WSFS Reports 1st Quarter 2014 EPS of $1.85, an 81% Increase Over 1st Quarter 2013; Aided by Recognition of Tax Benefit

WILMINGTON, Del., April 24, 2014 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (Nasdaq:WSFS), the parent company of WSFS Bank, reported net income of $16.9 million, or $1.85 per diluted common share, for the first quarter of 2014 compared to net income of $9.0 million, or $1.02 per diluted common share, for the first quarter of 2013 and net income of $12.1 million, or $1.33 per diluted common share, for the fourth quarter of 2013. First quarter 2014 results include a $6.7 million tax benefit as described below.

Highlights for the first quarter of 2014:

  • Commercial loans grew at a 9% annualized rate led by double digit growth in Commercial and Industrial (C&I) and Commercial Real Estate (CRE) lending reflecting continued success in winning good market share.
  • Core (o) revenues, excluding securities gains, increased $3.5 million, or 8%, from the first quarter 2013 despite the negative impact of the prolonged and severe weather on first quarter 2014 results.
  • Core (o) non-interest income improved $1.4 million, or 8% from the first quarter of 2013 with increases in nearly all fee income categories.
  • Core(o) EPS of $1.10 per common share increased 22% from $0.90 per common share for the first quarter of 2013 and core (o) ROA was 0.90%, up from 0.81% reported in the first quarter of 2013.
  • Tangible common capital(o) and tangible common book value per share(o) both increased more than 7% during the first quarter of 2014.

Notable items:

  • During the first quarter of 2014, WSFS completed the legal call of the reverse mortgage trust bonds previously consolidated on WSFS' balance sheet. As a result, WSFS recorded an income tax benefit of approximately $6.7 million, or $0.73 in diluted earnings per share.
  • WSFS realized $578,000, or $0.04 per diluted common share (after-tax), in net gains on securities sales from continued portfolio management, down from $1.6 million, or $0.12 per diluted common share, in the first quarter 2013 and $660,000, or $0.05 per diluted common share, in the fourth quarter of 2013.
  • WSFS recorded $250,000, or $0.02 per diluted common share (after tax) in expenses related to corporate development activities. There were no corporate development costs in the first quarter of 2013 and $525,000, or $0.04 per share, of during the fourth quarter of 2013.

CEO outlook and commentary:

Mark A. Turner, President and CEO, said, "We are pleased to report another quarter of strong growth and solid earnings. Year-over-year revenue growth continues positive trends as we build our businesses and benefit from our position as the leading community bank in our primary market. Our growth comes despite typical first quarter seasonal slowness compounded by the challenges of a severe, prolonged winter and heightened competition.

"In addition to revenue growth, our balance sheet improvements also reflect the success we are having in building our franchise and solidifying our market position. Loan growth statistics continue to show strength, as C&I lending increased 10% on an annualized basis and CRE lending increased by 12%. Additionally, underlying core customer funding performance reflected market share gains.

"Credit quality statistics reflect the continued strength of our loan portfolio. The migration of two relationships to nonperforming status modestly impacted our credit quality metrics. However, the underlying credit trends for the remainder of the portfolio remained solid during the quarter.

"Our growth trends provide a strong foundation, and we will continue to work diligently towards our goal of becoming a sustainably high-performing company. Our constant focus on, and belief in our strategy of 'Engaged Associates delivering Stellar Service growing Customer advocates and value for our Owners' is a key to our continued success."

First Quarter 2014 Discussion of Financial Results

Net interest income and margin up significantly over 2013 levels

The net interest margin for the first quarter of 2014 was 3.57%, an 11 basis point increase from 3.46% reported for the first quarter of 2013. Net interest income for the first quarter of 2014 was $34.0 million, a $2.5 million, or 8% increase from the year-ago period. Compared to the fourth quarter of 2013, the net interest margin decreased 11 basis points and net interest income decreased $502,000, or 6% annualized.

Compared to the first quarter of 2013, results benefitted from consolidation of the reverse mortgage assets late in the third quarter of 2013 as well as balance sheet mix improvements, as higher yielding loans replaced low yielding mortgage-backed securities. Compared to the fourth quarter 2013, results were impacted by a shorter quarter, which reduced net interest income by approximately $650,000 and the net interest margin by 7 basis points. In addition, a decrease in reverse mortgage income negatively impacted the net interest margin by 2 basis points. As expected, reverse mortgage income can vary from period-to-period depending on the timing of cash flows and underlying collateral values. The linked quarter comparison was also negatively impacted by a decrease in overall loan yields resulting from increased competition.

Loan portfolio growth led by double-digit C&I and CRE loan growth

Total net loans were $3.0 billion at March 31, 2014, an increase of $37.4 million, or 5% annualized compared to the prior quarter-end. The growth was the result of significant increases in C&I loans of $40.2 million, or 10% annualized, and CRE loans of $21.0 million, or 12% annualized.

Total net loans at March 31, 2014 increased $217.2 million, or 8%, compared to March 31, 2013. The year-over-year increase includes $137.6 million, or 9%, growth in C&I loans and a $111.7 million, or 18%, increase in CRE loans.

The following table summarizes loan balances and composition at March 31, 2014 compared to prior periods.

At At At
(Dollars in thousands) March 31, 2014 December 31, 2013 March 31, 2013
Commercial & industrial $ 1,636,087 55% $ 1,595,888 54% $ 1,498,514 55%
Commercial real estate 740,004 25 718,972 24 628,265 23
Construction 100,671 3 105,460 4 133,032 5
Total commercial loans 2,476,762 83 2,420,320 82 2,259,811 83
Residential mortgage 236,309 8 254,324 9 255,807 9
Consumer 302,157 10 303,067 10 284,047 10
Allowance for loan losses (41,328) (1) (41,244) (1) (42,948) (2)
Net Loans $ 2,973,900 100% $ 2,936,467 100% $ 2,756,717 100%

Credit quality fundamentals reflect periodic volatility and remain strong

Credit quality metrics remained strong during the first quarter of 2014. Credit metrics reflect expected periodic fluctuations and were negatively impacted by two relationships totaling approximately $7.7 million which moved to nonperforming status during the quarter. Nonperforming assets increased $7.6 million over the fourth quarter of 2013, or 16%, to $55.4 million, or 1.22% of assets, and delinquencies (including nonperforming delinquencies) increased $5.3 million to 0.92% of total loans.

For the quarter, net charge-offs increased $1.1 million to $2.6 million, and were an annualized 0.34% of loans. The ratio of total classified loans to Tier 1 capital plus allowance for loan losses ('ALLL') increased to 31.47% from 29.69% in the fourth quarter of 2013.

Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit reserves) were $3.1 million during the quarter ended March 31, 2014, an increase from $2.3 million in the previous quarter.

The ALLL grew slightly from the fourth quarter of 2013 to $41.3 million. The ratio of the ALLL to total gross loans decreased slightly to 1.38% at March 31, 2014 from 1.40% at December 31, 2013, due primarily to loan growth and stood at 103% of nonaccruing loans.

Customer funding reflects outflow of temporary year-end trust accounts and continued strength in core deposits

Customer funding decreased to $2.9 billion at March 31, 2014, due to an expected outflow in temporary trust-related money market deposits of $115.0 million. Excluding temporary trust accounts, customer funding increased $19.6 million, or 3% (annualized), and core customer funding increased $29.5 million, or 5% (annualized).

Customer funding decreased $87.2 million from March 31, 2013 balances. This decrease was mainly due to $111.1 million of purposeful reductions in higher cost CDs and an $89.0 million decrease in temporary trust-related money market deposits, which more than offset growth in core deposits of $135.4 million or 9%.

Core deposits now represent a robust 84% of total customer funding, and no-cost and low-cost demand deposit accounts represent a strong 45% of total customer funding.

The following table summarizes customer funding balances and composition at March 31, 2014 compared to prior periods.

At At At
(Dollars in thousands) March 31, 2014 December 31, 2013 March 31, 2013
Noninterest demand $ 664,976 23% $ 650,256 21% $ 626,751 21%
Interest-bearing demand 648,856 22 638,403 21 560,394 18
Savings 410,186 14 383,731 13 401,452 13
Money market 750,541 25 887,715 29 848,967 28
Total core deposits 2,474,559 84 2,560,105 84 2,437,564 80
Customer time 451,154 15 458,110 15 562,289 19
Total customer deposits 2,925,713 99 3,018,215 99 2,999,853 99
Customer sweep accounts 20,807 1 23,710 1 33,895 1
Total customer funding $ 2,946,520 100% $ 3,041,925 100% $ 3,033,748 100%

Noninterest income reflects first quarter seasonality and business growth over prior year

When compared to the same period a year ago, noninterest income increased $290,000. Excluding net securities gains in both periods, noninterest income of $17.8 million increased $1.4 million, or 8%, from $16.4 million in the first quarter of 2013. This growth was the result of increases in all businesses from prior-year levels, including significant increases in the Cash Connect (ATM) division (reflected in debit/ credit & ATM income and other income) as well as increases in our Wealth and core Banking businesses.

Typical seasonality, combined with the impact of a severe winter on transactional activity, impacted the fee income comparison to the fourth quarter 2013. During the first quarter of 2014, the Company earned noninterest income of $18.4 million, a decrease of $1.4 million compared to $19.8 million in the fourth quarter of 2013. Adjusted for securities gains, this decrease was $1.3 million, or 7%. Transactional items such as debit/credit card & ATM income ($353,000), deposit service charges ($302,000) and mortgage banking activities ($331,000) were particularly affected by seasonality and weather.

Noninterest expense reflects seasonal expenses and franchise growth

Noninterest expense for the first quarter of 2014 increased $1.8 million from the same period in 2013. Adjusting for corporate development costs, expenses increased $1.3 million, or 5% from the prior year. Contributing to the year-over-year expense growth is an increase in salaries, benefits and other compensation expense of $491,000, mostly due to the addition of Array & Arrow Associates, as well as the timing of corporate merit increases during the first quarter. In addition, the occupancy expense increase of $346,000 is attributable to heavier snow removal costs as well as increases in utility costs for the 2014 winter season. Finally, other operating expenses, including armored courier costs, increased by $750,000, supporting the growth in the Cash Connect division's revenue, mentioned previously.

Noninterest expense for the first quarter of 2014 decreased $420,000 from the fourth quarter of 2013. Adjusting for corporate development costs in both quarters, expenses decreased $149,000, or 2%, from the prior quarter. This decrease was driven by lower equipment costs of $645,000, as well as small declines in a number of other expense categories. These decreases were partially offset by a $694,000 increase in salaries, benefits and other compensation expense. The increase in salary and related expenses reflect typical seasonality related to taxes and other benefits, such as 401(k) matching costs, from the payment of incentives and the reset of tax caps during the first quarter. Additionally, occupancy expenses increased $412,000 due to snow removal and higher utility costs as a result of the 2014 weather.

Selected Business Segments (included in previous results):

Wealth Management division fee revenue grew by 4% 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 $630 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 $9.0 billion in assets under management and 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 $6.7 million during the first quarter of 2014. This represented an increase of $100,000 or 2%, compared to the first quarter of 2013 and decrease of $100,000 or 1% compared to the fourth quarter of 2013. Fee revenue increased $135,000 or 4% compared to the first quarter of 2013 and was flat compared to the fourth quarter of 2013. This growth reflects the continued expansion of corporate and personal trust business lines. Offsetting this growth are decreases in current revenue from the refocus of Retail Brokerage towards a relationship-oriented, recurring-revenue model and reassignment of a number of smaller transactional accounts from Private Banking to the WSFS Banking channel, best equipped to provide the appropriate products and services to these customers.

Total segment noninterest expense (including intercompany allocations of expense and provision for loan losses) was $4.5 million during the first quarter of 2014 compared to $4.0 million during first quarter 2013 and $3.7 million during the fourth quarter of 2013. This increase was the result of higher personnel and infrastructure expenses to support ongoing growth as well as normal fluctuations in credit costs between the periods. Pre-tax income for the Wealth Management division in the first quarter of 2014 was $2.2 million compared to $2.5 million in the first quarter 2013 and $1.9 million in the fourth quarter 2013. Excluding variable credit costs, pre-tax income for the first quarter 2014 was $2.4 million compared to $2.5 million in the first quarter 2013 and $2.4 million in the fourth quarter 2013. The increased credit costs year-over-year are the result of write-downs on OREO properties sold in the current quarter compared to net recoveries in same period last year.

Cash Connect results reflect meaningful growth over 2013

The Cash Connect® division is a premier provider of ATM vault cash and related services in the United States. Cash Connect® services over $471 million in vault cash in nearly 15,000 non-bank ATMs nationwide and operates more than 460 ATMs for WSFS Bank, which has the largest branded ATM network in Delaware.

Cash Connect® recorded $5.7 million in net revenue (fee income less funding costs) during the first quarter of 2014, an increase of $1.0 million, or 22%, compared to the first quarter of 2013 due to growth and additional product and service offerings. This amount decreased from the $6.2 million reported in the fourth quarter of 2013 due to seasonality. Noninterest expenses (including intercompany allocations of expense) were $4.1 million during the first quarter of 2014, an increase of $646,000 from the first quarter of 2013 and an increase of $227,000 compared to the fourth quarter of 2013. Cash Connect® reported pre-tax income of $1.7 million for the first quarter of 2014, compared to $1.3 million in the first quarter of 2013 and $2.3 million in the fourth quarter of 2013. The decrease in linked-quarter bottom-line results was due to typical seasonality.

Income taxes

The Company recorded a net $1.3 million income tax benefit in the first quarter of 2014 compared to $6.4 million tax provision in the fourth quarter of 2013 and $5.3 million in the first quarter of 2013.

During the first quarter of 2014, WSFS recorded a tax benefit of approximately $6.7 million related to the legal call of the reverse mortgage trust bonds. Excluding this tax benefit, the income tax provision for the first quarter of 2014 was approximately $5.4 million and the effective tax rate was 35% compared to 35% in the fourth quarter of 2013, and 35% during the first quarter of 2013.

Capital management

The Company's tangible common equity increased to $370.3 million at March 31, 2014 from $344.1 million at December 31, 2013. Tangible common book value per share was $41.56 at March 31, 2014, a $2.88, or 7%, increase from $38.68 reported at December 31, 2013. The Company's tangible common equity to asset ratio increased by 0.51% to 8.21%.

The Company's total stockholders' equity increased $25.8 to $408.9 million at March 31, 2014 from $383.1 million at December 31, 2013, primarily due to quarterly earnings and improvement in unrealized losses/gains in the investment portfolio.

At March 31, 2014, WSFS Bank's Tier 1 leverage ratio of 10.68%, Tier 1 risk-based ratio of 13.47%, and total risk-based capital ratio of 14.66%, all increased from the prior quarter and 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 May 23, 2014, to shareholders of record as of May 9, 2014.

First quarter 2014 earnings release conference call

Management will conduct a conference call to review first quarter results at 1:00 p.m. Eastern Daylight Time (EDT) on Friday, April 25, 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 May 10, 2014, by dialing 1-855-859-2056 and using Conference ID 31818348.

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 $9.5 billion in fiduciary assets, including approximately $1.1 billion in assets under management. WSFS operates from 52 offices located in Delaware (42), 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 customer, 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; the Company's ability to timely integrate any businesses it may acquire and realize any anticipated cost savings from those acquisitions; 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, 2013 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
(Unaudited) March 31, December 31, March 31,
2014 2013 2013
Interest income:
Interest and fees on loans $ 32,202 $ 32,871 $ 31,426
Interest on mortgage-backed securities 3,278 3,166 3,729
Interest and dividends on investment securities 792 693 142
Interest on reverse mortgage related assets (n) 1,197 1,346 269
Other interest income 316 257 25
37,785 38,333 35,591
Interest expense:
Interest on deposits 1,656 1,666 2,019
Interest on Federal Home Loan Bank advances 526 498 443
Interest on trust preferred borrowings 326 336 329
Interest on Senior Debt 942 942 943
Interest on Bonds Payable 15 60 --
Interest on other borrowings 276 285 277
3,741 3,787 4,011
Net interest income 34,044 34,546 31,580
Provision for loan losses 2,630 1,292 2,231
Net interest income after provision for loan losses 31,414 33,254 29,349
Noninterest income:
Credit/debit card and ATM income 5,766 6,119 5,668
Deposit service charges 4,269 4,571 4,014
Investment management and fiduciary revenue 3,834 3,905 3,728
Mortgage banking activities, net 812 1,143 737
Securities gains, net 578 660 1,644
Loan fee income 384 558 495
Bank-owned life insurance income 139 108 40
Other income 2,582 2,732 1,748
18,364 19,796 18,074
Noninterest expense:
Salaries, benefits and other compensation 18,474 17,780 17,983
Occupancy expense 3,729 3,317 3,383
Equipment expense 1,687 2,332 1,829
Data processing and operations expense 1,471 1,633 1,349
Professional fees 1,350 1,700 947
FDIC expenses 653 425 1,166
Loan workout and OREO expense 539 1,104 170
Marketing expense 499 660 517
Other operating expenses 5,776 5,647 5,026
34,178 34,598 32,370
Income before taxes 15,600 18,452 15,053
Income tax (benefit) provision (1,311) 6,378 5,313
Net income 16,911 12,074 9,740
Dividends on preferred stock and accretion of discount -- -- 692
Net income allocable to common stockholders $ 16,911 $ 12,074 $ 9,048
Diluted earnings per share of common stock:
Net income allocable to common stockholders $ 1.85 $ 1.33 $ 1.02
Weighted average shares of common stock outstanding for diluted EPS 9,127,880 9,078,228 8,873,170
Performance Ratios:
Return on average assets (a) 1.52% 1.09% 0.91%
Return on average equity (a) 16.79 12.64 9.19
Return on tangible common equity (a) (n) 18.88 14.50 10.94
Net interest margin (a)(b) 3.57 3.68 3.46
Efficiency ratio (c) 64.57 63.13 65.04
Noninterest income as a percentage of total net revenue (b) 34.70 36.12 36.32
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION
(Dollars in thousands)
(Unaudited) March 31, December 31, March 31,
2014 2013 2013
Assets:
Cash and due from banks $ 96,917 $ 94,734 $ 75,379
Cash in non-owned ATMs 342,561 389,360 454,955
Investment securities (d) 142,658 132,343 70,500
Other investments 33,825 36,201 31,804
Mortgage-backed securities (d) 716,593 684,773 753,143
Net loans (e)(f)(l) 2,973,900 2,936,467 2,756,717
Reverse mortgage related assets (n) 36,266 37,327 18,288
Bank owned life insurance 63,324 63,185 62,955
Other assets 139,918 141,373 130,902
Total assets $ 4,545,962 $ 4,515,763 $ 4,354,643
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 664,976 $ 650,256 $ 626,751
Interest-bearing deposits 2,260,737 2,367,959 2,373,102
Total customer deposits 2,925,713 3,018,215 2,999,853
Brokered deposits 247,369 168,727 188,666
Total deposits 3,173,082 3,186,942 3,188,519
Federal Home Loan Bank advances 654,824 638,091 455,262
Reverse mortgage trust bonds payable -- 21,990 --
Other borrowings 269,494 243,750 250,906
Other liabilities 39,702 41,940 35,687
Total liabilities 4,137,102 4,132,713 3,930,374
Stockholders' equity 408,860 383,050 424,269
Total liabilities and stockholders' equity $ 4,545,962 $ 4,515,763 $ 4,354,643
Capital Ratios:
Equity to asset ratio 8.99% 8.48% 9.74%
Tangible equity to asset ratio (o) 8.21 7.69 9.05
Tangible common equity to asset ratio (o) 8.21 7.69 7.84
Tier 1 leverage (g) (required: 4.00%; well-capitalized: 5.00%) 10.68 10.35 10.12
Tier 1 risk-based capital (g) (required: 4.00%; well-capitalized: 6.00%) 13.47 13.16 13.27
Total Risk-based capital (g) (required: 8.00%; well-capitalized: 10.00%) 14.66 14.36 14.52
Asset Quality Indicators:
Nonperforming Assets:
Nonaccruing loans $ 40,128 $ 30,950 $ 45,721
Troubled debt restructuring (accruing) 11,579 12,332 10,776
Assets acquired through foreclosure 3,684 4,532 6,522
Total nonperforming assets $ 55,391 $ 47,814 $ 63,019
Past due loans (h) $ 403 $ 533 $ 400
Allowance for loan losses $ 41,328 $41,244 42,948
Ratio of nonperforming assets to total assets 1.22% 1.06% 1.45%
Ratio of allowance for loan losses to total gross loans (i) 1.38 1.40 1.54
Ratio of allowance for loan losses to nonaccruing loans 103 133 94
Ratio of quarterly net charge-offs to average gross loans (a)(e) 0.34 0.20 0.46
Ratio of year-to-date net charge-offs to average gross loans (a)(f) 0.34 0.34 0.46
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited) Three months ended
March 31, 2014 December 31, 2013 March 31, 2013
Average Interest & Yield/ Average Interest & Yield/ Average Interest & Yield/
Balance Dividends Rate (a)(b) Balance Dividends Rate (a)(b) Balance Dividends Rate (a)(b)
Assets:
Interest-earning assets:
Loans: (e) (j)
Commercial real estate loans $ 834,196 $ 9,286 4.45% $ 815,671 $ 9,700 4.76% $ 761,508 $ 8,927 4.69%
Residential real estate loans (l) 240,472 2,271 3.78 256,418 2,452 3.83 260,329 2,601 4.04
Commercial loans 1,601,615 17,220 4.33 1,557,022 17,302 4.38 1,489,004 16,550 4.47
Consumer loans 302,290 3,425 4.60 297,219 3,417 4.56 284,177 3,348 4.78
Total loans (l) 2,978,573 32,202 4.32 2,926,330 32,871 4.51 2,795,018 31,426 4.51
Mortgage-backed securities (d) 680,080 3,278 1.93 674,586 3,270 1.94 765,476 3,729 1.95
Investment securities (d) 138,819 792 3.45 129,577 693 3.16 56,027 142 1.23
Reverse mortgage related assets (n) 37,261 1,197 12.85 39,971 1,343 13.44 19,347 269 5.56
Other interest-earning assets 35,093 316 3.65 33,304 257 3.06 31,489 25 0.32
Total interest-earning assets 3,869,826 37,785 3.92 3,803,768 38,434 4.09 3,667,357 35,591 3.89
Allowance for loan losses (41,585) (41,817) (44,489)
Cash and due from banks 78,318 85,972 76,363
Cash in non-owned ATMs 353,867 387,164 404,821
Bank owned life insurance 63,234 63,115 62,931
Other noninterest-earning assets 140,752 130,857 117,334
Total assets $ 4,464,412 $ 4,429,059 $ 4,284,317
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand $ 624,761 $ 146 0.09% $ 634,274 $ 160 0.10% $ 525,002 $ 120 0.09%
Money market 767,362 311 0.16 790,602 292 0.15 781,870 335 0.17
Savings 394,317 59 0.06 383,637 56 0.06 396,584 60 0.06
Customer time deposits 453,842 957 0.86 481,148 1,018 0.84 588,571 1,341 0.92
Total interest-bearing customer deposits 2,240,282 1,473 0.27 2,289,661 1,526 0.26 2,292,027 1,856 0.33
Brokered deposits 215,336 183 0.34 174,056 140 0.32 177,746 163 0.37
Total interest-bearing deposits 2,455,618 1,656 0.27 2,463,717 1,666 0.27 2,469,773 2,019 0.33
FHLB of Pittsburgh advances 655,509 526 0.32 611,473 498 0.32 475,685 443 0.37
Trust preferred borrowings 67,011 326 1.95 67,011 336 1.96 67,011 329 1.96
Reverse mortgage bonds payable 6,597 15 0.97 25,550 161 2.47 -- -- --
Senior Debt 55,000 942 6.85 55,000 942 6.85 55,000 943 6.86
Other borrowed funds 147,256 276 0.75 147,322 285 0.77 151,216 277 0.73
Total interest-bearing liabilities 3,386,991 3,741 0.44 3,370,073 3,888 0.46 3,218,685 4,011 0.50
Noninterest-bearing demand deposits 641,052 638,716 610,947
Other noninterest-bearing liabilities 37,066 38,073 30,595
Stockholders' equity 399,303 382,197 424,090
Total liabilities and stockholders' equity $ 4,464,412 $ 4,429,059 $ 4,284,317
Excess of interest-earning assets over interest-bearing liabilities $ 482,835 $ 433,695 $ 448,672
Net interest and dividend income $ 34,044 $ 34,546 $ 31,580
Interest rate spread 3.48% 3.63% 3.39%
Net interest margin 3.57% 3.68% 3.46%
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited) Three months ended
March 31, December 31, March 31,
Stock Information: 2014 2013 2013
Market price of common stock:
High $ 77.62 $ 79.11 $ 49.28
Low 67.57 58.02 43.75
Close 71.43 77.53 48.64
Book value per share of common stock 45.90 43.06 48.25
Tangible book value per share of common stock (o) 41.56 38.68 44.48
Tangible common book value per share of common stock (o) 41.56 38.68 38.51
Number of shares of common stock outstanding (000s) 8,909 8,895 8,793
Other Financial Data:
One-year repricing gap to total assets (k) (1.81)% (3.28)% 0.19%
Weighted average duration of the MBS portfolio 5.4 years 5.3 years 4.9 years
Unrealized (losses) gains on securities available-for-sale, net of taxes $ (12,036) $ (20,822) $ 7,569
Number of Associates (FTEs) (m) 774 762 771
Number of offices (branches, LPO's, operations centers, etc.) 52 52 52
Number of WSFS owned ATMs 462 457 449
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 seasonal Associates, when applicable.
(n) Includes all reverse mortgage related revenue from the reverse mortgage consolidation and related interest income from Class O certificates and the BBB-rated traunch of a reverse mortgage security.
(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
March 31, December 31, March 31,
2014 2013 2013
Net interest Income (GAAP) $ 34,044 $ 34,546 $ 31,580
Noninterest Income (GAAP) 18,364 19,796 18,074
Less: Securities gains (578) (660) (1,644)
Core noninterest income (non-GAAP) 17,786 19,136 16,430
Core net revenue (non-GAAP) $ 51,830 $ 53,682 $ 48,010
End of period
March 31, December 31, March 31,
2014 2013 2013
Total assets $ 4,545,962 $ 4,515,763 $ 4,354,643
Less: Goodwill and other intangible assets (38,610) (38,979) (33,134)
Total tangible assets $ 4,507,352 $ 4,476,784 $ 4,321,509
Total Stockholders' equity $ 408,860 $ 383,050 $ 424,269
Less: Goodwill and other intangible assets (38,610) (38,979) (33,134)
Total tangible equity 370,250 344,071 391,135
Less: Preferred stock -- -- (52,509)
Total tangible common equity $ 370,250 $ 344,071 $ 338,626
Calculation of tangible common book value:
Book Value (GAAP) $ 45.90 $ 43.06 $ 48.25
Tangible book value (non-GAAP) 41.56 38.68 44.47
Tangible common book value (non-GAAP) 41.56 38.68 38.51
Calculation of tangible common equity to assets:
Equity to asset ratio (GAAP) 8.99% 8.48% 9.74%
Tangible equity to asset ratio (non-GAAP) 8.21 7.69 9.05
Tangible common equity to asset ratio (non-GAAP) 8.21 7.69 7.84
GAAP net income $ 16,911 $ 12,074 $ 9,740
Less: Sec. gains, corp. dev. costs & income tax benefit, net of taxes (6,913) (88) (1,069)
Non-GAAP net income $ 9,998 $ 11,986 $ 8,671
Return on Average Assets (ROA) 1.52% 1.09% 0.91%
Less: Sec. gains, corp. dev. costs & income tax benefit, net of taxes 0.62 0.01 0.10
Non-GAAP ROA 0.90% 1.08% 0.81%
GAAP EPS $ 1.85 $ 1.33 $ 1.02
Less: Sec. gains, corp. dev. costs & income tax benefit, net of taxes (0.75) (0.01) (0.12)
Non-GAAP EPS $ 1.10 $ 1.32 $ 0.90

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