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WSFS FINANCIAL CORPORATION LOGO 838 Market Street, Wilmington, Delaware 19801
PRESS RELEASE
FOR IMMEDIATE RELEASE Contact: Stephen A. Fowle
April 25, 2006 (302) 571-6833
WSFS ANNOUNCES 1Q '06 EPS OF $1.06,
AN 18% INCREASE OVER 2005
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $7.3
million, or $1.06 per diluted share. This compares to net income of $6.8
million, or $0.90 per share for the first quarter of 2005. Net income per share
for the first quarter of 2006 improved $0.16, or 18% over the same quarter last
year.
Highlights for the first quarter of 2006 include: (i) growth in net loans
of $102.9 million, or 6%, over balances at December 31, 2005; (ii) an increase
in total retail deposits of $49.8 million, or 4%, over balances at December 31,
2005; and (iii) continued strong asset quality with annualized net recoveries of
2 basis points, and the ratio of nonperforming assets (NPA) to total assets of
10 basis points at March 31, 2006.
Marvin N. Schoenhals, Chairman and President of WSFS, said, "Our 17% loan
growth and 12% core deposit growth since last year demonstrates the continued
success of our focus on our core banking franchise. The success of our recently
renovated Airport Plaza branch and early results from our newest West Dover
branch are very encouraging. We look forward to opening our new Long Neck branch
in Sussex County and completing the renovation of our Pike Creek branch office
soon."
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WSFS FINANCIAL CORPORATION LOGO 838 Market Street, Wilmington, Delaware 19801
The following is a brief discussion of the first quarter 2006 results.
NET INTEREST INCOME
Net interest income for the first quarter of 2006 was $19.3 million. This
compares to $18.1 million reported for the same quarter in 2005 and $18.5
million reported for the fourth quarter of 2005. During the fourth quarter of
2005 the Company recognized interest expense of $615,000 related to an interest
rate cap associated with its trust preferred securities and a one-time $420,000
pre-tax charge related to a correction of interest rates on a certain class of
savings accounts. Additionally, during the first quarter of 2006 WSFS recorded
income on reverse mortgages of $158,000, which was $319,000 less than the amount
recorded in the fourth quarter 2005. The net interest margin percentage of 3.04%
for the first quarter of 2006 declined from 3.06% for the fourth quarter of
2005. Despite strong growth in retail deposits, the success in increasing the
Company's loan portfolio in recent years has put pressure on funding costs, as
higher-cost borrowings were required to fund incremental growth. Recognizing
these pressures, the Company has continued to place greater emphasis and
resources on deposit gathering including the opening of new branches, as
mentioned earlier.
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 4.70% in the first quarter of
2006 versus 4.63% in the fourth quarter of 2005. The weighted average duration
of the MBS portfolio was 3.2 years at March 31, 2006 compared to 3.1 years at
December 31, 2005.
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WSFS FINANCIAL CORPORATION LOGO 838 Market Street, Wilmington, Delaware 19801
LOANS AND ASSET QUALITY
Net loans grew $102.9 million, or 6%, during the first quarter of 2006 to
$1.9 billion at March 31, 2006. Net loans grew $272.5 million, or 17%, compared
to balances at March 31, 2005. 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) Mar. 31, 2006 Dec. 31, 2005 Mar. 31, 2005
------------- ------------- -------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
Commercial and CRE $1,170,919 62% $1,094,913 61% $ 980,437 61%
Residential 476,791 25 459,680 26 433,220 27
Consumer 256,203 14 245,646 14 216,283 14
Allowance for loan losses (26,143) (1) (25,381) (1) (24,647) (2)
---------- --- ---------- --- ---------- ---
Net Loans $1,877,770 100% $1,774,858 100% $1,605,293 100%
========== === ========== === ========== ===
The Company recorded a provision for loan losses of $688,000 in the first
quarter of 2006, compared to $579,000 in the same period last year. This
provision is the result of more than $100 million in loan growth during the
quarter, one of the strongest quarters of loan growth in the Company's history,
despite continued positive trends in asset quality. The positive net interest
income effect of this growth will not be fully realized until the second quarter
of 2006. The ratio of allowance for loan losses to total loans is 1.37%,
compared to 1.41% at December 31, 2005.
Asset quality statistics continued to improve from historically strong
levels. Nonperforming assets totaled $2.9 million as of March 31, 2006, down
from $3.5 million as of December 31, 2005 and $6.7 million as of March 31, 2005.
NPA as a percentage of assets improved to 0.10% as of March 31, 2006 versus
0.12% as of December 31, 2005 and 0.26% as of March 31, 2005. Annualized net
recoveries in the first quarter of 2006 were 0.02% of average loans compared to
annualized net charge-offs of 0.13% for the fourth quarter of 2005 and 0.04% for
the first quarter of 2005.
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WSFS FINANCIAL CORPORATION LOGO 838 Market Street, Wilmington, Delaware 19801
DEPOSITS
Total retail deposits (core deposits and retail time deposits) increased
$49.8 million, or 4%, during the first quarter to $1.2 billion at March 31, 2006
and increased $161.4 million, or 15% over March 31, 2005. Core deposit
relationships (demand deposits, money market and savings accounts) increased
$18.1 million, or 2% during the quarter and increased $96.6 million, or 12% over
the same period last year. 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) Mar. 31, 2006 Dec. 31, 2005 Mar. 31, 2005
------------- ------------- -------------
Amount % Amount % Amount %
------ --- ------ --- ------ ---
Non-interest demand $ 274,983 22% $ 279,415 23% $ 256,926 24%
Interest bearing demand 141,972 11 141,378 12 106,834 10
Savings 245,011 20 251,675 21 286,229 26
Money market 238,003 19 209,398 18 153,347 14
---------- --- ---------- --- ---------- ---
Total core deposits 899,969 72 881,866 74 803,336 74
Retail time 343,762 28 312,065 26 278,986 26
---------- --- ---------- --- ---------- ---
Total retail deposits $1,243,731 100% $1,193,931 100% $1,082,322 100%
========== === ========== === ========== ===
NONINTEREST INCOME
During the first quarter of 2006, the Company recorded noninterest income
of $9.0 million, which was $1.2 million, or 15% greater than the first quarter
of 2005. Noninterest income declined by $461,000, or 5% when compared to the
fourth quarter of 2005. The increase over the first quarter 2005 was mainly
attributable to increases of $957,000 in card and ATM income during the quarter,
mostly the result of underlying growth in volumes and $399,000 in increased
deposit service charges. The decrease compared to the fourth quarter of 2005 was
primarily due to a seasonal decrease of $173,000 in deposit service charges and
a decrease of $114,000 in card and ATM income primarily at the CashConnect (ATM)
business.
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NONINTEREST EXPENSES
Noninterest expenses for the first quarter of 2006 totaled $16.2
million, which was $1.3 million, or 8% more than the same quarter last year.
Noninterest expense for the first quarter of 2006 was $88,000 greater than the
fourth quarter of 2005. The increase over both the prior quarter and the first
quarter of 2005 was primarily due to increases in salaries, benefits and other
compensation and other operating expenses, mainly the result of the Company's
continued growth efforts. The increase in salaries, benefits and other
compensation also includes $333,000 (pre-tax), or $0.04 (after-tax) per share,
of expenses related to stock options due to the implementation of Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS
123R), during this quarter. The Company adopted FAS 123R using the Modified
Prospective Application Method which recognizes expenses related to stock
options as compensation costs and does not require the restatement of prior
periods. These increases were offset by a $322,000 reduction of a reserve
related to reverse mortgages. This reserve is analyzed quarterly and is adjusted
in accordance with a formulaic calculation.
CAPITAL MANAGEMENT
During the first quarter of 2006, the Company repurchased 12,500 of its
shares of common stock at an average price of $61.22 per share. At March 31,
2006, the Company had 637,500 shares remaining under its current share
repurchase authorization, or approximately 10% of its 6.6 million outstanding
shares.
The ratio of tangible equity to assets was 6.17% at March 31, 2006. The
Tier 1 capital ratio was 12.18%, which is more than double the 6.00% level
required to be considered "well-capitalized" under regulatory definitions.
Tangible book value per share was $27.56 at March 31, 2006.
WSFS Financial Corporation is a $3.0 billion financial services
company. At March 31, 2006, its principal subsidiary, Wilmington Savings Fund
Society, FSB, operated 25 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.,
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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
-----------------------------------------------------
Mar 31, Dec 31, Mar 31,
2006 2005 2005
------------------ -------------- ---------------
Interest income:
Interest and fees on loans $ 32,096 $ 29,616 $ 23,157
Interest on mortgage-backed securities 7,332 6,924 5,874
Interest and dividends on investment securities 635 943 755
Other interest income 414 352 379
------------------ -------------- ---------------
40,477 37,835 30,165
------------------ -------------- ---------------
Interest expense:
Interest on deposits 8,177 7,267 4,087
Interest on Federal Home Loan Bank advances 10,743 9,254 6,187
Interest on trust preferred borrowings 1,017 1,659 712
Interest on other borrowings 1,237 1,119 1,066
------------------ -------------- ---------------
21,174 19,299 12,052
------------------ -------------- ---------------
Net interest income 19,303 18,536 18,113
Provision for loan losses 688 1,006 579
------------------ -------------- ---------------
Net interest income after provision for loan losses 18,615 17,530 17,534
------------------ -------------- ---------------
Noninterest income:
Credit/debit card and ATM income 4,160 4,274 3,203
Deposit service charges 2,577 2,750 2,178
Investment advisory income 630 641 608
Bank owned life insurance income 488 481 496
Loan fee income 421 488 426
Mortgage banking activities, net 22 104 144
Securities gains - 4 -
Other income 740 757 801
------------------ -------------- ---------------
9,038 9,499 7,856
------------------ -------------- ---------------
Noninterest expenses:
Salaries, benefits and other compensation 9,192 8,795 8,822
Occupancy expense 1,300 1,339 1,276
Equipment expense 982 992 983
Data processing and operations expense 857 795 911
Marketing expense 613 703 525
Professional fees 257 755 553
Other operating expenses 3,041 2,775 1,900
------------------ -------------- ---------------
16,242 16,154 14,970
------------------ -------------- ---------------
Income before minority interest and taxes 11,411 10,875 10,420
Less minority interest 16 11 37
------------------ -------------- ---------------
Income before taxes 11,395 10,864 10,383
Income tax provision 4,054 3,771 3,593
------------------ -------------- ---------------
Net income $ 7,341 $ 7,093 $ 6,790
================== ============== ===============
Diluted earnings per share:
Net income $ 1.06 $ 1.03 $ 0.90
================== ============== ===============
Weighted average shares outstanding for diluted EPS 6,904,774 6,870,836 7,508,827
- --------------------------------------------------------------------------------------------------------------------------
Performance Ratios (continuing operations only):
Return on average assets (a) 1.03 % 1.03 % 1.07 %
Return on average equity (a) 15.75 15.97 13.66
Net interest margin (a)(b) 3.04 3.06 3.23
Efficiency ratio (c) 56.75 57.04 57.04
- --------------------------------------------------------------------------------------------------------------------------
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
Mar 31, Dec 31, Mar 31,
2006 2005 2005
--------------- -------------- -------------
Summary Statement of Condition:
Assets:
- -------
Cash and due from banks $ 58,589 $ 59,251 $ 52,733
Cash in non-owned ATMs 159,042 174,527 129,688
Investment securities (d)(e) 58,694 57,489 96,706
Other investments 46,693 46,466 44,004
Mortgage-backed securities (d) 630,187 620,323 577,670
Net loans (f)(g) 1,877,770 1,774,858 1,605,293
Loans held for sale (f) 1,503 436 2,387
Bank owned life insurance 54,681 54,193 52,686
Other assets 65,702 59,209 60,910
--------------- -------------- -------------
Total assets $ 2,952,861 $ 2,846,752 $ 2,622,077
=============== ============== =============
Liabilities and Stockholders' Equity:
- -------------------------------------
Noninterest-bearing deposits $ 274,983 $ 279,415 $ 256,926
Interest-bearing deposits 968,748 914,516 825,396
--------------- -------------- -------------
Total retail deposits 1,243,731 1,193,931 1,082,322
Jumbo CD's - non retail 79,122 40,567 45,511
Brokered CD's 244,301 211,738 170,921
--------------- -------------- -------------
Total deposits 1,567,154 1,446,236 1,298,754
Federal Home Loan Bank advances 998,533 1,008,721 868,004
Other borrowings 176,379 186,287 244,881
Other liabilities 26,374 23,327 19,208
--------------- -------------- -------------
Total liabilities 2,768,440 2,664,571 2,430,847
--------------- -------------- -------------
Minority interest 72 206 213
Stockholders' equity 184,349 181,975 191,017
--------------- -------------- -------------
--------------- -------------- -------------
Total liabilities, minority interest and stockholders' equity $ 2,952,861 $ 2,846,752 $ 2,622,077
=============== ============== =============
- -----------------------------------------------------------------------------------------------------------------
Capital Ratios:
Equity to asset ratio 6.24 % 6.39 % 7.28 %
Tangible equity to asset ratio 6.17 6.33 7.23
Core capital (h) (required: 4.00%; well-capitalized: 5.00%) 8.51 8.56 9.12
Tier 1 Capital (h) (required: 4.00%; well-capitalized: 6.00%) 12.18 12.31 13.51
Risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%) 13.18 13.38 14.36
- -----------------------------------------------------------------------------------------------------------------
Asset Quality Indicators (continuing operations only):
Nonperforming Assets:
Nonaccruing loans $ 2,891 $ 3,410 $ 6,294
Assets acquired through foreclosure 44 59 425
--------------- -------------- -------------
Total nonperforming assets $ 2,935 $ 3,469 $ 6,719
=============== ============== =============
Past due loans (i) $ 277 $ 386 $ 349
Allowance for loan losses $ 26,143 $ 25,381 $ 24,647
Ratio of nonperforming assets to total assets 0.10 % 0.12 % 0.26 %
Ratio of allowance for loan losses to total gross
loans (j) 1.37 1.41 1.51
Ratio of allowance for loan losses to nonaccruing
loans (k) 863 709 373
Ratio of quarterly net (recoveries) charge-offs
to average gross loans (a)(f) (0.02) 0.13 0.04
- ------------------------------------------------------------------------------------------------------------------
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three months ended
----------------------------------------------------------------------------------------------------------
Mar 31, 2006 Dec 31, 2005 Mar 31, 2005
------------------------------ ------------------------------- -------------------------------
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 $ 605,189 $ 11,760 7.77 % $ 580,554 $10,951 7.55 % $ 550,790 $ 8,584 6.23 %
Residential real
estate loans 466,329 6,279 5.39 447,670 5,854 5.23 437,109 5,580 5.11
Commercial loans 525,339 9,645 7.55 485,242 8,632 7.19 385,439 5,489 5.98
Consumer loans 250,856 4,406 7.12 237,657 4,162 6.95 212,762 3,469 6.61
----------- --------- ----------- -------- ---------- --------
Total loans 1,847,713 32,090 7.01 1,751,123 29,599 6.83 1,586,100 23,122 5.90
Mortgage-backed
securities (d) 623,551 7,332 4.70 598,171 6,924 4.63 542,965 5,874 4.33
Loans held-
for-sale (f) 594 6 4.04 1,061 17 6.41 2,510 35 5.58
Investment
securities (d)(e) 58,060 635 4.37 57,499 943 6.56 97,194 755 3.11
Other interest-
earning assets 48,690 414 3.45 48,736 352 2.87 45,950 379 3.30
----------- --------- ----------- -------- ---------- --------
Total interest-
earning assets 2,578,608 40,477 6.32 2,456,590 37,835 6.21 2,274,719 30,165 5.35
--------- -------- --------
Allowance for
loan losses (25,515) (25,190) (24,377)
Cash and due from banks 51,364 54,486 54,011
Cash in non-owned ATMs 144,436 143,226 123,306
Bank owned life
insurance 54,365 53,894 52,367
Other noninterest-
earning assets 59,986 59,249 54,310
----------- ----------- ----------
Total assets $ 2,863,244 $ 2,742,255 $2,534,336
=========== =========== ==========
Liabilities and
Stockholders' Equity:
Interest-bearing
liabilities:
Interest bearing
deposits:
Interest-bearing
demand $ 123,805 $ 140 0.46 $ 119,390 $ 101 0.34 $ 99,596 $ 59 0.24
Money market 226,229 1,714 3.07 223,358 1,475 2.62 141,107 590 1.70
Savings 247,152 511 0.84 256,047 922 1.43 285,462 271 0.39
Retail time deposits 322,184 2,688 3.38 292,503 2,281 3.09 286,722 1,851 2.62
----------- --------- ----------- -------- ---------- --------
Total interest-
bearing retail
deposits 919,370 5,053 2.23 891,298 4,779 2.13 812,887 2,771 1.38
Jumbo certificates of
deposit-nonretail 60,081 663 4.48 43,444 417 3.81 45,250 294 2.63
Brokered certificates
of deposit 226,022 2,461 4.42 212,550 2,071 3.87 156,471 1,022 2.65
----------- --------- ----------- -------- ---------- --------
Total interest-
bearing
deposits 1,205,473 8,177 2.75 1,147,292 7,267 2.51 1,014,608 4,087 1.63
FHLB of Pittsburgh
advances 1,003,350 10,743 4.28 946,375 9,254 3.83 819,476 6,187 3.02
Trust preferred
borrowings 67,011 1,017 6.07 67,011 1,659 9.69 51,547 712 5.53
Other borrowed funds 121,822 1,237 4.06 124,810 1,119 3.59 194,210 1,066 2.20
----------- --------- ----------- -------- ---------- --------
Total interest-
bearing
liabilities 2,397,656 21,174 3.53 2,285,488 19,299 3.38 2,079,841 12,052 2.32
--------- -------- --------
Noninterest-bearing
demand deposits 257,963 254,542 239,590
Other noninterest-
bearing liabilities 21,022 24,372 15,861
Minority interest 154 216 224
Stockholders' equity 186,449 177,637 198,820
----------- ----------- ----------
Total liabilities and
stockholder$' equity 2,863,244 $ 2,742,255 $2,534,336
=========== =========== ==========
Excess of interest-
earning assets
over interest-
bearing liabilities $ 180,952 $ 171,102 $ 194,878
=========== =========== ==========
Net interest and
dividend income $ 19,303 $18,536 $18,113
========= ======== ========
Interest rate spread 2.79% 2.83% 3.03%
======= ========= =========
Net interest margin 3.04% 3.06% 3.23%
======= ========= =========
See "Notes"
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WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
--------------------------------------------------
Mar 31, Dec 31, Mar 31,
2006 2005 2005
--------------------------------------------------
Stock Information:
Market price of common stock:
High $ 64.50 $ 64.65 $ 59.91
Low 60.00 57.55 52.20
Close 62.83 61.25 52.56
Book value per share 27.91 27.59 27.29
Tangible book value per share 27.56 27.32 27.06
Number of shares outstanding (000s) 6,606 6,596 6,998
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Other Financial Data:
One-year repricing gap to total assets (m) 0.04 % (0.57)% (1.22)%
Number of associates (FTEs) (n) 529 515 487
Number of branch offices 25 24 24
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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).