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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Mark A. Turner
April 20, 2004 (302) 571-7160
WSFS ANNOUNCES 1Q '04 ePS of $0.79
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $6.2
million, or $0.79 per diluted share. This compares to net income of $45.3
million, or $5.14 per share, for the first quarter of 2003. Earnings for the
first quarter of 2003 included $41.2 million in gains, primarily from the sale
of the Corporation's sub-prime mortgage banking subsidiary. Excluding these
gains, income from continuing operations in the first quarter of 2003 was $4.1
million or $0.46 per share.
Highlights for the first quarter 2004 include: (i) growth in net loans
of $41.2 million, or 3% over December 31, 2003, and $208.4 million, or 18% over
March 31, 2003, primarily concentrated in commercial and commercial real estate
loans, and (ii) continued strong asset quality with annualized net charge-offs
of 10 basis points, and the ratio of nonperforming assets (NPA) to total assets
of 29 basis points at March 31, 2004.
The following is a brief discussion of the first quarter 2004 results:
Net Interest Income
Net interest income for the first quarter of 2004 was $15.9 million.
This compares favorably to both the $14.2 million reported for the same quarter
in 2003 and $15.8 million for the fourth quarter of 2003. The net interest
margin percentage of 3.24% for the first quarter of 2004 remained unchanged from
the fourth quarter of 2003. For the first quarter, the net interest margin was
positively impacted by, among other things, the improving mix of earning assets
and
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[LOGO] _______________ 2
WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
funding, and the yield on the Bank's mortgage-backed securities ("MBS")
portfolio. The yield on the MBS portfolio was 3.81% in the first quarter of 2004
compared to 3.47% in the fourth quarter of 2003. This improvement in the MBS
yield was primarily caused by lower amortization of premiums on MBS securities
as a result of lower amounts of prepayments during the quarter. The weighted
average duration of the MBS portfolio was 2.5 years at March 31, 2004 compared
to 2.8 years at December 31, 2003. Offsetting these improvements were, among
other things, the purchase of Bank-Owned Life Insurance (more later) and a
slight increase in borrowing costs. Beginning late in the fourth quarter 2003,
the Company has begun to extend some of its wholesale borrowings to longer
maturities to become less liability sensitive in anticipation of higher interest
rates.
Loans and Asset Quality
Net loans grew $41.2 million, or 3%, during the first quarter of 2004
to $1.3 billion at March 31, 2004. Net loans grew 18% over this time last year.
Loan volume reflects the continued strong growth in commercial and commercial
real estate (CRE) loans which increased $42.8 million, or 6%, from balances at
December 31, 2003 and $198.1 million, or 38% from balances at March 31, 2003.
The increase is primarily the continuing result of gaining market share due to
the addition of several seasoned local relationship managers over the past few
years. The table below summarizes the current loan balance and composition and
recent changes in balance and composition.
At At At
(Dollars in thousands) Mar. 31, 2004 Dec. 31, 2003 Mar. 31, 2003
------------- ------------- -------------
Amount % Amount % Amount %
----------- --- ----------- --- ----------- ---
Commercial and CRE $ 723,346 54% $ 680,557 52% $ 525,273 46%
Residential 446,303 33 458,237 35 448,157 40
Consumer 197,738 15 187,011 15 184,750 16
Allowance for loan losses (22,745) (2) (22,386) (2) (21,941) (2)
----------- --- ----------- --- ----------- ---
Net Loans $ 1,344,642 100% $ 1,303,419 100% $ 1,136,239 100%
=========== =========== ===========
Non-performing assets (NPAs) totaled $6.5 million at March 31, 2004, an
increase from the $5.5 million at December 31, 2003 but lower than the $7.8
million at March 31, 2003. NPAs as a percentage of total assets were 0.29% at
March 31, 2004 compared to 0.25% at December 31, 2003 and 0.40% at March 31,
2003. Annualized net charge-offs in the first quarter 2004 were 0.10% of average
loans compared to 0.13% for the fourth quarter of 2003, and 0.10% for
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
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the first quarter in 2003. The allowance for loan losses was 1.66% of total
loans at March 31, 2004, with a coverage ratio (ratio of allowance to
non-accruing loans) of 359%.
Deposits
Core deposit relationships (demand deposits, money market and savings
accounts) increased $14.5 million, or 2% during the quarter, and increased $61.8
million, or 10% over this time last year. Retail time deposits (CDs), however,
decreased $6.9 million during the quarter. As a result, total retail deposits
increased $7.6 million, or 1%, during the first quarter to $890.7 million at
March 31, 2004. 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. Core deposits now
represent a healthy 75% of total retail deposits. The following table summarizes
the current retail deposit balances and composition and recent changes in
balances and composition.
At At At
(Dollars in thousands) Mar. 31, 2004 Dec. 31, 2003 Mar. 31, 2003
------------- ------------- -------------
Amount % Amount % Amount %
-------- -- -------- -- -------- --
Non-interest demand $223,490 25% $215,819 25% $185,946 21%
Savings 320,353 36 316,976 36 304,846 36
Money market and int. demand 121,565 14 118,151 13 112,794 13
-------- -- -------- -- -------- --
Total core deposits 665,408 75% 650,946 74% 603,586 70%
Retail time 225,256 25 232,113 26 263,290 30
-------- -- -------- -- -------- --
Total retail deposits $890,664 100% $883,059 100% $866,876 100%
======== ======== ========
Noninterest Income
During the first quarter of 2004, the Corporation recorded noninterest
income of $7.6 million, which was $1.7 million, or 30% greater than first
quarter of 2003. The increase was primarily due to income of $479,000 from the
investment in Bank-Owned Life Insurance (BOLI) and $538,000 in fee income from
Montchanin Capital Management, Inc. (both discussed more later), as well as
increases of $430,000 in service charges on core deposit accounts and $491,000
in ATM fee income during the quarter, both primarily the result of underlying
growth in volumes.
In late January 2004, the Company insured the lives of certain senior
managers of WSFS under a BOLI program through MetLife. In addition to
providing economic protection in the
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
event of the loss of key managers, the BOLI investment provides the opportunity
for better long-term investment yields, enhanced by the tax-free build up of
value and the tax-free returns upon the ultimate distribution of proceeds, both
provided for in the Internal Revenue Code. The initial premium of $50 million
was funded through the liquidation of mortgage-backed securities (MBS). Income
from this long-term illiquid investment is shown as noninterest income in
accordance with GAAP. Therefore this investment had the incremental accounting
impact of reducing the net interest income and the net interest margin, but
enhancing fee income and reducing the effective tax rate from what they
otherwise would be.
Noninterest Expenses
Noninterest expenses for the three months ended March 31, 2004 totaled
$13.2 million, and was $268,000 greater than the same quarter last year. Last
year's results included $1.3 million of expenses recorded in connection with the
sale of the Corporation's sub-prime mortgage banking subsidiary. Also, included
in 2004 results were $500,000 in operating expenses from Montchanin Capital
Management, Inc., the Company's wealth management initiative, as well as
additional operating expenses resulting from the Company's branch expansion
efforts.
Montchanin Capital Management, Inc.
As previously announced, the Company, through its subsidiary Montchanin
Capital Management, Inc., acquired a 60% interest in Cypress Capital Management
during the first quarter of 2004 as part of its wealth management strategy.
Total revenues for this unit were $538,000 and total expenses were $500,000 in
the quarter. After minority interest and taxes, as previously anticipated, the
unit did not have a material impact on the financial results of the Company in
the first quarter. However, the results for the quarter included certain legal
and closing costs associated with the acquisition and, as a result it is
expected that results for this unit will be modestly improved in future
quarters.
Share Repurchases
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 first quarter
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
of 2004, the Corporation repurchased 25,000 of its shares of common stock at an
average price of $51.47 per share. The Corporation has 402,000 shares, or
approximately 5% of outstanding shares remaining under the current
authorization. The Corporation currently has 7.4 million shares outstanding.
The ratio of tangible equity to assets was a strong 8.81% and tangible
book value per share was $26.80 at March 31, 2004.
Marvin N. Schoenhals, Chairman and President of WSFS said, "We are
pleased to report another very strong quarter. The first quarter results reflect
the continued success of our strategic focus on Delaware banking." Mr.
Schoenhals went on to say, "Part of this strategy included the purchase of a
majority interest in Cypress Capital Management, Inc. in the first quarter,
through the Corporation's subsidiary, Montchanin Capital Management, Inc. in
order to serve the wealth management needs of our growing clientele. In
addition, construction continues on a new banking office in Rehoboth, Delaware,
and is expected to be completed in the second quarter. We look forward to
opening more offices during 2004 to serve the Delaware marketplace."
WSFS Financial Corporation is a $2.2 billion financial services
company. At March 31, 2004, 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, Wilmington, Delaware 19801
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
------------------------------------
Mar 31, Dec 31, Mar 31,
2004 2003 2003
---------- ---------- ----------
Interest income:
Interest and fees on loans $ 18,100 $ 18,302 $ 17,862
Interest on mortgage-backed securities 4,727 4,568 3,482
Interest and dividends on investment securities 798 764 251
Other interest income 537 111 312
---------- ---------- ----------
24,162 23,745 21,907
---------- ---------- ----------
Interest on deposits 1,793 1,716 2,479
Interest on Federal Home Loan Bank advances 5,555 5,325 4,481
Interest on federal funds purchased and securities sold
under agreements to repurchase 133 387 140
Interest on trust preferred borrowings 496 485 496
Interest on other borrowings 305 51 96
---------- ---------- ----------
8,282 7,964 7,692
---------- ---------- ----------
Net interest income 15,880 15,781 14,215
Provision for loan losses 687 525 775
---------- ---------- ----------
Net interest income after provision for loan losses 15,193 15,256 13,440
---------- ---------- ----------
Noninterest income:
Loan servicing fee income 531 625 672
Deposit service charges 2,335 2,453 1,905
Credit/debit card and ATM income 2,664 2,549 2,173
Securities gains 222 178 -
Gain on sales of loans 73 139 404
Bank owned life insurance income 479 - -
Investment advisory income 538 - -
Other income 716 570 656
---------- ---------- ----------
7,558 6,514 5,810
---------- ---------- ----------
Noninterest expenses:
Salaries, benefits and other compensation 7,643 6,587 6,819
Equipment expense 865 994 933
Data processing and operations expense 762 707 677
Occupancy expense 1,149 1,062 988
Marketing expense 520 348 407
Professional fees 522 851 501
Other operating expenses 1,777 2,013 2,645
---------- ---------- ----------
13,238 12,562 12,970
---------- ---------- ----------
Income from continuing operations before minority interest and taxes 9,513 9,208 6,280
Less minority interest 45 - -
---------- ---------- ----------
Income from continuing operations before taxes 9,468 9,208 6,280
Income tax provision 3,286 3,020 2,199
---------- ---------- ----------
Income from continuing operations 6,182 6,188 4,081
Gain on sale of businesses held-for-sale, net of taxes - 400 41,181
---------- ---------- ----------
Net income $ 6,182 $ 6,588 $ 45,262
========== ========== ==========
Diluted earnings per share:
Income from continuing operations $ 0.79 $ 0.79 $ 0.46
Gain on sale of businesses held-for-sale, net of taxes - 0.05 4.68
---------- ---------- ----------
Net income $ 0.79 $ 0.84 $ 5.14
========== ========== ==========
Weighted average shares outstanding for diluted EPS 7,799,699 7,847,779 8,798,648
===========================================================================================================
Performance Ratios (continuing operations only):
Return on average assets (a) 1.12% 1.15% 0.95%
Return on average equity (a) 12.72 13.10 7.32
Net interest margin (a)(b) 3.24 3.24 3.69
Efficiency ratio (c) 55.81 55.63 63.88
===========================================================================================================
See "Notes"
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
Mar 31, Dec 31, Mar 31,
2004 2003 2003
----------- ----------- -----------
Summary Statement of Condition:
Assets:
- -------
Cash and due from banks $ 157,049 $ 160,420 $ 135,061
Investment securities (d) 114,841 116,295 21,673
Investment in reverse mortgages, net 277 193 779
Other investments 43,018 44,771 33,173
Mortgage-backed securities (d) 480,549 530,552 537,391
Net loans (e)(f) 1,344,642 1,303,419 1,136,239
Loans held for sale (e) 3,240 1,458 2,439
Bank owned life insurance 50,479 - -
Other assets 39,427 40,495 35,265
Loans, operating leases and
other assets of discontinued operations 6,147 9,474 36,086
----------- ----------- -----------
Total assets $ 2,239,669 $ 2,207,077 $ 1,938,106
=========== =========== ===========
Liabilities and Stockholders' Equity:
- -------------------------------------
Noninterest-bearing deposits $ 223,490 $ 215,819 $ 185,946
Interest-bearing deposits 667,174 667,240 680,930
----------- ----------- -----------
Total retail deposits 890,664 883,059 866,876
Jumbo CD's - non retail 44,411 40,274 32,844
Brokered CD's 49,991 - -
----------- ----------- -----------
Total deposits 985,066 923,333 899,720
Federal Home Loan Bank advances 798,239 843,296 626,463
Other borrowings 242,993 237,762 175,767
Other liabilities 14,753 14,648 38,783
----------- ----------- -----------
Total liabilities 2,041,051 2,019,039 1,740,733
----------- ----------- -----------
Minority interest 191 46 50
Stockholders' equity 198,427 187,992 197,323
----------- ----------- -----------
Total liabilities, minority interest and
stockholders' equity $ 2,239,669 $ 2,207,077 $ 1,938,106
=========== =========== ===========
=========================================================================================================
Capital Ratios:
Equity to asset ratio 8.86% 8.52% 10.18%
Tangible equity to asset ratio 8.81 8.52 10.18
Core capital (g) (required: 4.00%) 10.58 10.63 12.50
Risk-based capital (g) (required: 8.00%) 17.30 17.94 21.11
=========================================================================================================
Asset Quality Indicators (continuing operations only):
Nonperforming Assets:
Nonaccruing loans $ 6,256 $ 5,243 $ 6,834
Assets acquired through foreclosure 233 301 942
----------- ----------- -----------
Total nonperforming assets $ 6,489 $ 5,544 $ 7,776
=========== =========== ===========
Past due loans (h) $ 368 $ 1,192 $ 211
Allowance for loan losses $ 22,745 $ 22,386 $ 21,941
Ratio of nonperforming assets to total assets 0.29% 0.25% 0.40%
Ratio of allowance for loan losses to total gross
loans (i) 1.66 1.69 1.89
Ratio of allowance for loan losses to nonaccruing
loans (j) 359 422 317
Ratio of quarterly net charge-offs to
average gross loans (a)(e) 0.10 0.13 0.10
=========================================================================================================
See "Notes"
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three Months Ended,
------------------------------------------------------------------------------------------------
Mar 31, 2004 Dec 31, 2003 Mar 31, 2003
--------------------------------- ------------------------------- ----------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate (a)(b) Balance Interest Rate (a)(b) Balance Interest Rate (a)(b)
---------- -------- ----------- --------- -------- ----------- -------- -------- -----------
Assets:
Interest-earning assets:
Loans: (e) (k)
Real estate loans (l) $ 839,797 $ 11,336 5.40% $ 834,208 $ 11,649 5.59% $ 726,378 $11,318 6.23%
Commercial loans 304,227 3,505 4.92 284,206 3,299 4.93 213,764 2,983 6.11
Consumer loans 194,168 3,226 6.68 190,318 3,302 6.88 185,067 3,480 7.63
---------- -------- --------- ------- --------- -------
Total loans 1,338,192 18,067 5.49 1,308,732 18,250 5.67 1,125,209 17,781 6.42
Mortgage-backed securities (d) 496,699 4,727 3.81 526,492 4,568 3.47 338,040 3,482 4.12
Loans held-for-sale (e) 1,174 33 11.24 4,478 52 4.64 5,460 81 5.93
Investment securities (d) 114,246 798 2.79 103,078 764 2.96 21,662 251 4.63
Other interest-earning assets 46,870 537 4.61 43,431 111 1.01 81,186 312 1.56
---------- -------- --------- ------- --------- -------
Total interest-earning
assets 1,997,181 24,162 4.90 1,986,211 23,745 4.84 1,571,557 21,907 5.65
-------- ------- -------
Allowance for loan losses (22,632) (22,368) (21,592)
Cash and due from banks 150,383 146,722 130,004
Loans, operating leases and
other assets of discontinued
operations 8,619 12,237 41,911
Bank owned life insurance 39,684 - -
Other noninterest-earning
assets 38,600 38,509 33,590
---------- -------- ---------
Total assets $2,211,835 $2,161,311 $1,755,470
========== ========= ==========
Liabilities and
Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Money market and interest-
bearing demand $ 113,052 $ 66 0.23 $ 112,552 $ 64 0.23 $ 102,500 $ 106 0.42
Savings 317,396 329 0.42 321,495 340 0.42 299,737 480 0.65
Retail time deposits 226,027 1,067 1.90 234,287 1,181 2.00 276,375 1,788 2.63
Jumbo certificates of
deposit-nonretail 42,779 152 1.43 36,684 131 1.42 22,197 105 1.92
Brokered certificates of
deposit 42,820 179 1.68 - - - - - -
---------- -------- --------- ------- --------- ------
Total interest-bearing
deposits 742,074 1,793 0.97 705,018 1,716 0.97 700,809 2,479 1.44
FHLB of Pittsburgh advances 819,713 5,631 2.72 814,894 5,431 2.61 482,410 4,977 4.13
Trust preferred borrowings 50,000 496 3.92 50,000 485 3.80 50,000 496 3.97
Other borrowed funds 186,780 438 0.94 185,877 438 0.94 81,274 236 1.16
Cost of funding discontinued
operations (76) (106) (496)
---------- -------- ---------- ------- --------- ------
Total interest-bearing
liabilities 1,798,567 8,282 1.84 1,755,789 7,964 1.81 1,314,493 7,692 2.34
-------- ------- ------
Noninterest-bearing demand
deposits 205,803 196,824 170,266
Other noninterest-bearing
liabilities 12,950 19,702 47,632
Minority interest 66 50 17
Stockholders' equity 194,449 188,946 223,062
---------- ---------- ----------
Total liabilities and
stockholders' equity $2,211,835 $2,161,311 $1,755,470
========== ========== ==========
Excess of interest-earning
assets over interest-bearing
liabilities $ 198,614 $ 230,422 $ 257,064
========== ========== ==========
Net interest and dividend income $ 15,880 $15,781 $14,215
======== ======= =======
Interest rate spread 3.06% 3.03% 3.31%
======= ======== ========
Net interest margin 3.24% 3.24% 3.69%
======= ======== ========
See "Notes"
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WSFS Financial
Corporation 838 Market Street, Wilmington, Delaware 19801
_______________
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
------------------------------------
Mar 31, Dec 31, Mar 31,
2004 2003 2003
------------------------------------
Stock Information:
Market price of common stock:
High $ 51.40 $ 46.70 $ 33.35
Low 44.43 42.00 30.96
Close 50.17 44.85 31.60
Book value per share 26.95 25.68 25.21
Tangible book value per share 26.80 25.68 25.21
Number of shares outstanding (000s) 7,362 7,321 7,826
---------------------------------------------------------------------------------
Other Financial Data:
One-year repricing gap to total assets (m) (4.07)% (7.95)% (4.04)%
Number of associates (FTEs) (n) 437 431 420
Number of branch offices 23 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) Includes the FTEs of WCC (discontinued operations).