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| FOR IMMEDIATE RELEASE | Investor Relations Contact: Stephen A. Fowle |
| July 26, 2010 | (302) 571-6833 sfowle@wsfsbank.com |
| | Media Contact: Stephanie A. Heist |
| | (302) 571-5259 sheist@wsfsbank.com |
WSFS REPORTS 2ND QUARTER NET INCOME OF $3.3 MILLION AND $0.36 DILUTED EARNINGS PER SHARE
ASSET QUALITY STATISTICS CONTINUE TO STABILIZE
EARNINGS, REVENUE, RESERVES AND CAPITAL ALL SHOW HEALTHY GROWTH
WILMINGTON, Del., WSFS Financial Corporation (NASDAQ: WSFS), the parent company of WSFS Bank, reported net income of $3.3 million or $0.36 per diluted common share for the second quarter of 2010. These results are significantly improved from net income of $514,000 or a loss per common share of $0.03 (after payment of preferred stock dividends) reported for the first quarter of 2010, and a net loss of $2.3 million or $0.50 per common share for the second quarter of 2009.
For the first six months of 2010, WSFS reported net income of $3.8 million or $0.34 per diluted common share compared to net income of $624,000, or a loss per common share of $0.10 (after payment of preferred stock dividends) for the first half of 2009.
Highlights:
| · | Revenues of $43.1 million continued strong growth trends and increased $2.7 million, or 7% (not annualized), from $40.4 million in the first quarter of 2010. |
| · | WSFS' net interest margin continued its strong positive trend, increasing to 3.66% for the quarter ended June 30, 2010 from 3.57% in the quarter ended March 31, 2010 and 3.31% in the quarter ended June 30, 2009. Net interest income of $30.7 million increased $1.4 million, or 5% from the first quarter of 2010 and $4.3 million, or 16%, from the second quarter of 2009. |
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| · | Customer deposit growth continued, increasing $26.6 million (5% annualized) from March 31, 2010 and a strong $254.8 million, or 13%, from June 30, 2009. |
| · | Commercial and Industrial (C&I) loans increased $7.3 million (3% annualized) from March 31, 2010 and $43.4 million, or 4%, from June 30, 2009. |
| · | The ratio of allowance for loan losses to total gross loans improved 21 basis points to 2.48%. Net charge-offs decreased to $5.4 million from $7.8 million in the first quarter of 2009. As a result, the provision for loan losses decreased to $10.6 million from $11.4 million in the same period. |
| · | Results for the quarter include a $1.8 million increase in loan workout and OREO expenses over the first quarter of 2010 as management continues to actively exit troubled assets and take prudent adjustments to expected realizable values. |
| · | Capital ratios increased from already strong levels with a tangible common equity ratio of 6.60% (up 27 basis points from last quarter), total risk-based capital ratio of 12.51% (up 18 basis points from last quarter) and Tier 1 capital ratio of 11.26% (up 19 basis points from last quarter). Tangible book value per common share was $35.02 as of June 30, 2010, up $1.15 from $33.87 reported as of March 31, 2010. |
| · | The Company maintained its quarterly common dividend of $0.12 per share. |
CEO outlook and commentary:
Mark A. Turner, President and CEO said, "Earnings for our franchise show significant improvement, reflecting active management of our core businesses on many fronts.”
"We reported revenue, earnings and capital improvements, while increasing our reserve for loan losses. Our delinquency trends remained essentially flat over the quarter and our nonperforming assets increased less than $4 million. We have also made significant progress on asset disposition, with an additional nearly $4 million in foreclosed assets written down to sales contract value and awaiting closure at the end of the second quarter. This quarter allowed for the third consecutive quarterly decrease to our loan loss provision. And, because our net charge-offs decreased substantially, we were also able to increase the ratio of allowance for loan losses to gross loans.”
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“We also continue to grow our banking franchise. Deposit growth is moderating but still healthy. While we reported a slight decline in our total loan portfolio, our C&I lending and pipeline are strong. Our year-over-year C&I figures compare favorably to local peers as we gain customers from our competition and strengthen existing current customer relationships. We believe that this market share gain is a result of our strength and customer advocacy strategy, as our most recent customer survey results confirm our “world class” standing, with customer engagement at the 92nd percentile of Gallup, Inc.’s overall database.”
Mr. Turner concluded, "We continue to be excited about our previously announced agreement to acquire Christiana Bank and Trust. With more than $6 billion in fiduciary assets, this acquisition will add critical mass to our trust business, provide additional depth to our Greenville, DE banking presence and diversify and strengthen our overall revenue stream which will build franchise value. Upon closing, the acquisition is expected to be immediately accretive to earnings per share. This acquisition represents continued success in pursuing opportunities to grow and strengthen our banking franchise during this challenging economic environment.”
Second Quarter 2010 Discussion of Financial Results
Net interest margin continues strong positive trend
The net interest margin for the second quarter of 2010 increased 9 basis points to 3.66% from the 3.57% reported in the first quarter of 2010. Net interest income for the second quarter of 2010 was $30.7 million, a $1.4 million, or 5%, increase over the $29.3 million reported during the first quarter of 2010. Net interest income increased $4.3 million, or 16%, and the net interest margin increased a strong 35 basis points over the second quarter of 2009.
During the second quarter of 2010, net interest margin improved as funding costs continued to decrease while the yields on assets showed continued stabilization. This dynamic was the result of active pricing management combined with a favorable shift in funding mix towards lower costing, non-maturity deposits.
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Customer deposits increased $254.8 million from June 30, 2009
Total customer deposits (core deposits and customer time deposits) were $2.2 billion at June 30, 2010, and increased $26.6 million or 1% (5% annualized) over levels reported at March 31, 2010. The linked-quarter increase in deposits was primarily in core deposits and included marked growth in noninterest DDA accounts. Core deposits (non-CD) represent a strong 70% of total customer deposits.
Customer deposits increased $254.8 million, or 13%, over balances at June 30, 2009. The strong growth was across all core deposit categories, and also represented a notable shift to lower-cost, more liquid core deposit accounts.
These increases in customer deposits have improved funding mix and allowed the Company to reduce its wholesale funding needs. As a result, the loan to total customer funding (excluding brokered CDs) ratio at June 30, 2010 was 107%, a significant improvement from 125% for the same period of 2009.
The following table summarizes current customer deposit balances and composition compared to prior periods.
| | | At | | | At | | | At | |
| (Dollars in thousands) | | June 30, 2010 | | | March 31, 2010 | | | June 30, 2009 | |
| Noninterest demand | | $ | 469,518 | | | | 21 | % | | $ | 435,812 | | | | 20 | % | | $ | 424,382 | | | | 22 | % |
| Interest-bearing demand | | | 259,180 | | | | 12 | | | | 259,140 | | | | 12 | | | | 245,556 | | | | 12 | |
| Savings | | | 243,268 | | | | 11 | | | | 237,502 | | | | 11 | | | | 223,829 | | | | 11 | |
| Money market | | | 594,007 | | | | 26 | | | | 608,342 | | | | 27 | | | | 413,764 | | | | 21 | |
| Total core deposits | | | 1,565,973 | | | | 70 | | | | 1,540,796 | | | | 70 | | | | 1,307,531 | | | | 66 | |
| Customer time | | | 669,948 | | | | 30 | | | | 668,499 | | | | 30 | | | | 673,603 | | | | 34 | |
| Total customer deposits | | | 2,235,921 | | | | 100 | % | | $ | 2,209,295 | | | | 100 | % | | $ | 1,981,134 | | | | 100 | % |
Net loans
Total net loans of $2.5 billion at June 30, 2010, decreased $4.8 million, or well less than 1%, compared to the prior quarter end. Notably, total commercial loans increased by $6.8 million from March 31, 2010 as the Company continued to add customers and build market share in Delaware and contiguous areas. Total commercial loans grew despite the continued intentional decline in construction and land development (CLD) loan balances of $9.6 million in the quarter. Residential mortgage loans also declined $6.0 million mainly due to the sale of $17.7 million in mortgage
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loans during the quarter, continuing the Company’s strategy of selling newly originated residential mortgage loans.
Total net loans decreased $56.5 million, or 2%, compared to June 30, 2009. Total commercial loans grew $34.9 million during the period despite a $68.4 million, or 26% decline in construction loans. Offsetting the increase in total commercial loans was a $62.5 million decrease in residential mortgage loans, due to $92.9 million in mortgage loan sales over the last twelve months.
The following table summarizes current loan balances and composition compared to prior periods.
| | | At | | | At | | | At | |
| (Dollars in thousands) | | June 30, 2010 | | | March 31, 2010 | | | June 30, 2009 | |
| | | | | | | | | | |
| Commercial & industrial | | $ | 1,146,289 | | | | 46 | % | | $ | 1,139,027 | | | | 46 | % | | $ | 1,102,868 | | | | 44 | % |
| Commercial real estate | | | 543,411 | | | | 22 | | | | 534,218 | | | | 22 | | | | 483,448 | | | | 19 | |
Construction (1) | | | 192,269 | | | | 8 | | | | 201,876 | | | | 8 | | | | 260,711 | | | | 11 | |
| Total commercial loans | | $ | 1,881,969 | | | | 76 | % | | $ | 1,875,121 | | | | 76 | % | | $ | 1,847,027 | | | | 74 | % |
| Residential mortgage | | | 345,656 | | | | 14 | | | | 351,612 | | | | 14 | | | | 408,111 | | | | 16 | |
| Consumer | | | 294,634 | | | | 12 | | | | 295,158 | | | | 12 | | | | 302,762 | | | | 12 | |
| Allowance for loan losses | | | (62,256 | ) | | | (2 | ) | | | (57,052 | ) | | | (2 | ) | | | (41,415 | ) | | | (2 | ) |
| Net Loans | | $ | 2,460,003 | | | | 100 | % | | $ | 2,464,839 | | | | 100 | % | | $ | 2,516,485 | | | | 100 | % |
(1) At June 30, 2010 includes $63.6 million of commercial, $90.9 million of residential and $37.8 million of owner occupied CLD.
Asset quality statistics continue to stabilize
Assets quality statistics showed continued stabilization during the second quarter of 2010. Net charge-offs and allowance for loan losses to total gross loans improved during the second quarter of 2010, while delinquency rates remained relatively flat and nonperforming assets increased only slightly.
During the second quarter of 2010 the Company continued to increase its allowance for loan losses by providing reserves in excess of net charge-offs. As a result, the ratio of allowance for loan losses to total gross loans increased 21 basis points to 2.48%. The provision of $10.6 million was comprised of $4.6 million from the migration of loans to higher risk ratings and $5.0 million related to collateral depreciation affecting loss estimates and charge-offs on classified loans. Also, in response to the impact of the continued recession and extended unemployment, the Company increased its loss factor for its consumer loan portfolio resulting in an increase in the allowance for loan losses of $1.0 million in the second quarter of 2010. Despit e these
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factors, the provision decreased $816,000 from the first quarter of 2010 and $1.4 million from the second quarter of 2009 because those periods evidenced a higher level of loan migration and charge-offs than in the second quarter of 2010.
Net charge-offs in the second quarter of 2010 were $5.4 million, or 0.86% (annualized) of average loans, an improvement from $7.8 million, or 1.24% (annualized) reported in the first quarter of 2010 and $6.2 million or 0.97% (annualized) reported in the second quarter of 2009. Net charge-offs were concentrated in the C&I portfolio ($3.0 million, or 1.04% annualized, primarily in smaller credits of less than $1 million) and the construction loan portfolio ($604,000 or 1.26% annualized mainly representing continued proactive management and resolution of problem assets). Additional net charge-offs in the consumer loan and residential mortgage portfolios were $1.1 million (1.43% annualized) and $452,000 (0.52% annualized), respectively. This represents a decrease of $666,000 for consumer loans and a decrease of $180,000 for residential mortgage loans from the first quarter of 2010.
Total loan portfolio delinquency remained relatively flat at $71.2 million, or 2.82% of total loans as of June 30, 2010, compared to $71.3 million, or 2.80%, as of March 31, 2010. Delinquency statistics reflect decreases in early stage delinquencies as the Company’s 30-89 day delinquencies decreased from $42.1 million, or 1.65%, to $24.8 million, or 0.98%, during the quarter.
The following table summarizes current loan portfolio delinquency (contractually past due 30 days or greater) compared to prior periods.
| | | At | | | At | | | At | |
| (Dollars in thousands) | | June 30, 2010 | | | March 31, 2010 | | | June 30, 2009 | |
| | | | | | | | | | |
| Commercial and CRE | | $ | 45,153 | | | | 2.37 | % | | $ | 46,592 | | | | 2.44 | % | | $ | 42,588 | | | | 2.28 | % |
| Residential mortgage | | | 21,198 | | | | 6.37 | | | | 19,014 | | | | 5.54 | | | | 13,736 | | | | 3.50 | |
| Consumer | | | 4,834 | | | | 1.67 | | | | 5,671 | | | | 1.94 | | | | 3,155 | | | | 1.05 | |
| Total Delinquency | | $ | 71,185 | | | | 2.82 | % | | $ | 71,277 | | | | 2.80 | % | | $ | 59,479 | | | | 2.32 | % |
Nonperforming assets increased slightly to $85.8 million as of June 30, 2010 from $82.1 million as of March 31, 2010. As a result, the ratio of nonperforming assets to total assets increased to 2.26% from the 2.15% reported for the first quarter of 2010. The increase was mainly in C&I loans and reflects the impact the current ongoing economic downturn is having on small business customers. Nonperforming residential
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mortgage and consumer loans also increased by $2.5 million and $1.7 million, respectively. These increases were partially offset by a $5.3 million decrease in nonperforming construction loans as proactive asset disposition efforts continue. In addition, approximately $4 million of additional foreclosed asset sales were awaiting closure at the end of the second quarter.
Further reflecting stabilization over the past year, nonperforming assets of $85.8 million as of June 30, 2010 were only $5.9 million greater than the $79.9 million reported as of June 30, 2009.
Investments
At June 30, 2010, the Company’s securities portfolio had a carrying value of $801.1 million, compared to $805.3 million at March 31, 2010. The Company continued normal active portfolio management during the quarter, including purchases, sales and paydowns in the portfolio, which resulted in a net securities gain of $268,000.
The private label securities portfolio (comprised of 109 bonds with a market value of $462.1 million) includes 24 bonds (totaling $76.8 million par value) downgraded below AAA since the start of this credit cycle. Second quarter 2010 stress tests on these downgraded bonds continue to show very good results, as projected losses were only $106,000 (14 basis points of loss) in a “housing depression” scenario (an additional 10% decline in housing prices over the next 24-months).
Noninterest income
During the second quarter of 2010, the Company earned noninterest income of $12.4 million, an increase of $1.3 million, or 12%, compared to the first quarter of 2010. Contributing to the linked-quarter increase were increases in deposit service charges and credit/debit card and ATM income which increased by $470,000 and $447,000, respectively, related to seasonality and growth in accounts. As discussed earlier, the Company also recognized $268,000 of securities gains during the second quarter of 2010.
Noninterest income decreased to $12.4 million compared to $12.7 million during the second quarter of 2009. This decrease was mainly attributable to decreases in
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loan fees (primarily related to the closure of 1st Reverse Financial Services, Inc. in 2009) of $645,000 and a $619,000 decline in net securities gains. Partially offsetting these decreases was a $768,000 increase in credit/debit card and ATM income.
Noninterest expense
Noninterest expense for the second quarter of 2010 totaled $27.7 million, or a $1.9 million decrease from the first quarter of 2010. Adjusted for niche businesses and non-routine charges (both discussed further below), noninterest expenses increased $2.4 million compared to the first quarter of 2010. This increase was mainly due to higher loan workout and OREO expenses, which increased by $1.8 million during the second quarter of 2010 as the Company continued its active asset disposition efforts and prudent write-downs to expected realizable values. The remaining increase primarily reflects additional professional fees of $390,000 incurred during the quarter (including $164,000 of legal fees related to the planned acquisition of Christiana Bank and Trust) and higher marketing costs of $201,000 mainly due to the timing of expenses relating to our annual m arketing plan.
Noninterest expense for the second quarter decreased $3.2 million from the second quarter of 2009. Adjusted for niche businesses and non-routine charges, noninterest expenses increased $3.1 million, or 13%, compared to last year. This increase was partly due to additional loan workout and OREO expenses of $1.2 million compared to the second quarter of 2009. In addition, FDIC insurance costs were $509,000 higher in the second quarter of 2010 compared to the second quarter of 2009. Also professional fees increased $370,000 during the second quarter of 2010 and included $338,000 of consulting expenses related to our CORE efficiency program. The remainder of the increase was mainly in salaries, benefits and other compensation and includes additional resources to support franchise growth and increased asset disposition and credit adminis tration activities.
Capital management
The Company increased capital by $8.2 million from March 31, 2010 levels. The Bank’s core capital ratio of 8.69%, Tier 1 capital ratio of 11.26% and total risk-based capital ratio of 12.51%, all remain substantially in excess of “well-capitalized” regulatory
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benchmarks, the regulator’s highest capital rating. Additionally, the Company holds $29 million of funds which support the Company’s cash needs and can be contributed as capital to the Bank to support its balance sheet and growth.
Tangible common book value per share was $35.02 at June 30, 2010, and increased $1.15, or 3%, from the $33.87 reported at March 31, 2010. The Company’s tangible common equity ratio was 6.60% at the end of the second quarter.
The Board of Directors approved a quarterly cash dividend of $0.12 per common share. This dividend will be paid on August 27, 2010, to shareholders of record as of August 6, 2010.
Niche businesses (included in above results)
The Cash Connect division is a premier provider of ATM Vault Cash and related services in the United States. Cash Connect manages more than $308 million in vault cash in nearly 12,000 non-bank ATMs nationwide and also operates 339 ATMs for WSFS Bank, by far the largest branded ATM network in Delaware. During the second quarter of 2010, Cash Connect reported pre-tax income of $1.5 million, compared to a loss of $3.0 million for the first quarter of 2010 and earnings of $1.3 million for the second quarter of 2009. Cash Connect recorded $3.3 million in net revenue (fee income less funding costs) during the second quarter primarily comprised of interest rate-sensitive bailment fees, an increase of $209,000 compared to the first quarter of 2010 and an incre ase of $506,000 compared to the second quarter of 2009. Noninterest expenses were $1.8 million during the second quarter of 2010 a decrease of $4.3 million from the first quarter of 2010 (the first quarter of 2010 included a $4.5 million non-routine loss related to an alleged fraud and embezzlement perpetrated by a third-party ATM armored courier) and an increase of $249,000 from the second quarter of 2009 (see non-routine charges below).
During 2009 the Company completed its wind-down of 1st Reverse. There was no noninterest income or expense recorded for this business in the first half of 2010. The results for the second quarter of 2009 included pre-tax losses of $152,000.
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Income taxes
The Company recorded a $1.5 million income tax provision in the second quarter of 2010 compared to an income tax benefit of $1.1 million in the first quarter of 2010. The first quarter of 2010 included a tax benefit of $899,000 resulting from a decrease in the Company’s income tax reserve due to the expiration of the statute of limitations on certain tax items. The Company’s effective tax rate (excluding the statute of limitations related benefit in the first quarter of 2010) was 31.3% for both the first and second quarters of 2010 and 40.5% during the second quarter of 2009.
Non-routine charges
As previously reported and for comparison purposes only, during the second quarter of 2009, the Company recorded $5.7 million, pre-tax, of non-routine items affecting noninterest expenses.
In addition, during the first quarter of 2010, WSFS reported in a regulatory filing that an armored car company that served as a vendor for several of Cash Connect’s customers, engaged in an alleged fraud and embezzlement. As a result, the Company recorded a $4.5 million loss related to funds not immediately recoverable by Cash Connect (see recent developments below).
Recent Developments
Recent events have allowed management to conclude that recovery of the above mentioned armored car fraud loss is probable, and expects that proceeds will be received in early August 2010, and therefore a full $4.5 million pre-tax recovery will be recorded in the third quarter of 2010.
2nd Quarter 2010 Earnings Release Conference Call
Management will conduct a conference call to review this information at 10:00 a.m. Eastern Daylight Time (EDT) on Tuesday, July 27, 2010. 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 conference call, until August 2, 2010, by calling 1-800-642-1687 and using Conference ID 89253656.
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About WSFS Financial Corporation
WSFS Financial Corporation is a $3.8 billion financial services company. Its primary subsidiary, Wilmington Savings Fund Society, FSB (WSFS Bank), operates 40 banking offices located in Delaware (35), Pennsylvania (4) and Virginia (1). WSFS Bank provides comprehensive financial services including trust and wealth management. Other subsidiaries include WSFS Investment Group, Inc. and Montchanin Capital Management, Inc. Founded in 1832, WSFS is one of the ten oldest banks in the United States continuously operating under the same name. For more information, please visit the Bank’s website at www.wsfsbank.com.
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Statements contained in this news release which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, which are based on various assumptions (some of which may be beyond the Company’s control) are subject to risks and uncertainties 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; the volatility of the financial and securities markets, including changes with respect to the market value of our financial assets; changes in government regulation affecting financial institutions and potential expenses associated therewith; changes resulting from our participation in the CPP including additional conditions that may be imposed in the future on participating companies; 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. 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.
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| WSFS FINANCIAL CORPORATION | | | | | | | | | | | | | | | |
| FINANCIAL HIGHLIGHTS | | | | | | | | | | | | | | | |
| STATEMENT OF OPERATIONS | | | | | | | | | | | | | | | |
| (Dollars in thousands, except per share data) | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | |
| | | Three months ended | | | Six months ended | |
| | | June 30, | | | March 31, | | | June 30, | | | June 30, | | | June 30, | |
| | | 2010 | | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| Interest income: | | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ | 31,610 | | | $ | 31,223 | | | $ | 32,356 | | | $ | 62,833 | | | $ | 63,730 | |
| Interest on mortgage-backed securities | | | 9,639 | | | | 9,032 | | | | 6,948 | | | | 18,671 | | | | 14,284 | |
| Interest and dividends on investment securities | | | 199 | | | | 303 | | | | 535 | | | | 502 | | | | 632 | |
| Other interest income | | | 6 | | | | - | | | | - | | | | 6 | | | | - | |
| | | | 41,454 | | | | 40,558 | | | | 39,839 | | | | 82,012 | | | | 78,646 | |
| Interest expense: | | | | | | | | | | | | | | | | | | | | |
| Interest on deposits | | | 5,771 | | | | 6,294 | | | | 7,523 | | | | 12,065 | | | | 15,852 | |
| Interest on Federal Home Loan Bank advances | | | 4,017 | | | | 3,977 | | | | 4,804 | | | | 7,994 | | | | 10,145 | |
| Interest on trust preferred borrowings | | | 348 | | | | 329 | | | | 465 | | | | 677 | | | | 1,060 | |
| Interest on other borrowings | | | 620 | | | | 615 | | | | 667 | | | | 1,235 | | | | 1,318 | |
| | | | 10,756 | | | | 11,215 | | | | 13,459 | | | | 21,971 | | | | 28,375 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | | 30,698 | | | | 29,343 | | | | 26,380 | | | | 60,041 | | | | 50,271 | |
| Provision for loan losses | | | 10,594 | | | | 11,410 | | | | 11,997 | | | | 22,004 | | | | 19,650 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net interest income after provision for loan losses | | | 20,104 | | | | 17,933 | | | | 14,383 | | | | 38,037 | | | | 30,621 | |
| | | | | | | | | | | | | | | | | | | | | |
| Noninterest income: | | | | | | | | | | | | | | | | | | | | |
| Credit/debit card and ATM income | | | 4,817 | | | | 4,370 | | | | 4,049 | | | | 9,187 | | | | 7,751 | |
| Deposit service charges | | | 4,349 | | | | 3,879 | | | | 4,276 | | | | 8,228 | | | | 8,093 | |
| Loan fee income | | | 709 | | | | 680 | | | | 1,354 | | | | 1,389 | | | | 2,604 | |
| Investment advisory income | | | 612 | | | | 604 | | | | 516 | | | | 1,216 | | | | 1,047 | |
| Securities gains | | | 268 | | | | - | | | | 887 | | | | 268 | | | | 1,310 | |
| Mortgage banking activities, net | | | 247 | | | | 252 | | | | 406 | | | | 499 | | | | 608 | |
| Bank owned life insurance income | | | 219 | | | | 196 | | | | 229 | | | | 415 | | | | 439 | |
| Other income | | | 1,215 | | | | 1,160 | | | | 950 | | | | 2,375 | | | | 1,916 | |
| | | | 12,436 | | | | 11,141 | | | | 12,667 | | | | 23,577 | | | | 23,768 | |
| Noninterest expenses: | | | | | | | | | | | | | | | | | | | | |
| Salaries, benefits and other compensation | | | 12,111 | | | | 11,986 | | | | 12,051 | | | | 24,097 | | | | 24,382 | |
| Loan workout and OREO expense | | | 2,872 | | | | 1,097 | | | | 1,721 | | | | 3,969 | | | | 2,361 | |
| Occupancy expense | | | 2,271 | | | | 2,562 | | | | 2,355 | | | | 4,833 | | | | 4,791 | |
| FDIC expenses | | | 1,762 | | | | 1,643 | | | | 2,903 | | | | 3,405 | | | | 4,368 | |
| Professional fees | | | 1,440 | | | | 1,018 | | | | 2,082 | | | | 2,458 | | | | 2,992 | |
| Equipment expense | | | 1,645 | | | | 1,469 | | | | 1,725 | | | | 3,114 | | | | 3,304 | |
| Data processing and operations expense | | | 1,159 | | | | 1,286 | | | | 1,157 | | | | 2,445 | | | | 2,278 | |
| Marketing expense | | | 905 | | | | 704 | | | | 831 | | | | 1,609 | | | | 1,558 | |
| Non-routine ATM loss | | | - | | | | 4,491 | | | | - | | | | 4,491 | | | | - | |
| Other operating expenses | | | 3,574 | | | | 3,377 | | | | 6,130 | | | | 6,951 | | | | 9,295 | |
| | | | 27,739 | | | | 29,633 | | | | 30,955 | | | | 57,372 | | | | 55,329 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) before taxes | | | 4,801 | | | | (559 | ) | | | (3,905 | ) | | | 4,242 | | | | (940 | ) |
| Income tax provision (benefit) | | | 1,500 | | | | (1,073 | ) | | | (1,589 | ) | | | 427 | | | | (1,564 | ) |
| Net income (loss) | | | 3,301 | | | | 514 | | | | (2,316 | ) | | | 3,815 | | | | 624 | |
| Dividends on preferred stock and accretion | | | 692 | | | | 692 | | | | 751 | | | | 1,384 | | | | 1,264 | |
| Net income (loss) allocable to common stockholders | | $ | 2,609 | | | $ | (178 | ) | | $ | (3,067 | ) | | $ | 2,431 | | | $ | (640 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Diluted earnings per common share: | | | | | | | | | | | | | | | | | | | | |
| Net income (loss) allocable to common stockholders | | $ | 0.36 | | | $ | (0.03 | ) | | $ | (0.50 | ) | | $ | 0.34 | | | $ | (0.10 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted average common shares outstanding for diluted EPS | | | 7,259,477 | | | | 7,084,197 | | | | 6,190,987 | | | | 7,221,409 | | | | 6,181,781 | |
| | | | | | | | | | | | | | | | | | | | | |
| Performance Ratios: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Return on average assets (a) | | | 0.35 | % | | | 0.05 | % | | | (0.26 | )% | | | 0.20 | % | | | 0.04 | % |
| Return on average equity (a) | | | 4.23 | | | | 0.67 | | | | (3.32 | ) | | | 2.46 | | | | 0.46 | |
| Net interest margin (a)(b) | | | 3.66 | | | | 3.57 | | | | 3.31 | | | | 3.62 | | | | 3.18 | |
| Efficiency ratio (c) | | | 63.91 | | | | 72.71 | | | | 78.72 | | | | 68.17 | | | | 74.18 | |
| Noninterest income as a percentage of total revenue (b) | | | 28.65 | | | | 27.34 | | | | 32.21 | | | | 28.01 | | | | 31.87 | |
See "Notes"
13
| WSFS FINANCIAL CORPORATION | | | | | | | | | |
| FINANCIAL HIGHLIGHTS (Continued) | | | | | | | | | |
| SUMMARY STATEMENT OF CONDITION | | | | | | | | | |
| (Dollars in thousands) | | | | | | | | | |
| (Unaudited) | | | | | | | | | |
| | | | | | | | | | |
| | | June 30, | | | March 31, | | | June 30, | |
| | | 2010 | | | 2010 | | | 2009 | |
Assets: | | | | | | | | | |
| Cash and due from banks | | $ | 57,664 | | | $ | 58,920 | | | $ | 75,042 | |
| Cash in non-owned ATMs | | | 263,989 | | | | 263,330 | | | | 201,844 | |
| Investment securities (d)(e) | | | 45,026 | | | | 45,024 | | | | 47,625 | |
| Other investments | | | 39,779 | | | | 40,055 | | | | 39,547 | |
| Mortgage-backed securities (d) | | | 755,591 | | | | 759,743 | | | | 549,877 | |
| Net loans (f)(g)(n) | | | 2,460,003 | | | | 2,464,839 | | | | 2,516,485 | |
| Bank owned life insurance | | | 60,669 | | | | 60,450 | | | | 59,776 | |
| Other assets | | | 109,145 | | | | 119,970 | | | | 97,720 | |
| Total assets | | $ | 3,791,866 | | | $ | 3,812,331 | | | $ | 3,587,916 | |
| | | | | | | | | | | | | |
Liabilities and Stockholders' Equity: | | | | | | | | | | | | |
| Noninterest-bearing deposits | | $ | 469,518 | | | $ | 435,812 | | | $ | 424,382 | |
| Interest-bearing deposits | | | 1,766,403 | | | | 1,773,483 | | | | 1,556,752 | |
| Total customer deposits | | | 2,235,921 | | | | 2,209,295 | | | | 1,981,134 | |
| Other jumbo CDs | | | 91,915 | | | | 79,329 | | | | 58,694 | |
| Brokered deposits | | | 300,946 | | | | 328,787 | | | | 333,123 | |
| Total deposits | | | 2,628,782 | | | | 2,617,411 | | | | 2,372,951 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Federal Home Loan Bank advances | | | 572,072 | | | | 615,454 | | | | 636,773 | |
| Other borrowings | | | 247,793 | | | | 243,226 | | | | 270,431 | |
| Other liabilities | | | 28,486 | | | | 29,725 | | | | 35,851 | |
| | | | | | | | | | | | | |
| Total liabilities | | | 3,477,133 | | | | 3,505,816 | | | | 3,316,006 | |
| | | | | | | | | | | | | |
| Stockholders' equity | | | 314,733 | | | | 306,515 | | | | 271,910 | |
| | | | | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,791,866 | | | $ | 3,812,331 | | | $ | 3,587,916 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Capital Ratios: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Equity to asset ratio | | | 8.30 | % | | | 8.04 | % | | | 7.58 | % |
| Tangible equity to asset ratio | | | 7.98 | | | | 7.71 | | | | 7.22 | |
| Tangible common equity to asset ratio | | | 6.60 | | | | 6.33 | | | | 5.75 | |
| Core capital (h) (required: 4.00%; well-capitalized: 5.00%) | | | 8.69 | | | | 8.55 | | | | 8.08 | |
| Tier 1 capital (h) (required: 4.00%; well-capitalized: 6.00%) | | | 11.26 | | | | 11.07 | | | | 9.95 | |
| Risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%) | | | 12.51 | | | | 12.33 | | | | 11.15 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Asset Quality Indicators: | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Nonperforming Assets: | | | | | | | | | | | | |
| Nonaccruing loans | | $ | 68,759 | | | $ | 63,766 | | | $ | 64,510 | |
| Troubled debt restructuring | | | 7,638 | | | | 7,595 | | | | 7,312 | |
| Assets acquired through foreclosure | | | 9,428 | | | | 10,711 | | | | 8,123 | |
| Total nonperforming assets | | $ | 85,825 | | | $ | 82,072 | | | $ | 79,945 | |
| | | | | | | | | | | | | |
| Past due loans (i) | | $ | 1,428 | | | $ | 673 | | | $ | 1,126 | |
| | | | | | | | | | | | | |
| Allowance for loan losses | | $ | 62,256 | | | $ | 57,052 | | | $ | 41,415 | |
| | | | | | | | | | | | | |
| Ratio of nonperforming assets to total assets | | | 2.26 | % | | | 2.15 | % | | | 2.23 | % |
| Ratio of allowance for loan losses to total gross | | | | | | | | | | | | |
| loans (j) | | | 2.48 | | | | 2.27 | | | | 1.63 | |
| Ratio of allowance for loan losses to nonaccruing | | | | | | | | | | | | |
| loans (k) | | | 69 | | | | 72 | | | | 56 | |
| Ratio of quarterly net charge-offs | | | | | | | | | | | | |
| to average gross loans (a)(f) | | | 0.86 | | | | 1.24 | | | | 0.97 | |
| Ratio of year-to-date net charge-offs | | | | | | | | | | | | |
| to average gross loans (a)(f) | | | 1.05 | | | | 1.24 | | | | 0.75 | |
| | | | | | | | | | | | | |
See “Notes”
14
| WSFS FINANCIAL CORPORATION | | | | |
| FINANCIAL HIGHLIGHTS (Continued) | | | | |
| AVERAGE BALANCE SHEET | | | | |
| (Dollars in thousands) | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | |
| | | June 30, 2010 | | | | March 31, 2010 | | | June 30, 2009 | |
| | | 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) (l) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial real estate loans | | $ | 736,103 | | | $ | 8,920 | | | | 4.85 | % | | | $ | 744,510 | | | $ | 8,573 | | | | 4.61 | % | | $ | 791,884 | | | $ | 9,161 | | | | 4.63 | % |
| Residential real estate loans (n) | | | 346,373 | | | | 4,391 | | | | 5.07 | | | | | 355,643 | | | | 4,603 | | | | 5.18 | | | | 414,985 | | | | 5,660 | | | | 5.46 | |
| Commercial loans | | | 1,143,086 | | | | 14,694 | | | | 5.18 | | | | | 1,124,398 | | | | 14,427 | | | | 5.23 | | | | 1,057,167 | | | | 13,747 | | | | 5.25 | |
| Consumer loans | | | 294,582 | | | | 3,605 | | | | 4.91 | | | | | 299,711 | | | | 3,620 | | | | 4.90 | | | | 301,613 | | | | 3,788 | | | | 5.04 | |
| Total loans (n) | | | 2,520,144 | | | | 31,610 | | | | 5.06 | | | | | 2,524,262 | | | | 31,223 | | | | 4.99 | | | | 2,565,649 | | | | 32,356 | | | | 5.09 | |
| Mortgage-backed securities (d) | | | 780,044 | | | | 9,639 | | | | 4.94 | | | | | 707,432 | | | | 9,032 | | | | 5.11 | | | | 570,740 | | | | 6,948 | | | | 4.87 | |
| Investment securities (d)(e) | | | 45,117 | | | | 199 | | | | 1.76 | | | | | 45,180 | | | | 303 | | | | 2.68 | | | | 47,606 | | | | 535 | | | | 4.50 | |
| Other interest-earning assets (o) | | | 39,831 | | | | 6 | | | | 0.06 | | | | | 39,998 | | | | - | | | | 0.00 | | | | 39,668 | | | | - | | | | 0.00 | |
| Total interest-earning assets | | | 3,385,136 | | | | 41,454 | | | | 4.93 | | | | | 3,316,872 | | | | 40,558 | | | | 4.92 | | | | 3,223,663 | | | | 39,839 | | | | 4.98 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | | (59,630 | ) | | | | | | | | | | | | (56,686 | ) | | | | | | | | | | | (36,726 | ) | | | | | | | | |
| Cash and due from banks | | | 59,252 | | | | | | | | | | | | | 62,928 | | | | | | | | | | | | 59,263 | | | | | | | | | |
| Cash in non-owned ATMs | | | 250,372 | | | | | | | | | | | | | 252,546 | | | | | | | | | | | | 182,696 | | | | | | | | | |
| Bank owned life insurance | | | 60,526 | | | | | | | | | | | | | 60,324 | | | | | | | | | | | | 59,624 | | | | | | | | | |
| Other noninterest-earning assets | | | 114,427 | | | | | | | | | | | | | 115,480 | | | | | | | | | | | | 93,649 | | | | | | | | | |
| Total assets | | $ | 3,810,083 | | | | | | | | | | | | $ | 3,751,464 | | | | | | | | | | | $ | 3,582,169 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Stockholders' Equity: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing demand | | $ | 260,857 | | | $ | 109 | | | | 0.17 | | % | | $ | 252,916 | | | $ | 111 | | | | 0.18 | % | | $ | 233,035 | | | $ | 153 | | | | 0.26 | % |
| Money market | | | 601,982 | | | | 1,103 | | | | 0.73 | | | | | 589,638 | | | | 1,192 | | | | 0.82 | | | | 363,952 | | | | 1,018 | | | | 1.12 | |
| Savings | | | 242,465 | | | | 123 | | | | 0.20 | | | | | 229,593 | | | | 112 | | | | 0.20 | | | | 224,595 | | | | 122 | | | | 0.22 | |
| Customer time deposits | | | 662,100 | | | | 3,445 | | | | 2.09 | | | | | 671,477 | | | | 3,942 | | | | 2.38 | | | | 655,484 | | | | 5,194 | | | | 3.18 | |
| Total interest-bearing customer deposits | | | 1,767,404 | | | | 4,780 | | | | 1.08 | | | | | 1,743,624 | | | | 5,357 | | | | 1.25 | | | | 1,477,066 | | | | 6,487 | | | | 1.76 | |
| Other jumbo certificates of deposit | | | 89,565 | | | | 452 | | | | 2.02 | | | | | 72,490 | | | | 420 | | | | 2.35 | | | | 75,467 | | | | 473 | | | | 2.51 | |
| Brokered deposits | | | 328,651 | | | | 539 | | | | 0.66 | | | | | 337,860 | | | | 517 | | | | 0.62 | | | | 338,163 | | | | 563 | | | | 0.67 | |
| Total interest-bearing deposits | | | 2,185,620 | | | | 5,771 | | | | 1.06 | | | | | 2,153,974 | | | | 6,294 | | | | 1.19 | | | | 1,890,696 | | | | 7,523 | | | | 1.60 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FHLB of Pittsburgh advances | | | 606,335 | | | | 4,017 | | | | 2.62 | | | | | 604,950 | | | | 3,977 | | | | 2.63 | | | | 712,243 | | | | 4,804 | | | | 2.67 | |
| Trust preferred borrowings | | | 67,011 | | | | 348 | | | | 2.05 | | | | | 67,011 | | | | 329 | | | | 1.96 | | | | 67,011 | | | | 465 | | | | 2.75 | |
| Other borrowed funds | | | 177,351 | | | | 620 | | | | 1.40 | | | | | 176,050 | | | | 615 | | | | 1.40 | | | | 209,426 | | | | 667 | | | | 1.27 | |
| Total interest-bearing liabilities | | | 3,036,317 | | | | 10,756 | | | | 1.42 | | | | | 3,001,985 | | | | 11,215 | | | | 1.49 | | | | 2,879,376 | | | | 13,459 | | | | 1.87 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing demand deposits | | | 435,820 | | | | | | | | | | | | | 415,172 | | | | | | | | | | | | 390,516 | | | | | | | | | |
| Other noninterest-bearing liabilities | | | 25,988 | | | | | | | | | | | | | 25,595 | | | | | | | | | | | | 33,018 | | | | | | | | | |
| Stockholders' equity | | | 311,958 | | | | | | | | | | | | | 308,712 | | | | | | | | | | | | 279,259 | | | | | | | | | |
| Total liabilities and stockholders' equity | | $ | 3,810,083 | | | | | | | | | | | | $ | 3,751,464 | | | | | | | | | | | $ | 3,582,169 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Excess of interest-earning assets over interest-bearing liabilities | | $ | 348,819 | | | | | | | | | | | | $ | 314,887 | | | | | | | | | | | $ | 344,287 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest and dividend income | | | | | | $ | 30,698 | | | | | | | | | | | | $ | 29,343 | | | | | | | | | | | $ | 26,380 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate spread | | | | | | | | | | | 3.51 | % | | | | | | | | | | | | 3.43 | % | | | | | | | | | | | 3.11 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net interest margin | | | | | | | | | | | 3.66 | % | | | | | | | | | | | | 3.57 | % | | | | | | | | | | | 3.31 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| See "Notes" | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
15
| | WSFS FINANCIAL CORPORATION | | | | | | | | | | | | | | | |
| | FINANCIAL HIGHLIGHTS (Continued) | | | | | | | | | | | | | | | |
| | (Dollars in thousands, except per share data) | | | | | | | | | | | | | | | |
| | (Unaudited) | | | | | | | | | | | | | | | |
| | | | Three months ended | | | Six months ended | |
| | | | June 30, | | | March 31, | | | June 30, | | | June 30, | | | June 30, | |
| | | | 2010 | | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | | | | | | | | | | | | | | | |
| | Stock Information: | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| | Market price of common stock: | | | | | | | | | | | | | | | |
| | High | | $ | 44.95 | | | $ | 39.75 | | | $ | 33.12 | | | $ | 44.95 | | | $ | 48.49 | |
| | Low | | | 34.33 | | | | 25.28 | | | | 21.31 | | | | 25.28 | | | | 17.34 | |
| | Close | | | 35.93 | | | | 39.00 | | | | 27.31 | | | | 35.93 | | | | 27.31 | |
| | Book value per common share | | | 44.22 | | | | 43.19 | | | | 43.92 | | | | | | | | | |
| | Tangible book value per common share | | | 42.35 | | | | 41.29 | | | | 41.69 | | | | | | | | | |
| | Tangible common book value per common share | | | 35.02 | | | | 33.87 | | | | 33.19 | | | | | | | | | |
| | Number of common shares outstanding (000s) | | | 7,117 | | | | 7,097 | | | | 6,191 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Other Financial Data: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | One-year repricing gap to total assets (m) | | | 4.53 | % | | | 3.14 | % | | | (0.24 | )% | | | | | | | | |
| | Weighted average duration of the MBS portfolio | | 2.4 years | | | 2.5 years | | | 2.5 years | | | | | | | | | |
| | Unrealized gains (losses) on securities available-for-sale, net of taxes | | $ | 9,273 | | | $ | 3,563 | | | $ | (8,413 | ) | | | | | | | | |
| | Number of associates (FTEs) | | | 662 | | | | 649 | | | | 670 | | | | | | | | | |
| | Number of offices (branches and LPO's) | | | 40 | | | | 41 | | | | 40 | | | | | | | | | |
| | Number of WSFS owned ATMs | | | 339 | | | | 367 | | | | 341 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | 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. | | |
| (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) | Includes general reserves only. | | |
| (l) | Nonperforming loans are included in average balance computations. | | |
| (m) | 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. | | |
| (n) | Includes loans held-for-sale. | | |
| (o) | The FHLB has suspended dividend payments as of December 31, 2008. | | |
