NEWS RELEASE
[LOGO] FINANCIAL CORPORATION
838 Market Street, Wilmington, DE 19899
For Release: July 22, 2003 Contact: Mark A. Turner
(302) 571-7160
WSFS ANNOUNCES 2Q `03 EPS of $0.70
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported net income for the quarter of
$5.8 million, or $0.70 per share, including $208,000, or $0.02 per share of
income from businesses held-for-sale. Income from continuing operations was $5.6
million, or $0.68 per diluted share, for the three months ended June 30, 2003.
This compares to $5.8 million, or $0.62 per diluted share, for the second
quarter of 2002.
Other highlights for the quarter included: (i) growth in loans of $61.5
million, or 5% over March 31, 2003, primarily concentrated in business loans;
(ii) continued strong and stable asset quality with the ratio of nonperforming
assets (NPA) to total assets of 41 basis points at June 30, 2003, and annualized
net chargeoffs of only 7 basis points for the second quarter of 2003; and (iii)
growth in core deposits (non-CD) of $24.8 million, or 4% over March 31, 2003.
The following is a brief discussion of the second quarter 2003 results.
Continuing Operations
- ---------------------
Net Interest Income
Net interest income for the second quarter of 2003 was $14.6 million.
This compares to $16.3 million for the same quarter in 2002; however, the second
quarter of 2002 included $4.1 million in interest income from reverses
mortgages. Substantially all
(more)
of WSFS' reverse mortgages were sold effective October 1, 2002 at a significant
gain. Net interest income was $14.2 million for the first quarter of 2003. The
net interest margin percentage of 3.34% for the second quarter of 2003 declined
from 3.69% for the first quarter of 2003. Management estimates that
approximately 18 basis points of the 35 basis point quarterly decline in the net
interest margin percentage is due to recent proactive capital management
strategies - the purchase of high-quality mortgage-backed securities (MBS) and
aggressive share repurchase activity designed to increase earnings per share
(EPS) and return on equity (ROE). Management estimates that the remaining
approximately 17 basis point decline in net interest margin percentage during
the quarter is due to the current historically low interest rate environment in
which loans and investments are able to reprice down by more than funding costs.
Despite the decline in the net interest margin percentage, net interest income
improved over the first quarter 2003 as a result of increased average loans and
investments and an improving mix of loans and deposits.
Loans and Asset Quality
Net loans grew $61.5 million, or 5%, during the second quarter of 2003
to $1.2 billion at June 30, 2003. Net loans grew 18% over this time last year.
Loan volume reflects the continued strong growth in commercial and commercial
real estate (CRE) loans of $51.5 million, an increase of 10% from balances at
March 31, 2003. The increase is primarily the result of gaining local market
share due to the addition, over the past few years, of several seasoned
relationship managers who have built their careers in the local marketplace. The
table below summarizes the current loan composition and recent changes in
composition.
At At
(Dollars in thousands) June 30, 2003 March 31, 2003 Quarterly Change
------------- -------------- ----------------
Amount % Amount % Amount %
------ ----- ------ ----- ------ -----
Commercial and CRE $ 576,745 48% $ 525,273 46% $ 51,472 10%
Residential 454,019 38 448,157 40 5,862 1
Consumer 189,395 16 184,750 16 4,645 3
Allowance for loan losses (22,459) (2) (21,941) (2) (518) 2
----------- --- ----------- --- --------
Net Loans $ 1,197,700 100% $ 1,136,239 100% $ 61,461 5%
=========== =========== ========
Non-performing assets (NPAs) totaled $8.3 million at June 30, 2003, an
increase from the $7.8 million at March 31, 2003 and the $8.1 million at June
30, 2002. NPA's as
(more)
a percentage of total assets were stable at 0.41% at June 30, 2003 compared to
0.40% at March 31, 2003 and 0.42% at June 30, 2002. Annualized net charge-offs
in the second quarter 2003 were 0.07% of average loans compared to 0.10% for the
last quarter and an annualized net recovery of 0.01% for the same quarter in
2002. The allowance for loan losses was 1.83% of total loans at June 30, 2003
with a coverage ratio (ratio of allowance to non-accruing loans) of 303%.
Deposits
Retail deposits (excluding nonretail jumbo deposits) increased $14.4
million, or 2%, during the second quarter to $881.3 million at June 30, 2003.
This increase was concentrated in core deposit relationships (demand deposits,
money market and savings accounts), which increased $24.8 million, or 4% during
the quarter and 8% over this time last year. Retail time deposits decreased
$10.3 million during the quarter. This reflects management's strategy to allow
more price-sensitive deposits to run-off in favor of both attracting core
deposits and utilizing less costly wholesale funding. The following table
summarizes the current retail deposit composition and recent changes in
composition.
At At
(Dollars in thousands) June 30, 2003 March 31, 2003 Quarterly Change
------------------ ---------------- ----------------
Amount % Amount % Amount %
------ ----- ------ ----- ------ -----
Non-interest demand $202,021 23% $185,946 21% $16,075 9%
Savings 315,895 36 304,846 36 11,049 4
Money market and int. demand 110,420 12 112,794 13 (2,374) (2)
Retail time 252,982 29 263,290 30 (10,308) (4)
-------- --- -------- --- -------
Retail deposits $881,318 100% $866,876 100% $14,442 2%
======== ======== =======
Noninterest Income
During the second quarter 2003, the Corporation recorded noninterest
income of $7.3 million, which was $1.6 million, or 27% greater than the
comparable quarter in 2002. The increase was driven by growth in ATM fee income
and gains on sales of residential mortgage loans of $757,000 during the quarter.
While the current low interest rate environment has had an adverse impact on the
Company's net interest margin percentage, conversely, it has had a positive
impact on mortgage banking activity where a higher than normal amount of
conforming mortgage loans are able to be originated and then sold in the
secondary market (primarily to the Federal Home Loan Mortgage Corporation) for
gains.
(more)
Noninterest Expenses
Noninterest expenses for the three months ended June 30, 2003 totaled
$12.4 million, which was relatively flat in comparison to the second quarter of
2002. However, salaries and benefits increased $751,000 compared to the same
quarter of 2002. This increase was due to higher levels of variable
compensation, which was a direct result of the profitable mortgage banking
activity, commercial loan growth, and ATM business growth experienced recently.
Professional fees, data processing costs and equipment expenses decreased as a
result of the successful completion of the organization's reengineering effort
(TOPS) in the first quarter of 2003.
Capital Management
The Corporation has continued to repurchase WSFS's common stock as one
use of the capital generated by the previously reported sales of business
components (in particular, the C1FN/Everbank segment, reverse mortgages and
Wilmington Finance, Inc.). During the second quarter of 2003, the Corporation
repurchased 211,000, or almost 3% of its shares of common stock at an average
price of $36.11 per share. During the first six months of 2003 the Corporation
has repurchased 1,101,000 or 13% of its shares at an average price of $33.33 per
share. During the last twelve months the Corporation has repurchased 1,518,000,
or 17% of its shares at an average price of $33.30 per share. The Corporation
has 211,000 shares, or almost 3% of outstanding shares remaining under the
current authorization. The Corporation currently has 7.6 million shares
outstanding.
Also, during the later portion of the first quarter of 2003 the
Corporation redeployed some of its substantial capital into high-quality
mortgage-backed securities (MBS). During the second quarter 2003, MBS decreased
$5.8 million to $531.6 million at June 30, 2003. At June 30, 2003, the
Corporation's total MBS portfolio was 100% agency or AAA-rated, had a duration
of approximately only 2.5 years (compared to 2.6 years at March 31, 2003) and
had an effective yield of approximately 3.20%. The Corporation expects that the
MBS portfolio will decrease over time as loans continue to grow or capital is
deployed elsewhere.
(more)
Equity to assets was a strong 9.73% and book value per share was $25.69
at June 30, 2003.
Gain on Businesses Held-For-Sale
- --------------------------------
In the second quarter of 2003, the Corporation received the final
escrow payment from its first quarter 2003 sale of Wilmington Finance, Inc. This
resulted in an after tax gain of $208,000, or $0.02 per diluted share.
* * *
Marvin N. Schoenhals, Chairman and President of WSFS said, "We are very
pleased with the results for the second quarter including the robust loan,
deposit and fee income growth. The momentum demonstrated in the first six months
of 2003 reaffirms our continued commitment to being the premier community bank
in Delaware. As part of that commitment, we look forward to the opening of three
new branches over the next year to serve additional Delaware communities."
WSFS Financial Corporation is a $2.0 billion financial services
company. At June 30, 2003, its principal subsidiary, Wilmington Savings Fund
Society, FSB, operated 21 retail banking offices in New Castle County and Dover,
Delaware, as well as Chester and Delaware Counties in Pennsylvania. Other
operating subsidiaries include WSFS Credit Corporation, and WSFS Investment
Group, Inc. For more information, please visit the Bank's website at
www.wsfsbank.com.
- ----------------
* * *
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 are
subject to risks and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of factors, which
include, but are not limited to, factors discussed in documents filed by WSFS
Financial Corporation with the Securities and Exchange Commission from time to
time. The Corporation 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 Corporation.
# # #
(more)
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended June 30, Six months ended June 30,
-------------------------- --------------------------
2003 2002 2003 2002
------------ ------------ ------------ -----------
Interest income:
Interest and fees on loans $ 17,915 $ 18,205 $ 35,777 $ 36,432
Interest on mortgage-backed securities 4,065 2,186 7,547 3,816
Interest and dividends on investment securities 205 218 456 457
Interest on investments in reverse mortgages 50 4,103 (27) 11,097
Other interest income 235 201 624 547
------- ------- -------- --------
22,470 24,913 44,377 52,349
------- ------- -------- --------
Interest expense:
Interest on deposits 2,112 2,896 4,591 6,144
Interest on Federal Home Loan Bank advances 4,945 4,603 9,426 9,131
Interest on federal funds purchased and securities sold
under agreements to repurchase 225 714 365 1,250
Interest on trust preferred borrowings 493 850 989 1,486
Interest on other borrowed funds 92 101 188 201
Cost of funding businesses held-for-sale - (502) - (1,070)
------- ------- -------- --------
7,867 8,662 15,559 17,142
------- ------- -------- --------
Net interest income 14,603 16,251 28,818 35,207
Provision for loan losses 725 504 1,500 1,211
------- ------- -------- --------
Net interest income after provision for loan losses 13,878 15,747 27,318 33,996
------- ------- -------- --------
Noninterest income:
Loan servicing fee income 757 768 1,429 1,559
Deposit service charges 2,369 2,186 4,274 4,211
Credit/debit card and ATM income 2,529 2,052 4,702 3,700
Securities gains 189 21 189 23
Gain on sale of loans 757 79 1,161 98
Other income 699 622 1,355 1,161
------- ------- -------- --------
7,300 5,728 13,110 10,752
------- ------- -------- --------
Noninterest expenses:
Salaries, benefits and other compensation 6,767 6,016 13,586 12,358
Equipment expense 923 1,079 1,856 2,102
Data processing and operations expense 690 947 1,367 1,842
Occupancy expense 984 926 1,972 1,867
Marketing expense 414 313 821 627
Professional fees 864 1,140 1,365 1,960
Other operating expenses 1,717 1,891 4,362 3,582
------- ------- -------- --------
12,359 12,312 25,329 24,338
------- ------- -------- --------
Income from continuing operations before taxes and cumulative
effect of change in accounting principle 8,819 9,163 15,099 20,410
Income tax provision 3,183 3,356 5,382 7,516
------- ------- -------- --------
Income from continuing operations before cumulative effect of
change in accounting principle 5,636 5,807 9,717 12,894
Cumulative effect of change in accounting principle, net of taxes - - - 703
------- ------- -------- --------
Income from continuing operations 5,636 5,807 9,717 13,597
Income on discontinued operations of businesses held-for-sale, net of taxes - 2,114 - 3,750
Gain on sale of businesses held-for-sale, net of taxes 208 - 41,389 -
------- ------- -------- --------
Net income $ 5,844 $ 7,921 $ 51,106 $ 17,347
======= ======= ======== ========
Diluted earnings per share:
Income from continuing operations before cumulative effect
of change in accounting principle $ 0.68 $ 0.62 $ 1.13 $ 1.37
Cumulative effect of change in accounting principle - - - 0.08
------- ------- -------- --------
Income from continuing operations 0.68 0.62 1.13 1.45
Income on discontinued operations of businesses held-for-sale - 0.22 - 0.40
Gain on sale of businesses held-for-sale 0.02 - 4.81 -
------- ------- -------- --------
Net income $ 0.70 $ 0.84 $ 5.94 $ 1.85
======= ======= ======== ========
Weighted average shares outstanding for diluted EPS 8,318,691 9,461,172 8,608,384 9,400,836
- ------------------------------------------------------------------------------------------------------------------------------------
Performance Ratios (continuing operations only):
Return on average assets (a) 1.17 % 1.66 % 1.07 % 1.98 %
Return on average equity (a) 11.33 20.43 9.21 24.81
Net interest margin (a)(b) 3.34 5.22 3.50 5.72
Efficiency ratio (c) 55.71 55.31 59.61 52.32
- ------------------------------------------------------------------------------------------------------------------------------------
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION
(Dollars in thousands)
(Unaudited)
June 30, March 31, June 30,
2003 2003 2002
-------------- ------------- ------------
Assets:
Cash and due from banks $ 144,982 $ 135,061 $ 134,295
Investment securities (d) 12,738 21,673 11,677
Investment in reverse mortgages, net 466 1,025 36,018
Investments of businesses-held-for-sale - - 288,333
Other investments 55,443 33,173 69,019
Mortgage-backed securities (d) 531,640 537,391 142,873
Net loans (e)(f) 1,197,700 1,136,239 1,014,174
Net loans of businesses held-for-sale - - 36,330
Loans held-for-sale (e) 5,391 2,439 87,168
Other assets 41,251 35,019 37,768
Other assets of businesses held-for-sale - - 7,414
Loans, operating leases and
other assets of discontinued operations 23,566 36,086 78,708
----------- ----------- -----------
Total assets $ 2,013,177 $ 1,938,106 $ 1,943,777
=========== =========== ===========
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 202,021 $ 185,946 $ 176,605
Interest-bearing deposits 679,297 680,930 653,124
----------- ----------- -----------
Total retail deposits 881,318 866,876 829,729
Jumbo CD's - Non Retail 21,956 32,844 12,905
Brokered CD's - - -
----------- ----------- -----------
Total deposits excluding
businesses held-for-sale 903,274 899,720 842,634
Deposits of businesses held-for-sale - - 321,356
----------- ----------- -----------
Total deposits 903,274 899,720 1,163,990
Federal Home Loan Bank advances 743,408 626,463 460,000
Other borrowings 140,398 175,767 180,843
Other liabilities 30,122 38,833 15,930
Other liabilities of businesses held-for-sale - - 1,390
----------- ----------- -----------
Total liabilities 1,817,202 1,740,783 1,822,153
----------- ----------- -----------
Minority Interest - - 6,531
Stockholders' equity 195,975 197,323 115,093
----------- ----------- -----------
Total liabilities, minority interest
and stockholders' equity $ 2,013,177 $ 1,938,106 $1,943,777
============ ============ ===========
- -------------------------------------------------------------------------------------------
Capital Ratios:
Equity to asset ratio 9.73 % 10.18 % 5.92 %
Core capital (g) (required: 4.00%) 11.27 12.50 8.23
Risk-based capital (g) (required: 8.00%) 18.77 21.11 13.55
- ---------------------------------------------------------------------------- ------------
Asset Quality Indicators (continuing operations only):
Nonperforming Assets:
Nonaccruing loans $ 7,319 $ 6,834 $ 7,099
Assets acquired through foreclosure 983 942 1,005
----------- ----------- -----------
Total nonperforming assets $ 8,302 $ 7,776 $ 8,104
=========== =========== ===========
Past due loans (h) 374 211 1,132
Allowance for loan losses 22,459 21,941 21,621
Ratio of nonperforming assets to total assets 0.41 % 0.40 % 0.42 %
Ratio of allowance for loan losses to total gross
loans (i) 1.83 1.89 2.01
Ratio of allowance for loan losses to nonaccruing
loans (j) 303 317 305
Ratio of quarterly net charge-offs to
average gross loans (a)(e) 0.07 0.10 (0.01)
- --------------------------------------------------------------------------------------------
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three Months Ended June 30,
-----------------------------------------------------------------------------------
2003 2002
Average Yield/ Average Yield/
Balance Interest Rate (a)(b) Balance Interest Rate (a)(b)
------- -------- ----------- ------- -------- -----------
Assets:
Interest-earning assets:
Loans: (e) (k)
Real estate loans (l).................. $ 762,804 $ 11,330 5.94 % $ 648,586 $11,315 6.98 %
Commercial loans....................... 242,476 3,115 5.54 196,768 2,882 6.36
Consumer loans......................... 185,462 3,394 7.34 191,604 3,950 8.27
----------- -------- --------- -------
Total loans......................... 1,190,742 17,839 6.09 1,036,958 18,147 7.11
Mortgage-backed securities (d)........... 531,584 4,065 3.06 151,894 2,186 5.76
Loans held-for-sale (e).................. 3,683 76 8.25 3,466 58 6.69
Investment securities (d)................ 14,176 205 5.78 12,328 218 7.07
Investment in reverse mortgages.......... 989 50 20.22 35,565 4,103 46.15
Other interest-earning assets............ 41,672 235 2.26 26,247 201 3.07
----------- -------- --------- -------
Total interest-earning assets....... 1,782,846 22,470 5.10 1,266,458 24,913 7.96
-------- -------
Allowance for loan losses................ (22,096) (21,160)
Cash and due from banks.................. 131,777 113,821
Loans, operating leases and other assets
of discontinued operations............. 29,529 86,589
Assets of businesses held-for-sale....... - 397,741
Other noninterest-earning assets......... 29,050 49,343
----------- -----------
Total assets........................ $ 1,951,106 $ 1,892,792
=========== ===========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Money market and interest-
bearing demand..................... $ 104,959 $ 83 0.32 $ 88,862 $ 106 0.48
Savings............................... 311,521 448 0.58 311,666 758 0.98
Retail time deposits.................. 255,919 1,469 2.30 247,198 1,945 3.16
Jumbo certificates of deposit-
nonretail........................... 28,688 112 1.57 12,495 87 2.79
----------- -------- --------- -------
Total interest-bearing deposits..... 701,087 2,112 1.21 660,221 2,896 1.76
FHLB of Pittsburgh advances.............. 677,074 5,240 3.06 453,198 5,250 4.58
Trust preferred borrowings............... 50,000 493 3.90 50,000 850 6.73
Other borrowed funds..................... 109,107 317 1.16 118,698 815 2.75
Cost of funding discontinued operations.. (295) (647)
Cost of funding businesses held-for-sale. - (502)
----------- -------- --------- -------
Total interest-bearing liabilities.. 1,537,268 7,867 2.05 1,282,117 8,662 2.70
-------- -------
Noninterest-bearing demand deposits...... 185,123 160,714
Liabilities of businesses held-for-sale.. - 315,921
Other noninterest-bearing liabilities.... 29,763 14,583
Minority interest........................ - 5,756
Stockholders' equity..................... 198,952 113,701
----------- -----------
Total liabilities and stockholders'
equity................................. $ 1,951,106 $ 1,892,792
=========== ===========
Excess (deficit) of interest-earning
assets over interest-bearing
liabilities........................... $ 245,578 $ (15,659)
=========== =========
Net interest and dividend income......... $ 14,603 $16,251
======== =======
Interest rate spread..................... 3.05% 5.26%
==== ====
Net interest margin...................... 3.34% 5.22%
==== ====
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
------------------------- -----------------------
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------------------------- -----------------------
Stock Information:
Market price of common stock:
High $ 38.63 $ 25.87 $ 38.63 $ 25.87
Low 31.58 18.20 30.96 16.96
Close 37.96 25.87 37.96 25.87
Book value per share 25.69 12.67
Number of shares outstanding (000s) 7,627 9,084
- -------------------------------------------------------------------------------------------------------------------
Other Financial Data:
One-year repricing gap to total assets (m) (6.58)% 4.13
Number of associates (FTEs) (n) 442 800
Number of branch offices 21 22
- ------------------------------------------------------------------------------------------------------------------------
Notes:
(a) Annualized.
(b) Computed on a fully tax-equivalent basis.
(c) Noninterest expense divided by (tax-equivalent) net interest income and
other income.
(d) Includes securities available-for-sale.
(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) Includes general reserves only.
(k) Nonperforming loans are included in average balance computations.
(l) Includes commercial mortgage loans.
(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) June 30, 2003 also includes the FTEs of WCC (discontinued operations); and
June 30, 2002 also includes the FTEs of WCC (discontinued operations) and
WF and C1FN (controlled, but not wholly-owned subsidiaries).