increase in margin from the second quarter of 2012 was due to the items mentioned above, as well as several initiatives undertaken by the Company in late 2012 and into 2013, including: mortgage-banking securities deleveraging strategy; the prepayment of higher rate Federal Home Loan Bank ("FHLB") borrowings; and the intentional reduction in higher-cost CDs.
Loan portfolio growth includes strong C&I lending results
Total net loans were $2.8 billion at September 30, 2013, an increase of $33.8 million, or 5% annualized compared to the prior quarter-end, mainly due to a $35.7 million, or 9% annualized increase in C&I loans.
Total net loans at September 30, 2013 increased $165.5 million, or 6%, compared to September 30, 2012. The year-over-year improvement was due to a $184.7 million, or 9% increase in total commercial loans.
These annual and quarterly increases in commercial lending were partially offset by a decrease in residential mortgages due to the Company's ongoing strategy of selling these loans in the secondary market.
The following table summarizes loan balances and composition at September 30, 2013 compared to prior periods.
| At | At | At | ||||
| (Dollars in thousands) | September 30, 2013 | June 30, 2013 | September 30, 2012 | |||
| Commercial & industrial | $ 1,542,714 | 54 % | $ 1,507,004 | 54 % | $ 1,449,200 | 54 % |
| Commercial real estate | 707,762 | 25 | 682,716 | 24 | 604,556 | 23 |
| Construction | 102,119 | 4 | 125,061 | 4 | 114,177 | 4 |
| Total commercial loans | 2,352,595 | 83 | 2,314,781 | 82 | 2,167,933 | 81 |
| Residential mortgage | 242,582 | 9 | 249,476 | 9 | 271,247 | 10 |
| Consumer | 288,854 | 10 | 286,001 | 10 | 283,484 | 11 |
| Allowance for loan losses | (41,431) | (2) | (41,494) | (1) | (45,598) | (2) |
| Net Loans | $ 2,842,600 | 100 % | $ 2,808,764 | 100 % | $ 2,677,066 | 100 % |
Improvement in credit quality metrics and low total credit costs
Credit quality improved in the third quarter of 2013 in nearly all metrics as charge-offs declined $1.0 million to $2.0 million, and was an annualized 0.28% of loans in the quarter, the lowest level of quarterly net charge-offs since the second quarter of 2008. Nonperforming assets improved $2.7 million, or 5%, to $56.5 million, and were 1.27% of assets. Total classified loans decreased $14.4 million and the ratio of total classified loans to Tier 1 capital plus allowance for loan losses (ALLL) improved from 34.2% to 30.8%. In addition, delinquencies (including nonperforming delinquencies) remained low despite increasing 0.61% during the quarter to 1.84% of total loans.
Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit reserves) were $2.2 million during the third quarter of 2013, essentially unchanged from the previous quarter. Credit costs remained moderate, even as one larger C&I relationship, previously and currently carried as a substandard loan, became delinquent during the quarter. (The $19 million relationship is in a highly seasonal business and will continue to be evaluated for accrual status on a month-by-month basis as the borrower manages through its current Fall sales season.) Based on a review of the underlying collateral compared to net book balances, we believe a negative change in the status of this loan, if any, would not have a material impact on credit costs.
Also as a result of the moderation in credit quality and despite the increase associated with the newly delinquent relationship, ALLL was essentially unchanged from the second quarter of 2013 at $41.4 million, as the provision for loan losses matched net charge-offs during the period. The ratio of the ALLL to total gross loans decreased slightly to 1.44% at September 30, 2013 from 1.46% at June 30, 2013, due to loan growth, and was 109% of nonaccruing loans.
Customer funding growth reflects continued success of business lines
Customer funding increased to $3.0 billion at September 30, 2013 from $2.9 billion at June 30, 2013. The growth included $109.5 million in interest-bearing demand accounts (including a $47.1 million expected seasonal increase in municipal funds) and $26.0 million in money market accounts, partially offset by the continued intentional run-off of higher cost CDs and a $48.5 million decrease in noninterest bearing demand accounts. During the period, WSFS introduced its new "MyWSFSSM" deposit solution set, resulting in a reassignment of some balances from noninterest DDA accounts to interest-bearing DDA accounts.
Customer funding increased $54.9 million over balances at September 30, 2012. This increase was driven by core deposit account balances, which increased $239.5 million, or 11%, partially offset by intentional run-off in higher-cost CDs of $191.4 million.
Core deposits represent 82% of total customer funding at September 30, 2013, with no-cost and low-cost demand accounts representing 43% of total customer funding.
The following table summarizes customer funding balances and composition at September 30, 2013 compared to prior periods.
| At | At | At | ||||
| (Dollars in thousands) | September 30, 2013 | June 30, 2013 | September 30, 2012 | |||
| Noninterest demand | $ 609,115 | 21 % | $ 657,616 | 23 % | $ 596,235 | 21 % |
| Interest-bearing demand | 669,173 | 22 | 559,632 | 19 | 413,042 | 14 |
| Savings | 378,397 | 13 | 390,689 | 13 | 388,878 | 13 |
| Money market | 780,753 | 26 | 754,780 | 26 | 799,786 | 27 |
| Total core deposits | 2,437,438 | 82 | 2,362,717 | 81 | 2,197,941 | 75 |
| Customer time | 508,161 | 17 | 518,997 | 18 | 699,604 | 24 |
| Total customer deposits | 2,945,599 | 99 | 2,881,714 | 99 | 2,897,545 | 99 |
| Customer sweep accounts | 36,807 | 1 | 34,680 | 1 | 29,942 | 1 |
| Total customer funding | $ 2,982,406 | 100 % | $ 2,916,394 | 100 % | $ 2,927,487 | 100 % |
Noninterest income growth reflects continued business growth
During the third quarter of 2013, the Company earned noninterest income of $22.7 million, compared to $19.5 million in the second quarter of 2013. Excluding the impact of non-operating items(q), noninterest income was essentially unchanged compared to the second quarter of 2013. Quarterly increases in credit/debit card and ATM fees (largely related to our ATM division) of $185,000 and increases in deposit service charges of $191,000 were offset by seasonal decreases in investment management and fiduciary revenue and lower mortgage banking revenues due to the increasing rate environment.
Noninterest income increased $3.0 million during the third quarter of 2013 from the same period a year ago. Excluding non-operating items(q), noninterest income increased by $1.4 million, or 8% from the same period in 2012. This increase was primarily the result of growth in credit/debit card and fees (largely related to the ATM division), which increased $636,000, or 11%, and investment management and fiduciary revenue, which increased $578,000, or 18%, reflecting continued fundamental momentum in these businesses. The increase in noninterest income also reflected continued growth and success in the traditional banking franchise.
Finally, on August 1, 2013 the Company completed the purchase of Array and Arrow. These two units combined to add $309,000 in mortgage banking revenues in the third quarter. Excluding transaction costs, these results were essentially neutral to net income, as the Companies were combined for only two months – the seasonally slower mortgage origination months, and as management's focus was on integration during that period.
Noninterest expense decreases reflect prudent expense management
Noninterest expense for the third quarter of 2013 totaled $32.8 million compared to $33.2 million for the second quarter of 2013, a decrease of $343,000, or 4% annualized. This decrease was in most categories and included a $278,000 decrease in loan workout and OREO expenses and reduced regulatory costs during the third quarter of 2013.
Noninterest expense for the third quarter of 2013 increased $656,000, or 2% from the same period in 2012. Excluding the change in the method of billing(p) by Cash Connect, noninterest expenses decreased by $335,000 below the same period in the prior year.
As with the linked quarter comparison, the annual decrease came despite Company growth, improved performance and higher incentive compensation in many of the business lines.
Selected Business Segments (included in previous results):
Wealth Management division revenue grew by 17% over the prior year
The Wealth Management division provides a broad array of fiduciary, investment management, credit and deposit products to clients through four businesses. WSFS Investment Group, Inc. provides insurance and brokerage products primarily to our retail banking clients. Cypress Capital Management, LLC is a registered investment advisor with over $609 million in assets under management. Cypress' primary market segment is high net worth individuals, offering a 'balanced' investment style focused on preservation of capital and current income. Christiana Trust, with $8 billion in assets under administration, provides fiduciary and investment services to personal trust clients, and trustee, agency, custodial and commercial domicile services to corporate and institutional clients. WSFS Private Banking serves high net worth clients by delivering credit and deposit products and partnering with Cypress, Christiana and WSFS Investment Group to deliver investment management and fiduciary products and services.
Total wealth management fee revenue (investment management and fiduciary revenue plus other noninterest income generated by the segment) was $4.0 million during the third quarter of 2013. This represented a decrease of $248,000, compared to the second quarter of 2013 and an increase of $582,000 or 17%, compared to the third quarter of 2012. The decrease from the second quarter of 2013 reflects seasonal declines as higher tax preparation fees are traditionally recorded in the second quarter. Fee income growth over the prior year reflects the continued benefit from growth in both the Corporate and Personal Trust business lines, as well as additional wealth products and services offered during 2013. Net interest income (mainly from Private Banking) increased to $2.8 million for the third quarter of 2013, compared to $2.6 million for both the second quarter of 2013 and the third quarter of 2012. Total segment noninterest expense (including intercompany allocations of expense and provision for loan losses) was $3.7 million during the third quarter of 2013 compared to $4.6 million during the second quarter of 2013, mainly due to increased seasonal tax preparation expenses recognized in the second quarter, which are commensurate with additional revenues for the same period. Noninterest expense declined $1.4 million compared to third quarter 2012, mainly due to reduced provision for loan losses during the third quarter of 2013 as credit quality improved. As a result, pre-tax income for the Wealth business in the third quarter of 2013 was $3.1 million compared to $2.3 million in the second quarter 2013 and $895,000 in the third quarter 2012.
Cash Connect growth reflects seasonal growth and new customers and product offerings
The Cash Connect® division is a premier provider of ATM vault cash and related services in the United States. Cash Connect® services over $489 million in vault cash in nearly 15,000 non-bank ATMs nationwide and operates more than 450 ATMs for WSFS Bank, which has the largest branded ATM network in Delaware.
Cash Connect® recorded $6.2 million in net revenue (fee income less funding costs) during the third quarter of 2013. This represented an increase of $341,000 compared to the second quarter of 2013 and an increase of $1.7 million compared to the third quarter of 2012. Noninterest expenses (including intercompany allocations of expense) were $4.0 million during the third quarter of 2013, an increase of $325,000 compared to the second quarter of 2013, and an increase of $1.3 million from the third quarter of 2012. (A large portion of the year-over-year increase in both noninterest income and expenses was due to the Cash Connect billing change in late 2012 (p) increasing both these line items, but not affecting the bottom-line). Cash Connect® reported pre-tax income of $2.2 million for the third quarter of 2013, compared to $2.1 million in the second quarter of 2013, and $1.8 million in the third quarter of 2012. The increase in bottom-line results was due to both typical seasonality and continued fundamental growth in this business line.
Income taxes
The Company recorded a $7.2 million income tax provision in the third quarter of 2013 compared to $5.9 million in the second quarter of 2013 and $4.8 million in the third quarter of 2012. The Company's effective tax rate for the third quarter of 2013 was 34%, compared to 35% in the second quarter of 2013, and 32% during the third quarter of 2012 mainly due to the impact of unanticipated tax-free bank-owned life insurance income during that year-ago period.
Capital management
The Company's tangible common equity increased to $341.0 million at September 30, 2013 from $329.3 million at June 30, 2013 primarily due to earnings in the quarter. Tangible common book value per share was $38.56 at September 30, 2013, a $1.21 increase from $37.35 reported at June 30, 2013. The Company's tangible common equity to asset ratio increased 20 basis points to 7.73% from 7.53%.
The Company's total stockholders' equity decreased to $374.0 million at September 30, 2013 from $394.9 million at June 30, 2013, primarily due to the $32.6 million repurchase of preferred stock (formerly TARP), offset by quarterly retained earnings.
At September 30, 2013, WSFS Bank's Tier 1 leverage ratio of 10.30%, Tier 1 risk-based ratio of 13.21% and total risk-based capital ratio of 14.46%, all increased from the prior quarter and were substantially in excess of "well-capitalized" regulatory benchmarks.
The Board of Directors approved a quarterly cash dividend of $0.12 per share of common stock. This dividend will be paid on November 22, 2013, to shareholders of record as of November 8, 2013.
Third quarter 2013 earnings release conference call
Management will conduct a conference call to review third quarter results at 1:00 p.m. Eastern Daylight Time (EDT) on October 25, 2013. Interested parties may listen to this call by dialing 1-877-312-5857. A rebroadcast of the conference call will be available two hours after the completion of the call, until November 2, 2013, by dialing 1-855-859-2056 and using Conference ID 76597914.
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 $4.4 billion in assets on its balance sheet and $8.7 billion in fiduciary assets, including approximately $1.1 billion in assets under management. WSFS operates from 51 offices located in Delaware (41), 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, Cash Connect® and Array Financial. Serving the Delaware Valley since 1832, WSFS Bank is the seventh oldest bank in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.
Forward-Looking Statement Disclaimer
This press release contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's 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, those related to the economic environment, particularly in the market areas in which the Company operates, including an increase in unemployment levels; the volatility of the financial and securities markets, including changes with respect to the market value of financial assets; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; increases in benchmark rates would increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated; 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 and elevated capital levels associated therewith; possible additional loan losses and impairment of the collectability of loans; seasonality, which may impact customer, such as construction-related businesses, the availability of public funds, and certain types of the Company's fee revenue, such as mortgage originations; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect on business; possible rules and regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact our business model or products and services; possible stresses in the real estate markets, including possible continued deterioration in property values that affect the collateral value of underlying real estate loans; the Company's ability to expand into new markets, develop competitive new products and services in a timely manner and to maintain profit margins in the face of competitive pressures; possible changes in consumer and business spending and savings habits could affect the Company's ability to increase assets and to attract deposits; the Company's ability to effectively manage credit risk, interest rate risk market risk, operational risk, legal risk, liquidity risk, reputational risk, and regulatory and compliance risk; the effects of increased competition from both banks and non-banks; the effects of geopolitical instability and risks such as terrorist attacks; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes, and the effects of man-made disasters; possible changes in the speed of loan prepayments by the Company's customers and loan origination or sales volumes; possible acceleration of prepayments of mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on prepayments on mortgage-backed securities due to low interest rates; and the costs associated with resolving any problem loans, litigation and other risks and uncertainties, discussed in the Company's Form 10-K for the year ended December 31, 2012 and other documents filed by the Company 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) | Three months ended | Nine months ended | |||
| (Unaudited) | September 30, | June 30, | September 30, | September 30, | September 30, |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Interest income: | |||||
| Interest and fees on loans | $ 32,708 | $ 32,108 | $ 32,003 | $ 96,268 | $ 98,185 |
| Interest on mortgage-backed securities | 3,527 | 3,470 | 4,344 | 10,726 | 14,953 |
| Interest and dividends on investment securities | 794 | 282 | 158 | 1,461 | 335 |
| Other interest income | 87 | 22 | 9 | 134 | 27 |
| 37,116 | 35,882 | 36,514 | 108,589 | 113,500 | |
| Interest expense: | |||||
| Interest on deposits | 1,673 | 1,821 | 3,237 | 5,513 | 10,652 |
| Interest on Federal Home Loan Bank advances | 482 | 451 | 1,403 | 1,376 | 4,985 |
| Interest on trust preferred borrowings | 339 | 337 | 369 | 1,005 | 1,114 |
| Interest on Senior Debt | 943 | 944 | 353 | 2,830 | 353 |
| Interest on other borrowings | 273 | 273 | 259 | 823 | 895 |
| 3,710 | 3,826 | 5,621 | 11,547 | 17,999 | |
| Net interest income | 33,406 | 32,056 | 30,893 | 97,042 | 95,501 |
| Provision for loan losses | 1,969 | 1,680 | 3,751 | 5,880 | 28,379 |
| Net interest income after provision for loan losses | 31,437 | 30,376 | 27,142 | 91,162 | 67,122 |
| Noninterest income: | |||||
| Credit/debit card and ATM income | 6,374 | 6,189 | 5,738 | 18,231 | 17,031 |
| Deposit service charges | 4,407 | 4,216 | 4,360 | 12,637 | 12,673 |
| Investment management and fiduciary revenue | 3,836 | 4,059 | 3,258 | 11,623 | 9,716 |
| Reverse mortgage consolidation gain | 3,801 | -- | -- | 3,801 | -- |
| Mortgage banking activities, net | 907 | 1,193 | 914 | 2,837 | 1,882 |
| Securities gains, net | 306 | 906 | 2,451 | 2,856 | 17,797 |
| Loan fee income | 419 | 487 | 706 | 1,401 | 1,803 |
| Bank-owned life insurance income | 74 | 48 | 1,126 | 162 | 1,447 |
| Other income | 2,618 | 2,441 | 1,195 | 6,807 | 3,149 |
| 22,742 | 19,539 | 19,748 | 60,355 | 65,498 | |
| Noninterest expense: | |||||
| Salaries, benefits and other compensation | 17,648 | 17,455 | 16,942 | 53,086 | 49,840 |
| Occupancy expense | 3,385 | 3,401 | 3,235 | 10,169 | 9,697 |
| Equipment expense | 2,044 | 2,117 | 1,701 | 5,990 | 5,403 |
| Data processing and operations expense | 1,548 | 1,394 | 1,402 | 4,291 | 4,190 |
| FDIC expenses | 959 | 942 | 1,384 | 3,067 | 4,262 |
| Professional fees | 866 | 899 | 671 | 2,712 | 2,917 |
| Loan workout and OREO expense | 492 | 770 | 2,115 | 1,432 | 4,902 |
| Marketing expense | 643 | 608 | 379 | 1,768 | 1,976 |
| Other operating expenses | 5,224 | 5,566 | 4,324 | 15,816 | 12,972 |
| 32,809 | 33,152 | 32,153 | 98,331 | 96,159 | |
| Income before taxes | 21,370 | 16,763 | 14,737 | 53,186 | 36,461 |
| Income tax provision | 7,210 | 5,855 | 4,758 | 18,378 | 12,708 |
| Net income | 14,160 | 10,908 | 9,979 | 34,808 | 23,753 |
| Dividends on preferred stock and accretion of discount | 332 | 609 | 693 | 1,633 | 2,077 |
| Net income allocable to common stockholders | $ 13,828 | $ 10,299 | $ 9,286 | $ 33,175 | $ 21,676 |
| Diluted earnings per share of common stock: | |||||
| Net income allocable to common stockholders | $ 1.54 | $ 1.16 | $ 1.06 | $ 3.72 | $ 2.47 |
| Weighted average shares of common stock outstanding for diluted EPS | 8,975,826 | 8,897,029 | 8,794,973 | 8,909,507 | 8,779,003 |
| Performance Ratios: | |||||
| Return on average assets (a) | 1.29 % | 1.00 % | 0.95 % | 1.07 % | 0.74 % |
| Return on average equity (a) | 14.67 | 10.29 | 9.72 | 11.28 | 7.82 |
| Return on tangible common equity (a) (q) | 16.84 | 12.21 | 11.73 | 13.31 | 9.39 |
| Net interest margin (a)(b) | 3.61 | 3.50 | 3.41 | 3.52 | 3.50 |
| Efficiency ratio (c) | 58.04 | 63.93 | 63.39 | 62.18 | 59.48 |
| Noninterest income as a percentage of total net revenue (b) | 40.23 | 37.68 | 38.93 | 38.16 | 40.52 |
| See "Notes" | |||||
| WSFS FINANCIAL CORPORATION | |||
| FINANCIAL HIGHLIGHTS (Continued) | |||
| SUMMARY STATEMENT OF CONDITION | |||
| (Dollars in thousands) | |||
| (Unaudited) | September 30, | June 30, | September 30, |
| 2013 | 2013 | 2012 | |
| Assets: | |||
| Cash and due from banks | $ 96,021 | $ 78,540 | $ 73,236 |
| Cash in non-owned ATMs | 406,227 | 458,680 | 373,577 |
| Reverse mortgages and investment securities (d) (e) | 165,225 | 99,256 | 53,649 |
| Other investments | 34,073 | 39,633 | 30,459 |
| Mortgage-backed securities (d) | 681,796 | 727,043 | 868,996 |
| Net loans (f)(g)(m) | 2,842,600 | 2,808,764 | 2,677,066 |
| Bank owned life insurance | 63,077 | 63,003 | 62,818 |
| Other assets | 153,637 | 133,804 | 121,531 |
| Total assets | $ 4,442,656 | $ 4,408,723 | $ 4,261,332 |
| Liabilities and Stockholders' Equity: | |||
| Noninterest-bearing deposits | $ 609,115 | $ 657,616 | $ 596,235 |
| Interest-bearing deposits | 2,336,484 | 2,224,098 | 2,301,310 |
| Total customer deposits | 2,945,599 | 2,881,714 | 2,897,545 |
| Brokered deposits | 175,599 | 172,758 | 262,259 |
| Total deposits | 3,121,198 | 3,054,472 | 3,159,804 |
| Federal Home Loan Bank advances | 600,435 | 663,800 | 392,870 |
| Other borrowings | 274,180 | 257,031 | 251,953 |
| Other liabilities | 72,892 | 38,480 | 38,910 |
| Total liabilities | 4,068,705 | 4,013,783 | 3,843,537 |
| Stockholders' equity | 373,951 | 394,940 | 417,795 |
| Total liabilities and stockholders' equity | $ 4,442,656 | $ 4,408,723 | $ 4,261,332 |
| Capital Ratios: | |||
| Equity to asset ratio | 8.42 % | 8.96 % | 9.80 % |
| Tangible equity to asset ratio (q) | 7.73 | 8.27 | 9.09 |
| Tangible common equity to asset ratio (q) | 7.73 | 7.53 | 7.85 |
| Tier 1 leverage (h) (required: 4.00%; well-capitalized: 5.00%) | 10.30 | 10.01 | 9.91 |
| Tier 1 risk-based capital (h) (required: 4.00%; well-capitalized: 6.00%) | 13.21 | 13.04 | 13.02 |
| Total Risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%) | 14.46 | 14.29 | 14.28 |
| Asset Quality Indicators: | |||
| Nonperforming Assets: | |||
| Nonaccruing loans | $ 38,169 | $ 41,033 | $ 39,940 |
| Troubled debt restructuring (accruing) | 11,161 | 11,019 | 10,189 |
| Assets acquired through foreclosure | 7,163 | 7,109 | 6,996 |
| Total nonperforming assets | $ 56,493 | $ 59,161 | $ 57,125 |
| Past due loans (i) | $ 658 | $ 129 | $ 1,869 |
| Allowance for loan losses | $ 41,431 | $ 41,494 | $ 45,598 |
| Ratio of nonperforming assets to total assets | 1.27 % | 1.34 % | 1.34 % |
| Ratio of allowance for loan losses to total gross loans (j) | 1.44 | 1.46 | 1.69 |
| Ratio of allowance for loan losses to nonaccruing loans | 109 | 101 | 114 |
| Ratio of quarterly net charge-offs to average gross loans (a)(f) | 0.28 | 0.45 | 0.68 |
| Ratio of year-to-date net charge-offs to average gross loans (a)(f) | 0.39 | 0.45 | 1.75 |
| See "Notes" | |||
| WSFS FINANCIAL CORPORATION | |||||||||
| FINANCIAL HIGHLIGHTS (Continued) | |||||||||
| AVERAGE BALANCE SHEET | |||||||||
| (Dollars in thousands) | |||||||||
| (Unaudited) | Three months ended | ||||||||
| September 30, 2013 | June 30, 2013 | September 30, 2012 | |||||||
| 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 | $ 818,361 | $ 9,877 | 4.83 % | $ 793,173 | $ 9,340 | 4.71 % | $ 718,046 | $ 8,803 | 4.90 % |
| Residential real estate loans (m) | 249,476 | 2,455 | 3.94 | 252,777 | 2,550 | 4.04 | 276,681 | 2,980 | 4.31 |
| Commercial loans | 1,525,053 | 17,023 | 4.40 | 1,505,390 | 16,892 | 4.48 | 1,435,514 | 16,848 | 4.61 |
| Consumer loans | 287,555 | 3,353 | 4.63 | 285,548 | 3,326 | 4.67 | 283,704 | 3,372 | 4.73 |
| Total loans (m) | 2,880,445 | 32,708 | 4.56 | 2,836,888 | 32,108 | 4.55 | 2,713,945 | 32,003 | 4.73 |
| Mortgage-backed securities (d) | 711,659 | 3,527 | 1.98 | 738,351 | 3,470 | 1.88 | 829,930 | 4,344 | 2.09 |
| Reverse mortgages and Investment securities (d) (e) | 112,237 | 794 | 3.66 | 83,530 | 282 | 1.87 | 53,392 | 158 | 1.27 |
| Other interest-earning assets (n) | 38,054 | 87 | 0.91 | 35,157 | 22 | 0.25 | 31,187 | 9 | 0.11 |
| Total interest-earning assets | 3,742,395 | 37,116 | 4.01 | 3,693,926 | 35,882 | 3.91 | 3,628,454 | 36,514 | 4.03 |
| Allowance for loan losses | (42,315) | (43,470) | (46,808) | ||||||
| Cash and due from banks | 80,586 | 78,747 | 70,366 | ||||||
| Cash in non-owned ATMs | 424,125 | 435,150 | 362,332 | ||||||
| Bank owned life insurance | 63,030 | 62,971 | 63,315 | ||||||
| Other noninterest-earning assets | 131,313 | 118,174 | 118,330 | ||||||
| Total assets | $ 4,399,134 | $ 4,345,498 | $ 4,195,989 | ||||||
| Liabilities and Stockholders' Equity: | |||||||||
| Interest-bearing liabilities: | |||||||||
| Interest-bearing deposits: | |||||||||
| Interest-bearing demand | $ 563,409 | $ 121 | 0.09 % | $ 543,544 | $ 128 | 0.09 % | $ 404,185 | $ 53 | 0.05 % |
| Money market | 764,973 | 238 | 0.12 | 778,705 | 259 | 0.13 | 759,944 | 431 | 0.23 |
| Savings | 388,132 | 50 | 0.05 | 396,009 | 50 | 0.05 | 390,275 | 83 | 0.08 |
| Customer time deposits | 512,689 | 1,123 | 0.87 | 540,952 | 1,229 | 0.91 | 716,676 | 2,365 | 1.31 |
| Total interest-bearing customer deposits | 2,229,203 | 1,532 | 0.27 | 2,259,210 | 1,666 | 0.30 | 2,271,080 | 2,932 | 0.51 |
| Brokered deposits | 174,690 | 141 | 0.32 | 183,163 | 155 | 0.34 | 283,345 | 305 | 0.43 |
| Total interest-bearing deposits | 2,403,893 | 1,673 | 0.28 | 2,442,373 | 1,821 | 0.30 | 2,554,425 | 3,237 | 0.50 |
| FHLB of Pittsburgh advances | 651,993 | 482 | 0.29 | 554,455 | 451 | 0.32 | 389,745 | 1,403 | 1.41 |
| Trust preferred borrowings | 67,011 | 339 | 1.98 | 67,011 | 337 | 1.99 | 67,011 | 369 | 2.15 |
| Senior Debt | 55,000 | 943 | 6.86 | 55,000 | 944 | 6.86 | 20,924 | 353 | 6.60 |
| Other borrowed funds | 133,077 | 273 | 0.82 | 141,063 | 273 | 0.77 | 129,293 | 259 | 0.80 |
| Total interest-bearing liabilities | 3,310,974 | 3,710 | 0.45 | 3,259,902 | 3,826 | 0.47 | 3,161,398 | 5,621 | 0.71 |
| Noninterest-bearing demand deposits | 669,807 | 633,467 | 590,133 | ||||||
| Other noninterest-bearing liabilities | 32,289 | 27,984 | 33,757 | ||||||
| Stockholders' equity | 386,064 | 424,145 | 410,701 | ||||||
| Total liabilities and stockholders' equity | $ 4,399,134 | $ 4,345,498 | $ 4,195,989 | ||||||
| Excess of interest-earning assets over interest-bearing liabilities | $ 431,421 | $ 434,024 | $ 467,056 | ||||||
| Net interest and dividend income | $ 33,406 | $ 32,056 | $ 30,893 | ||||||
| Interest rate spread | 3.56 % | 3.44 % | 3.32 % | ||||||
| Net interest margin | 3.61 % | 3.50 % | 3.41 % | ||||||
| See "Notes" | |||||||||
| WSFS FINANCIAL CORPORATION | |||||
| FINANCIAL HIGHLIGHTS (Continued) | |||||
| (Dollars in thousands, except per share data) | |||||
| (Unaudited) | Three months ended | Nine months ended | |||
| September 30, | June 30, | September 30, | September 30, | September 30, | |
| Stock Information: | 2013 | 2013 | 2012 | 2013 | 2012 |
| Market price of common stock: | |||||
| High | $ 62.78 | $ 52.64 | $ 44.00 | $ 62.78 | $ 44.00 |
| Low | 53.45 | 46.39 | 38.66 | 43.75 | 35.98 |
| Close | 60.25 | 52.39 | 41.28 | 60.25 | 41.28 |
| Book value per share of common stock | 42.28 | 44.80 | 47.84 | ||
| Tangible book value per share of common stock | 38.56 | 41.05 | 43.99 | ||
| Tangible common book value per share of common stock (q) | 38.56 | 37.35 | 37.99 | ||
| Number of shares of common stock outstanding (000s) | 8,844 | 8,815 | 8,734 | ||
| Other Financial Data: | |||||
| One-year repricing gap to total assets (l) | (1.57)% | (1.17)% | 3.13 % | ||
| Weighted average duration of the MBS portfolio | 5.8 years | 5.4 years | 4.2 years | ||
| Unrealized (losses) gains on securities available-for-sale, net of taxes | $ (15,606) | $ (12,310) | $ 17,805 | ||
| Number of Associates (FTEs) (o) | 776 | 806 | 754 | ||
| Number of offices (branches, LPO's and operations centers) | 51 | 51 | 51 | ||
| Number of WSFS owned ATMs | 454 | 455 | 431 | ||
| 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 suspended dividend payments from December 31, 2008 until February 22, 2012. | |||||
| (o) Includes summer Associates, when applicable. | |||||
| (p) A change in the method of billing for armored car services by WSFS Bank's Cash Connect division caused revenues and expenses for these services to be reported separately rather than netted together in the Company's statement of operations, beginning in the fourth quarter 2012. The impact will be ongoing and resulted in an increase of $1.1 million in both noninterest income (other income) and noninterest expenses (other operating expenses) during the third quarter of 2013, $1.2 million for the second quarter of 2013 and $138,000 in the third quarter of 2012. | |||||
| (q) The Company uses non-GAAP (Generally Accepted Accounting Principles) financial information in its analysis of the Company's performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. | |||||
| WSFS FINANCIAL CORPORATION | |||
| FINANCIAL HIGHLIGHTS (Continued) | |||
| (Dollars in thousands, except per share data) | |||
| (Unaudited) | |||
| Non-GAAP Reconciliation (q): | Three months ended | ||
| September 30, | June 30, | September 30, | |
| 2013 | 2013 | 2012 | |
| Net interest Income (GAAP) | $ 33,406 | $ 32,056 | $ 30,893 |
| Noninterest Income (GAAP) | 22,742 | 19,539 | 19,748 |
| Less: Securities gains | (306) | (906) | (2,451) |
| Less: Reverse mortgage consolidation gain | (3,801) | -- | -- |
| Less: Billing change (Cash Connect) | (1,129) | (1,199) | (138) |
| Less: Unanticipated BOLI Income | -- | -- | (1,007) |
| Core noninterest income (non-GAAP) | 17,506 | 17,434 | 16,152 |
| Core net revenue (non-GAAP) | $ 50,912 | $ 49,490 | $ 47,045 |
| End of period | |||
| September 30, | June 30, | September 30, | |
| 2013 | 2013 | 2012 | |
| Total assets | $ 4,442,656 | $ 4,408,723 | $ 4,261,332 |
| Less: Goodwill and other intangible assets | (32,939) | (33,116) | (33,563) |
| Total tangible assets | $ 4,409,717 | $ 4,375,607 | $ 4,227,769 |
| Total Stockholders' equity | $ 373,951 | $ 394,940 | $ 417,795 |
| Less: Goodwill and other intangible assets | (32,939) | (33,116) | (33,563) |
| Total tangible equity | 341,012 | 361,824 | 384,232 |
| Less: Preferred stock | -- | (32,546) | (52,440) |
| Total tangible common equity | $ 341,012 | $ 329,278 | $ 331,792 |
| Calculation of tangible common book value: | |||
| Book Value (GAAP) | $ 42.28 | $ 44.80 | $ 47.84 |
| Tangible book value (non-GAAP) | 38.56 | 41.05 | 43.99 |
| Tangible common book value (non-GAAP) | 38.56 | 37.35 | 37.99 |
| Calculation of tangible common equity to assets: | |||
| Equity to asset ratio (GAAP) | 8.42 % | 8.96 % | 9.80 % |
| Tangible equity to asset ratio (non-GAAP) | 7.73 | 8.27 | 9.09 |
| Tangible common equity to asset ratio (non-GAAP) | 7.73 | 7.53 | 7.85 |
| WSFS FINANCIAL CORPORATION | |||||
| FINANCIAL HIGHLIGHTS (Continued) | |||||
| (Dollars in thousands, except per share data) | |||||
| (Unaudited) | |||||
| Non-GAAP Reconciliation, continued (q): | Three months ended | Nine months ended | |||
| September 30, | June 30, | September 30, | September 30, | September 30, | |
| 2013 | 2013 | 2012 | 2013 | 2012 | |
| Return on tangible common equity: | |||||
| Net income | $ 14,160 | $ 10,908 | $ 9,979 | $ 34,808 | $ 23,753 |
| Preferred dividends and discount accretion | (332) | (609) | (693) | (1,633) | (2,077) |
| Net income allocable to common stockholders' | 13,828 | 10,299 | 9,286 | 33,175 | 21,676 |
| Add: Amortization of intangibles, net of tax | 204 | 204 | 233 | 612 | 749 |
| Net tangible income | 14,032 | 10,503 | 9,519 | 33,787 | 22,425 |
| Less: Securities gains (net of tax) | (199) | (589) | (1,593) | (1,856) | (11,568) |
| Less: Reverse mortgage consolidation gain (net of tax) | (2,471) | -- | -- | (2,471) | -- |
| Less: BOLI (tax free) | -- | -- | (1,007) | -- | (1,007) |
| Core net tangible income | $ 11,362 | $ 9,914 | $ 6,919 | $ 29,460 | $ 9,850 |
| Total average stockholders' equity | $ 386,064 | $ 424,145 | $ 410,701 | $ 411,294 | $ 404,783 |
| Less: Goodwill and other intangible assets | (33,034) | (33,054) | (33,702) | (33,109) | (33,951) |
| Total average tangible equity | 353,030 | 391,091 | 376,999 | 378,185 | 370,832 |
| Less: Preferred stock | (19,812) | (46,891) | (52,419) | (39,611) | (52,384) |
| Total average tangible common equity | $ 333,218 | $ 344,199 | $ 324,581 | $ 338,574 | $ 318,448 |
| Total average assets | $ 4,399,134 | $ 4,345,498 | $ 4,195,989 | $ 4,343,404 | $ 4,251,143 |
| Calculation of return on assets: | |||||
| Return on assets (GAAP) | 1.29 % | 1.00 % | 0.95 % | 1.07 % | 0.74 % |
| Core return on assets (non-GAAP) | 1.04 | 0.95 | 0.70 | 0.94 | 0.35 |
| Calculation of return on tangible common equity: | |||||
| Return on equity (GAAP) | 14.67 % | 10.29 % | 9.72 % | 11.28 % | 7.82 % |
| Return on tangible common equity (non-GAAP) | 16.84 | 12.21 | 11.73 | 13.31 | 9.39 |
| Core return on tangible common equity (non-GAAP) | 13.64 | 11.52 | 8.53 | 11.60 | 4.12 |