WSFS Financial (WSFS) 8-K Results of Operations and Financial Condition

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801 EXHIBIT 99.2

WSFS FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS

SUMMARY STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data)	Three months ended							Twelve months ended
	December 31, 2017			September 30, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Interest income:
Interest and fees on loans	$	59,889		$	58,504	$	53,951	$	229,147	$	194,345
Interest on mortgage-backed securities	5,176			4,955		4,096		19,308		15,754
Interest and dividends on investment securities	1,124			1,139		1,212		4,648		4,872
Other interest income	367			412		433		1,623		1,607
	66,556			65,010		59,692		254,726		216,578
Interest expense:
Interest on deposits	4,626			3,862		2,687		14,904		9,421
Interest on Federal Home Loan Bank advances	2,206			2,402		1,310		8,263		4,707
Interest on senior debt	1,179			1,807		2,120		7,228		6,356
Interest on trust preferred borrowings	522			500		439		1,940		1,622
Interest on other borrowings	298			310		182		1,120		727
	8,831			8,881		6,738		33,455		22,833
Net interest income	57,725			56,129		52,954		221,271		193,745
Provision for loan losses	4,063			2,896		5,124		10,964		12,986
Net interest income after provision for loan losses	53,662			53,233		47,830		210,307		180,759
Noninterest income:
Credit/debit card and ATM income	9,710			9,350		7,969		36,116		29,899
Investment management and fiduciary revenue	9,420			8,809		8,081		35,103		25,691
Deposit service charges	4,666			4,695		4,634		18,318		17,734
Mortgage banking activities, net	1,508			1,756		1,409		6,293		7,434
Loan fee income	735			483		567		2,218		2,066
Investment securities gains, net	220			736		479		1,984		2,369
Bank-owned life insurance income	421			546		222		1,545		919
Other income	5,755			6,066		4,938		23,067		18,949
	32,435			32,441		28,299		124,644		105,061
Noninterest expense:
Salaries, benefits and other compensation	28,145			29,172		24,794		114,376		95,983
Occupancy expense	4,807			4,756		4,086		19,409		16,646
Equipment expense	3,020			2,922		2,726		12,564		10,368
Professional fees	2,045			2,248		2,251		8,597		9,142
Data processing and operations expense	1,594			1,817		1,711		6,779		6,275
Marketing expense	815			712		843		3,083		3,020
FDIC expenses	533			560		526		2,216		2,606
Loan workout and OREO expense	316			484		622		1,820		1,681
Early extinguishment of debt	—			695		—		695		—
Corporate development expense	21			153		1,526		878		8,529
Provision for legal settlement	12,000			—		—		12,000		—
Fraud loss	2,844			—		—		2,844		—
Other operating expenses	11,925			10,644		9,864		41,200		34,416
	68,065			54,163		48,949		226,461		188,666
Income before taxes	18,032			31,511		27,180		108,490		97,154
Income tax provision	27,864			10,942		9,070		58,246		33,074
Net (loss) income	$	(9,832	)	$	20,569	$	18,110	$	50,244	$	64,080
Diluted (loss) earnings per share of common stock:	$	(0.31	)	$	0.64	$	0.56	$	1.56	$	2.06
Weighted average shares of common stock outstanding for fully diluted EPS (q)	31,404,353			32,268,538		32,280,897		32,302,540		31,085,693

See “Notes”

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

WSFS FINANCIAL CORPORATION     

FINANCIAL HIGHLIGHTS

SUMMARY STATEMENTS OF INCOME (Unaudited)- continued

	Three months ended						Twelve months ended
	December 31, 2017		September 30, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Performance Ratios:
Return on average assets (a)	(0.56	)%	1.20	%	1.08	%	0.74	%	1.06	%
Return on average equity (a)	(5.19	)	11.06		10.37		6.92		10.03
Return on average tangible common equity (a)(o)	(6.60	)	15.22		14.82		9.74		12.85
Net interest margin (a)(b)	4.00		3.95		3.90		3.95		3.88
Efficiency ratio (c)	74.87		60.61		59.71		64.91		62.52
Noninterest income as a percentage of total net revenue (b)	35.68		36.30		34.52		35.72		34.81

See “Notes”

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

WSFS FINANCIAL CORPORATION     

FINANCIAL HIGHLIGHTS (Continued)

SUMMARY STATEMENTS OF FINANCIAL CONDITION  (Unaudited)

(Dollars in thousands)	December 31, 2017			September 30, 2017			December 31, 2016
Assets:
Cash and due from banks	$	122,141		$	117,343		$	119,929
Cash in non-owned ATMs	598,117			612,443			698,454
Investment securities (d)	161,809			162,345			199,979
Other investments	34,892			36,856			41,788
Mortgage-backed securities (d)	837,499			809,809			758,910
Net loans (e)(f)(l)	4,807,373			4,689,529			4,499,157
Bank owned life insurance	102,958			102,727			101,425
Goodwill and intangibles	188,444			189,116			191,247
Other assets	146,307			155,176			154,381
Total assets	$	6,999,540		$	6,875,344		$	6,765,270
Liabilities and Stockholders’ Equity:
Noninterest-bearing deposits	$	1,420,760		$	1,357,597		$	1,266,306
Interest-bearing deposits	3,597,473			3,520,190			3,333,330
Total customer deposits	5,018,233			4,877,787			4,599,636
Brokered deposits	229,371			173,932			138,802
Total deposits	5,247,604			5,051,719			4,738,438
Federal Home Loan Bank advances	710,001			697,812			854,236
Other borrowings	227,805			305,496			413,211
Other liabilities	89,785			79,456			72,049
Total liabilities	6,275,195			6,134,483			6,077,934
Stockholders’ equity	724,345			740,861			687,336
Total liabilities and stockholders’ equity	$	6,999,540		$	6,875,344		$	6,765,270
Capital Ratios:
Equity to asset ratio	10.35		%	10.78		%	10.16		%
Tangible common equity to tangible asset ratio (o)	7.87			8.25			7.55
Common equity Tier 1 capital (g) (required: 4.5%; well capitalized: 6.5%) (p)	11.36			11.52			11.19
Tier 1 leverage (g) (required: 4.00%; well-capitalized: 5.00%) (p)	9.73			10.24			9.66
Tier 1 risk-based capital (g) (required: 6.00%; well-capitalized: 8.00%) (p)	11.36			11.52			11.19
Total Risk-based capital (g) (required: 8.00%; well-capitalized: 10.00%) (p)	12.08			12.22			11.93
Asset Quality Indicators:
Nonperforming Assets:
Nonaccruing loans	$	36,436		$	33,536		$	22,876
Troubled debt restructuring (accruing)	20,061			14,905			14,336
Assets acquired through foreclosure	2,503			3,924			3,591
Total nonperforming assets	$	59,000		$	52,365		$	40,803
Past due loans (h)	$	461		$	1,338		$	438
Allowance for loan losses	40,599			40,201			39,751
Ratio of nonperforming assets to total assets	0.84		%	0.76		%	0.60		%
Ratio of nonperforming assets (excluding accruing TDRs) to total assets	0.56			0.54			0.39
Ratio of allowance for loan losses to total gross loans (i)(n)	0.84			0.86			0.89
Ratio of allowance for loan losses to nonaccruing loans	111			120			174
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n)	0.31			0.23			0.40
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n)	0.22			0.19			0.25

See “Notes”

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

WSFS FINANCIAL CORPORATION    

FINANCIAL HIGHLIGHTS (Continued) 

AVERAGE BALANCE SHEET (Unaudited)

(Dollars in thousands)	Three months ended
	December 31, 2017							September 30, 2017							December 31, 2016
	Average Balance			Interest & Dividends		Yield/ Rate (a)(b)		Average Balance			Interest & Dividends		Yield/ Rate (a)(b)		Average Balance			Interest & Dividends		Yield/ Rate (a)(b)
Assets:
Interest-earning assets:
Loans: (e) (j)
Commercial real estate loans	$	1,469,316		$	18,713	5.05	%	$	1,422,306		$	18,186	5.07	%	$	1,354,359		$	17,004	4.99	%
Residential real estate loans	258,900			3,714		5.74		269,134			3,747		5.57		288,281			4,687		6.50
Commercial loans	2,497,730			30,575		4.89		2,471,382			30,013		4.85		2,328,245			26,789		4.61
Consumer loans	543,569			6,700		4.89		509,750			6,329		4.93		448,709			4,988		4.42
Loans held for sale	18,862			187		3.97		22,734			229		4.03		57,432			483		3.36
Total loans	4,788,377			59,889		4.98		4,695,306			58,504		4.96		4,477,026			53,951		4.81
Mortgage-backed securities (d)	824,838			5,176		2.51		809,655			4,955		2.45		763,379			4,096		2.15
Investment securities (d)	162,258			1,124		4.12		168,526			1,139		4.08		200,517			1,212		3.49
Other interest-earning assets	33,389			367		4.40		36,992			412		4.46		36,418			433		4.76
Total interest-earning assets	5,808,862			66,556		4.60	%	5,710,479			65,010		4.57	%	5,477,340			59,692		4.39	%
Allowance for loan losses	(40,465		)					(40,831		)					(39,720		)
Cash and due from banks	136,542							118,056							127,583
Cash in non-owned ATMs	575,121							558,855							653,662
Bank owned life insurance	102,781							102,513							101,733
Other noninterest-earning assets	342,467							344,783							324,679
Total assets	$	6,925,308						$	6,793,855						$	6,645,277
Liabilities and Stockholders’ Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand	$	1,017,068		$	781	0.30	%	$	939,239		$	606	0.26	%	$	925,853		$	331	0.14	%
Money market	1,345,702			1,375		0.41		1,324,946			1,227		0.37		1,273,868			968		0.30
Savings	554,028			262		0.19		564,275			264		0.19		548,669			220		0.16
Customer time deposits	597,111			1,467		0.97		555,668			1,188		0.85		577,834			934		0.64
Total interest-bearing customer deposits	3,513,909			3,885		0.44		3,384,128			3,285		0.39		3,326,224			2,453		0.29
Brokered deposits	243,441			741		1.21		195,073			577		1.17		148,127			234		0.63
Total interest-bearing deposits	3,757,350			4,626		0.49		3,579,201			3,862		0.43		3,474,351			2,687		0.31
FHLB of Pittsburgh advances	633,941			2,206		1.38		730,390			2,402		1.30		786,171			1,310		0.66
Trust preferred borrowings	67,011			522		3.09		67,011			500		2.96		67,011			439		2.61
Senior Debt	98,139			1,179		4.81		134,658			1,807		5.37		151,966			2,120		5.58
Other borrowed funds	122,313			298		0.97		132,030			310		0.93		133,037			182		0.54
Total interest-bearing liabilities	4,678,754			8,831		0.75	%	4,643,290			8,881		0.76	%	4,612,536			6,738		0.58	%
Noninterest-bearing demand deposits	1,414,356							1,333,266							1,271,373
Other noninterest-bearing liabilities	80,248							79,176							66,580
Stockholders’ equity	751,950							738,123							694,788
Total liabilities and stockholders’ equity	$	6,925,308						$	6,793,855						$	6,645,277
Excess of interest-earning assets over interest-bearing liabilities	$	1,130,108						$	1,067,189						$	864,804
Net interest and dividend income				$	57,725						$	56,129						$	52,954
Interest rate spread						3.85	%						3.81	%						3.81	%
Net interest margin						4.00	%						3.95	%						3.90	%

See “Notes”

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

WSFS FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS (Continued)

(Unaudited)

(Dollars in thousands, except per share data)	Three months ended			Twelve months ended
Stock Information:	December 31, 2017	September 30, 2017	December 31, 2016	December 31, 2017	December 31, 2016
Market price of common stock:
High	$52.50	$49.45	$47.64	$52.50	$47.64
Low	45.75	42.45	31.90	42.45	26.40
Close	47.85	48.75	46.35	47.85	46.35
Book value per share of common stock	23.06	23.59	21.90
Tangible common book value per share of common stock (o)	17.06	17.57	15.80
Number of shares of common stock outstanding (000s)	31,418	31,410	31,390
Other Financial Data:
One-year repricing gap to total assets (k)	(0.80)%	(1.70)%	(4.14)%
Weighted average duration of the MBS portfolio	5.2 years	5.1 years	5.4 years
Unrealized (losses) gains on securities available for sale, net of taxes	$(6,401)	$(3,528)	$(8,194)
Number of Associates (FTEs) (m)	1,159	1,121	1,116
Number of offices (branches, LPO’s, operations centers, etc.)	76	77	77
Number of WSFS owned ATMs	440	447	446

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 held to maturity (at amortized cost) and securities available for sale (at fair value).

(e) Net of unearned income.

(f) Net of allowance for loan losses.

(g) Represents capital ratios of Wilmington Savings Fund Society, FSB and subsidiaries.

(h) Accruing loans which are contractually past due 90 days or more as to principal or interest.

(i) Excludes loans held for sale.

(j) Nonperforming loans are included in average balance computations.

(k) 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.

(l) Includes loans held for sale and reverse mortgages.

(m) Includes seasonal Associates, when applicable.

(n) Excludes reverse mortgage loans.

(o) The Company uses non-GAAP (Generally Accepted Accounting Principles) financial information in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Company’s management believes that investors may use these non-GAAP measures to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying 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. A reconciliation of these non-GAAP measures is included on the following pages.

(p) Calculated for Wilmington Savings Fund Society, FSB.

(q) Diluted earnings per share considers the impact of potentially dilutive shares except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. For the three months ended December 31, 2017, 884,982 shares were anti-dilutive and were not included in the diluted earnings per share calculation.          

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

WSFS FINANCIAL CORPORATION    

FINANCIAL HIGHLIGHTS (Continued)

(Dollars in thousands, except per share data)

(Unaudited)

Non-GAAP Reconciliation (o):	Three months ended									Twelve months ended
	December 31, 2017			September 30, 2017			December 31, 2016			December 31, 2017			December 31, 2016
Net interest income (GAAP)	$	57,725		$	56,129		$	52,954		$	221,271		$	193,745
Core net interest income (non-GAAP)	$	57,725		$	56,129		$	52,954		$	221,271		$	193,745
Noninterest Income (GAAP)	$	32,435		$	32,441		$	28,299		$	124,644		$	105,061
Less: Securities gains	220			736			479			1,984			2,369
Core fee income (non-GAAP)	$	32,215		$	31,705		$	27,820		$	122,660		$	102,692
Core net revenue (non-GAAP)	$	89,940		$	87,834		$	80,774		$	343,931		$	296,437
Core net revenue (non-GAAP)(tax-equivalent)	$	90,688		$	88,627		$	81,494		$	346,922		$	299,407
Noninterest expense (GAAP)	$	68,065		$	54,163		$	48,949		$	226,461		$	188,666
Less: Provision for legal settlement	12,000			—			—			12,000			—
Less: Fraud loss	2,844			—			—			2,844			—
Less: WSFS Foundation contribution	1,500			—			—			1,500			—
Less: Corporate development costs	21			153			1,526			878			8,529
Less: Debt extinguishment costs	—			695			—			695			—
Core noninterest expense (non-GAAP)	$	51,700		$	53,315		$	47,423		$	208,544		$	180,137
Core efficiency ratio (c)	57.0		%	60.2		%	58.2		%	60.1		%	60.2		%
	End of period
	December 31, 2017			September 30, 2017			December 31, 2016
Total assets	$	6,999,540		$	6,875,344		$	6,765,270
Less: Goodwill and other intangible assets	188,444			189,116			191,247
Total tangible assets	$	6,811,096		$	6,686,228		$	6,574,023
Total stockholders’ equity	$	724,345		$	740,861		$	687,336
Less: Goodwill and other intangible assets	188,444			189,116			191,247
Total tangible common equity (non-GAAP)	$	535,901		$	551,745		$	496,089
Calculation of tangible common book value per share:
Book value per share (GAAP)	$	23.06		$	23.59		$	21.90
Tangible common book value per share (non-GAAP)	17.06			17.57			15.80
Calculation of tangible common equity to tangible assets:
Equity to asset ratio (GAAP)	10.35		%	10.78		%	10.16		%
Tangible common equity to tangible assets ratio (non-GAAP)	7.87			8.25			7.55

WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801

	Three months ended									Twelve months ended
	December 31, 2017			September 30, 2017			December 31, 2016			December 31, 2017			December 31, 2016
GAAP net (loss) income	$	(9,832	)	$	20,569		$	18,110		$	50,244		$	64,080
Pre-tax adjustments: Securities gains, Provision for legal settlement, fraud loss and WSFS Foundation contribution, debt extinguishment costs, corporate development	16,145			112			1,047			15,933			6,160
Tax adjustments: DTA writedown & BOLI surrender	22,452			—			—			22,452			—
Tax impact of pre-tax adjustments	(5,858		)	(43		)	(315		)	(5,788		)	(1,837		)
Non-GAAP net income	$	22,907		$	20,638		$	18,842		$	82,841		$	68,403
GAAP return on average assets (ROA)	(0.56		)%	1.20		%	1.08		%	0.74		%	1.06		%
Pre-tax adjustments: Securities gains, Provision for legal settlement, fraud loss and WSFS Foundation contribution, debt extinguishment costs, corporate development	0.92			0.01			0.06			0.23			0.10
Tax adjustments: DTA writedown & BOLI surrender	1.29			—			—			0.33			—
Tax impact of pre-tax adjustments	(0.34		)	—			(0.02		)	(0.09		)	(0.03		)
Core ROA (non-GAAP)	1.31		%	1.21		%	1.12		%	1.21		%	1.13		%
EPS (GAAP)	$	(0.31	)	$	0.64		$	0.56		$	1.56		$	2.06
Pre-tax adjustments: Securities gains, Provision for legal settlement, fraud loss and WSFS Foundation contribution, debt extinguishment costs, corporate development	0.50			—			0.03			0.49			0.19
Tax adjustments: DTA writedown & BOLI surrender	0.70			—			—			0.70			—
Tax impact of pre-tax adjustments	(0.18		)	—			(0.01		)	(0.18		)	(0.06		)
Core EPS (non-GAAP)	$	0.71		$	0.64		$	0.58		$	2.57		$	2.19
Calculation of return on average tangible common equity:
GAAP net (loss) income	$	(9,832	)	$	20,569		$	18,110		$	50,244		$	64,080
Plus: Tax effected amortization of intangible assets	461			468			808			1,954			1,621
Net tangible income (non-GAAP)	$	(9,371	)	$	21,037		$	18,918		$	52,198		$	65,701
Average shareholders’ equity	$	751,950		$	738,123		$	694,788		$	725,763		$	638,624
Less: average goodwill and intangible assets	188,834			189,599			186,890			189,784			127,168
Net average tangible common equity	$	563,116		$	548,524		$	507,898		$	535,979		$	511,456
Return on average tangible common equity (non-GAAP)	(6.60		)%	15.22		%	14.82		%	9.74		%	12.85		%
Calculation of core return on average tangible common equity:
Non-GAAP net income	$	22,907		$	20,638		$	18,842		$	82,841		$	68,403
Plus: Tax effected amortization of intangible assets	461			468			808			1,954			1,621
Core net tangible income (non-GAAP)	$	23,368		$	21,106		$	19,650		$	84,795		$	70,024
Net average tangible common equity	$	563,116		$	548,524		$	507,898		$	535,979		$	511,456
Core return on average tangible common equity (non-GAAP)	16.46		%	15.27		%	15.39		%	15.82		%	13.69		%