Press Release
WSFS Reports 4Q 2018 ROA of 1.66% and EPS of $0.93 and Full-Year ROA of 1.92% and EPS of $4.19; Record Full-Year Operating Performance Driven Entirely by Organic and Balanced Net Revenue Growth, Including a 4.09% Net Interest Margin
The results for full-year 2018 include
Net revenue (which includes net interest income and noninterest income) was
Net interest income for 4Q 2018 was
For 4Q 2018, return on assets (ROA) was 1.66%, return on equity (ROE) was 14.89%, return on average tangible common equity (ROTCE)(1) was 19.83% and the efficiency ratio was 59.44%. For the full-year 2018, ROA was 1.92%, ROE was 17.63%, ROTCE was 23.72% and the efficiency ratio was 54.84%. The full-year represented top-tier performance compared to our peer groups and, on a reported and core basis, significantly outperformed targets set for the third and final year of our Strategic Plan.
(1) As used in this release, core return on average tangible common equity (ROTCE) is a non-GAAP financial measure. For a reconciliation of this measure to its comparable GAAP measure, see "Non-GAAP Reconciliation" at the end of this press release.
Highlights for 4Q and Full-Year 2018:
- 4Q 2018 core earnings per share (EPS)(2) of
$0.94 increased$0.23 , or 32%, from$0.71 in 4Q 2017. Full-year 2018 core EPS was a record$3.55 , and increased$0.99 , or 39%, from$2.56 in 2017. - 4Q 2018 core ROA(2) was 1.67%, a 27% increase compared to 1.31% for 4Q 2017. Full-year 2018 core ROA was a record 1.63%, a 35% increase compared to 1.21% in 2017.
- Core ROTCE was 19.96% for 4Q 2018, a 21% increase compared to 16.46% for 4Q 2017. Full-year 2018 core ROTCE was 20.18%, a 28% increase compared to 15.82% in 2017.
- Core net revenue(2) of
$100.7 million increased$10.8 million , or 12%, from 4Q 2017, and was driven entirely by strong organic growth, balanced between a$6.9 million , or 12%, increase in core net interest income(2) and a$3.8 million , or 12%, increase in core fee income (noninterest income)(2) across several business lines. Full-year 2018 core net revenue also increased 12% from 2017. - 4Q 2018 net interest margin increased 16 bps to 4.16% from 4Q 2017 and full-year 2018 net interest margin increased 14 bps to 4.09% compared to 2017, primarily as a result of improved positioning in the higher short-term interest rate environment, pricing discipline, and prudent balance sheet management.
- 4Q 2018 core noninterest expense(2) increased
$7.4 million , or 14% from 4Q 2017, resulting in a core efficiency ratio(2) of 58.5%. The increase in 4Q 2018 included a$4.3 million increase in variable incentive compensation costs from pay-for-performance plans, including$1.8 million driven by the Company delivering strong performance against peer groups and significantly outperforming high Strategic Plan targets for the full-year 2018. Full-year core noninterest expenses increased 9%, resulting in 3 percentage points of entirely organic, positive core operating leverage(2). The full-year 2018 core efficiency ratio was 59.1%, improved from 60.1% in 2017.
(2) As used in this release, core earnings per share (EPS), core return on average assets (ROA), core net revenue, core net interest income, core fee income (noninterest income), core noninterest expense, core efficiency ratio and core operating leverage are non-GAAP financial measures. For a reconciliation of these measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of this press release.
Notable items in the quarter:
- WSFS recorded an unrealized valuation gain of
$2.2 million (pre-tax), or approximately$0.05 per share (after-tax), based on observed external transactions relating to our remaining investment in Visa Class B shares. - WSFS recorded
$2.2 million (pre-tax), or approximately$0.06 per share (after-tax) in 4Q 2018, in corporate development expenses related to our pending merger with Beneficial, a portion of which are not tax deductible, compared to less than$0.1 million (pre-tax) or less than$0.01 per share (after-tax), in 4Q 2017. - WSFS realized no net gains on sales of securities in 4Q 2018, compared to
$0.2 million (pre-tax), or less than$0.01 per share (after-tax), in 4Q 2017.
CEO outlook and commentary
“Further, the results of our 2018 Associate engagement survey conducted by the Gallup organization placed us among the top 5% of Gallup clients worldwide for the second year in a row. During the year, we also were named a top workplace in
Fourth Quarter 2018 Discussion of Financial Results
Net interest margin expands from good positioning in rising rate cycle and disciplined pricing
Net interest margin for 4Q 2018 was a strong 4.16%, an increase of 16 bps compared to 4Q 2017. Excluding a 3 bps decrease in purchased loan accretion, the net interest margin increased 19 bps organically compared to 4Q 2017. The 19 bps increase includes an estimated 14 bps from good positioning in the higher short-term interest rate environment, and approximately 5 bps from disciplined pricing and effective balance sheet management. Net interest income for 4Q 2018 was
Net interest margin increased 5 bps from 4.11% in 3Q 2018 and net interest income increased
Loan portfolio reflects disciplined pricing strategy, paydown activity, and market conditions
At December 31, 2018, WSFS’ net loan portfolio was
Compared to December 31, 2017, net loans increased
The following table summarizes loan balances and composition at December 31, 2018 compared to September 30, 2018 and December 31, 2017:
(Dollars in thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||
Commercial & industrial | $ | 2,532,377 | 52 | % | $ | 2,598,626 | 53 | % | $ | 2,540,853 | 52 | % | |||||||||
Commercial real estate | 1,155,257 | 24 | 1,125,660 | 23 | 1,180,399 | 25 | |||||||||||||||
Construction | 314,732 | 6 | 331,562 | 7 | 280,017 | 6 | |||||||||||||||
Total commercial loans | 4,002,366 | 82 | 4,055,848 | 83 | 4,001,269 | 83 | |||||||||||||||
Residential mortgage | 241,166 | 5 | 250,263 | 5 | 284,798 | 6 | |||||||||||||||
Consumer | 685,244 | 14 | 657,692 | 13 | 561,905 | 12 | |||||||||||||||
Allowance for loan losses | (39,539 | ) | (1 | ) | (41,812 | ) | (1 | ) | (40,599 | ) | (1 | ) | |||||||||
Net Loans | $ | 4,889,237 | 100 | % | $ | 4,921,991 | 100 | % | $ | 4,807,373 | 100 | % |
Credit quality trends remain stable and strong
Credit quality metrics during 4Q 2018 reflect continued strength in portfolio performance.
Total problem assets, which includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO), were
Total delinquencies, which include nonperforming delinquencies, were
Total nonperforming assets decreased
Net charge-offs for 4Q 2018 were
Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit costs) were
The ratio of the ALLL to total gross loans was 0.81% at December 31, 2018 compared with 0.85% at September 30, 2018. Excluding the balances for acquired loans (marked-to-market at acquisition), the ALLL to total gross loans ratio would have been 0.89% at December 31, 2018 compared with 0.95% at September 30, 2018. The ALLL was 132% of nonaccruing loans at December 31, 2018 compared to 114% at September 30, 2018 and 111% at December 31, 2017.
Customer funding reflects continued organic core deposit strength
Total customer funding was
Customer funding increased
Core deposits were a very strong 88% of total customer deposits, and no- and low-cost checking deposit accounts represented a robust 50% of total customer deposits at December 31, 2018. These core deposits predominantly represent longer-term, less price-sensitive customer relationships, which are very valuable in a changing rate environment. The ratio of loans to customer deposits was a healthy 90% at December 31, 2018.
The following table summarizes customer funding balances and composition at December 31, 2018 compared to September 30, 2018 and December 31, 2017:
(Dollars in thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||
Noninterest demand | $ | 1,626,252 | 30 | % | $ | 1,515,336 | 28 | % | $ | 1,420,760 | 28 | % | |||||||||
Interest-bearing demand | 1,062,228 | 20 | 1,091,546 | 20 | 1,071,512 | 21 | |||||||||||||||
Savings | 538,213 | 10 | 535,344 | 10 | 549,744 | 11 | |||||||||||||||
Money market | 1,542,962 | 28 | 1,581,684 | 29 | 1,347,146 | 27 | |||||||||||||||
Total core deposits | 4,769,655 | 88 | 4,723,910 | 87 | 4,389,162 | 87 | |||||||||||||||
Customer time deposits | 672,942 | 12 | 712,859 | 13 | 629,071 | 13 | |||||||||||||||
Total customer deposits | $ | 5,442,597 | 100 | % | $ | 5,436,769 | 100 | % | $ | 5,018,233 | 100 | % |
Core fee income is well diversified, organically growing a strong 12% year-over-year
Core fee income (noninterest income) increased by
When compared to 3Q 2018, core fee income increased
For 4Q 2018, core fee income was 35.7% of total revenue (computed on a fully tax-equivalent basis), compared to 35.5% for 4Q 2017, and was well diversified among various sources, including traditional banking, mortgage banking, wealth management and cash logistics services (Cash Connect®).
Noninterest expenses reflect superior financial performance and improved full-year efficiency
Our core efficiency ratio was 58.5% in 4Q 2018, an increase compared to 57.6% in 3Q 2018 and 57.0% in 4Q 2017. The increase in 4Q 2018 included a
Core noninterest expense for 4Q 2018 was
When compared to 3Q 2018, core noninterest expense increased
Income taxes
We recorded an
The effective tax rate was 22.2% in 4Q 2018, 20.3% in 3Q 2018, and 32.6% in 4Q 2017 (excluding previously disclosed transactions related to the 2017 Tax Cuts and Jobs Act). The slightly higher tax rate in 4Q 2018 compared to 3Q 2018 resulted primarily from lower benefits realized from stock-based compensation activity and higher non-deductible corporate development costs during the quarter. The lower tax rates in 2018 compared with 2017 primarily reflects the reduction of the corporate federal tax rate resulting from the tax law change beginning in 1Q 2018.
Selected Business Segments (included in previous results):
Wealth Management segment revenue grew 12% over the prior year quarter
The Wealth Management segment provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate, and institutional clients through multiple integrated businesses. Combined, these businesses had
Total Wealth Management revenue (net interest income, fiduciary fees and other fee income) was
Total noninterest expense (including intercompany allocations and provision for loan losses) was
Pre-tax income in 4Q 2018 was
Cash Connect® net revenue increases 18% over same quarter 2017
Cash Connect® is a premier provider of ATM vault cash and smart safe and cash logistics services in
Our Cash Connect® division recorded
Non-interest expense (including intercompany allocations of expense) was
During 2018, Cash Connect®’s customers felt the impact of rising interest rates that challenged their profitability and created margin compression for the entire ATM industry. Cash Connect® remains focused on optimizing the use of cash for the division and its customers to maximize efficiency. For the year, Cash Connect® also experienced significant fee income growth (over 50%) in the strategic remote cash capture (smart safe, recycler and kiosk) space with approximately 2,291 devices currently under service, up from 1,599 safes at the beginning of the year, and has a strong and growing pipeline driven by an expanding list of channel partners.
Capital management
WSFS’ total stockholders’ equity increased
WSFS’ tangible common equity(3) increased by
WSFS’ common equity to assets ratio was 11.32% at December 31, 2018, and its tangible common equity to tangible assets ratio(3) increased by 21 bps during the quarter to 8.99%. At December 31, 2018, book value per share was
At December 31, 2018, WSFS Bank’s Tier 1 leverage ratio of 10.82%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 12.69%, and Total Capital ratio of 13.37%, were all substantially in excess of the “well-capitalized” regulatory benchmarks.
In 4Q 2018, WSFS repurchased 524,742 shares of common stock at an average price of
(3) As used in this release, tangible common equity, tangible common equity to tangible assets and tangible common book value per share are non-GAAP financial measures. For a reconciliation of these measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of this press release.
Fourth quarter 2018 earnings release conference call
Management will conduct a conference call to review 4Q 2018 results at
About
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 predictions or expectations of future business or financial performance as well as its goals 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. The words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project” and similar expressions, among others, generally identify forward-looking statements. 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 difficult market conditions and unfavorable economic trends in
We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date on which they are made, and the Company disclaims any duty to revise or update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company for any reason, except as specifically required by law. As used in this press release, the terms “WSFS”, “the Company”, “registrant”, “we”, “us”, and “our” mean
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands, except per share data) | Three months ended | Twelve months ended | ||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||||||
Interest income: | ||||||||||||||||||||
Interest and fees on loans | $ | 68,435 | $ | 67,164 | $ | 59,889 | $ | 260,506 | $ | 229,147 | ||||||||||
Interest on mortgage-backed securities | 7,814 | 6,662 | 5,176 | 26,065 | 19,308 | |||||||||||||||
Interest and dividends on investment securities | 1,071 | 1,079 | 1,124 | 4,378 | 4,648 | |||||||||||||||
Other interest income | 474 | 510 | 367 | 2,024 | 1,623 | |||||||||||||||
77,794 | 75,415 | 66,556 | 292,973 | 254,726 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Interest on deposits | 9,483 | 7,977 | 4,626 | 29,068 | 14,904 | |||||||||||||||
Interest on Federal Home Loan Bank advances | 1,299 | 2,097 | 2,206 | 8,395 | 8,263 | |||||||||||||||
Interest on senior debt | 1,179 | 1,179 | 1,179 | 4,717 | 7,228 | |||||||||||||||
Interest on trust preferred borrowings | 702 | 677 | 522 | 2,573 | 1,940 | |||||||||||||||
Interest on other borrowings | 457 | 388 | 298 | 1,746 | 1,120 | |||||||||||||||
13,120 | 12,318 | 8,831 | 46,499 | 33,455 | ||||||||||||||||
Net interest income | 64,674 | 63,097 | 57,725 | 246,474 | 221,271 | |||||||||||||||
Provision for loan losses | 3,306 | 3,716 | 4,063 | 13,170 | 10,964 | |||||||||||||||
Net interest income after provision for loan losses | 61,368 | 59,381 | 53,662 | 233,304 | 210,307 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Credit/debit card and ATM income | 12,084 | 11,239 | 9,710 | 43,837 | 36,116 | |||||||||||||||
Investment management and fiduciary revenue | 10,140 | 10,029 | 9,420 | 39,602 | 35,103 | |||||||||||||||
Deposit service charges | 4,807 | 4,670 | 4,666 | 18,771 | 18,318 | |||||||||||||||
Mortgage banking activities, net | 1,348 | 1,509 | 1,508 | 6,286 | 6,293 | |||||||||||||||
Loan fee income | 633 | 693 | 735 | 2,492 | 2,218 | |||||||||||||||
Investment securities gains, net | — | — | 220 | 21 | 1,984 | |||||||||||||||
Unrealized gain on equity investment | 2,150 | 3,249 | — | 20,745 | — | |||||||||||||||
Realized gain on sale of equity investment | — | 3,757 | — | 3,757 | — | |||||||||||||||
Bank-owned life insurance (loss) income | (153 | ) | 96 | 421 | 175 | 1,545 | ||||||||||||||
Other income | 7,177 | 6,659 | 5,755 | 26,855 | 23,067 | |||||||||||||||
38,186 | 41,901 | 32,435 | 162,541 | 124,644 | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries, benefits and other compensation | 31,545 | 30,641 | 28,145 | 122,983 | 114,376 | |||||||||||||||
Occupancy expense | 4,830 | 4,697 | 4,807 | 19,783 | 19,409 | |||||||||||||||
Equipment expense | 3,086 | 3,258 | 3,020 | 12,609 | 12,564 | |||||||||||||||
Professional fees | 2,330 | 2,358 | 2,045 | 8,733 | 8,597 | |||||||||||||||
Data processing and operations expense | 1,992 | 1,962 | 1,594 | 7,757 | 6,779 | |||||||||||||||
Marketing expense | 1,245 | 1,499 | 815 | 4,586 | 3,083 | |||||||||||||||
FDIC expenses | 485 | 518 | 533 | 2,117 | 2,216 | |||||||||||||||
Loan workout and OREO expense | 460 | (19 | ) | 316 | 1,548 | 1,820 | ||||||||||||||
Early extinguishment of debt | — | — | — | — | 695 | |||||||||||||||
Corporate development expense | 2,205 | 3,794 | 21 | 6,456 | 878 | |||||||||||||||
(Recovery of) provision for legal settlement | — | (7,938 | ) | 12,000 | (7,938 | ) | 12,000 | |||||||||||||
(Recovery of) provision for fraud loss | — | (10 | ) | 2,844 | (1,675 | ) | 2,844 | |||||||||||||
Other operating expenses | 13,172 | 11,694 | 11,925 | 48,088 | 41,200 | |||||||||||||||
61,350 | 52,454 | 68,065 | 225,047 | 226,461 | ||||||||||||||||
Income before taxes | 38,204 | 48,828 | 18,032 | 170,798 | 108,490 | |||||||||||||||
Income tax provision | 8,486 | 9,893 | 27,864 | 36,055 | 58,246 | |||||||||||||||
Net (loss) income | $ | 29,718 | $ | 38,935 | $ | (9,832 | ) | $ | 134,743 | $ | 50,244 | |||||||||
Diluted (loss) earnings per share of common stock: | $ | 0.93 | $ | 1.20 | $ | (0.31 | ) | $ | 4.19 | $ | 1.56 | |||||||||
Weighted average shares of common stock outstanding for fully diluted EPS (p) | 31,902,023 | 32,348,619 | 31,404,353 | 32,167,603 | 32,302,540 |
See “Notes”
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued
Three months ended | Twelve months ended | ||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||||||||
Performance Ratios: | |||||||||||||||
Return on average assets (a) | 1.66 | % | 2.18 | % | (0.56 | )% | 1.92 | % | 0.74 | % | |||||
Return on average equity (a) | 14.89 | 19.75 | (5.19 | ) | 17.63 | 6.92 | |||||||||
Return on average tangible common equity (a)(o) | 19.83 | 26.32 | (6.60 | ) | 23.72 | 9.74 | |||||||||
Net interest margin (a)(b) | 4.16 | 4.11 | 4.00 | 4.09 | 3.95 | ||||||||||
Efficiency ratio (c) | 59.44 | 49.80 | 74.87 | 54.84 | 64.91 | ||||||||||
Noninterest income as a percentage of total net revenue (b) | 37.00 | 39.78 | 35.68 | 39.61 | 35.72 |
See “Notes”
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands) | December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||||
Assets: | ||||||||||||
Cash and due from banks | $ | 134,939 | $ | 158,234 | $ | 122,141 | ||||||
Cash in non-owned ATMs | 484,648 | 552,952 | 598,117 | |||||||||
Investment securities (d) | 149,950 | 152,577 | 161,809 | |||||||||
Other investments | 57,662 | 51,809 | 52,240 | |||||||||
Mortgage-backed securities (d) | 1,205,079 | 997,131 | 837,499 | |||||||||
Net loans (e)(f)(l) | 4,889,237 | 4,921,991 | 4,807,373 | |||||||||
Bank owned life insurance | 6,687 | 6,840 | 102,958 | |||||||||
Goodwill and intangibles | 186,023 | 186,584 | 188,444 | |||||||||
Other assets | 134,645 | 131,724 | 128,959 | |||||||||
Total assets | $ | 7,248,870 | $ | 7,159,842 | $ | 6,999,540 | ||||||
Liabilities and Stockholders’ Equity: | ||||||||||||
Noninterest-bearing deposits | $ | 1,626,252 | $ | 1,515,336 | $ | 1,420,760 | ||||||
Interest-bearing deposits | 3,816,345 | 3,921,433 | 3,597,473 | |||||||||
Total customer deposits | 5,442,597 | 5,436,769 | 5,018,233 | |||||||||
Brokered deposits | 197,834 | 287,147 | 229,371 | |||||||||
Total deposits | 5,640,431 | 5,723,916 | 5,247,604 | |||||||||
Federal Home Loan Bank advances | 328,465 | 338,465 | 710,001 | |||||||||
Other borrowings | 371,323 | 206,624 | 227,805 | |||||||||
Other liabilities | 87,731 | 92,015 | 89,785 | |||||||||
Total liabilities | 6,427,950 | 6,361,020 | 6,275,195 | |||||||||
Stockholders’ equity | 820,920 | 798,822 | 724,345 | |||||||||
Total liabilities and stockholders’ equity | $ | 7,248,870 | $ | 7,159,842 | $ | 6,999,540 | ||||||
Capital Ratios: | ||||||||||||
Equity to asset ratio | 11.32 | % | 11.16 | % | 10.35 | % | ||||||
Tangible common equity to tangible asset ratio (o) | 8.99 | 8.78 | 7.87 | |||||||||
Common equity Tier 1 capital (g) (required: 4.5%; well capitalized: 6.5%) | 12.69 | 12.37 | 11.36 | |||||||||
Tier 1 leverage (g) (required: 4.00%; well-capitalized: 5.00%) | 10.82 | 10.65 | 9.73 | |||||||||
Tier 1 risk-based capital (g) (required: 6.00%; well-capitalized: 8.00%) | 12.69 | 12.37 | 11.36 | |||||||||
Total Risk-based capital (g) (required: 8.00%; well-capitalized: 10.00%) | 13.37 | 13.09 | 12.08 | |||||||||
Asset Quality Indicators: | ||||||||||||
Nonperforming Assets: | ||||||||||||
Nonaccruing loans | $ | 30,054 | $ | 36,688 | $ | 36,436 | ||||||
Troubled debt restructuring (accruing) | 14,953 | 15,192 | 20,061 | |||||||||
Assets acquired through foreclosure | 2,668 | 2,004 | 2,503 | |||||||||
Total nonperforming assets | $ | 47,675 | $ | 53,884 | $ | 59,000 | ||||||
Past due loans (h) | $ | 835 | $ | 211 | $ | 461 | ||||||
Allowance for loan losses | 39,539 | 41,812 | 40,599 | |||||||||
Ratio of nonperforming assets to total assets | 0.66 | % | 0.75 | % | 0.84 | % | ||||||
Ratio of nonperforming assets (excluding accruing TDRs) to total assets | 0.45 | 0.54 | 0.56 | |||||||||
Ratio of allowance for loan losses to total gross loans (i)(n) | 0.81 | 0.85 | 0.84 | |||||||||
Ratio of allowance for loan losses to nonaccruing loans | 132 | 114 | 111 | |||||||||
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) | 0.46 | 0.24 | 0.31 | |||||||||
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) | 0.29 | 0.24 | 0.22 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited)
(Dollars in thousands) | Three months ended | ||||||||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
Average Balance |
Interest & Dividends |
Yield/ Rate (a)(b) |
Average Balance |
Interest & Dividends |
Yield/ Rate (a)(b) |
Average Balance |
Interest & Dividends |
Yield/ Rate (a)(b) |
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Assets: | |||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||
Loans: (e) (j) | |||||||||||||||||||||||||||||||||
Commercial real estate loans | $ | 1,453,593 | $ | 20,726 | 5.66 | % | $ | 1,453,110 | $ | 19,833 | 5.41 | % | $ | 1,469,316 | $ | 18,713 | 5.05 | % | |||||||||||||||
Residential real estate loans | 223,564 | 3,525 | 6.31 | 228,256 | 3,722 | 6.52 | 258,900 | 3,714 | 5.74 | ||||||||||||||||||||||||
Commercial loans | 2,546,071 | 34,737 | 5.43 | 2,594,124 | 34,463 | 5.29 | 2,497,730 | 30,575 | 4.89 | ||||||||||||||||||||||||
Consumer loans | 674,441 | 9,153 | 5.38 | 638,849 | 8,753 | 5.44 | 543,569 | 6,700 | 4.89 | ||||||||||||||||||||||||
Loans held for sale | 23,122 | 294 | 5.04 | 27,503 | 393 | 5.67 | 18,862 | 187 | 3.97 | ||||||||||||||||||||||||
Total loans | 4,920,791 | 68,435 | 5.53 | 4,941,842 | 67,164 | 5.40 | 4,788,377 | 59,889 | 4.98 | ||||||||||||||||||||||||
Mortgage-backed securities (d) | 1,070,865 | 7,814 | 2.92 | 970,501 | 6,662 | 2.75 | 824,838 | 5,176 | 2.51 | ||||||||||||||||||||||||
Investment securities (d) | 151,927 | 1,071 | 3.39 | 153,718 | 1,079 | 3.36 | 162,258 | 1,124 | 4.12 | ||||||||||||||||||||||||
Other interest-earning assets | 61,772 | 474 | 3.04 | 62,145 | 510 | 3.26 | 33,389 | 367 | 4.40 | ||||||||||||||||||||||||
Total interest-earning assets | 6,205,355 | 77,794 | 5.00 | % | 6,128,206 | 75,415 | 4.90 | % | 5,808,862 | 66,556 | 4.60 | % | |||||||||||||||||||||
Allowance for loan losses | (42,266 | ) | (42,074 | ) | (40,465 | ) | |||||||||||||||||||||||||||
Cash and due from banks | 95,523 | 94,959 | 136,542 | ||||||||||||||||||||||||||||||
Cash in non-owned ATMs | 487,542 | 546,464 | 575,121 | ||||||||||||||||||||||||||||||
Bank owned life insurance | 6,738 | 6,347 | 102,781 | ||||||||||||||||||||||||||||||
Other noninterest-earning assets | 349,396 | 346,743 | 342,467 | ||||||||||||||||||||||||||||||
Total assets | $ | 7,102,288 | $ | 7,080,645 | $ | 6,925,308 | |||||||||||||||||||||||||||
Liabilities and Stockholders’ Equity: | |||||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||
Interest-bearing deposits: | |||||||||||||||||||||||||||||||||
Interest-bearing demand | $ | 1,053,891 | $ | 1,660 | 0.62 | % | $ | 977,915 | $ | 1,126 | 0.46 | % | $ | 1,017,068 | $ | 781 | 0.30 | % | |||||||||||||||
Money market | 1,618,594 | 3,775 | 0.93 | 1,498,437 | 2,667 | 0.71 | 1,345,702 | 1,375 | 0.41 | ||||||||||||||||||||||||
Savings | 537,715 | 259 | 0.19 | 550,146 | 257 | 0.19 | 554,028 | 262 | 0.19 | ||||||||||||||||||||||||
Customer time deposits | 685,960 | 2,520 | 1.46 | 701,897 | 2,393 | 1.35 | 597,111 | 1,467 | 0.97 | ||||||||||||||||||||||||
Total interest-bearing customer deposits | 3,896,160 | 8,214 | 0.84 | 3,728,395 | 6,443 | 0.69 | 3,513,909 | 3,885 | 0.44 | ||||||||||||||||||||||||
Brokered deposits | 244,509 | 1,269 | 2.06 | 319,456 | 1,534 | 1.91 | 243,441 | 741 | 1.21 | ||||||||||||||||||||||||
Total interest-bearing deposits | 4,140,669 | 9,483 | 0.91 | 4,047,851 | 7,977 | 0.78 | 3,757,350 | 4,626 | 0.49 | ||||||||||||||||||||||||
FHLB of Pittsburgh advances | 212,942 | 1,299 | 2.42 | 381,386 | 2,097 | 2.18 | 633,941 | 2,206 | 1.38 | ||||||||||||||||||||||||
Trust preferred borrowings | 67,011 | 702 | 4.16 | 67,011 | 677 | 4.01 | 67,011 | 522 | 3.09 | ||||||||||||||||||||||||
Senior Debt | 98,356 | 1,179 | 4.79 | 98,301 | 1,179 | 4.80 | 98,139 | 1,179 | 4.81 | ||||||||||||||||||||||||
Other borrowed funds | 117,592 | 457 | 1.54 | 114,427 | 388 | 1.35 | 122,313 | 298 | 0.97 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 4,636,570 | 13,120 | 1.12 | % | 4,708,976 | 12,318 | 1.04 | % | 4,678,754 | 8,831 | 0.75 | % | |||||||||||||||||||||
Noninterest-bearing demand deposits | 1,582,406 | 1,507,434 | 1,414,356 | ||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 91,503 | 82,135 | 80,248 | ||||||||||||||||||||||||||||||
Stockholders’ equity | 791,809 | 782,100 | 751,950 | ||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,102,288 | $ | 7,080,645 | $ | 6,925,308 | |||||||||||||||||||||||||||
Excess of interest-earning assets over interest-bearing liabilities | $ | 1,568,785 | $ | 1,419,230 | $ | 1,130,108 | |||||||||||||||||||||||||||
Net interest and dividend income | $ | 64,674 | $ | 63,097 | $ | 57,725 | |||||||||||||||||||||||||||
Interest rate spread | 3.88 | % | 3.86 | % | 3.85 | % | |||||||||||||||||||||||||||
Net interest margin | 4.16 | % | 4.11 | % | 4.00 | % |
See “Notes”
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
(Dollars in thousands, except per share data) | Three months ended | Twelve months ended | ||||||||
Stock Information: | December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | |||||
Market price of common stock: | ||||||||||
High | $49.40 | $57.70 | $52.50 | $57.70 | $52.50 | |||||
Low | 33.75 | 45.72 | 45.75 | 33.75 | 42.45 | |||||
Close | 37.91 | 47.15 | 47.85 | 37.91 | 47.85 | |||||
Book value per share of common stock | 26.17 | 25.08 | 23.06 | |||||||
Tangible common book value per share of common stock (o) | 20.24 | 19.22 | 17.06 | |||||||
Number of shares of common stock outstanding (000s) | 31,374 | 31,852 | 31,418 | |||||||
Other Financial Data: | ||||||||||
One-year repricing gap to total assets (k) | (0.57)% | 1.04% | (0.80)% | |||||||
Weighted average duration of the MBS portfolio | 4.7 years | 5.6 years | 5.2 years | |||||||
Unrealized (losses) gains on securities available for sale, net of taxes | $(14,553) | $(30,228) | $(6,401) | |||||||
Number of Associates (FTEs) (m) | 1,177 | 1,152 | 1,159 | |||||||
Number of offices (branches, LPO’s, operations centers, etc.) | 76 | 77 | 76 | |||||||
Number of WSFS owned ATMs | 441 | 443 | 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 held to maturity (at amortized cost) and 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 and reverse mortgages.
(m) Includes seasonal Associates, when applicable.
(n) Excludes reverse mortgage loans.
(o) The Company uses non-GAAP (Generally Accepted Accounting Principles) financial information in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results of operations with prior periods and show the effects of significant gains and charges in the periods presented. The Company’s management believes that investors may use these non-GAAP measures to analyze the Company’s financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying 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. For a reconciliation of these non-GAAP measures, see "Non-GAAP Reconciliation" at the end of this press release.
(p) Diluted earnings per share considers the impact of potentially dilutive shares except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. For the three months ended December 31, 2017, 884,982 shares were anti-dilutive and were not included in the diluted earnings per share calculation.
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Non-GAAP Reconciliation (o): | Three months ended | Twelve months ended | ||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||||||
Net interest income (GAAP) | $ | 64,674 | $ | 63,097 | $ | 57,725 | $ | 246,474 | $ | 221,271 | ||||||||||
Core net interest income (non-GAAP) | $ | 64,674 | $ | 63,097 | $ | 57,725 | $ | 246,474 | $ | 221,271 | ||||||||||
Noninterest Income (GAAP) | $ | 38,186 | $ | 41,901 | $ | 32,435 | $ | 162,541 | $ | 124,644 | ||||||||||
Less: Securities gains | — | — | 220 | 21 | 1,984 | |||||||||||||||
Less: Unrealized gains on equity investment | 2,150 | 3,249 | — | 20,745 | — | |||||||||||||||
Less: Gain on sale of Visa Class B shares | — | 3,757 | — | 3,757 | — | |||||||||||||||
Core fee income (non-GAAP) | $ | 36,036 | $ | 34,895 | $ | 32,215 | $ | 138,018 | $ | 122,660 | ||||||||||
Core net revenue (non-GAAP) | $ | 100,710 | $ | 97,992 | $ | 89,940 | $ | 384,492 | $ | 343,931 | ||||||||||
Core net revenue (non-GAAP)(tax-equivalent) | $ | 101,055 | $ | 98,323 | $ | 90,688 | $ | 385,852 | $ | 346,922 | ||||||||||
Noninterest expense (GAAP) | $ | 61,350 | $ | 52,454 | $ | 68,065 | $ | 225,047 | $ | 226,461 | ||||||||||
(Plus)/less: (Recovery of)/provision for fraud loss | — | (10 | ) | 2,844 | (1,675 | ) | 2,844 | |||||||||||||
Plus/(less): (Recovery of)/provision for legal settlement | — | (7,938 | ) | 12,000 | (7,938 | ) | 12,000 | |||||||||||||
Less: WSFS Foundation contribution | — | — | 1,500 | — | 1,500 | |||||||||||||||
Less: Corporate development costs | 2,205 | 3,794 | 21 | 6,456 | 878 | |||||||||||||||
Less: Debt extinguishment costs | — | — | — | — | 695 | |||||||||||||||
Core noninterest expense (non-GAAP) | $ | 59,145 | $ | 56,608 | $ | 51,700 | $ | 228,204 | $ | 208,544 | ||||||||||
Core efficiency ratio (c) | 58.5 | % | 57.6 | % | 57.0 | % | 59.1 | % | 60.1 | % | ||||||||||
Three months ended | ||||||||||||||||||||
Calculation of core operating leverage: | December 31, 2018 | September 30, 2018 | December 31, 2017 | |||||||||||||||||
Core net revenue growth (year over year) | 12 | % | 12 | % | 11 | % | ||||||||||||||
Core noninterest expense growth (year over year) | 14 | % | 6 | % | 9 | % | ||||||||||||||
Core operating leverage (non-GAAP) | (2 | )% | 6 | % | 2 | % | ||||||||||||||
End of period | ||||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||
Total assets | $ | 7,248,870 | $ | 7,159,842 | $ | 6,999,540 | ||||||||||||||
Less: Goodwill and other intangible assets | 186,023 | 186,584 | 188,444 | |||||||||||||||||
Total tangible assets | $ | 7,062,847 | $ | 6,973,258 | $ | 6,811,096 | ||||||||||||||
Total stockholders’ equity | $ | 820,920 | $ | 798,822 | $ | 724,345 | ||||||||||||||
Less: Goodwill and other intangible assets | 186,023 | 186,584 | 188,444 | |||||||||||||||||
Total tangible common equity (non-GAAP) | $ | 634,897 | $ | 612,238 | $ | 535,901 | ||||||||||||||
Calculation of tangible common book value per share: | ||||||||||||||||||||
Book value per share (GAAP) | $ | 26.17 | $ | 25.08 | $ | 23.06 | ||||||||||||||
Tangible common book value per share (non-GAAP) | 20.24 | 19.22 | 17.06 | |||||||||||||||||
Calculation of tangible common equity to tangible assets: | ||||||||||||||||||||
Equity to asset ratio (GAAP) | 11.32 | % | 11.16 | % | 10.35 | % | ||||||||||||||
Tangible common equity to tangible assets ratio (non-GAAP) | 8.99 | 8.78 | 7.87 |
Three months ended | Twelve months ended | |||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | December 31, 2018 | December 31, 2017 | ||||||||||||||||
GAAP net (loss) income | $ | 29,718 | $ | 38,935 | $ | (9,832 | ) | $ | 134,743 | $ | 50,244 | |||||||||
Plus (less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investment, (recoveries of)/provisions for legal settlement and fraud loss, WSFS Foundation contribution, corporate development costs, and debt extinguishment costs | 55 | (11,160 | ) | 16,145 | (27,680 | ) | 15,933 | |||||||||||||
Tax adjustments: DTA writedown & BOLI surrender | — | — | 22,452 | — | 22,452 | |||||||||||||||
Tax impact of pre-tax adjustments | 141 | 3,140 | (5,858 | ) | 7,244 | (5,788 | ) | |||||||||||||
Adjusted net income (non-GAAP) | $ | 29,914 | $ | 30,915 | $ | 22,907 | $ | 114,307 | $ | 82,841 | ||||||||||
GAAP return on average assets (ROA) | 1.66 | % | 2.18 | % | (0.56 | )% | 1.92 | % | 0.74 | % | ||||||||||
Plus (less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investment, (recoveries of)/provisions for legal settlement and fraud loss, WSFS Foundation contribution, corporate development costs, and debt extinguishment costs | — | (0.63 | ) | 0.92 | (0.39 | ) | 0.23 | |||||||||||||
Tax adjustments: DTA writedown & BOLI surrender | — | — | 1.29 | — | 0.33 | |||||||||||||||
(Plus) less: Tax impact of pre-tax adjustments | 0.01 | 0.18 | (0.34 | ) | 0.10 | (0.09 | ) | |||||||||||||
Core ROA (non-GAAP) | 1.67 | % | 1.73 | % | 1.31 | % | 1.63 | % | 1.21 | % | ||||||||||
EPS (GAAP) | $ | 0.93 | $ | 1.20 | $ | (0.31 | ) | $ | 4.19 | $ | 1.56 | |||||||||
Plus (less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investment, (recoveries of)/provisions for legal settlement and fraud loss, WSFS Foundation contribution, corporate development costs, and debt extinguishment costs | — | (0.34 | ) | 0.50 | (0.86 | ) | 0.49 | |||||||||||||
Tax adjustments: DTA writedown & BOLI surrender | — | — | 0.70 | — | 0.70 | |||||||||||||||
(Plus) less: Tax impact of pre-tax adjustments | 0.01 | 0.10 | (0.18 | ) | 0.22 | (0.19 | ) | |||||||||||||
Core EPS (non-GAAP) | $ | 0.94 | $ | 0.96 | $ | 0.71 | $ | 3.55 | $ | 2.56 | ||||||||||
Calculation of return on average tangible common equity: | ||||||||||||||||||||
GAAP net (loss) income | $ | 29,718 | $ | 38,935 | $ | (9,832 | ) | $ | 134,743 | $ | 50,244 | |||||||||
Plus: Tax effected amortization of intangible assets | 537 | 543 | 461 | 2,164 | 1,954 | |||||||||||||||
Net tangible income (non-GAAP) | $ | 30,255 | $ | 39,478 | $ | (9,371 | ) | $ | 136,907 | $ | 52,198 | |||||||||
Average shareholders’ equity | $ | 791,809 | $ | 782,100 | $ | 751,950 | $ | 764,489 | $ | 725,763 | ||||||||||
Less: average goodwill and intangible assets | 186,418 | 187,007 | 188,834 | 187,297 | 189,784 | |||||||||||||||
Net average tangible common equity | $ | 605,391 | $ | 595,093 | $ | 563,116 | $ | 577,192 | $ | 535,979 | ||||||||||
Return on average tangible common equity (non-GAAP) | 19.83 | % | 26.32 | % | (6.60 | )% | 23.72 | % | 9.74 | % | ||||||||||
Calculation of core return on average tangible common equity: | ||||||||||||||||||||
Adjusted net income (non-GAAP) | $ | 29,914 | $ | 30,915 | $ | 22,907 | $ | 114,307 | $ | 82,841 | ||||||||||
Plus: Tax effected amortization of intangible assets | 537 | 543 | 461 | 2,164 | 1,954 | |||||||||||||||
Core net tangible income (non-GAAP) | $ | 30,451 | $ | 31,458 | $ | 23,368 | $ | 116,471 | $ | 84,795 | ||||||||||
Net average tangible common equity | $ | 605,391 | $ | 595,093 | $ | 563,116 | $ | 577,192 | $ | 535,979 | ||||||||||
Core return on average tangible common equity (non-GAAP) | 19.96 | % | 20.97 | % | 16.46 | % | 20.18 | % | 15.82 | % |
Investor Relations Contact: Dominic C. Canuso
(302) 571-6833
dcanuso@wsfsbank.com
Media Contact: Jimmy A. Hernandez
(302) 571-5254
jhernandez@wsfsbank.com
Source: WSFS Financial Corporation