1
FOR IMMEDIATE RELEASE Contact: Stephen A. Fowle
July 19, 2006 (302) 571-6833
WSFS ANNOUNCES INCREASED 2Q '06 EPS OF $1.09
WSFS Financial Corporation (NASDAQ/NMS: WSFS), the parent company of
Wilmington Savings Fund Society, FSB, reported quarterly net income of $7.5
million, or $1.09 per diluted share. This compares to net income of $6.6
million, or $0.90 per share for the second quarter of 2005. Net income per share
for the second quarter of 2006 improved $0.19, or 21% over the same quarter last
year. Earnings for the second quarter of 2005 were impacted by the 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 2006 include: (i) an increase in
total retail deposits of $160.0 million, or 14%, over balances at June 30, 2005;
(ii) continued strong growth in net loans of $307.5 million, or 18%, over
balances at June 30, 2005; (iii) growth in noninterest income of $1.2 million,
or 13% over the same quarter last year; and (iv), continued strong asset quality
with the ratio of nonperforming assets (NPA) to total assets of only 11 basis
points at June 30, 2006, and annualized net charge-offs of only 3 basis points
for the quarter.
Marvin N. Schoenhals, Chairman and President of WSFS, said, "WSFS
continues to enjoy strong deposit generation and even greater loan growth.
Retail deposits grew by 14% over the same period last year and we grew our loan
portfolio by 18% over the same period last year, led by commercial lending.
While we continue to be challenged by rising rates and a flattening
2
yield curve, this robust growth has helped us continue to increase our net
interest income." Mr. Schoenhals continued, "we have continued our expansion
strategy and have already opened a new branch and renovated an existing site
this year. In addition, we plan to have two to three new branches and several
renovations completed by early next year".
The following is a brief discussion of the second quarter 2006 results.
Net Interest Income
Net interest income for the second quarter of 2006 was $19.4 million.
This compares to $17.8 million reported for the same quarter in 2005 (the second
quarter of 2005 was impacted by the refinancing of $50 million of Trust
Preferred Securities, resulting in a $1.1 million (pre-tax) non-cash charge) and
$19.3 million reported for the first quarter of 2006. The net interest margin of
2.94% for the second quarter of 2006 declined 10 basis points from the first
quarter of 2006. The net interest margin continues to be negatively impacted by
rising interest rates and a flattening yield curve; the effects of the Company's
CashConnect (ATM) business (revenues related to cash outstanding for this
business are recorded as fee income rather than interest income while the cost
of funding these balances are charged to interest expense) and aggressive
competition for deposits. In addition, during the second quarter of 2006, the
Company's income on reverse mortgages was $236,000 less than the first quarter
of 2006, negatively impacting the net interest margin by 4 basis points. The
strong growth in lending has also continued to put pressure on funding costs, as
higher-cost borrowings were required to fund incremental growth. However,
overall balance sheet growth, fueled by growth in commercial lending, resulted
in an increase in net interest income, despite the decrease in the net interest
margin.
Loans and Asset Quality
Net loans grew $92.6 million, or 5%, during the second quarter of 2006
to $2.0 billion at June 30, 2006. Net loans grew $307.5 million, or 18%,
compared to balances at June 30, 2005.
3
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, 2006 Mar. 31, 2006 Jun. 30, 2005
------------- ------------- -------------
Amount % Amount % Amount %
---------- --- ---------- --- ---------- ---
Commercial and CRE $1,241,228 63% $1,170,919 62% $1,035,656 62%
Residential 495,715 25 476,791 25 432,518 26
Consumer 260,143 13 256,203 14 219,675 13
Allowance for loan losses (26,701) (1) (26,143) (1) (24,939) (1)
---------- --- ---------- --- ---------- ---
Net Loans $1,970,385 100% $1,877,770 100% $1,662,910 100%
========== === ========== === ========== ===
The Company recorded a provision for loan losses of $695,000 in the
second quarter of 2006, compared to $772,000 in the same period last year and
$688,000 for the prior quarter. This provision is the result of continued loan
growth, despite continued strength in asset quality. The ratio of allowance for
loan losses to total loans is 1.34%, compared to 1.37% at March 31, 2006.
Asset quality statistics remain strong. Nonperforming assets as a
percentage of assets were 0.11% at June 30, 2006, a slight increase from 0.10%
at March 31, 2006, and well below the 0.22% reported at June 30, 2005.
Annualized net charge-offs in the second quarter of 2006 were 0.03% of average
loans compared to annualized net recoveries of 0.02% for the first quarter of
2006 and annualized net charge-offs of 0.12% for the second quarter of 2005.
Deposits
Total retail deposits (core deposits and retail time deposits)
increased $23.5 million, or 2%, during the second quarter to $1.3 billion at
June 30, 2006 and increased $160.0 million, or 14% over June 30, 2005. WSFS
achieved this growth despite the planned attrition, in the second quarter of
2006, of a $24.9 million money market escrow account that had been opened in the
third quarter of 2005.
4
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, 2006 Mar. 31, 2006 Jun. 30, 2005
------------- ------------- -------------
Amount % Amount % Amount %
---------- --- ---------- --- ---------- ---
Non-interest demand $ 289,054 23% $ 274,983 22% $ 261,987 24%
Interest bearing demand 126,430 10 141,972 11 120,232 11
Savings 244,843 19 245,011 20 276,514 25
Money market 218,719 17 238,003 19 167,854 15
---------- --- ---------- --- ---------- ---
Total core deposits 879,046 69 899,969 72 826,587 75
Retail time 388,209 31 343,762 28 280,652 25
---------- --- ---------- --- ---------- ---
Total retail deposits $1,267,255 100% $1,243,731 100% $1,107,239 100%
========== === ========== === ========== ===
Noninterest Income
During the second quarter of 2006, the Company recorded noninterest
income of $9.9 million, which was $842,000, or 9% greater than the first
quarter of 2006 and $1.2 million, or 13% greater than the second quarter of
2005. The increase over the second quarter 2005 was mainly attributable to
increases of $1.2 million in card and ATM income during the quarter and
$339,000 in increased deposit service charges. This increase in card and ATM
income was primarily due to increased volumes of cash in non-owned ATMs and
higher rates earned on this cash. Consistent with the year over year results,
the improvement compared to the first quarter of 2006 was primarily due to an
increase of $698,000 in card and ATM income primarily at the CashConnect
business and a seasonal increase of $249,000 in deposit service charges.
5
Noninterest Expenses
Noninterest expenses for the second quarter of 2006 totaled $16.9
million, which was $690,000 greater than the first quarter of 2006. The increase
over the prior quarter was primarily due to increases in compensation and
marketing expenses resulting from the continued growth of the Company. In
addition, professional fees recorded in the second quarter were $248,000 higher
than the first quarter of 2006. During the first quarter of 2006, the Company
reduced a legal reserve that decreased expenses in this category by $322,000.
Without this reduction, professional expenses would have decreased by $74,000 in
the second quarter.
The increase in noninterest expenses for the second quarter of 2006 was
$1.3 million, or 9% higher than the same quarter last year. This was primarily
due to increases in compensation and other operating expenses, mainly the result
of the Company's continued growth efforts (the number of full-time equivalent
Associates increased from 516 in the second quarter of 2005 to 554 in the second
quarter of 2006). However, the increase in salaries, benefits and other
compensation also includes $358,000 (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), this year. The Company adopted FAS 123R using the Modified Prospective
Application Method which recognizes expenses related to stock options as
compensation costs only in periods beginning after January 1, 2006. Without this
newly recognized expense, noninterest expense for the second quarter of 2006
would have been $16.6 million, an increase of 6% over the same period in 2005.
Capital Management
During the second quarter of 2006, the Company did not repurchase any
shares of common stock. For the year the Company has repurchased 12,500 shares
of common stock at an average price of $61.22 per share. At June 30, 2006, the
Company had 637,500 shares
6
remaining under its current share repurchase authorization, or 9.6% of its 6.7
million outstanding shares.
The ratio of tangible equity to assets was 6.23% at June 30, 2006. The
Tier 1 capital ratio was 11.94%, which is almost double the 6.00% level required
to be considered "well- capitalized" under regulatory definitions. Tangible book
value per share was $28.43 at June 30, 2006.
WSFS Financial Corporation is a $3.0 billion financial services
company. At June 30, 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
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.
# # #
(More)
7
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
---------------------------------------------- -----------------------------
June 30, Mar 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
-------------- ------------ ------------ -------------- ------------
Interest income:
Interest and fees on loans $ 35,332 $ 32,096 $ 25,447 $ 67,428 $ 48,604
Interest on mortgage-backed securities 7,471 7,332 6,444 14,803 12,318
Interest and dividends on investment securities 388 635 639 1,023 1,394
Other interest income 677 414 356 1,091 735
-------------- ------------ ------------ -------------- ------------
43,868 40,477 32,886 84,345 63,051
-------------- ------------ ------------ -------------- ------------
Interest expense:
Interest on deposits 10,113 8,177 4,662 18,290 8,749
Interest on Federal Home Loan Bank advances 12,004 10,743 7,263 22,747 13,450
Interest on trust preferred borrowings 1,106 1,017 1,967 2,123 2,679
Interest on other borrowings 1,259 1,237 1,216 2,496 2,282
-------------- ------------ ------------ -------------- ------------
24,482 21,174 15,108 45,656 27,160
-------------- ------------ ------------ -------------- ------------
Net interest income 19,386 19,303 17,778 38,689 35,891
Provision for loan losses 695 688 772 1,383 1,351
-------------- ------------ ------------ -------------- ------------
Net interest income after provision for loan losses 18,691 18,615 17,006 37,306 34,540
-------------- ------------ ------------ -------------- ------------
Noninterest income:
Credit/debit card and ATM income 4,858 4,160 3,665 9,018 6,868
Deposit service charges 2,826 2,577 2,487 5,403 4,665
Investment advisory income 618 630 619 1,248 1,227
Bank owned life insurance income 522 488 527 1,010 1,023
Loan fee income 413 421 569 834 995
Mortgage banking activities, net 61 22 37 83 181
Securities losses (41) - - (41) -
Other income 623 740 810 1,363 1,611
-------------- ------------ ------------ -------------- ------------
9,880 9,038 8,714 18,918 16,570
-------------- ------------ ------------ -------------- ------------
Noninterest expenses:
Salaries, benefits and other compensation 9,421 9,192 8,494 18,613 17,316
Occupancy expense 1,347 1,300 1,263 2,647 2,539
Equipment expense 1,075 982 954 2,057 1,937
Data processing and operations expense 889 857 998 1,746 1,909
Marketing expense 728 613 828 1,341 1,353
Professional fees 505 257 498 762 1,051
Other operating expenses 2,967 3,041 2,568 6,008 4,468
-------------- ------------ ------------ -------------- ------------
16,932 16,242 15,603 33,174 30,573
-------------- ------------ ------------ -------------- ------------
Income before minority interest and taxes 11,639 11,411 10,117 23,050 20,537
Less minority interest 15 16 37 31 74
-------------- ------------ ------------ -------------- ------------
Income before taxes 11,624 11,395 10,080 23,019 20,463
Income tax provision 4,126 4,054 3,514 8,180 7,107
-------------- ------------ ------------ -------------- ------------
Net income $ 7,498 $ 7,341 $ 6,566 $ 14,839 $ 13,356
============== ============ ============ ============== ============
Diluted earnings per share:
Net income $ 1.09 $ 1.06 $ 0.90 $ 2.15 $ 1.80
============== ============ ============ ============== ============
Weighted average shares outstanding for diluted EPS 6,905,922 6,904,774 7,313,355 6,905,230 7,412,573
- -------------------------------------------------------------------------------------------------- -----------------------------
Performance Ratios (continuing operations only):
Return on average assets (a) 1.01 % 1.03 % 0.99 % 1.02 % 1.03 %
Return on average equity (a) 15.82 15.75 13.52 15.78 13.59
Net interest margin (a)(b) 2.94 3.04 3.03 2.98 3.13
Efficiency ratio (c) 57.31 56.75 58.28 57.04 57.66
Noninterest income as a percentage of total revenue (b) 33.44 31.58 32.55 32.53 31.25
- -------------------------------------------------------------------------------------------------- -----------------------------
See "Notes"
8
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
June 30, Mar 31, June 30,
2006 2006 2005
----------- ----------- -----------
Summary Statement of Condition:
Assets:
- ------
Cash and due from banks $ 71,237 $ 58,589 $ 56,776
Cash in non-owned ATMs 171,174 159,042 137,203
Investment securities (d)(e) 48,428 58,694 98,091
Other investments 50,461 46,693 46,606
Mortgage-backed securities (d) 599,933 630,187 586,259
Net loans (f)(g) 1,970,385 1,877,770 1,662,910
Loans held for sale (f) 1,752 1,503 1,429
Bank owned life insurance 55,203 54,681 53,213
Other assets 68,057 65,702 57,359
----------- ----------- -----------
Total assets $ 3,036,630 $ 2,952,861 $ 2,699,846
=========== =========== ===========
Liabilities and Stockholders' Equity:
- ------------------------------------
Noninterest-bearing deposits $ 289,054 $ 274,983 $ 261,987
Interest-bearing deposits 978,201 968,748 845,252
----------- ----------- -----------
Total retail deposits 1,267,255 1,243,731 1,107,239
Jumbo CD's - non retail 73,946 79,122 35,930
Brokered CD's 241,623 244,301 203,400
----------- ----------- -----------
Total deposits 1,582,824 1,567,154 1,346,569
Federal Home Loan Bank advances 1,051,458 998,533 902,943
Other borrowings 183,764 176,379 236,916
Other liabilities 27,151 26,374 20,047
----------- ----------- -----------
Total liabilities 2,845,197 2,768,440 2,506,475
----------- ----------- -----------
Minority interest 69 72 184
Stockholders' equity 191,364 184,349 193,187
----------- ----------- -----------
----------- ----------- -----------
Total liabilities, minority interest and stockholders' equity $ 3,036,630 $ 2,952,861 $ 2,699,846
=========== =========== ===========
- -----------------------------------------------------------------------------------------------------------------
Capital Ratios:
Equity to asset ratio 6.30 % 6.24 % 7.16 %
Tangible equity to asset ratio 6.23 6.17 7.10
Core capital (h) (required: 4.00%; well-capitalized: 5.00%) 8.53 8.51 9.15
Tier 1 Capital (h) (required: 4.00%; well-capitalized: 6.00%) 11.94 12.18 13.40
Risk-based capital (h) (required: 8.00%; well-capitalized: 10.00%) 13.02 13.18 14.31
- -----------------------------------------------------------------------------------------------------------------
Asset Quality Indicators (continuing operations only):
Nonperforming Assets:
Nonaccruing loans $ 3,189 $ 2,891 $ 5,602
Assets acquired through foreclosure 61 44 372
----------- ----------- -----------
Total nonperforming assets $ 3,250 $ 2,935 $ 5,974
=========== =========== ===========
Past due loans (i) $ 527 $ 277 $ 370
Allowance for loan losses $ 26,701 $ 26,143 $ 24,939
Ratio of nonperforming assets to total assets 0.11 % 0.10 % 0.22 %
Ratio of allowance for loan losses to total gross
loans (j) 1.34 1.37 1.48
Ratio of allowance for loan losses to nonaccruing
loans (k) 800 863 424
Ratio of quarterly net (recoveries) charge-offs
to average gross loans (a)(f) 0.03 (0.02) 0.12
- -----------------------------------------------------------------------------------------------------------------
See "Notes"
9
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three months ended
---------------------------------------------------------------------------------------------------
June 30, 2006 Mar 31, 2006 June 30, 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 $ 638,645 $12,860 8.05 % $ 605,189 $11,760 7.77 % $ 572,714 $ 9,576 6.69 %
Residential real estate loans 484,000 6,621 5.47 466,329 6,279 5.39 429,787 5,524 5.14
Commercial loans 573,853 11,146 7.88 525,339 9,645 7.55 434,056 6,686 6.35
Consumer loans 257,930 4,687 7.29 250,856 4,406 7.12 218,328 3,633 6.67
---------- ------- ---------- ------- --------- -------
Total loans 1,954,428 35,314 7.28 1,847,713 32,090 7.01 1,654,885 25,419 6.21
Mortgage-backed securities (d) 617,553 7,471 4.84 623,551 7,332 4.70 583,785 6,444 4.42
Loans held-for-sale (f) 1,284 18 5.61 594 6 4.04 2,107 28 5.32
Investment securities (d)(e) 54,366 388 2.85 58,060 635 4.37 97,459 639 2.62
Other interest-earning assets 52,402 677 5.18 48,690 414 3.45 49,434 356 2.89
---------- ------- ----------- ------- --------- -------
Total interest-earning
assets 2,680,033 43,868 6.59 2,578,608 40,477 6.32 2,387,670 32,886 5.56
------- ------- -------
Allowance for loan losses (26,397) (25,515) (24,842)
Cash and due from banks 55,424 51,364 51,945
Cash in non-owned ATMs 157,655 144,436 127,760
Bank owned life insurance 54,860 54,365 52,877
Other noninterest-earning assets 62,156 59,986 53,919
---------- ---------- ----------
Total assets $2,983,731 $2,863,244 $2,649,329
========== ========== ==========
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing demand $ 122,917 $ 162 0.53 $ 123,805 $ 140 0.46 $ 110,565 $ 66 0.24
Money market 228,493 1,978 3.47 226,229 1,714 3.07 162,934 747 1.84
Savings 239,474 444 0.74 247,152 511 0.84 280,668 280 0.40
Retail time deposits 364,669 3,497 3.85 322,184 2,688 3.38 278,253 1,882 2.71
---------- ------- ---------- ------- ---------- -------
Total interest-bearing
retail deposits 955,553 6,081 2.55 919,370 5,053 2.23 832,420 2,975 1.43
Jumbo certificates of
deposit-nonretail 84,353 1,033 4.91 60,081 663 4.48 39,081 280 2.87
Brokered certificates of
deposit 245,213 2,999 4.91 226,022 2,461 4.42 182,220 1,407 3.10
---------- ------- ---------- ------- ---------- -------
Total interest-bearing
deposits 1,285,119 10,113 3.16 1,205,473 8,177 2.75 1,053,721 4,662 1.77
FHLB of Pittsburgh advances 1,037,132 12,004 4.58 1,003,350 10,743 4.28 889,641 7,263 3.23
Trust preferred borrowings 67,011 1,106 6.53 67,011 1,017 6.07 66,161 1,967 11.76
Other borrowed funds 113,190 1,259 4.45 121,822 1,237 4.06 177,090 1,216 2.75
---------- ------- ---------- ------- ---------- -------
Total interest-bearing
liabilities 2,502,452 24,482 3.91 2,397,656 21,174 3.53 2,186,613 15,108 2.76
------- ------- -------
Noninterest-bearing
demand deposits 269,060 257,963 252,134
Other noninterest-bearing
liabilities 22,566 21,022 16,061
Minority interest 65 154 195
Stockholders' equity 189,588 186,449 194,326
---------- ---------- ----------
Total liabilities and
stockholders' equity $2,983,731 $2,863,244 $2,649,329
========== ========== ==========
Excess of interest-earning
assets over interest-bearing
liabilities $ 177,581 $ 180,952 $ 201,057
========== =========== ==========
Net interest and dividend income $19,386 $ 19,303 $17,778
======= ======== =======
Interest rate spread 2.68% 2.79% 2.80%
===== ======= =======
Net interest margin 2.94% 3.04% 3.03%
===== ======= =======
See "Notes"
10
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended Six months ended
------------------------------------------ --------------------------
June 30, Mar 31, June 30, June 30, June 30,
2006 2006 2005 2006 2005
------------------------------------------ ------------ ------------
Stock Information:
Market price of common stock:
High $ 64.65 $ 64.50 $ 55.91 $ 64.65 $ 59.91
Low 58.24 60.00 49.80 58.24 49.80
Close 61.45 62.83 54.71 61.45 54.71
Book value per share 28.77 27.91 28.16
Tangible book value per share 28.43 27.56 27.92
Number of shares outstanding (000s) 6,650 6,606 6,860
-----------------------------------------------------------------------------------------------------------------
Other Financial Data:
One-year repricing gap to total assets (m) (1.65)% 0.04 % 0.50 %
Weighted average duration of the MBS portfolio 3.3 years 3.2 years 2.7 years
Number of associates (FTEs) 554 529 516
Number of branch offices 25 25 24
Number of WSFS owned ATMs 318 263 268
-----------------------------------------------------------------------------------------------------------------------------
Notes:
(a) Annualized.
(b) Computed on a fully tax-equivalent basis.
(c) Noninterest expense divided by (tax-equivalent) net interest income and
noninterest 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.