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PRESS RELEASE
FOR IMMEDIATE RELEASE Contact: Stephen A. Fowle
July 19, 2005 (302) 571-6833
WSFS ANNOUNCES 2Q '05 EPS OF $0.90
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $6.6
million, or $0.90 per diluted share. This compares to net income of $6.3
million, or $0.82 per share, for the second quarter of 2004. This $0.08 growth
in earnings per share is a 10% increase over the same period in 2004. Earnings
for the quarter were impacted by the previously announced refinancing of $50
million of Trust Preferred Securities, resulting in a non-cash charge, net of
taxes, of $728,000, or $0.10 per share.
Highlights for the second quarter of 2005 include: (i) growth in net
loans of $57.6 million, or 4%, over balances at March 31, 2005, primarily in
commercial and commercial real estate loans; (ii) continued strong asset quality
with the ratio of nonperforming assets (NPA) to total assets of 22 basis points
at June 30, 2005; and (iii) an increase in total retail deposits of $24.9
million, or 2%, over balances at March 31, 2005.
The following is a brief discussion of the second quarter 2005 results.
Net Interest Income
Net interest income for the second quarter of 2005 was $17.8 million.
This compares to the $15.6 million reported for the same quarter in 2004 and the
$18.1 million reported for the first quarter of 2005. The net interest margin
percentage of 3.03% for the second quarter of 2005 declined from 3.23% for the
first quarter of 2005. The net interest margin was negatively
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affected by 18 basis points due to the redemption of $50 million of WSFS Capital
Trust I Securities, which carried an interest rate of LIBOR plus 250 basis
points. In connection with the redemption, the Company recognized a $1.1 million
(pre-tax) non-cash charge from the write-down of the unamortized debt issuance
costs of the called securities as a charge to interest expense. In conjunction
with this redemption, the Company issued $65 million aggregate principal amount
of Pooled Floating Rate Capital Securities, which carry an interest rate of
LIBOR plus 177 basis points. Without this charge the margin would have been
3.21% for the second quarter of 2005.
Overall portfolio yields on loans have continued to trend upward due to
higher prevailing rates combined with the Bank's recent growth in variable rate
loans. Additionally, the gross yield on the Bank's mortgage-backed securities
(MBS) portfolio was 4.42% in the second quarter of 2005 versus 4.33% in the
first quarter of 2005. The weighted average duration of the MBS portfolio was
2.7 years at June 30, 2005 compared to 3.1 years at March 31, 2005.
Loans and Asset Quality
Net loans grew $57.6 million, or 4%, during the second quarter of 2005
to $1.7 billion at June 30, 2005. Net loans grew $259.7 million, or 19%, versus
June 30, 2004. Loan volume increases resulted primarily from continued strong
growth in commercial and commercial real estate (CRE) loans, which increased
$55.2 million, or 6% from balances at March 31, 2005 and $262.6 million, or 34%
from balances at June 30, 2004. The following table summarizes the current loan
balances and composition as well as recent changes in balances and composition.
At At At
(Dollars in thousands) Jun. 30, 2005 Mar. 31, 2005 Jun. 30, 2004
---------------------- -------------------- ---------------------
Amount % Amount % Amount %
------ - ------ - ------ -
Commercial and CRE $1,035,656 62% $ 980,437 61% $ 773,044 55%
Residential 432,518 26 433,220 27 444,728 32
Consumer 219,675 13 216,283 14 208,591 15
Allowance for loan losses (24,939) (1) (24,647) (2) (23,139) (2)
---------- --- ---------- --- ---------- ---
Net Loans $1,662,910 100% $1,605,293 100% $1,403,224 100%
========== === ========== === ========== ===
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The Company's provision for loan losses was $772,000 in the second
quarter of 2005, compared to $687,000 in the same period last year. This
increase reflects, among other things, the Company's strong loan growth,
particularly in commercial and CRE loans. At June 30, 2005, the allowance for
loan losses was 1.48% of total loans, compared to 1.51% at March 31, 2005 and
1.62% at June 30, 2004. NPA as a percentage of total assets were 0.22% at June
30, 2005 compared to 0.26% at March 31, 2005 and 0.22% at June 30, 2004 and
totaled $6.0 million at June 30, 2005, an improvement from the $6.7 million
reported at March 31, 2005 and an increase from the $5.3 million reported at
June 30, 2004. Annualized net charge-offs in the second quarter of 2005 were
0.12% of average loans compared to 0.04% for the first quarter of 2005, and
0.08% for the second quarter in 2004.
Deposits
Core deposit relationships (demand deposits, money market and savings
accounts) increased $23.3 million, or 3% during the quarter and increased $137.6
million, or 20% over the same period last year. Total retail deposits increased
$24.9 million, or 2%, during the second quarter to $1.1 billion at June 30, 2005
and increased $192.7 million, or 21% over June 30, 2004. This continued deposit
growth was due, in part, to the opening of three new retail banking offices
during 2004, and from deposits attributable to commercial banking relationships.
In addition, growth in the Company's "High-Performance Checking" initiative
continues to contribute to deposit balances. The following table summarizes the
current retail deposit balances and composition as well as recent changes in
balances and composition.
At At At
(Dollars in thousands) Jun. 30, 2005 Mar. 31, 2005 Jun. 30, 2004
------------- ------------- -------------
Amount % Amount % Amount %
------ - ------ - ------ -
Non-interest demand $ 261,987 24% $ 256,926 24% $229,842 25%
Interest bearing demand 120,232 11 106,834 10 94,662 10
Savings 276,514 25 286,229 26 323,128 35
Money market 167,854 15 153,347 14 41,380 5
---------- --- ---------- --- -------- ---
Total core deposits 826,587 75 803,336 74 689,012 75
Retail time 280,652 25 278,986 26 225,549 25
---------- --- ---------- --- -------- ---
Total retail deposits $1,107,239 100% $1,082,322 100% $914,561 100%
========== === ========== === ======== ===
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Noninterest Income
During the second quarter of 2005, the Company recorded noninterest
income of $8.7 million, which was $494,000, or 6% greater than the second
quarter of 2004 and $858,000, or 11% greater than the first quarter of 2005.
The increase over the second quarter of 2004 was primarily due to increases of
$689,000 in card and ATM income during the quarter, mostly the result of
underlying growth in volumes. This increase was partially offset by lower
income from mortgage banking activities of $257,000. The increase in
comparison to the first quarter 2005 was mainly attributable to increases of
$462,000 in card and ATM income, increased service charges on deposits of
$309,000 and increased loan fee income of $143,000, resulting mostly from
prepayment fees.
Noninterest Expenses
Noninterest expenses for the second quarter of 2005 totaled $15.6
million, which was $2.4 million, or 18% more than the same quarter last year and
a $633,000 increase over the first quarter of 2005. The increase over the second
quarter of 2004 was primarily in salaries, benefits and other compensation,
marketing expenses and other operating expenses. These increases were mainly the
result of the Company's growth efforts including branch expansion. The increase
in noninterest expenses compared to the first quarter of 2005 was primarily due
to marketing expenses which were $303,000 higher than the first quarter of 2005,
reflecting expenses related to the promotion of "High-Performance Checking," and
a campaign to increase market share for commercial banking. Also contributing to
this quarter over quarter growth was the reversal of a $503,000 reserve for
losses in the CashConnect (ATM) business that was recorded during the previous
quarter. As a result of the continued growth in commercial banking, retail
banking and the newly announced formation of the Wealth Management Services
division, the Company expects that expenses will continue to grow over the next
several quarters.
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Capital Management
During the second quarter of 2005, the Company repurchased 166,000 of
its shares of common stock at an average price of $53.05 per share. At June 30,
2005, the Company had 382,064 shares, or nearly 6% of its 6.9 million
outstanding shares remaining under its current share repurchase authorization.
The ratio of tangible equity to assets was 7.10% at June 30, 2005. The
Tier 1 capital ratio was 13.39%, which is more than double the 6.00% level
required to be considered "well-capitalized" under regulatory definitions.
Tangible book value per share was $27.92 at June 30, 2005.
Marvin N. Schoenhals, Chairman and President of WSFS, said, "We are
very proud of our second quarter results which reflect the continued growth and
strength of our banking franchise." Mr. Schoenhals went on to say, "During the
quarter, WSFS passed the benchmark of $1 billion in commercial loan balances as
we have continued to build relationships with businesses in our market. Our
commitment to strengthening the core of Delaware is also evident in our retail
and wealth management activities, as we have plans to open and renovate two to
four branches per year, and have recently announced the formation of a Wealth
Management Services division."
WSFS Financial Corporation is a $2.7 billion financial services
company. At June 30, 2005, its principal subsidiary, Wilmington Savings Fund
Society, FSB, operated 24 retail banking offices in all three counties in
Delaware, as well as Chester and Delaware Counties in Pennsylvania. Other
continuing operating subsidiaries include: WSFS Investment Group, Inc.,
Montchanin Capital Management, Inc. and WSFS Reit, 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
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,
2005 2005 2004 2005 2004
--------------- ----------- ----------- --------------- ------------
Interest income:
Interest and fees on loans $ 25,447 $ 23,157 $ 18,222 $ 48,604 $ 36,322
Interest on mortgage-backed securities 6,444 5,874 4,689 12,318 9,416
Interest and dividends on investment securities 639 755 1,219 1,394 2,348
Other interest income 356 379 152 735 358
--------------- ----------- ----------- --------------- ------------
32,886 30,165 24,282 63,051 48,444
--------------- ----------- ----------- --------------- ------------
Interest expense:
Interest on deposits 4,662 4,087 1,832 8,749 3,625
Interest on Federal Home Loan Bank advances 7,263 6,187 5,886 13,450 11,441
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,092 1,011 413 2,103 813
Interest on trust preferred borrowings 1,967 712 503 2,679 999
Interest on other borrowings 124 55 40 179 78
--------------- ----------- ----------- --------------- ------------
15,108 12,052 8,674 27,160 16,956
--------------- ----------- ----------- --------------- ------------
Net interest income 17,778 18,113 15,608 35,891 31,488
Provision for loan losses 772 579 687 1,351 1,374
--------------- ----------- ----------- --------------- ------------
Net interest income after provision for
loan losses 17,006 17,534 14,921 34,540 30,114
--------------- ----------- ----------- --------------- ------------
Noninterest income:
Credit/debit card and ATM income 3,665 3,203 2,976 6,868 5,640
Deposit service charges 2,487 2,178 2,366 4,665 4,701
Investment advisory income 619 608 549 1,227 1,087
Bank owned life insurance income 527 496 626 1,023 1,105
Loan fee income 569 426 627 995 1,158
Mortgage banking activities, net 37 144 294 181 367
Securities gains - - 2 - 224
Other income 810 801 780 1,611 1,496
--------------- ----------- ----------- --------------- ------------
8,714 7,856 8,220 16,570 15,778
--------------- ----------- ----------- --------------- ------------
Noninterest expenses:
Salaries, benefits and other compensation 8,494 8,822 7,406 17,316 15,049
Occupancy expense 1,263 1,276 1,122 2,539 2,271
Equipment expense 954 983 925 1,937 1,790
Data processing and operations expense 998 911 837 1,909 1,599
Marketing expense 828 525 541 1,353 1,061
Professional fees 498 553 309 1,051 831
Other operating expenses 2,568 1,900 2,049 4,468 3,826
--------------- ----------- ----------- --------------- ------------
15,603 14,970 13,189 30,573 26,427
--------------- ----------- ----------- --------------- ------------
Income before minority interest and taxes 10,117 10,420 9,952 20,537 19,465
Less minority interest 37 37 47 74 92
--------------- ----------- ----------- --------------- ------------
Income before taxes 10,080 10,383 9,905 20,463 19,373
Income tax provision 3,514 3,593 3,638 7,107 6,924
--------------- ----------- ----------- --------------- ------------
Net income $ 6,566 $ 6,790 $ 6,267 $ 13,356 $ 12,449
=============== =========== =========== =============== ============
Diluted earnings per share:
Net income $ 0.90 $ 0.90 $ 0.82 $ 1.80 $ 1.62
=============== =========== =========== =============== ============
Weighted average shares outstanding for
diluted EPS 7,313,355 7,508,827 7,604,845 7,412,573 7,703,868
=================================================================================================================================
Performance Ratios:
Return on average assets (a) 0.99% 1.07% 1.09% 1.03% 1.10%
Return on average equity (a) 13.52 13.66 13.26 13.59 12.98
Net interest margin (a)(b) 3.03 3.23 3.07 3.13 3.15
Efficiency ratio (c) 58.28 57.04 54.71 57.66 55.25
=================================================================================================================================
See "Notes"
7
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
June 30, March 31, June 30,
2005 2005 2004
---------------- -------------- -------------
Summary Statement of Condition:
Assets:
Cash and due from banks $ 56,776 $ 52,733 $ 55,979
Cash in non-owned ATMs 137,203 129,688 123,777
Investment securities (d)(e) 98,091 96,706 122,064
Other investments 46,606 44,004 62,719
Mortgage-backed securities (d) 586,259 577,670 527,312
Net loans (f)(g) 1,662,910 1,605,293 1,403,224
Loans held for sale (f) 1,429 2,387 1,064
Bank owned life insurance 53,213 52,686 51,105
Other assets 57,132 60,353 49,065
Loans, operating leases and
other assets of discontinued operations 227 557 3,645
---------------- -------------- -------------
Total assets $ 2,699,846 $ 2,622,077 $ 2,399,954
================ ============== =============
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 261,987 $ 256,926 $ 229,842
Interest-bearing deposits 845,252 825,396 684,719
---------------- -------------- -------------
Total retail deposits 1,107,239 1,082,322 914,561
Jumbo CDs - non retail 35,930 45,511 45,300
Brokered CDs 203,400 170,921 74,974
---------------- -------------- -------------
Total deposits 1,346,569 1,298,754 1,034,835
Federal Home Loan Bank advances 902,943 868,004 930,181
Other borrowings 236,916 244,881 241,604
Other liabilities 20,047 19,208 15,373
---------------- -------------- -------------
Total liabilities 2,506,475 2,430,847 2,221,993
---------------- -------------- -------------
Minority interest 184 213 237
Stockholders' equity 193,187 191,017 177,724
---------------- -------------- -------------
Total liabilities, minority interest and
stockholders' equity $ 2,699,846 $ 2,622,077 $ 2,399,954
================ ============== =============
==================================================================================================
Capital Ratios:
Equity to asset ratio 7.16 % 7.28 % 7.41 %
Tangible equity to asset ratio 7.10 7.23 7.36
Core capital (h) (required: 4.00%) 9.15 9.12 9.49
Tier 1 Capital (h) (required 4.00%) 13.39 13.51 14.94
Risk-based capital (h) (required: 8.00%) 14.34 14.36 15.80
==================================================================================================
Asset Quality Indicators:
Nonperforming Assets:
Nonaccruing loans $ 5,602 $ 6,294 $ 5,172
Assets acquired through foreclosure 372 425 175
---------------- -------------- -------------
Total nonperforming assets $ 5,974 $ 6,719 $ 5,347
================ ============== =============
Past due loans (i) $ 370 $ 349 $ 301
Allowance for loan losses $ 24,939 $ 24,647 $ 23,139
Ratio of nonperforming assets to total assets 0.22% 0.26% 0.22%
Ratio of allowance for loan losses to total gross
loans (j) 1.48 1.51 1.62
Ratio of allowance for loan losses to nonaccruing
loans (k) 424 373 425
Ratio of quarterly net charge-offs to
average gross loans (a)(f) 0.12 0.04 0.08
==================================================================================================
See "Notes"
8
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three months ended
-----------------------------------------------------------------------------------------------------------
June 30, 2005 March 31, 2005 June 30, 2004
------------------------------------- --------------------------------- --------------------------------
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: (f) (l)
Commercial
real estate loans $ 572,714 $ 9,576 6.69 % $ 550,790 $ 8,584 6.23 % $ 406,101 $ 5,424 5.34 %
Residential
real estate loans 429,787 5,524 5.14 437,109 5,580 5.11 446,039 5,864 5.26
Commercial loans 434,056 6,686 6.35 385,439 5,489 5.98 337,152 3,740 4.72
Consumer loans 218,328 3,633 6.67 212,762 3,469 6.61 201,013 3,163 6.33
------------- ---------- ----------- --------- ----------- --------
Total loans 1,654,885 25,419 6.21 1,586,100 23,122 5.90 1,390,305 18,191 5.31
Mortgage-backed
securities (d) 583,785 6,444 4.42 542,965 5,874 4.33 511,379 4,689 3.67
Loans held-for-sale (f) 2,107 28 5.32 2,510 35 5.58 2,423 31 5.12
Investment securities
(d)(e) 97,459 639 2.62 97,194 755 3.11 121,179 1,219 4.02
Other interest-earning
assets 49,434 356 2.89 45,950 379 3.30 45,601 152 1.33
------------- ---------- ----------- --------- ----------- --------
Total interest-
earning assets 2,387,670 32,886 5.56 2,274,719 30,165 5.35 2,070,887 24,282 4.74
---------- --------- --------
Allowance for loan losses (24,842) (24,377) (22,899)
Cash and due from banks 51,945 54,011 49,512
Cash in non-owned ATMs 127,760 123,306 112,559
Loans, operating leases
and other assets of
discontinued operations 577 988 5,663
Bank owned life insurance 52,877 52,367 50,691
Other noninterest-earning
assets 53,342 53,322 43,027
------------- ----------- -----------
Total assets $ 2,649,329 $2,534,336 $2,309,440
============= =========== ===========
Liabilities and
Stockholders' Equity:
Interest-bearing
liabilities:
Interest bearing deposits:
Interest-bearing
demand $ 110,565 $ 66 0.24 $ 99,596 $ 59 0.24 $ 83,720 $ 51 0.25
Money market 162,934 747 1.84 141,107 590 1.70 36,012 33 0.37
Savings 280,668 280 0.40 285,462 271 0.39 322,682 326 0.41
Retail time deposits 278,253 1,882 2.71 286,722 1,851 2.62 222,589 1,024 1.85
------------- ---------- ----------- --------- ----------- --------
Total interest-
bearing retail
deposits 832,420 2,975 1.43 812,887 2,771 1.38 665,003 1,434 0.87
Jumbo certificates of
deposit-nonretail 39,081 280 2.87 45,250 294 2.63 45,942 168 1.47
Brokered certificates
of deposit 182,220 1,407 3.10 156,471 1,022 2.65 59,841 230 1.55
------------- ---------- ----------- --------- ----------- --------
Total interest-
bearing deposits 1,053,721 4,662 1.77 1,014,608 4,087 1.63 770,786 1,832 0.96
FHLB of Pittsburgh advances 889,641 7,267 3.23 819,476 6,191 3.02 869,267 5,933 2.70
Trust preferred borrowings 66,161 1,967 11.76 51,547 712 5.53 51,547 503 3.86
Other borrowed funds 177,090 1,216 2.75 194,210 1,066 2.20 193,678 453 0.94
Cost of funding
discontinued operations (4) (4) (47)
------------- ---------- ----------- --------- ----------- --------
Total interest-
bearing liabilities 2,186,613 15,108 2.76 2,079,841 12,052 2.32 1,885,278 8,674 1.84
---------- --------- --------
Noninterest-bearing demand
deposits 252,134 239,590 221,141
Other noninterest-bearing
liabilities 16,061 15,861 13,767
Minority interest 195 224 213
Stockholders' equity 194,326 198,820 189,041
------------- ----------- -----------
Total liabilities and
stockholders' equity $ 2,649,329 $2,534,336 $2,309,440
============= =========== ===========
Excess of interest-
earning assets
over interest-
bearing liabilities $ 201,057 $ 194,878 $ 185,609
============= =========== ===========
Net interest and
dividend income $ 17,778 $18,113 $15,608
========== ========= ========
Interest rate spread 2.80% 3.03% 2.90%
====== ======== ========
Net interest margin 3.03% 3.23% 3.07%
====== ======== ========
See "Notes"
9
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,
2005 2005 2004 2005 2004
-------------------------------------- --------------------------
Stock Information:
Market price of common stock:
High $ 55.91 $ 59.91 $ 50.75 $ 59.91 $ 51.40
Low 49.80 52.20 45.03 49.80 44.43
Close 54.71 52.56 48.56 54.71 48.56
Book value per share 28.16 27.29 25.33
Tangible book value per share 27.92 27.06 25.18
Number of shares outstanding (000s) 6,860 6,998 7,016
=======================================================================================================================
Other Financial Data:
One-year repricing gap to total assets (m) 0.50 % (1.22)% (4.92)%
Number of associates (FTEs) (n) 516 487 471
Number of branch offices 24 24 23
=======================================================================================================================
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) 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 the FTEs of WCC (discontinued operations) and Cypress Capital
Management (controlled, but not wholly owned subsidiary).