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WSFS Financial Corporation 838 Market Street, Wilmington, Delaware 19801
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Stephen A. Fowle
October 18, 2005 (302) 571-6833
WSFS ANNOUNCES 3Q '05 EPS OF $1.06
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $7.4
million, or $1.06 per diluted share. This compares to net income of $6.6
million, or $0.88 per share, for the third quarter of 2004. This $0.18 growth in
earnings per share is a 20% increase over the same period in 2004.
Highlights for the third quarter of 2005 include: (i) an increase in
total retail deposits of $43.2 million, or 4%, over balances at June 30, 2005;
(ii) growth in net loans of $35.7 million, or 2%, over balances at June 30,
2005; and (iii) continued strong asset quality with the ratio of nonperforming
assets (NPA) to total assets of 16 basis points at September 30, 2005.
Marvin N. Schoenhals, Chairman and President of WSFS, said, "We are
very proud of our third quarter results which reflect the continued emphasis of
growing and strengthening our banking franchise." Mr. Schoenhals went on to say,
"the benefits from our increased focus on retail business is apparent in our 22%
increase in core deposits. In addition, our continued lending success is
reflected in our 15% year over year loan growth."
The following is a brief discussion of the third quarter 2005 results.
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Net Interest Income
Net interest income for the third quarter of 2005 was $19.2 million.
This compares to the $17.1 million reported for the same quarter in 2004 and the
$17.8 million reported for the second quarter of 2005. The net interest margin
percentage of 3.22% for the third quarter of 2005 improved from 3.03% for the
second quarter of 2005. During the second quarter of 2005, the net interest
margin was negatively affected by 18 basis points due to a $1.1 million
(pre-tax) charge connected with the redemption of $50 million of WSFS Capital
Trust I Securities. Without this charge the margin would have been 3.21%.
Overall portfolio yields on loans have continued to trend upward due to
higher prevailing rates combined with the Company's continued focus on growth of
variable rate loans. Additionally, the gross yield on the Company's
mortgage-backed securities (MBS) portfolio was 4.47% in the third quarter of
2005 versus 4.42% in the second quarter of 2005. The weighted average duration
of the MBS portfolio was 3.0 years at September 30, 2005 compared to 2.7 years
at June 30, 2005.
Loans and Asset Quality
Net loans grew $35.7 million, or 2%, during the third quarter of 2005
to $1.7 billion at September 30, 2005. Net loans grew $224.9 million, or 15%,
compared to balances at September 30, 2004. Loan volume continued to show strong
increases despite $9.2 million in commercial and commercial real estate (CRE)
loan sales/participations, conducted to diversify the Company's balance sheet.
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) Sep. 30, 2005 Jun. 30, 2005 Sep. 30, 2004
------------- ------------- -------------
Amount % Amount % Amount %
---------- --- ---------- --- ---------- ---
Commercial and CRE $1,053,168 62% $1,035,656 62% $ 842,013 57%
Residential 439,975 26 432,518 26 444,860 30
Consumer 230,424 13 219,675 13 210,893 15
Allowance for loan losses (24,933) (1) (24,939) (1) (24,052) (2)
---------- --- ---------- --- ---------- ---
Net Loans $1,698,634 100% $1,662,910 100% $1,473,714 100%
========== === ========== === ========== ===
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The Company's provision for loan losses was $225,000 in the third
quarter of 2005, compared to $996,000 in the same period last year. This
decreased level of provision is due to slower net growth in the Company's loan
portfolio combined with continued improvement in credit quality and a lower
level of adversely rated loans. The allowance for loan loss reserves declined
from 1.48% to 1.45% during the quarter. In addition to recording a provision for
loan losses, a $397,000 liability was recorded representing a loss contingency
for standby letters of credit as a charge against other non-interest expense.
NPA as a percentage of assets stood at 0.16% as of September 30, 2005
versus 0.22% as of June 30, 2005 and 0.19% as of September 30, 2004. NPA totaled
$4.4 million as of September 30, 2005, down from $6.0 million as of June 30,
2005 and $4.5 million as of September 30, 2004. Annualized net charge-offs in
the third quarter of 2005 were 0.05% of average loans compared to 0.12% for the
second quarter of 2005 and 0.02% for the third quarter of 2004.
Deposits
Core deposit relationships (demand deposits, money market and savings
accounts) increased $32.8 million, or 4% during the quarter and increased $152.7
million, or 22% over the same period last year. Total retail deposits (core
deposits and retail time deposits) increased $43.2 million, or 4%, during the
third quarter to $1.2 billion at September 30, 2005 and increased $194.9
million, or 20% over September 30, 2004. 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) Sep. 30, 2005 Jun. 30, 2005 Sep. 30, 2004
------------- ------------- -------------
Amount % Amount % Amount %
---------- --- ---------- --- -------- ---
Non-interest demand $ 266,598 23% $ 261,987 24% $229,999 24%
Interest bearing demand 122,870 11 120,232 11 87,726 9
Savings 257,082 22 276,514 25 302,141 32
Money market 212,794 19 167,854 15 86,821 9
---------- --- ---------- --- -------- ---
Total core deposits 859,344 75 826,587 75 706,687 74
Retail time 291,053 25 280,652 25 248,799 26
---------- --- ---------- --- -------- ---
Total retail deposits $1,150,397 100% $1,107,239 100% $955,486 100%
========== === ========== === ======== ===
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Noninterest Income
During the third quarter of 2005, the Company recorded noninterest
income of $8.6 million, which was $424,000, or 5% greater than the third
quarter of 2004. Noninterest income declined by $130,000, or 1% when compared
to the second quarter of 2005. The increase over the third quarter of 2004 was
primarily due to increases of $630,000 in card and ATM income during the
quarter, mostly the result of underlying growth in volumes and $361,000 in
increased deposit service charges. These increases were partially offset by
$609,000 in losses recognized on the sale of lower yielding agency
investments. The decrease in comparison to the second quarter 2005 was mainly
attributable to the loss on sale of lower yielding agency investments
occurring in the third quarter of 2005. Consistent with the year over year
trend, this decrease was partially offset by increased card and ATM income of
$242,000 and increased deposit service charges of $189,000.
Noninterest Expenses
Noninterest expenses for the third quarter of 2005 totaled $16.1
million, which was $2.0 million, or 14% more than the same quarter last year.
Noninterest expense increased by $547,000, or 4% compared to the second quarter
of 2005. The increase over both the third quarter of 2004 and the second quarter
of 2005 was primarily due to increases in salaries, benefits and other
compensation and other operating expenses. These increases were mainly the
result of the Company's continued growth efforts. Also, included in operating
expenses for the third quarter of 2005, is the previously mentioned $397,000
loss contingency liability for standby letters of credit.
Capital Management
During the third quarter of 2005, the Company repurchased 400,000 of
its shares of common stock at an average price of $57.22 per share. At September
30, 2005, the Company had 650,000 shares remaining under its current share
repurchase authorization, or approximately 10% of its 6.5 million outstanding
shares.
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The ratio of tangible equity to assets was 6.33% at September 30, 2005.
The Tier 1 capital ratio was 12.46%, which is more than double the 6.00% level
required to be considered "well-capitalized" under regulatory definitions.
Tangible book value per share was $26.53 at September 30, 2005.
Other Events
During the quarter, the Company finalized agreements related to the
move of its corporate headquarters. Related to this move, the Company sold the
land on which the WSFS Bank Center is to be built. As part of this agreement,
the property developer has agreed to purchase the Company's current
headquarters, which is expected to result in approximately a $3 million gain at
the time of the move, expected to be early 2007.
WSFS Financial Corporation is a $2.7 billion financial services
company. At September 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 Nine months ended
---------------------------------------------- ------------------------------
September 30, June 30, September 30, September 30, September 30,
2005 2005 2004 2005 2004
-------------- ------------ ------------ -------------- -------------
Interest income:
Interest and fees on loans $ 27,419 $ 25,447 $ 19,882 $ 76,023 $ 56,204
Interest on mortgage-backed securities 6,445 6,444 5,468 18,763 14,884
Interest and dividends on investment securities 921 639 1,090 2,315 3,438
Other interest income 351 356 161 1,086 519
-------- -------- -------- -------- --------
35,136 32,886 26,601 98,187 75,045
-------- -------- -------- -------- --------
Interest expense:
Interest on deposits 5,674 4,662 2,320 14,423 5,945
Interest on Federal Home Loan Bank advances 7,955 7,263 6,011 21,405 17,452
Interest on federal funds purchased and
securities sold under agreements to repurchase 1,125 1,092 561 3,228 1,374
Interest on trust preferred borrowings 954 1,967 551 3,633 1,550
Interest on other borrowings 213 124 38 392 116
-------- -------- -------- -------- --------
15,921 15,108 9,481 43,081 26,437
-------- -------- -------- -------- --------
Net interest income 19,215 17,778 17,120 55,106 48,608
Provision for loan losses 225 772 996 1,576 2,370
-------- -------- -------- -------- --------
Net interest income after provision for loan losses 18,990 17,006 16,124 53,530 46,238
-------- -------- -------- -------- --------
Noninterest income:
Credit/debit card and ATM income 3,907 3,665 3,277 10,775 8,917
Deposit service charges 2,676 2,487 2,315 7,341 7,016
Investment advisory income 651 619 584 1,878 1,671
Bank owned life insurance income 499 527 558 1,522 1,663
Loan fee income 516 569 518 1,511 1,676
Mortgage banking activities, net 106 37 77 287 444
Securities (losses) gains (609) - (15) (609) 209
Other income 838 810 846 2,449 2,342
-------- -------- -------- -------- --------
8,584 8,714 8,160 25,154 23,938
-------- -------- -------- -------- --------
Noninterest expenses:
Salaries, benefits and other compensation 9,061 8,494 7,655 26,377 22,704
Occupancy expense 1,290 1,263 1,151 3,829 3,422
Equipment expense 950 954 969 2,887 2,759
Data processing and operations expense 761 998 815 2,670 2,414
Marketing expense 689 828 465 2,042 1,526
Professional fees 610 498 607 1,661 1,438
Other operating expenses 2,789 2,568 2,505 7,257 6,331
-------- -------- -------- -------- --------
16,150 15,603 14,167 46,723 40,594
-------- -------- -------- -------- --------
Income before minority interest and taxes 11,424 10,117 10,117 31,961 29,582
Less minority interest 48 37 66 122 158
-------- -------- -------- -------- --------
Income before taxes 11,376 10,080 10,051 31,839 29,424
Income tax provision 3,969 3,514 3,499 11,076 10,423
-------- -------- -------- -------- --------
Net income $ 7,407 $ 6,566 $ 6,552 $ 20,763 $ 19,001
======== ======== ======== ======== ========
Diluted earnings per share:
Net income $ 1.06 $ 0.90 $ 0.88 $ 2.85 $ 2.49
======== ======== ======== ======== ========
Weighted average shares outstanding for diluted EPS 7,005,994 7,313,355 7,454,990 7,275,858 7,620,555
- ------------------------------------------------------------------------------------------------------------------------------------
Performance Ratios:
Return on average assets (a) 1.10 % 0.99 % 1.09 % 1.05 % 1.10 %
Return on average equity (a) 16.15 13.52 14.22 14.41 13.39
Net interest margin (a)(b) 3.22 3.03 3.26 3.16 3.19
Efficiency ratio (c) 57.51 58.28 55.42 57.61 55.31
- ------------------------------------------------------------------------------------------------------------------------------------
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
September 30, June 30, September 30,
2005 2005 2004
----------------- -------------- -------------
Summary Statement of Condition:
Assets:
- -------
Cash and due from banks $ 61,012 $ 56,776 $ 54,088
Cash in non-owned ATMs 143,289 137,203 123,765
Investment securities (d)(e) 57,699 98,091 98,338
Other investments 45,934 46,606 62,497
Mortgage-backed securities (d) 593,496 586,259 515,832
Net loans (f)(g) 1,698,634 1,662,910 1,473,714
Loans held for sale (f) 2,199 1,429 2,491
Bank owned life insurance 53,713 53,213 51,663
Other assets 55,300 57,132 51,882
Loans, operating leases and
other assets of discontinued operations 5 227 1,873
---------- ---------- ----------
Total assets $2,711,281 $2,699,846 $2,436,143
========== ========== ==========
Liabilities and Stockholders' Equity:
- -------------------------------------
Noninterest-bearing deposits $ 266,598 $ 261,987 $ 229,999
Interest-bearing deposits 883,799 845,252 725,487
---------- ---------- ----------
Total retail deposits 1,150,397 1,107,239 955,486
Jumbo CD's - non retail 44,433 35,930 51,873
Brokered CD's 207,340 203,400 124,884
---------- ---------- ----------
Total deposits 1,402,170 1,346,569 1,132,243
Federal Home Loan Bank advances 917,882 902,943 878,623
Other borrowings 191,755 236,916 218,982
Other liabilities 25,903 20,047 16,665
---------- ---------- ----------
Total liabilities 2,537,710 2,506,475 2,246,513
---------- ---------- ----------
Minority interest 200 184 258
Stockholders' equity 173,371 193,187 189,372
---------- ---------- ----------
Total liabilities, minority interest
and stockholders' equity $2,711,281 $2,699,846 $2,436,143
========== ========== ==========
- ----------------------------------------------------------------------------------------------------
Capital Ratios:
Equity to asset ratio 6.39 % 7.16 % 7.77 %
Tangible equity to asset ratio 6.33 7.10 7.73
Core capital (h) (required: 4.00%) 8.69 9.15 9.65
Tier 1 Capital (h) (required 4.00%) 12.46 13.39 14.61
Risk-based capital (h) (required: 8.00%) 13.64 14.34 15.53
- ----------------------------------------------------------------------------------------------------
Asset Quality Indicators:
Nonperforming Assets:
Nonaccruing loans $ 4,271 $ 5,602 $ 4,368
Assets acquired through foreclosure 89 372 159
---------- ---------- ----------
Total nonperforming assets $ 4,360 $ 5,974 $ 4,527
========== ========== ==========
Past due loans (i) $ 207 $ 370 $ 328
Allowance for loan losses $ 24,933 $ 24,939 $ 24,052
Ratio of nonperforming assets to total assets 0.16 % 0.22 % 0.19 %
Ratio of allowance for loan losses to total gross
loans (j) 1.45 1.48 1.61
Ratio of allowance for loan losses to nonaccruing
loans (k) 556 424 524
Ratio of quarterly net charge-offs to
average gross loans (a)(f) 0.05 0.12 0.02
- ----------------------------------------------------------------------------------------------------
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three months ended
--------------------------------------------------------------------------------------------------------
September 30, 2005 June 30, 2005 September 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 $ 589,703 $ 10,450 7.09 % $ 572,714 $ 9,576 6.69 % $ 450,707 $ 6,409 5.69 %
Residential real
estate loans 430,871 5,587 5.19 429,787 5,524 5.14 445,748 5,830 5.23
Commercial loans 451,532 7,554 6.79 434,056 6,686 6.35 350,263 4,254 5.07
Consumer loans 221,706 3,787 6.78 218,328 3,633 6.67 210,449 3,356 6.34
---------- -------- ---------- ------- ---------- -------
Total loans 1,693,812 27,378 6.53 1,654,885 25,419 6.21 1,457,167 19,849 5.53
Mortgage-backed
securities (d) 576,779 6,445 4.47 583,785 6,444 4.42 520,356 5,468 4.20
Loans held-for-sale (f) 2,462 41 6.66 2,107 28 5.32 2,349 33 5.62
Investment securities (d)(e) 100,523 921 3.66 97,459 639 2.62 109,086 1,090 4.00
Other interest-earning assets 48,155 351 2.89 49,434 356 2.89 48,784 161 1.31
---------- -------- ---------- ------- ---------- -------
Total interest-earning
assets 2,421,731 35,136 5.85 2,387,670 32,886 5.56 2,137,742 26,601 5.03
-------- ------- -------
Allowance for loan losses (25,215) (24,842) (23,482)
Cash and due from banks 53,121 51,945 54,439
Cash in non-owned ATMs 138,543 127,760 126,808
Loans, operating leases and
other assets of
discontinued operations 367 577 2,992
Bank owned life insurance 53,389 52,877 51,302
Other noninterest-earning
assets 54,235 53,342 48,963
---------- ---------- ----------
Total assets $2,696,171 $2,649,329 $2,398,764
========== ========== ==========
Liabilities and
Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing demand $ 116,518 $ 71 0.24 $ 110,565 $ 66 0.24 $ 82,756 $ 49 0.24
Money market 183,279 1,025 2.22 162,934 747 1.84 63,909 187 1.16
Savings 268,880 265 0.39 280,668 280 0.40 316,910 318 0.40
Retail time deposits 287,925 2,085 2.87 278,253 1,882 2.71 225,906 1,128 1.99
--------- -------- ---------- ------- --------- -------
Total interest-bearing
retail deposits 856,602 3,446 1.60 832,420 2,975 1.43 689,481 1,682 0.97
Jumbo certificates of
deposit-nonretail 46,430 383 3.27 39,081 280 2.87 50,578 211 1.66
Brokered certificates
of deposit 206,331 1,845 3.55 182,220 1,407 3.10 102,067 427 1.66
--------- -------- --------- ------- --------- -------
Total interest-bearing
deposits 1,109,363 5,674 2.03 1,053,721 4,662 1.77 842,126 2,320 1.10
FHLB of Pittsburgh advances 894,331 7,958 3.48 889,641 7,267 3.23 899,922 6,038 2.63
Trust preferred borrowings 67,011 954 5.57 66,161 1,967 11.76 51,547 551 4.18
Other borrowed funds 166,268 1,338 3.22 177,090 1,216 2.75 177,392 599 1.35
Cost of funding discontinued
operations (3) (4) (27)
--------- -------- ---------- ------- --------- -------
Total interest-bearing
liabilities 2,236,973 15,921 2.85 2,186,613 15,108 2.76 1,970,987 9,481 1.92
-------- ------- -------
Noninterest-bearing demand
deposits 254,807 252,134 227,319
Other noninterest-bearing
liabilities 20,691 16,061 15,929
Minority interest 201 195 259
Stockholders' equity 183,499 194,326 184,270
---------- ---------- ----------
Total liabilities and
stockholders' equity $2,696,171 $2,649,329 $2,398,764
========== ========== ==========
Excess of interest-earning
assets over interest-
bearing liabilities $ 184,758 $ 201,057 $ 166,755
========== ========== ==========
Net interest and dividend
income $19,215 $17,778 $17,120
======= ======= =======
Interest rate spread 3.00% 2.80% 3.11%
==== ==== ====
Net interest margin 3.22% 3.03% 3.26%
==== ==== ====
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended
-------------------------------------- ----------------------------
September 30, June 30, September 30, September 30, September 30,
2005 2005 2004 2005 2004
-------------------------------------- ----------------------------
Stock Information:
Market price of common stock:
High $ 59.26 $ 55.91 $ 53.39 $ 59.91 $ 53.39
Low 54.01 49.80 48.05 49.80 44.43
Close 58.89 54.71 50.00 58.89 50.00
Book value per share 26.80 28.16 26.92
Tangible book value per share 26.53 27.92 26.76
Number of shares outstanding (000s) 6,470 6,860 7,036
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Other Financial Data:
One-year repricing gap to total assets (m) (0.86)% 0.50 % (0.65)%
Number of associates (FTEs) (n) 512 516 486
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).