WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Mark A. Turner
January 20, 2004 (302) 571-7160
WSFS ANNOUNCES 4Q '03 EPS of $0.84
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $6.6
million, or $0.84 per diluted share. This includes earnings from continuing
operations of $6.2 million, or $0.79 per share, and a gain on sale of businesses
held for sale of $400,000, or $0.05 per share.
Net income for the fourth quarter of 2002 was $74.3 million, or $7.86
per diluted share. These earnings included approximately $71.5 million, or $7.57
per diluted share from divested activities including: a gain from the sale of
reverse mortgages, a gain from the sale of WSFS' branchless banking segment,
earnings from a mortgage banking segment that was later sold, and a charge for
discontinued operations of WSFS' indirect automobile financing segment.
Highlights for the fourth quarter 2003 include: (i) substantial
improvement in the net interest margin to 3.24% in the fourth quarter of 2003
from 2.96% in the third quarter of 2003; (ii) growth in net loans of $45.3
million, or 4% over September 30, 2003, and $227.5 million, or 21% over December
31, 2002, primarily concentrated in commercial loans; and (iii) continued strong
and improving asset quality with annualized net charge-offs of only 13 basis
points, and the ratio of nonperforming assets (NPA) to total assets of only 25
basis points at December 31, 2003.
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WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
During the fourth quarter of 2003, WSFS also received the final escrow
payment from the 2002 sale of its branchless banking segment. As a result, WSFS
recorded $400,000, net of tax, or $0.05 per share, as a gain on sale of
businesses held for sale.
The following is a brief discussion of the fourth quarter 2003 results
from continuing operations, which totaled $6.2 million in net income, or $0.79
per share.
Net Interest Income
Net interest income for the fourth quarter of 2003 was $15.8 million.
This compares favorably to $12.0 million for the same quarter in 2002 and $13.4
million for the third quarter of 2003. The net interest margin percentage of
3.24% for the fourth quarter of 2003 improved from 2.96% for the third quarter
of 2003. For the fourth quarter, the net interest margin was positively impacted
by, among other things, the yield on the Bank's mortgage-backed securities
("MBS") portfolio. The yield on the MBS portfolio was 3.47% in the fourth
quarter of 2003 versus 2.11% in the third quarter of 2003. This improvement in
the MBS yield was caused by lower amortization of premiums on MBS securities as
a result of lower amounts of prepayments during the quarter due to mortgage
rates rising from their historic lows in the third quarter of 2003. The weighted
average duration of the MBS portfolio was 2.8 years at December 31, 2003
compared to 2.9 years at September 30, 2003.
Loans and Asset Quality
Net loans grew $45.3 million, or 4%, during the fourth quarter of 2003
to $1.3 billion at December 31, 2003. Net loans grew 21% over this time last
year. Loan volume reflects the continued strong growth in commercial and
commercial real estate (CRE) loans which increased $48.3 million, or 8%, from
balances at September 30, 2003 and $185 million, or 37% from balances at
December 31, 2002. The increase is primarily the result of gaining local market
share due to the addition of several seasoned relationship managers over the
past few years who have built their careers in the local marketplace. The table
below summarizes the current loan balance and composition and recent changes in
balance and composition.
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WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
At At At
(Dollars in thousands) Dec. 31, 2003 Sept. 30, 2003 Dec. 31, 2002
------------- -------------- -------------
Amount % Amount % Amount %
----------- --- ----------- --- ----------- ---
Commercial and CRE $ 680,557 52 % $ 632,213 50 % $ 495,374 46 %
Residential 458,237 35 459,966 37 419,274 39
Consumer 187,011 15 188,245 15 182,674 17
Allowance for loan losses (22,386) (2) (22,293) (2) (21,452) (2)
----------- --- ----------- --- ----------- ---
Net Loans $ 1,303,419 100 % $ 1,258,131 100 % $ 1,075,870 100 %
=========== =========== ===========
Non-performing assets (NPAs) totaled $5.5 million at December 31, 2003,
a continued improvement from the $6.9 million at September 30, 2003 and the $7.4
million at December 31, 2002. NPAs as a percentage of total assets also improved
and were 0.25% at December 31, 2003 compared to 0.33% at September 30, 2003 and
0.44% at December 31, 2002. Annualized net charge-offs in the fourth quarter
2003 were 0.13% of average loans compared to 0.22% for the third quarter of
2003, and 0.28% for the same quarter in 2002. The allowance for loan losses was
1.69% of total loans at December 31, 2003, with a coverage ratio (ratio of
allowance to non-accruing loans) of 422%.
Deposits
Core deposit relationships (demand deposits, money market and savings
accounts) increased $4.8 million, or 1% during the quarter and increased $65.8
million, or 11% over this time last year. Retail time deposits (CDs), however,
decreased $12.7 million during the quarter. As a result, total retail deposits
decreased $7.8 million, or 1%, during the fourth quarter to $883.1 million at
December 31, 2003. These changes reflect management's continuing 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 balances and composition and recent
changes in balances and composition.
At At At
(Dollars in thousands) Dec. 31, 2003 Sept. 30, 2003 Dec. 31, 2002
------------- -------------- -------------
Amount % Amount % Amount %
----------- --- ----------- --- ----------- ---
Non-interest demand $ 215,820 25% $ 202,647 23% $ 182,957 21%
Savings 316,975 36 326,829 37 292,917 33
Money market and int. demand 118,151 13 116,626 13 109,259 13
--------- --- ---------- --- --------- ---
Total core deposits 650,946 74% 646,102 73% 585,133 67%
Retail time 232,113 26 244,777 27 286,939 33
--------- --- ---------- --- --------- ---
Total retail deposits $ 883,059 100% $ 890,879 100% $ 872,072 100%
========= ========== =========
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WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
Noninterest Income
During the fourth quarter of 2003, the Corporation recorded noninterest
income of $6.5 million, which was $677,000, or 12% greater than fourth quarter
of 2002, excluding the gain on reverse mortgages sold in that quarter. The
increase was primarily due to higher service charges on core deposit accounts
and ATM fee income during the quarter primarily as a result of underlying growth
in volumes. Management expects a modest increase in noninterest income in future
quarters as a result of its recently announced wealth management initiative.
Noninterest Expenses
Noninterest expenses for the three months ended December 31, 2003
totaled $12.6 million, which was a $2.3 million, or 16%, decrease from the same
quarter last year. Expenses in the fourth quarter of 2002 included significant
costs related to the sale of reverse mortgages in that quarter. Expenses also
decreased as a result of the successful completion of the organization's
reengineering effort (TOPS) in the first quarter of 2003. Management expects a
modest increase in expenses in future quarters as it incurs expenses in
connection with its recently announced wealth management initiative and as the
Company opens new branches in Delaware. The Company expects to add two to three
branches by the end of 2004.
Capital Management
The Corporation has continued to repurchase WSFS' common stock as one
use of the capital generated by the previously reported sales of business
segments. During the fourth quarter of 2003, the Corporation repurchased
152,000, or 2% of its shares of common stock at an average price of $43.14 per
share. During 2003 the Corporation repurchased 1,601,600 or 18% of its shares at
an average price of $36.52 per share. The Corporation has 427,000 shares, or
nearly 6% of outstanding shares remaining under the current authorization. The
Corporation currently has 7.3 million shares outstanding.
The ratio of tangible equity to assets was 8.52% and book value per
share was $25.68 at December 31, 2003.
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WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
Marvin N. Schoenhals, Chairman and President of WSFS said, "We are very
pleased with our strong fourth quarter results because it reflects the continued
success of our strategic focus on Delaware banking." Mr. Schoenhals went on to
say, "In November we were delighted to open our newest retail office in Bear,
Delaware. We look forward to opening more offices during 2004 to serve the
Delaware marketplace. And, with the recently announced formation of our
investment management initiative, Montchanin Capital Management, Inc., we will
also be able to provide quality wealth management services along with our
quality credit, deposit and other financial services."
WSFS Financial Corporation is a $2.2 billion financial services
company. At December 31, 2003, its principal subsidiary, Wilmington Savings Fund
Society, FSB, operated 23 retail banking offices in all three counties in
Delaware, as well as Chester and Delaware Counties in Pennsylvania. Other
operating subsidiaries include WSFS Credit Corporation, WSFS Reit, Inc., WSFS
Investment Group, Inc. and Montchanin Capital Management, 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.
# # #
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WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
December 31 December 31,
------------------------- --------------------------
2003 2002 2003 2002
------------ ----------- ----------- ------------
Interest income:
Interest and fees on loans $ 18,302 $ 17,656 $ 72,001 $ 72,018
Interest on mortgage-backed securities 4,568 1,807 14,874 7,608
Interest and dividends on investment securities 764 240 1,503 890
Interest on investments in reverse mortgages 2 - (24) 13,092
Other interest income 109 348 945 1,095
------------ ----------- ----------- ------------
23,745 20,051 89,299 94,703
------------ ----------- ----------- ------------
Interest expense:
Interest on deposits 1,716 2,978 8,189 12,040
Interest on Federal Home Loan Bank advances 5,325 4,490 19,918 18,166
Interest on federal funds purchased and securities sold
under agreements to repurchase 387 32 927 542
Interest on trust preferred borrowings 485 545 1,963 2,599
Interest on other borrowings 51 8 304 87
------------ ----------- ----------- ------------
7,964 8,053 31,301 33,434
------------ ----------- ----------- ------------
Net interest income 15,781 11,998 57,998 61,269
Provision for loan losses 525 525 2,550 2,243
------------ ----------- ----------- ------------
Net interest income after provision for loan losses 15,256 11,473 55,448 59,026
------------ ----------- ----------- ------------
Noninterest income:
Loan servicing fee income 625 645 2,850 3,025
Deposit service charges 2,453 2,133 9,119 8,568
Credit/debit card and ATM income 2,549 2,410 9,749 8,489
Securities gains 178 - 515 23
Gain on sale of reverse mortgages - 101,518 - 101,518
Gain on sales of loans 139 242 1,517 443
Other income 570 407 2,416 1,994
------------ ----------- ----------- ------------
6,514 107,355 26,166 124,060
------------ ----------- ----------- ------------
Noninterest expenses:
Salaries, benefits and other compensation 6,587 7,219 26,544 25,653
Equipment expense 994 1,021 3,777 4,185
Data processing and operations expense 707 1,059 2,812 3,815
Occupancy expense 1,062 979 4,040 3,794
Marketing expense 348 488 1,602 1,427
Professional fees 851 704 2,673 3,621
Other operating expenses 2,013 3,408 7,969 9,122
------------ ----------- ----------- ------------
12,562 14,878 49,417 51,617
------------ ----------- ----------- ------------
Income from continuing operations before taxes and cumulative
effect of change in accounting principle 9,208 103,950 32,197 131,469
Income tax provision 3,020 34,545 10,964 44,154
------------ ----------- ----------- ------------
Income from continuing operations before cumulative effect of
change in accounting principle 6,188 69,405 21,233 87,315
Cumulative effect of change in accounting principle, net of taxes - - - 703
------------ ----------- ----------- ------------
Income from continuing operations 6,188 69,405 21,233 88,018
Loss on wind-down of discontinued operations, net of taxes - (2,203) - (2,766)
Income on discontinued operations of businesses held-for-sale, net of taxes - 6,923 - 14,965
Gain on sale of businesses held-for-sale, net of taxes 400 187 41,789 924
------------ ----------- ----------- ------------
Net income $ 6,588 $ 74,312 $ 63,022 $ 101,141
============ =========== =========== ============
Diluted earnings per share:
Income from continuing operations before cumulative effect
of change in accounting principle $ 0.79 $ 7.34 $ 2.58 $ 9.27
Cumulative effect of change in accounting principle, net of taxes - - - 0.07
------------ ----------- ----------- ------------
Income from continuing operations 0.79 7.34 2.58 9.34
Loss on wind-down of discontinued operations, net of taxes - (0.23) - (0.30)
Income on discontinued operations of businesses held-for-sale, net of taxes - 0.73 - 1.59
Gain on sale of businesses held-for-sale, net of taxes 0.05 0.02 5.07 0.10
------------ ----------- ----------- ------------
Net income $ 0.84 $ 7.86 $ 7.65 $ 10.73
============ =========== =========== ============
Weighted average shares outstanding for diluted EPS 7,847,779 9,450,955 8,237,927 9,422,398
====================================================================================================================================
Performance Ratios (continuing operations only):
Return on average assets (a) 1.15 % 18.76 % 1.09 % 6.22 %
Return on average equity (a) 13.10 174.54 10.60 70.69
Net interest margin (a)(b) 3.24 3.78 3.29 4.93
Efficiency ratio (c) 55.63 12.44 57.94 27.68
====================================================================================================================================
See "Notes"
7
WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
Dec 31, Sept 30, Dec 31,
2003 2003 2002
------------- -------------- -------------
Summary Statement of Condition:
Assets:
- -------
Cash and due from banks $ 160,420 $ 138,282 $ 162,258
Investment securities (d) 116,295 73,043 21,777
Investment in reverse mortgages, net 193 138 1,131
Other investments 44,771 52,786 93,500
Mortgage-backed securities (d) 530,552 517,503 148,238
Net loans (e)(f) 1,303,419 1,258,131 1,075,870
Net loans of businesses held for sale - - 117,646
Loans held for sale (e) 1,458 13,263 3,516
Other assets 40,495 38,855 29,858
Other assets of businesses held for sale - - 3,810
Loans, operating leases and
other assets of discontinued operations 9,474 14,042 47,396
------------- -------------- -------------
Total assets $ 2,207,077 $ 2,106,043 $ 1,705,000
============= ============== =============
Liabilities and Stockholders' Equity:
- -------------------------------------
Noninterest-bearing deposits $ 215,819 $ 202,647 $ 182,957
Interest-bearing deposits 667,240 688,232 689,115
------------- -------------- -------------
Total retail deposits 883,059 890,879 872,072
Jumbo CD's - Non Retail 40,274 30,340 26,324
Brokered CD's - - -
------------- -------------- -------------
Total deposits excluding businesses
held-for-sale 923,333 921,219 898,396
Deposits of businesses held-for-sale - - -
------------- -------------- -------------
Total deposits 923,333 921,219 898,396
Federal Home Loan Bank advances 843,296 768,420 403,500
Other borrowings 237,762 207,259 112,506
Other liabilities 14,694 20,116 37,219
Other liabilities of businesses held for sale - - 57,862
------------- -------------- -------------
Total liabilities 2,019,085 1,917,014 1,509,483
------------- -------------- -------------
Minority Interest - - 12,845
Stockholders' equity 187,992 189,029 182,672
------------- -------------- -------------
Total liabilities, minority interest and
stockholders $ 2,207,077 $ 2,106,043 $ 1,705,000
============= ============== =============
==============================================================================================
Capital Ratios:
Equity to asset ratio 8.52 % 8.98 % 10.71 %
Core capital (g) (required: 4.00%) 10.63 10.81 13.74
Risk-based capital (g) (required: 8.00%) 17.94 17.95 20.12
==============================================================================================
Asset Quality Indicators (continuing operations only):
Nonperforming Assets:
Nonaccruing loans $ 5,243 $ 5,748 $ 6,529
Assets acquired through foreclosure 301 1,118 904
------------- -------------- -------------
Total nonperforming assets $ 5,544 $ 6,866 $ 7,433
============= ============== =============
Past due loans (h) $ 1,192 $ 446 $ 529
Allowance for loan losses $ 22,386 $ 22,293 $ 21,452
Ratio of nonperforming assets to total assets 0.25 % 0.33 % 0.44 %
Ratio of allowance for loan losses to total gross
loans (i) 1.69 1.74 1.95
Ratio of allowance for loan losses to nonaccruing
loans (j) 422 383 324
Ratio of quarterly net charge-offs to
average gross loans (a)(e) 0.13 0.22 0.28
==============================================================================================
See "Notes"
8
WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three Months Ended December 31,
-----------------------------------------------------------------------------------
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) $ 834,208 $ 11,649 5.59 % $ 666,498 $ 10,818 6.49 %
Commercial loans 284,206 3,299 4.93 204,055 3,062 6.42
Consumer loans 190,318 3,302 6.88 186,529 3,723 7.92
-------------- ----------- ------------- ----------
Total loans 1,308,732 18,250 5.67 1,057,082 17,603 6.77
Mortgage-backed securities (d) 526,492 4,568 3.47 150,303 1,807 4.81
Loans held-for-sale (e) 4,478 52 4.64 2,500 53 8.48
Investment securities (d) 103,078 764 2.96 19,778 240 4.85
Investment in reverse mortgages 99 2 8.08 1,586 - 0.00
Other interest-earning assets 43,332 109 1.00 69,436 348 1.99
-------------- ----------- ------------- ----------
Total interest-earning assets 1,986,211 23,745 4.84 1,300,685 20,051 6.25
----------- ----------
Allowance for loan losses (22,368) (21,667)
Cash and due from banks 146,722 133,747
Loans, operating leases and
other assets of discontinued operations 12,237 56,541
Assets of businesses held-for-sale - 264,129
Other noninterest-earning assets 38,509 67,249
-------------- -------------
Total assets $ 2,161,311 $ 1,800,684
============== =============
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Money market and interest-
bearing demand $ 112,552 $ 64 0.23 $ 96,083 $ 106 0.44
Savings 321,495 340 0.42 293,797 614 0.83
Retail time deposits 234,287 1,181 2.00 283,086 2,121 2.97
Jumbo certificates of
deposit-nonretail 36,684 131 1.42 25,183 137 2.16
-------------- ----------- ------------- ----------
Total interest-bearing deposits 705,018 1,716 0.97 698,149 2,978 1.69
FHLB of Pittsburgh advances 814,894 5,431 2.61 439,473 5,075 4.52
Trust preferred borrowings 50,000 485 3.80 50,000 545 4.27
Other borrowed funds 185,877 438 0.94 132,008 788 2.39
Cost of funding discontinued operations (106) (496)
Cost of funding businesses held-for-sale - (837)
-------------- ----------- ------------- ----------
Total interest-bearing liabilities 1,755,789 7,964 1.81 1,319,630 8,053 2.44
----------- ----------
Noninterest-bearing demand deposits 196,824 162,273
Liabilities of businesses held-for-sale - 124,836
Other noninterest-bearing liabilities 19,752 24,550
Minority interest - 10,341
Stockholders' equity 188,946 159,054
-------------- -------------
Total liabilities and
stockholders' equity $ 2,161,311 $ 1,800,684
============== =============
Excess (deficit) of interest-earning
assets over interest-bearing
liabilities $ 230,422 $ (18,945)
============== =============
Net interest and dividend income $ 15,781 $ 11,998
=========== ==========
Interest rate spread 3.03% 3.81%
======== =========
Net interest margin 3.24% 3.78%
======== =========
See "Notes"
9
WSFS Financial
Corporation 838 Market Street, Wilminton, Delaware 19801
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Twelve months ended
------------------------------- ---------------------------
Dec 31, Dec 31, Dec 31, Dec 31,
2003 2002 2003 2002
------------------------------- ---------------------------
Stock Information:
Market price of common stock:
High $ 46.70 $ 34.19 $ 46.70 $ 34.19
Low 42.00 26.40 30.96 16.96
Close 44.85 32.97 44.85 32.97
Book value per share 25.68 21.01
Number of shares outstanding (000s) 7,321 8,697
=============================================================================================================
Other Financial Data:
One-year repricing gap to total assets (m) (7.95)% 11.10 %
Number of associates (FTEs) (n) 431 870
Number of branch offices 23 21
=============================================================================================================
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) Dec 31, 2003 includes the FTEs of WCC (discontinued operations); and
Dec 31, 2002 includes the FTE's of WCC (discontinued operations) and WF
(sold on January 1, 2003) .