WSFS Reports 4Q 2013 EPS of $1.33, a 71% Increase From 4Q 2012; and Full Year 2013 EPS of $5.06, a 56% Increase From 2012

WILMINGTON, Del., Jan. 30, 2014 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, reported net income of $12.1 million, or $1.33 per diluted common share for the fourth quarter of 2013 compared to $14.2 million, or $1.54 per diluted common share for the third quarter of 2013, and $7.6 million, or $0.78 per diluted common share for the fourth quarter of 2012. The fourth quarter 2013 EPS represents a 71% improvement from prior-year levels.

Net income for the full year of 2013 was $46.9 million, up 50% from $31.3 million for the full year of 2012. Earnings per share were $5.06 per diluted common share for 2013, 56% greater than the $3.25 per diluted common share reported for the full year 2012.

Highlights for the fourth quarter of 2013:

  • Return on assets (ROA) reached 1.09% and return on tangible common equity (ROTCE) was 14.5%.
  • Total net loans grew $93.9 million or 13% (annualized) from third quarter level. All loan categories increased during the fourth quarter.
  • Net interest income increased to $34.5 million in the fourth quarter of 2013, $1.1 million, or 14% (annualized) above net income recorded for the third quarter of 2013. The net interest margin increased 7 basis points to 3.68% from 3.61% in the third quarter of 2013.
  • Core noninterest income(o) increased $501,000, or 3% (not annualized), from third quarter 2013 levels reflecting improvement across most business segments.
  • Major credit quality statistics showed continued improvement during the quarter, including nonperforming assets, classified and criticized loan ratios, delinquency, and net charge offs.

Notable items:

  • WSFS realized $660,000, or $0.05 per diluted common share (after tax) in net gains on securities sales, compared to $306,000, or $0.02 per diluted common share (after tax), in the third quarter of 2013 and $3.6 million, or $0.26 per diluted common share (after tax), in the fourth quarter 2012.
  • WSFS recorded $525,000, or $0.04 per diluted common share (after tax) in expenses related to corporate development activities. These were largely professional fees related to the Array Financial Group / Arrow Land Transfer Company acquisition ("Array" and "Arrow") which closed during the third quarter of 2013, the pending merger of First Wyoming Financial Corp ("First Wyoming") announced during the fourth quarter of 2013, and activities related to calling and consolidating of the equity tranche of a 2002 reverse mortgage trust transaction. This compares to $193,000, or $0.01 per share, of corporate development costs during the third quarter of 2013.

CEO outlook and commentary:

Mark A. Turner, President and CEO, said, "We finished 2013 with another strong quarter, with momentum accelerating in key operating areas as we ended the year. Earnings per share improved 56% over full year 2012 and 71% from fourth quarter 2012 levels. Our ROA was 1.07% for the full year and 1.09% in the fourth quarter. Further, 2013 represents our best year for both net income and ROA since 2007.

"This success was driven by fundamental growth in almost every aspect of our franchise, including improvement in net interest income and fee income, improvement in credit costs, careful expense management, as well as the benefits from prudent acquisitions of businesses and special assets.

"With respect to those corporate development activities, the fourth quarter of 2013 marks the first full quarter of results that include contributions of nearby Pennsylvania-based Array and Arrow to the revenues from our mortgage banking business as well a full quarter's benefit from our call and consolidation of the reverse mortgage loans. In addition, during the quarter we announced our agreement to combine with the First National Bank of Wyoming (DE). We look forward to increasing our presence in Kent County, achieving the #2 ranking in market share for deposits, further strengthening our retail, commercial and small business teams and adding important relationships to our banking franchise. Excluding transaction costs, we expect each of these activities to be meaningfully accretive during their first year of operation.

"Our fourth quarter and full year 2013 results reflect a significant step towards our goal of becoming a sustainably high-performing company. Our prior investments in Associates, infrastructure, products and businesses, combined with our strategy of 'Engaged Associates delivering Stellar Service growing Customer Advocates and value for our Owners' is key to the progress we have made and will continue to be key in achieving that goal. We look forward to continuing our growth and improvement in performance in 2014."

Fourth Quarter 2013 Discussion of Financial Results

Net interest margin continues to expand

The net interest margin for the fourth quarter of 2013 was 3.68%, a 7 basis point increase from 3.61% reported for the third quarter of 2013. Net interest income for the fourth quarter of 2013 was $34.5 million, a $1.1 million, or 14% (annualized) improvement from the third quarter of 2013. Compared to the fourth quarter of 2012, the net interest margin increased a significant 29 basis points and net interest income increased $3.0 million or 10%.

The third and fourth quarter of 2013 benefited from consolidation of the reverse mortgage trust late in the third quarter of 2013. The reverse mortgage loans had a positive net impact of $1.2 million on net interest income in the fourth quarter, or 9 basis points in margin, compared to $514,000, or 5 basis points in margin in the third quarter of 2013. The Company expects meaningful reverse mortgage income to continue in future periods; however, this income may vary significantly from period to period depending on the timing of cash flows and collateral valuations. Aside from the benefit of the reverse mortgages, the increase in margin from prior quarters was also due to franchise loan growth and continued prudent balance sheet management.

Loan portfolio grew at a strong 13% annualized rate

Total net loans were $2.9 billion at December 31, 2013, an increase of $93.9 million, or 13% (annualized) compared to the prior quarter-end. The growth was in all categories with significant increases in Commercial & Industrial (C&I) loans of $53.2 million, or 14% (annualized), and Consumer loans of $14.2 million, or 20% (annualized).

Total net loans at December 31, 2013 increased $199.8 million, or 7%, compared to December 31, 2012. The year-over-year increase includes $121.4 million, or 8%, growth in C&I loans and a $93.1 million, or 15%, increase in Commercial Real Estate (CRE) loans.

The following table summarizes loan balances and composition at December 31, 2013 compared to prior periods.

(Dollars in thousands) At
December 31, 2013
At
September 30, 2013
At
December 31, 2012
Commercial & industrial $ 1,595,888 54 % $ 1,542,714 54 % $ 1,474,500 54 %
Commercial real estate 718,972 24 707,762 25 625,908 23
Construction 105,460 4 102,119 4 132,879 5
Total commercial loans 2,420,320 82 2,352,595 83 2,233,287 82
Residential mortgage 254,324 9 242,582 9 257,559 9
Consumer 303,067 10 288,854 10 289,750 11
Allowance for loan losses (41,244) (1) (41,431) (2) (43,922) (2)
Net Loans $ 2,936,467 100 % $ 2,842,600 100 % $ 2,736,674 100 %

Credit Quality metrics improved broadly

Credit quality metrics continued to improve in the fourth quarter of 2013 as significant progress was made toward resolution of larger problem loans with minimal new migration to nonperforming assets. Nonperforming assets improved $8.7 million from the third quarter of 2013, or 15% (not annualized), to $47.8 million, or 1.06% of assets. In addition, delinquencies (including nonperforming delinquencies) improved $30.6 million, or 58%, to 0.75% of total loans. (The improvement in delinquent loans includes the $19.0 million relationship mentioned as delinquent in the third quarter earnings release which was brought current in December 2013. Still classified a substandard loan, the status of this seasonal business will continue to be evaluated month-to-month.)

For the quarter, net charge-offs declined $554,000 to $1.5 million, and were an annualized 0.20% of loans, reaching the lowest level of quarterly net charge-offs since the second quarter of 2008. The ratio of total classified loans to Tier 1 capital plus allowance for loan losses ('ALLL') also improved to 29.69% from 30.75% in the third quarter of 2013.

Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit reserves) were $2.3 million during the quarter ended December 31, 2013. This was essentially unchanged from the previous quarter, as broad improvement in portfolio credit metrics was offset by higher OREO write downs for assets which are expected to be disposed of in the near term.

The ALLL was essentially unchanged from the third quarter of 2013 at $41.2 million. The ratio of the ALLL to total gross loans decreased slightly to 1.40% at December 31, 2013 from 1.44% at September 30, 2013, due to loan growth, and improved to 133% of nonaccruing loans.

Customer funding changes reflect continued strength in core deposits and flow of temporary year-end trust accounts

Customer funding was $3.0 billion at December 31, 2013, an increase of $59.5 million, or 2% (not annualized), over levels reported at September 30, 2013. This growth included an increase in core deposits of $122.7 million, or 5% (not annualized), over the same period, which included $115.0 million in temporary trust-related money market deposits. Partially offsetting this increase was a $50.1 million purposeful reduction in higher-cost, generally single-service CDs.

Customer funding decreased $89.6 million, or 3%, from December 31, 2012 balances. This decrease was mainly due to $153.1 million of purposeful reductions in higher-cost CDs and a lower level of temporary trust-related money market deposits of $26.2 million, partially offset by growth in core deposits of $93.2 million or 4%.

Core deposits now represent a robust 84% of total customer funding at December 31, 2013, and no-cost and low-cost demand deposit accounts represent a strong 42% of total customer funding compared to 37% at December 31, 2012.

The following table summarizes customer funding balances and composition at December 31, 2013 compared to prior periods.

(Dollars in thousands) At
December 31, 2013
At
September 30, 2013
At
December 31, 2012
Noninterest demand $ 650,256 21 % $ 609,115 21 % $ 631,026 20 %
Interest-bearing demand 638,403 21 669,173 22 538,195 17
Savings 383,731 13 378,397 13 389,977 12
Money market 887,715 29 780,753 26 933,901 30
Total core deposits 2,560,105 84 2,437,438 82 2,493,099 79
Customer time 458,110 15 508,161 17 611,223 20
Total customer deposits 3,018,215 99 2,945,599 99 3,104,322 99
Customer sweep accounts 23,710 1 36,807 1 27,218 1
Total customer funding $ 3,041,925 100 % $ 2,982,406 100 % $ 3,131,540 100 %

Noninterest income growth reflects continued business growth

During the fourth quarter of 2013, the Company earned noninterest income of $19.8 million, a decrease of $2.9 million compared to $22.7 million in the third quarter of 2013. Excluding net securities gains in both periods as well as the one-time reverse mortgage consolidation gain recorded during the third quarter, noninterest income increased $501,000, or 3% (not annualized), when compared to the third quarter of 2013. This growth was primarily the result of a $236,000 increase in mortgage banking revenues, a $164,000 increase in deposit service charges, and a $139,000 increase in loan fee income.

Noninterest income decreased $1.4 million from the same period a year ago. Excluding net securities gains in both periods, noninterest income increased by $1.6 million, or 9% from the same period in 2012. This increase was primarily the result of: growth in investment management and fiduciary revenue, which increased $311,000, or 9%; growth in credit/debit card and ATM income (largely related to the Cash Connect® ATM division), which increased $215,000, or 4%; growth in mortgage banking revenue, which increased $179,000, or 19%, (these revenues include $885,000 from a full quarter of Array/Arrow results); and higher deposit service charges, which increased $111,000, or 2%.

Noninterest expense reflects careful management of operating expenses

Noninterest expense for the fourth quarter of 2013 totaled $34.6 million compared to $32.8 million for the third quarter of 2013, an increase of $1.8 million, or 5%. Included in this increase was $684,000 of additional performance-driven incentive compensation, a $612,000 increase in loan workout and OREO expense; and a $332,000 increase in corporate development related costs (primarily professional fees).

Noninterest expense for the fourth quarter of 2013 decreased $2.6 million, or 7% from the same period in 2012. Excluding the one-time debt extinguishment costs recorded during the fourth quarter of 2012, noninterest expense increased by $1.1 million, or only 3% when compared to the same period in the prior year, despite significant growth in core revenue, corporate development expenses of $525,000 and increased performance-related incentive expense. In addition, this was the first full quarter of operating results for Array / Arrow, which added $492,000 of noninterest expense.

Selected Business Segments (included in previous results):

Wealth Management division fee revenue grew by 12% over the prior year

The Wealth Management division provides a broad array of fiduciary, investment management, credit and deposit products to clients through four businesses. WSFS Investment Group, Inc. provides insurance and brokerage products primarily to our retail banking clients. Cypress Capital Management, LLC is a registered investment advisor with over $614 million in assets under management. Cypress' primary market segment is high net worth individuals, offering a 'balanced' investment style focused on preservation of capital and current income. Christiana Trust, with $8.8 billion in assets under administration,provides fiduciary and investment services to personal trust clients, and trustee, agency, custodial and commercial domicile services to corporate and institutional clients. WSFS Private Banking serves high net worth clients by delivering credit and deposit products and partnering with Cypress, Christiana and WSFS Investment Group to deliver investment management and fiduciary products and services.

Total wealth management revenue (net interest income, investment management and fiduciary revenue plus other noninterest income generated by the segment) was $7.0 million during the fourth quarter of 2013. This represented an increase of $237,000, or 4% (not annualized), compared to the third quarter of 2013 and an increase of $673,000, or 11%, compared to the fourth quarter of 2012. Fee revenue increased $218,000 compared to the third quarter of 2013 and $440,000, or 12%, compared to the fourth quarter of 2012. This growth reflects the continued expansion of the corporate and personal trust business lines, as well as more extensive jumbo mortgage product offerings for Private Banking clients provided by the Array acquisition. Total segment noninterest expense (including intercompany allocations of expense and provision for loan losses) was $4.9 million during the fourth quarter of 2013 compared to $3.6 million during the third quarter of 2013 and $3.4 million during fourth quarter 2012. This increase was mainly due to higher credit costs and increased personnel expenses to support significant growth in the business. The increased credit costs are the result of higher OREO write-downs during the fourth quarter of 2013 on soon-to-be-disposed assets, combined with the impact of net recoveries in both prior comparable periods. Pre-tax income for the Wealth Management division in the fourth quarter of 2013 was $1.9 million compared to $3.1 million in the third quarter 2013 and $2.9 million in the fourth quarter 2012. Excluding credit costs, pre-tax income for the fourth quarter 2013 was $2.4 million compared to $2.8 million in the third quarter 2013 and $1.3 million in the fourth quarter 2012.

Cash Connect growth reflects seasonal growth and new customers and product offerings

The Cash Connect® division is a premier provider of ATM vault cash and related services in the United States. Cash Connect® services over $476 million in vault cash in nearly 15,000 non-bank ATMs nationwide and operates more than 450 ATMs for WSFS Bank, which has the largest branded ATM network in Delaware.

Cash Connect® recorded $6.2 million in net revenue (fee income less funding costs) during the fourth quarter of 2013, which was unchanged compared to the third quarter of 2013 and an increase of $880,000, or 17%, compared to the fourth quarter of 2012 due to growth in bailments and additional product and service offerings. Noninterest expenses (including intercompany allocations of expense) were $3.9 million during the fourth quarter of 2013, a decrease of $122,000 compared to the third quarter of 2013, and an increase of $525,000from the fourth quarter of 2012. Cash Connect® reported pre-tax income of $2.3 million for the fourth quarter of 2013, compared to $2.2 million in the third quarter of 2013, and $1.8 million in the fourth quarter of 2012. The increase in bottom-line results was due to continued fundamental growth in this business line.

Income taxes

The Company recorded a $6.4 million income tax provision in the fourth quarter of 2013 compared to $7.2 million in the third quarter of 2013 and $4.3 million in the fourth quarter of 2012. The Company's effective tax rate for the fourth quarter of 2013 was 35%, compared to 34% in the third quarter of 2013, and 36% during the fourth quarter of 2012.

Positive Subsequent Event

As a result of consolidation of the reverse mortgage trust during the third quarter of 2013, a deferred tax asset ("DTA") was recorded at that time. However, because the reverse mortgage trust was not able to be consolidated for income tax purposes, a full valuation allowance was also recorded at that time on the DTA due to the uncertainty of realizing this benefit. On January 27, 2014, WSFS completed the legal call of the reverse mortgage trust bonds and the redemption of the trust's preferred shareholders, eliminating this uncertainty since the reverse mortgage trust's assets have now been combined with the Bank's for tax purposes. As a result, WSFS has removed the valuation allowance, and recorded a tax benefit of approximately $6.6 million during January 2014. This will positively impact diluted EPS and tangible book value per share by approximately $0.74 in the first quarter 2014 results.

Capital management

The Company's tangible common equity increased to $344.1 million at December 31, 2013 from $334.4 million at September 30, 2013. Tangible common book value per share was $38.68 at December 31, 2013, a $0.87 increase from $37.81 reported at September 30, 2013. The Company's tangible common equity to asset ratio increased 10 basis points to 7.69% from 7.59%.

The Company's total stockholders' equity increased to $383.1 million at December 31, 2013 from $374.0 million at September 30, 2013, primarily due to earnings in the quarter, partially offset by an unrealized loss in the value of the investment portfolio (interest rate related) and dividends paid.

At December 31, 2013, WSFS Bank's Tier 1 leverage ratio of 10.35%, Tier 1 risk-based ratio of 13.16% and total risk-based capital ratio of 14.36%, all increased from the prior quarter and all were substantially in excess of "well-capitalized" regulatory benchmarks.

The Board of Directors approved a quarterly cash dividend of $0.12 per share of common stock. This dividend will be paid on February 28, 2014, to shareholders of record as of February 14, 2014.

Fourth quarter 2013 earnings release conference call

Management will conduct a conference call to review fourth quarter results at 1:00 p.m. Eastern Time (ET) on January 31, 2014. Interested parties may listen to this call by dialing 1-877-312-5857. A rebroadcast of the conference call will be available two hours after the completion of the call, until February 8, 2014, by dialing 1-855-859-2056 and using Conference ID 38614537.

About WSFS Financial Corporation

WSFS Financial Corporation is a multi-billion dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest, locally-managed bank and trust company headquartered in Delaware with $4.5 billion in assets on its balance sheet and $8.8 billion in fiduciary assets, including approximately $1.1 billion in assets under management. WSFS operates from 51 offices located in Delaware (41), Pennsylvania (8), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking and trust and wealth management. Other subsidiaries or divisions include Christiana Trust, WSFS Investment Group, Inc., Cypress Capital Management, LLC, Cash Connect® and Array Financial. Serving the Delaware Valley since 1832, WSFS Bank is the seventh oldest bank in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.

Forward-Looking Statement Disclaimer

This press release contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's financial goals, management's plans and objectives for future operations, financial and business trends, business prospects, and management's outlook or expectations for earnings, revenues, expenses, capital levels, liquidity levels, asset quality or other future financial or business performance, strategies or expectations. Such forward-looking statements are based on various assumptions (some of which may be beyond the Company's control) and are subject to risks and uncertainties (which change over time) and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to, those related to the economic environment, particularly in the market areas in which the Company operates, including an increase in unemployment levels; the volatility of the financial and securities markets, including changes with respect to the market value of financial assets; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; increases in benchmark rates would increase debt service requirements for customers whose terms include a variable interest rate, which may negatively impact the ability of borrowers to pay as contractually obligated; changes in government regulation affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules being issued in accordance with this statute and potential expenses and elevated capital levels associated therewith; possible additional loan losses and impairment of the collectability of loans; seasonality, which may impact customers, such as construction-related businesses, the availability of public funds, and certain types of the Company's fee revenue, such as mortgage originations; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations, may have an adverse effect on business; possible rules and regulations issued by the Consumer Financial Protection Bureau or other regulators which might adversely impact our business model or products and services; possible stresses in the real estate markets, including possible continued deterioration in property values that affect the collateral value of underlying real estate loans; the Company's ability to expand into new markets, develop competitive new products and services in a timely manner and to maintain profit margins in the face of competitive pressures; possible changes in consumer and business spending and savings habits could affect the Company's ability to increase assets and to attract deposits; the Company's ability to effectively manage credit risk, interest rate risk market risk, operational risk, legal risk, liquidity risk, reputational risk, and regulatory and compliance risk; the effects of increased competition from both banks and non-banks; the effects of geopolitical instability and risks such as terrorist attacks; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes, and the effects of man-made disasters; possible changes in the speed of loan prepayments by the Company's customers and loan origination or sales volumes; possible acceleration of prepayments of mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on prepayments on mortgage-backed securities due to low interest rates; and the costs associated with resolving any problem loans, litigation and other risks and uncertainties, discussed in the Company's Form 10-K for the year ended December 31, 2012 and other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward looking statements are as of the date they are made, and the Company 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 Company.

WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data) Three months ended Twelve months ended
(Unaudited) December 31,
2013
September 30,
2013
December 31,
2012
December 31,
2013
December 31,
2012
Interest income:
Interest and fees on loans $ 32,871 $ 32,708 $ 32,341 $ 129,138 $ 130,526
Interest on reverse mortgage loans and securities (n) 1,343 514 279 2,565 655
Interest on mortgage-backed securities 3,270 3,261 4,012 13,237 18,548
Interest and dividends on investment securities 693 546 121 1,692 498
Other interest income 257 87 34 391 60
38,434 37,116 36,787 147,023 150,287
Interest expense:
Interest on deposits 1,666 1,673 2,449 7,180 13,101
Interest on Federal Home Loan Bank advances 498 482 1,267 1,874 6,252
Interest on trust preferred borrowings 336 339 366 1,342 1,480
Interest on Senior Debt 942 943 943 3,771 1,296
Interest on reverse mortgage bonds payable 161 -- -- 161 --
Interest on other borrowings 285 273 264 1,107 1,159
3,888 3,710 5,289 15,435 23,288
Net interest income 34,546 33,406 31,498 131,588 126,999
Provision for loan losses 1,292 1,969 3,674 7,172 32,053
Net interest income after provision for loan losses 33,254 31,437 27,824 124,416 94,946
Noninterest income:
Credit/debit card and ATM income 6,119 6,374 5,904 24,350 22,935
Deposit service charges 4,571 4,407 4,460 17,208 17,133
Investment management and fiduciary revenue 3,905 3,836 3,594 15,528 13,310
Reverse mortgage consolidation gain -- 3,801 -- 3,801 --
Mortgage banking activities, net 1,143 907 964 3,980 2,846
Securities gains, net 660 306 3,628 3,516 21,425
Loan fee income 558 419 537 1,959 2,340
Bank-owned life insurance income 108 74 97 270 1,544
Other income 2,732 2,618 2,011 9,539 5,160
19,796 22,742 21,195 80,151 86,693
Noninterest expense:
Salaries, benefits and other compensation 17,780 17,648 16,207 70,866 66,047
Occupancy expense 3,317 3,385 3,384 13,486 13,081
Equipment expense 2,332 2,044 1,760 8,322 7,163
Data processing and operations expense 1,633 1,548 1,391 5,924 5,581
FDIC expenses 425 959 1,396 3,492 5,658
Professional fees 1,700 866 1,192 4,412 4,109
Loan workout and OREO expense 1,104 492 1,953 2,536 6,855
Marketing expense 660 643 680 2,428 2,656
Debt extinguishment -- -- 3,662 -- 3,662
Other operating expenses 5,647 5,224 5,561 21,463 18,533
34,598 32,809 37,186 132,929 133,345
Income before taxes 18,452 21,370 11,833 71,638 48,294
Income tax provision 6,378 7,210 4,275 24,756 16,983
Net income 12,074 14,160 7,558 46,882 31,311
Dividends on preferred stock and accretion of discount -- 332 693 1,633 2,770
Net income allocable to common stockholders $ 12,074 $ 13,828 $ 6,865 $ 45,249 $ 28,541
Diluted earnings per share of common stock:
Net income allocable to common stockholders $ 1.33 $ 1.54 $ 0.78 $ 5.06 $ 3.25
Weighted average shares of common stock outstanding for diluted EPS 9,078,228 8,975,826 8,823,702 8,943,246 8,790,319
Performance Ratios:
Return on average assets (a) 1.09 % 1.29 % 0.70 % 1.07 % 0.73 %
Return on average equity (a) 12.64 14.67 7.18 11.60 7.66
Return on tangible common equity (a) (o) 14.50 16.84 8.48 13.60 9.15
Net interest margin (a)(b) 3.68 3.61 3.39 3.56 3.47
Efficiency ratio (c) 63.13 58.04 70.46 62.42 62.19
Noninterest income as a percentage of total net revenue (b) 36.12 40.23 40.16 37.64 40.43
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION
(Dollars in thousands)
(Unaudited) December 31,
2013
September 30,
2013
December 31,
2012
Assets:
Cash and due from banks $ 94,734 $ 96,021 $ 93,629
Cash in non-owned ATMs 389,360 406,227 406,627
Investment securities (d) 132,343 125,130 50,203
Other investments 36,201 34,073 31,796
Mortgage-backed securities (d) 684,773 681,796 863,246
Net loans (e)(f)(l) 2,936,467 2,842,600 2,736,674
Reverse mortgage loans and securities 37,327 40,095 6,639
Bank owned life insurance 63,185 63,077 62,915
Other assets 141,373 153,637 123,419
Total assets $ 4,515,763 $ 4,442,656 $ 4,375,148
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 650,256 $ 609,115 $ 631,026
Interest-bearing deposits 2,367,959 2,336,484 2,473,296
Total customer deposits 3,018,215 2,945,599 3,104,322
Brokered deposits 168,727 175,599 170,641
Total deposits 3,186,942 3,121,198 3,274,963
Federal Home Loan Bank advances 638,091 600,435 376,310
Reverse Mortgage bonds payable 21,990 26,340 --
Other borrowings 243,750 274,180 260,956
Other liabilities 41,940 46,552 41,865
Total liabilities 4,132,713 4,068,705 3,954,094
Stockholders' equity 383,050 373,951 421,054
Total liabilities and stockholders' equity $ 4,515,763 $ 4,442,656 $ 4,375,148
Capital Ratios:
Equity to asset ratio 8.48 % 8.42 % 9.62 %
Tangible equity to asset ratio (o) 7.69 7.59 8.93
Tangible common equity to asset ratio (o) 7.69 7.59 7.72
Tier 1 leverage (g) (required: 4.00%; well-capitalized: 5.00%) 10.35 10.17 9.83
Tier 1 risk-based capital (g) (required: 4.00%; well-capitalized: 6.00%) 13.16 13.05 13.04
Total Risk-based capital (g) (required: 8.00%; well-capitalized: 10.00%) 14.36 14.30 14.29
Asset Quality Indicators:
Nonperforming Assets:
Nonaccruing loans $ 30,950 $ 38,169 $ 47,760
Troubled debt restructuring (accruing) 12,332 11,161 10,093
Assets acquired through foreclosure 4,532 7,163 4,622
Total nonperforming assets $ 47,814 $ 56,493 $ 62,475
Past due loans (h) $ 533 $ 658 $ 786
Allowance for loan losses $ 41,244 $ 41,431 $ 43,922
Ratio of nonperforming assets to total assets 1.06 % 1.27 % 1.43 %
Ratio of allowance for loan losses to total gross loans (i) 1.40 1.44 1.58
Ratio of allowance for loan losses to nonaccruing loans 133 109 92
Ratio of quarterly net charge-offs to average gross loans (a)(e) 0.20 0.28 0.78
Ratio of year-to-date net charge-offs to average gross loans (a)(e) 0.34 0.39 1.49
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited) Three months ended
December 31, 2013 September 30, 2013 December 31, 2012
Average
Balance
Interest &
Dividends
Yield/Rate
(a)(b)
Average
Balance
Interest &
Dividends
Yield/Rate
(a)(b)
Average
Balance
Interest &
Dividends
Yield/Rate
(a)(b)
Assets:
Interest-earning assets:
Loans: (e) (j)
Commercial real estate loans $ 815,671 $ 9,700 4.76 % $ 818,361 $ 9,877 4.83 % $ 747,102 $ 9,391 5.03 %
Residential real estate loans (l) 256,418 2,452 3.83 249,476 2,455 3.94 264,867 2,812 4.25
Commercial loans 1,557,022 17,302 4.38 1,525,053 17,023 4.40 1,455,335 16,720 4.51
Consumer loans 297,219 3,417 4.56 287,555 3,353 4.63 285,399 3,418 4.76
Total loans (l) 2,926,330 32,871 4.51 2,880,445 32,708 4.56 2,752,703 32,341 4.71
Mortgage-backed securities (d) 674,586 3,270 1.94 711,659 3,261 1.83 887,947 4,012 1.81
Investment securities (d) 129,577 693 3.16 108,661 546 2.87 53,250 121 1.02
Reverse mortgage loans and securities (n) 39,971 1,343 13.44 3,576 514 57.53 5,690 279 19.58
Other interest-earning assets 33,304 257 3.06 38,054 87 0.91 30,854 34 0.44
Total interest-earning assets 3,803,768 38,434 4.09 3,742,395 37,116 4.01 3,730,444 36,787 3.95
Allowance for loan losses (41,817) (42,315) (46,533)
Cash and due from banks 85,972 80,586 72,612
Cash in non-owned ATMs 387,164 424,125 382,291
Bank owned life insurance 63,115 63,030 62,851
Other noninterest-earning assets 130,857 131,780 113,988
Total assets $ 4,429,059 $ 4,399,601 $ 4,315,653
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 634,274 $ 160 0.10 % $ 563,409 $ 121 0.09 % $ 461,841 $ 89 0.08 %
Money market 790,602 292 0.15 764,973 238 0.12 791,411 402 0.20
Savings 383,637 56 0.06 388,132 50 0.05 387,959 71 0.07
Customer time deposits 481,148 1,018 0.84 512,689 1,123 0.87 650,006 1,643 1.01
Total interest-bearing customer deposits 2,289,661 1,526 0.26 2,229,203 1,532 0.27 2,291,217 2,205 0.38
Brokered deposits 174,056 140 0.32 174,690 141 0.32 229,515 244 0.42
Total interest-bearing deposits 2,463,717 1,666 0.27 2,403,893 1,673 0.28 2,520,732 2,449 0.39
FHLB of Pittsburgh advances 611,473 498 0.32 651,993 482 0.29 466,175 1,267 1.06
Trust preferred borrowings 67,011 336 1.96 67,011 339 1.98 67,011 366 2.14
Reverse mortgage bonds payable 25,550 161 2.47 -- -- -- -- -- --
Senior Debt 55,000 942 6.85 55,000 943 6.86 55,000 943 6.71
Other borrowed funds 147,322 285 0.77 133,077 273 0.82 131,303 264 0.80
Total interest-bearing liabilities 3,370,073 3,888 0.46 3,310,974 3,710 0.45 3,240,221 5,289 0.65
Noninterest-bearing demand deposits 638,716 669,807 620,320
Other noninterest-bearing liabilities 38,073 32,756 33,993
Stockholders' equity 382,197 386,064 421,119
Total liabilities and stockholders' equity $ 4,429,059 $ 4,399,601 $ 4,315,653
Excess of interest-earning assets over interest-bearing liabilities $ 433,695 $ 431,421 $ 490,223
Net interest and dividend income $ 34,546 $ 33,406 $ 31,498
Interest rate spread 3.63 % 3.56 % 3.30 %
Net interest margin 3.68 % 3.61 % 3.39 %
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited) Three months ended Twelve months ended
Stock Information: December 31,
2013
September 30,
2013
December 31,
2012
December 31,
2013
December 31,
2012
Market price of common stock:
High $ 79.11 $ 62.78 $ 43.99 $ 79.11 $ 44.00
Low 58.02 53.45 41.12 43.75 35.98
Close 77.53 60.25 42.25 77.53 42.25
Book value per share of common stock 43.06 42.28 47.99
Tangible book value per share of common stock 38.68 37.81 44.19
Tangible common book value per share of common stock (o) 38.68 37.81 38.21
Number of shares of common stock outstanding (000s) 8,895 8,844 8,773
Other Financial Data:
One-year repricing gap to total assets (k) (3.28)% (1.57)% (1.02)%
Weighted average duration of the MBS portfolio 5.3 years 5.8 years 5.0 years
Unrealized (losses) gains on securities available-for-sale, net of taxes $ (20,822) $ (15,606) $ 13,415
Number of Associates (FTEs) (m) 762 776 763
Number of offices (branches, LPO's, operations centers, etc.) 51 51 51
Number of WSFS owned ATMs 457 454 440
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 at fair value.
(e) Net of unearned income.
(f) Net of allowance for loan losses.
(g) Represents capital ratios of Wilmington Savings Fund Society, FSB and subsidiaries.
(h) Accruing loans which are contractually past due 90 days or more as to principal or interest.
(i) Excludes loans held-for-sale.
(j) Nonperforming loans are included in average balance computations.
(k) 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.
(l) Includes loans held-for-sale.
(m) Includes summer Associates, when applicable.
(n) Includes all net interest income from reverse mortgages including net interest income recorded in conjunction with ownership of Class O certificates.
(o) The Company uses non-GAAP (Generally Accepted Accounting Principles) financial information in its analysis of the Company's performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results.
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Non-GAAP Reconciliation (o): Three months ended
December 31,
2013
September 30,
2013
December 31,
2012
Net interest Income (GAAP) $ 34,546 $ 33,406 $ 31,498
Noninterest Income (GAAP) 19,796 22,742 21,195
Less: Securities gains (660) (306) (3,628)
Less: Reverse mortgage consolidation gain -- (3,801) --
Core noninterest income (non-GAAP) 19,136 18,635 17,567
Core net revenue (non-GAAP) $ 53,682 $ 52,041 $ 49,065
End of period
December 31,
2013
September 30,
2013
December 31,
2012
Total assets $ 4,515,763 $ 4,442,656 $ 4,375,148
Less: Goodwill and other intangible assets (38,979) (39,541) (33,320)
Total tangible assets $ 4,476,784 $ 4,403,115 $ 4,341,827
Total Stockholders' equity $ 383,050 $ 373,951 $ 421,054
Less: Goodwill and other intangible assets (38,979) (39,541) (33,320)
Total tangible equity 344,071 334,410 387,734
Less: Preferred stock -- -- (52,474)
Total tangible common equity $ 344,071 $ 334,410 $ 335,260
Calculation of tangible common book value:
Book Value (GAAP) $ 43.06 $ 42.28 $ 47.99
Tangible book value (non-GAAP) 38.68 37.81 44.19
Tangible common book value (non-GAAP) 38.68 37.81 38.21
Calculation of tangible common equity to assets:
Equity to asset ratio (GAAP) 8.48 % 8.42 % 9.62 %
Tangible equity to asset ratio (non-GAAP) 7.69 7.59 8.93
Tangible common equity to asset ratio (non-GAAP) 7.69 7.59 7.72

CONTACT: Investor Relations Contact: Stephen A. Fowle (302) 571-6833 sfowle@wsfsbank.com Media Contact: Stephanie Heist (302) 571-5259 sheist@wsfsbank.comSource:WSFS Financial Corporation