Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
April 25, 2019
Date of Report
(Date of earliest event reported) 
WSFS Financial Corporation
(Exact name of registrant as specified in its charter)
 
Delaware
  
001-35638
  
22-2866913
(State or other jurisdiction
of incorporation)
  
(SEC Commission
File Number)
  
(IRS Employer
Identification Number)
 
 
 
 
500 Delaware Avenue, Wilmington, Delaware
  
19801
(Address of principal executive offices)
  
(Zip Code)
Registrant’s telephone number, including area code: (302) 792-6000
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
Written communications pursuant to Rule 425 under the Securities Act
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR 230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR 40.12b-2).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐





WSFS FINANCIAL CORPORATION
INFORMATION TO BE INCLUDED IN THE REPORT
Section 2 – Financial Information
Item 2.02 Results of Operation and Financial Condition
On April 25, 2019, the Registrant issued a press release to report earnings for the quarter ended March 31, 2019.  Copies of the press release and 1Q 2019 Earnings Release Supplement are furnished with this Form 8-K as exhibits.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits:
99.1 Press Release dated April 25, 2019
99.2 1Q 2019 Earnings Release Supplement






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
 
WSFS FINANCIAL CORPORATION
 
 
 
 
 
Date:
April 25, 2019
By:
 
/s/ Dominic C. Canuso
 
 
 
 
Dominic C. Canuso
Executive Vice President and
Chief Financial Officer



Exhibit

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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
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EXHIBIT 99.1
 
 
 
FOR IMMEDIATE RELEASE
  
Investor Relations Contact: Dominic C. Canuso
 
  
(302) 571-6833
April 25, 2019
 
dcanuso@wsfsbank.com
 
  
Media Contact: Jimmy A. Hernandez
 
  
(302) 571-5254
 
 
jhernandez@wsfsbank.com

WSFS REPORTS 1Q 2019 RESULTS,
SUCCESSFULLY CLOSED ACQUISITION OF BENEFICIAL BANCORP;
STRONG OPERATING PERFORMANCE DRIVEN BY GROWTH IN LOANS,
NET INTEREST MARGIN, FEE INCOME, AND DISCIPLINED COST MANAGEMENT;
BOARD APPROVES A 9% INCREASE IN CASH DIVIDEND
WILMINGTON, Del.WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, reported net income of $13.0 million, or $0.33 per diluted common share, for 1Q 2019 compared to net income of $37.4 million, or $1.16 per share, for 1Q 2018, and $29.7 million, or $0.93 per share, for 4Q 2018. The results for 1Q 2019 include the impact of our acquisition of Beneficial Bancorp, Inc. (Beneficial), which closed on March 1, 2019, as described in more detail below. 1Q 2019 results also include an unrealized valuation gain of $3.8 million (pre-tax), or $0.07 per share (after-tax), on our equity investment in Visa Class B shares, compared to $15.3 million (pre-tax), or $0.36 per share (after-tax), in 1Q 2018 and $2.2 million (pre-tax), or $0.05 per share (after-tax), for 4Q 2018.  
Net revenue (which includes net interest income and noninterest income) was $124.4 million for 1Q 2019, an increase of $19.3 million, or 18%, from 1Q 2018. Net interest income was $83.3 million, an increase of $25.6 million, or 44%, from 1Q 2018; and fee income (noninterest income) was $41.1 million, a decrease of $6.3 million, or 13%, from 1Q 2018, primarily due to $11.5 million of higher unrealized valuation gains on our equity investment in Visa Class B shares in 1Q 2018.
Noninterest expenses were $97.6 million in 1Q 2019, an increase of $44.2 million, or 83%, from 1Q 2018, which included $31.0 million, or $0.65 per share, of restructuring and corporate development costs in 1Q 2019 related to our acquisition of Beneficial. There were no restructuring or corporate development costs in 1Q 2018.
For 1Q 2019, return on assets (ROA) was 0.58% compared to 2.20% for 1Q 2018, return on average equity was 4.54% compared to 20.87% for 1Q 2018. The efficiency ratio was 78.2% compared to 50.6% for 1Q 2018.




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Highlights for 1Q 2019: 
Successfully closed the acquisition of Beneficial on March 1, 2019.
Total consideration of $1.2 billion for price to tangible book value (TBV) of 130.6% at closing (171.7% estimated at announcement) and core deposit premium of 7.2% at closing (15.4% estimated at announcement).
TBV(1) accretion of 1.15% at closing, immediately accretive to TBV per share, compared to pro forma TBV dilution of 4.3% estimated at announcement.
For additional information, please refer to the 1Q 2019 Earnings Release Supplement available under the Investor Relations section of WSFS website (www.wsfsbank.com).
Core earnings per share (EPS)(1) was $0.91, an increase of $0.15, or 20%, from $0.76 in 1Q 2018.
Core ROA(1) was 1.59%, an 11% increase compared to 1.43% for 1Q 2018.
Core return on average tangible common equity (ROTCE)(1) was 17.68%, a 6% decrease compared to 18.81% for 1Q 2018.
Core net revenue(1) of $120.6 million increased $30.8 million, or 34% from 1Q 2018, reflecting strong organic and acquisition growth, including a $25.6 million, or 44%, increase in core net interest income(1) and a $5.2 million, or 16%, increase in core fee income (noninterest income)(1).
The net interest margin increased 29 bps from 1Q 2018 to 4.30%, primarily as a result of higher purchase-related accretion, improved positioning in the higher short-term interest rate environment over the last year, pricing discipline and loan growth.
Core noninterest expense(1) increased $11.5 million, or 21%, from 1Q 2018 reflecting good cost management in support of the 34% increase in core net revenue described above.
Net loans, excluding loans acquired from Beneficial (net of purchase marks) increased $75.8 million, or 6% annualized.
Book value per share was $33.69, an increase of $7.52, or 29%, from December 31, 2018, and tangible common book value per share(1) was $22.77, an increase of $2.53, or 13%, from December 31, 2018.

(1) As used in this press release, tangible book value (TBV), core ROA, core EPS, core ROTCE, core net revenue, core net interest income, core fee income (noninterest income), core noninterest expense, and tangible common book value per share are non-GAAP financial measures. For a reconciliation of these and other non-GAAP measures to their comparable GAAP measures, see pages 20 and 21 of this press release.




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
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Notable items in the quarter:
WSFS recorded $31.0 million (pre-tax), or approximately $0.65 per share (after-tax) in 1Q 2019, in restructuring and corporate development costs related to our acquisition of Beneficial. We did not record any restructuring or corporate development costs in 1Q 2018. The 1Q 2019 amount was consistent with our original expectations.
WSFS recorded $3.8 million (pre-tax), or approximately $0.07 per share (after-tax) in 1Q 2019, related to our investment in Visa Class B shares, compared to $15.3 million (pre-tax), or $0.36 per share (after-tax) in 1Q 2018. Since our adoption of ASU 2016-01 in 1Q 2018, cumulative realized and unrealized gains on Visa Class B shares total $28.3 million.





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WSFS Bank Center
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CEO outlook and commentary
Rodger Levenson, President and CEO, said, “During the quarter we successfully closed our combination with Beneficial and we remain on track to complete our branding and systems conversion during the third quarter of 2019. We warmly welcome our new Associates, Customers and communities to WSFS, as we significantly enhance our position as the largest, premier, locally-headquartered bank in the Greater Delaware Valley.
Our first quarter results were impacted by the closing of the Beneficial combination on March 1, 2019, including $31.0 million, or $0.65 per share, of anticipated restructuring and corporate development costs. For the quarter, we recorded core EPS of $0.91 and a core ROA of 1.59%, both significantly improved compared to the prior year. During 1Q 2019, core net revenue increased 34% from 1Q 2018, or 15% excluding the impact of the Beneficial combination, reflecting balanced and diversified growth across net interest income and our fee-based businesses. Core noninterest expenses were also well managed in 1Q 2019, resulting in a lower core efficiency ratio compared to 1Q 2018. Excluding these non-core costs and other items, our first quarter results reflect strong fundamental performance, and position us to meet or exceed our full-year strategic goals, including a core ROA of 1.50% for 2019.
“In addition, as a result of the changes in the overall market, performance of the Beneficial portfolio and interest rate environment since we announced the combination, the transaction metrics improved at closing, including an immediate tangible book value accretion of 1.15%.  
“During the quarter, we were honored to receive the 2018 Gallup Great Workplace Award for the fourth consecutive year, in only our fourth year of eligibility. We believe that our ongoing commitment to Associate and Customer engagement and our focused strategy of ‘Engaged Associates, living our culture, making a better life for all we serve’ is fundamental to our sustainable high performance. We look forward to bringing our service-driven culture to our new Associates, Customers and communities.”









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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
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First Quarter 2019 Discussion of Financial Results
Net interest income and margin reflect both organic and acquisition growth
Net interest income in 1Q 2019 was $83.3 million, an increase of $25.6 million, or 44%, compared to 1Q 2018. Net interest margin for 1Q 2019 was a fundamentally strong 4.30%, an increase of 29 bps from 4.01% for 1Q 2018. Excluding an 18 bps increase from one month of purchase-related accretion from the Beneficial combination, the net interest margin increased 11 bps compared to 1Q 2018. This increase included 17 bps from improved positioning in the higher short-term interest rate environment over the last year, pricing discipline and loan growth, and a 6 bps decrease from expected margin compression due to Beneficial's lower-margin balance sheet, partially offset by balance sheet optimization and repositioning.
Net interest income increased $18.6 million, or 29% (not annualized) from 4Q 2018. Net interest margin increased 14 bps from 4.16% in 4Q 2018. The increase resulted from approximately 17 bps of purchase-related accretion (including 18 bps from the Beneficial combination), 3 bps from higher short-term interest rates and loan growth during the quarter, and a 6 bps decrease from expected margin compression due to Beneficial's lower-margin balance sheet, partially offset by balance sheet optimization and repositioning.
Loan growth driven by acquisition growth and organic increases in commercial and consumer lending
At March 31, 2019, WSFS’ net loan portfolio was $8.69 billion, an increase of $3.8 billion from December 31, 2018. The increase includes $3.7 billion of loans acquired from Beneficial (net of purchase accounting fair value adjustments). The remaining increase of $75.8 million, or 2% (6% annualized), was primarily due to an increase in total commercial loans of $61.0 million, or 2% (6% annualized), and an increase in consumer loans of $27.9 million, or 4% (17% annualized). The growth in commercial loans was mainly due to advances under previously closed, but unfunded, construction loan commitments, as well as growth in C&I loans. Consumer loan growth was primarily related to second-lien home equity installment loans originated through our partnership with Spring EQ and student loans though our partnership with LendKey.
Compared to March 31, 2018, net loans increased $3.9 billion. The increase includes $3.7 billion of net loans acquired from Beneficial. The remaining increase of $143.3 million, or 3%, was driven by strong consumer loan growth of $126.9 million, or 22%, driven by home equity and student lending, and an increase of $47.0 million, or 1%, in total commercial lending driven by construction loan advances.




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500 Delaware Avenue, Wilmington, Delaware 19801
  
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The following table summarizes loan balances and composition at March 31, 2019 compared to December 31, 2018 and March 31, 2018:
(Dollars in thousands)
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
Commercial & industrial
 
$
3,372,567

 
39
 %
 
$
2,532,377

 
52
 %
 
$
2,570,999

 
54
 %
Commercial real estate
 
2,345,568

 
27

 
1,155,257

 
24

 
1,156,955

 
24

Construction
 
573,773

 
7

 
314,732

 
6

 
288,373

 
6

Commercial small business leases
 
160,594

 
2

 

 

 

 

Total commercial loans
 
6,452,502

 
75

 
4,002,366

 
82

 
4,016,327

 
84

Residential mortgage
 
1,146,982

 
13

 
241,166

 
5

 
259,899

 
5

Consumer
 
1,136,334

 
13

 
685,244

 
14

 
586,279

 
12

Allowance for losses
 
(46,321
)
 
(1
)
 
(39,539
)
 
(1
)
 
(40,810
)
 
(1
)
Net loans
 
$
8,689,497

 
100
 %
 
$
4,889,237

 
100
 %
 
$
4,821,695

 
100
 %
Credit quality reflects portfolio strength
Credit quality metrics during 1Q 2019 reflect continued overall strength in both the originated and acquired loan portfolios, including the effect of the Beneficial acquisition.
Total problem assets, which includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO), were $248.3 million at March 31, 2019, an increase compared to $135.6 million at December 31, 2018. This increase included an expected $86.0 million of problem assets acquired from Beneficial. Total problem assets to total Tier 1 capital plus ALLL was 20.04% at March 31, 2019, compared to 17.21% at December 31, 2018. The Company’s ratio of classified assets to total Tier 1 capital plus ALLL was 14.56% compared to 13.41% at December 31, 2018.
Total delinquencies, which include nonperforming delinquencies, were $71.9 million at March 31, 2019, or 0.83% of gross loans, compared to $30.0 million, or 0.61% of gross loans at December 31, 2018. This increase was entirely due to expected delinquent loans acquired from Beneficial, primarily government-guaranteed student loans. Delinquency in the legacy WSFS portfolio decreased slightly during the quarter. Excluding nonperforming delinquencies, performing loan delinquencies were only 0.65% of gross loans at March 31, 2019, compared to 0.27% at December 31, 2018.
Total nonperforming assets increased $1.6 million, or 3%, to $49.3 million at March 31, 2019, as compared to $47.7 million at December 31, 2018. The nonperforming assets to total assets ratio decreased to 0.40% at March 31, 2019 from 0.66% at December 31, 2018, mainly due to the larger combined balance sheet.




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Net charge-offs for 1Q 2019 were $0.9 million, or 0.06% (annualized), of average gross loans, a decrease from $5.6 million, or 0.46% (annualized), for 4Q 2018, and $3.4 million, or 0.29% (annualized), during 1Q 2018. Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit costs), which can be uneven, were $7.9 million in 1Q 2019, $3.8 million in 4Q 2018 and $4.1 million in 1Q 2018. The increase in 1Q 2019 was primarily due to additional reserves related to an existing WSFS nonperforming commercial relationship.
The ratio of the ALLL to total gross loans was 0.53% at March 31, 2019 compared to 0.81% at December 31, 2018. Excluding the balances for acquired loans (which are marked to market at acquisition), the ALLL to total gross loans ratio would have been 1.05% at March 31, 2019 compared with 0.89% at December 31, 2018. The ALLL was 145% of nonaccruing loans at March 31, 2019 compared to 132% at December 31, 2018 and 120% at March 31, 2018.
 
Customer funding reflects continued core deposit strength
Total customer funding was $9.4 billion at March 31, 2019, a $3.9 billion increase from December 31, 2018. Excluding $3.8 billion of customer funding acquired from Beneficial, customer funding increased $71.6 million, or 1% (5% annualized), primarily due to a $65.7 million increase in customer time deposits and an increase of $15.3 million in savings deposits, partially offset by a decrease of $15.5 million in money market accounts. During 1Q 2019, we continued to take the opportunity to attract no- and low-cost relationship-based deposits.
Customer funding increased $4.4 billion compared to March 31, 2018. Excluding the $3.8 billion of customer funding acquired from Beneficial, customer funding increased $565.2 million, or 11%. This included a core deposit increase of $468.7 million, or 11%, over the prior year, with $331.3 million of that attributable to no- and low-cost checking deposit accounts. CDs also increased $96.5 million, or 15%, over the prior year consistent with our strategy to attract longer-term, fixed-rate funding.
Core deposits were 84% of total customer deposits, and no- and low-cost checking deposit accounts represented a robust 46% of total customer deposits at March 31, 2019. These core deposits predominantly represent longer-term, less price-sensitive customer relationships. The ratio of loans to customer deposits was 93% at March 31, 2019.




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
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The following table summarizes customer funding balances and composition at March 31, 2019 compared to December 31, 2018 and March 31, 2018:
(Dollars in thousands)
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
Noninterest demand
 
$
2,191,321

 
24
%
 
$
1,626,252

 
30
%
 
$
1,372,271

 
28
%
Interest-bearing demand
 
2,069,393

 
22

 
1,062,228

 
20

 
991,020

 
20

Savings
 
1,721,417

 
18

 
538,213

 
10

 
561,432

 
11

Money market
 
1,900,223

 
20

 
1,542,962

 
28

 
1,382,178

 
28

Total core deposits
 
7,882,354

 
84

 
4,769,655

 
88

 
4,306,901

 
87

Customer time deposits
 
1,475,695

 
16

 
672,942

 
12

 
642,116

 
13

Total customer deposits
 
$
9,358,049

 
100
%
 
$
5,442,597

 
100
%
 
$
4,949,017

 
100
%

Core fee income reflects diversification and strong growth over the prior year
Core fee income (noninterest income) increased by $5.2 million, or 16%, to $37.3 million compared to 1Q 2018. Excluding $1.5 million of traditional banking-related fee income related to Beneficial, core fee income increased by $3.7 million, or 12%, compared to the prior year reflecting growth across most of our businesses. The increase includes $1.3 million from higher trust-related fees, $0.9 million from credit/debit card and ATM income (primarily from higher bailment revenue from our Cash Connect® division), $0.7 million, net, from fee recognition related to the functional sale of certain Wealth Management accounts and $0.4 million from mortgage banking activities.
When compared to 4Q 2018, core fee income increased $1.3 million, or 4%. Excluding the impact of the Beneficial combination as discussed above, core fee income decreased $0.2 million, including a $1.6 million decrease in our Cash Connect® division, primarily due to the loss of bailment revenue from a large customer, the majority of which is offset by lower non-interest expenses. This decrease was largely offset by $0.7 million of higher mortgage banking revenue and higher income resulting from the functional sale of certain Wealth Management accounts discussed above.
For 1Q 2019, core fee income was 31% of core net revenue, compared to 36% for 1Q 2018, and was diversified among various sources, including traditional banking, mortgage banking, trust and wealth management and cash logistics services (Cash Connect®). The year-over-year percentage decline primarily reflects the Beneficial combination, which had a lower fee income mix.





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WSFS Bank Center
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Noninterest expenses reflect growth in revenue and effective cost management
Our core efficiency ratio(2) was 55.1% in 1Q 2019, compared to 58.5% in 4Q 2018, and 61.1% in 1Q 2018.
Core noninterest expense for 1Q 2019 was $66.6 million, an increase of $11.5 million, or 21%, from $55.1 million in 1Q 2018, primarily due to approximately $9.7 million of higher ongoing operating costs due to our combination with Beneficial, which closed on March 1, 2019. Also contributing to the year-over-year increase was $0.7 million of higher planned marketing costs in our expanded markets and $1.1 million, net, of higher operating costs to support growth in our balance sheet and fee-based businesses.
When compared to 4Q 2018, core noninterest expense increased $7.5 million, or 13%. Excluding the $9.7 million of higher ongoing operating costs from the Beneficial combination, described above, core noninterest expense decreased $2.2 million quarter-over-quarter. This decrease is due to $4.2 million of lower incentive compensation expense due to higher expense in 4Q 2018 due to the Company's 2018 performance and lower operating costs of $1.0 million in our Cash Connect® division, partially offset by higher compensation, occupancy and marketing costs, primarily related to typical seasonality.
Income taxes
We recorded a $6.3 million income tax provision in 1Q 2019, compared to provisions of $8.5 million in 4Q 2018 and $10.8 million in 1Q 2018.
The effective tax rate was 32.6% in 1Q 2019, 22.2% in 4Q 2018, and 22.4% in 1Q 2018. The higher tax rate in 1Q 2019 compared to 4Q 2018 resulted primarily from higher non-deductible costs related to our combination with Beneficial and lower benefits realized from stock-based compensation activity. Excluding the effect of higher non-deductible costs, our core adjusted tax rate was approximately 23.3%(2).












(2) As used in this press release, core efficiency ratio and core adjusted tax rate are non-GAAP financial measures. For a reconciliation of these and other non-GAAP measures to their comparable GAAP measures, see pages 20 and 21 of this press release.





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Selected Business Segments (included in previous results):
Wealth Management segment revenue grows 16% over the prior year, when excluding nonrecurring fee income
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 $19.0 billion in assets under management (AUM) and assets under administration (AUA) as of March 31, 2019.  
Total Wealth Management revenue (net interest income, fiduciary fees and other fee income) was $15.9 million for 1Q 2019. This represented an increase of $3.0 million, or 23%, compared to 1Q 2018 and an increase of $1.2 million, or 8% (not annualized), compared to 4Q 2018. The year-over-year increase includes $0.7 million, net, of fee recognition related to the functional sale of certain accounts.
Excluding the net fee recognition above, total Wealth Management revenue increased $2.3 million, or 16%, compared to 1Q 2018 and increased $0.5 million, or 4% (not annualized), compared to 4Q 2018. The year-over-year increase reflected continued organic growth, with particular strength in the capital markets and corporate trust services businesses. Interest income also increased due to higher no- and low-cost core deposit balances.
Total noninterest expense (including intercompany allocations and provision for loan losses and credit costs) was $8.7 million in 1Q 2019, an increase of $0.6 million compared to 1Q 2018 and essentially flat compared to 4Q 2018.
Pre-tax income in 1Q 2019 was $7.2 million (or $6.5 million excluding the fee recognition described above) compared to $6.1 million in 4Q 2018 and $4.8 million in 1Q 2018 and was driven by the above mentioned factors.
















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Cash Connect® net revenue increases 6% over same quarter in 2018
Cash Connect® is a premier provider of ATM vault cash, smart safe and cash logistics services in the United States. Cash Connect® services approximately 28,400 non-bank ATMs and retail safes nationwide supplying or managing over $1.0 billion in cash at March 31, 2019 and provides other fee-based services. Cash Connect® also operates 441 ATMs for WSFS Bank, which is one of the largest branded ATM networks in our market.
Our Cash Connect® division recorded $10.0 million of net revenue (fee income less funding costs) in 1Q 2019, an increase of $0.5 million, or 6%, from 1Q 2018, primarily due to continued growth in the bailment, cash management and smart safe lines of business, partially offset by higher funding costs. Compared to 4Q 2018, net revenue decreased $1.2 million, or 11% (not annualized), primarily due to the loss of low-margin bailment revenue from a large customer, for whom we continue to provide cash management and reconcilement services.
Noninterest expense (including intercompany allocations of expense) was $8.6 million in 1Q 2019, an increase of $0.6 million compared to 1Q 2018 and a decrease of $1.2 million compared to 4Q 2018. The year-over-year increase in expenses was primarily due to higher operating costs associated with growth, higher funding costs, and investment in enhancing our smart safe technology platform. Cash Connect® reported pre-tax income of $1.4 million for 1Q 2019, which was relatively flat compared to 1Q 2018 and 4Q 2018 due to organic growth offset by tighter margins.
In 2019, Cash Connect® continues to drive efficiencies in its cash optimization to control cost of funds and to best manage the mix of WSFS's cash and other sources of cash to increase our ROA. We are continuing to experience strong growth in the strategic remote cash capture (smart safe, recycler and kiosk) space with over 2,400 devices under service. Our pipeline is experiencing significant growth as we continue to add new channel partners with strong networks of national relationships.




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
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Capital management
WSFS’ total stockholders’ equity increased $968.8 million, or 118% (not annualized), to $1.8 billion at March 31, 2019 from $820.9 million at December 31, 2018, primarily due to our acquisition of Beneficial, the effect of market-value changes on available-for-sale securities, and the effect of quarterly earnings, partially offset by the payment of the common stock dividend during the quarter and stock buybacks.
WSFS’ tangible common equity(3) increased $574.6 million, or 91% (not annualized), to $1.2 billion at March 31, 2019 from $634.9 million at December 31, 2018 for the reasons described in the paragraph above. WSFS’ common equity to assets ratio was 14.69% at March 31, 2019, and our tangible common equity to tangible assets ratio(3) increased by 143 bps during the quarter to 10.42%.
At March 31, 2019, book value per share was $33.69, an increase of $7.52, or 29%, from December 31, 2018, and tangible common book value per share was $22.77, an increase of $2.53, or 13%, from December 31, 2018.
At March 31, 2019, WSFS Bank’s Tier 1 leverage ratio of 14.00%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 11.73%, and Total Capital ratio of 12.20% were all substantially in excess of the “well-capitalized” regulatory benchmarks.
The Board of Directors approved a quarterly cash dividend of $0.12 per share of common stock, a 9% increase from our cash dividend in 4Q 2018. This dividend will be paid on May 23, 2019 to stockholders of record as of May 9, 2019.
During 1Q 2019, WSFS repurchased 77,452 shares of common stock at an average price of $42.47 following the closing of the Beneficial acquisition, substantially all of which was purchased through our new share buyback program approved by the Board of Directors in 4Q 2018. As capital levels subsequent to our acquisition of Beneficial are stronger than anticipated, we intend to continue to buy back shares, consistent with our intent to return a minimum of 25% of annual net income to stockholders through dividends and share repurchases while maintaining capital ratios in excess of “well-capitalized” regulatory benchmarks.





(3) As used in this release, tangible common equity, and tangible common equity to tangible assets are non-GAAP financial measures. For a reconciliation of these and other non-GAAP measures to their comparable GAAP measures, see pages 20 and 21 of this press release.




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
13


First quarter 2019 earnings release conference call and supplemental materials
Management will conduct a conference call to review 1Q 2019 results at 1:00 p.m. Eastern Time (ET) on Friday, April 26, 2019. Interested parties may listen to this call by dialing 1-877-312-5857. A rebroadcast of the conference call will be available beginning at 4 pm on Friday, April 26, 2019 until Friday, May 10, 2019 at 4 pm by dialing 1-855-859-2056 and using Conference ID #9184923.
For additional information about our acquisition of Beneficial, which closed on March 1, 2019, please refer to the 1Q 2019 Earnings Release Supplement available under the Investor Relations section of WSFS website (www.wsfsbank.com).
About WSFS Financial Corporation
WSFS Financial Corporation is a multi-billion dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest and largest locally-managed bank and trust company headquartered in Delaware and the Delaware Valley. As of March 31, 2019, WSFS Financial Corporation had $12.2 billion in assets on its balance sheet and $19.0 billion in assets under management and administration. WSFS operates from 152 offices located in Delaware (49), Pennsylvania (72), New Jersey (29), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking, cash management and trust and wealth management. Other subsidiaries or divisions include Beneficial Equipment Finance Corporation, Cash Connect®, Christiana Trust Group, Cypress Capital Management, LLC, NewLane Finance, Powdermill Financial Solutions, WSFS Institutional Services, WSFS Wealth Investments, West Capital Management, and WSFS Mortgage and Arrow Land Transfer. Serving the greater Delaware Valley since 1832, WSFS Bank is one of the ten oldest banks in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.





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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
14


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 the United States generally, and particularly in the markets in which the Company operates and in which its loans are concentrated, including the effects of declines in housing markets, an increase in unemployment levels and slowdowns in economic growth; the Company's level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs; possible additional loan losses and impairment of the collectability of loans; changes in market interest rates which may increase funding costs and reduce earning asset yields and thus reduce margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of the Company's investment securities portfolio; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial and industrial loans in our loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company's operations including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) the Economic Growth, Regulatory Relief, and Consumer Protection Act (which amended the Dodd-Frank Act), and the rules and regulations issued in accordance therewith and potential expenses associated with complying with such regulations; the Company's ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including our ability to generate liquidity internally or raise capital on favorable terms; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations; any impairment of the Company's goodwill or other intangible assets; failure of the financial and operational controls of the Company's Cash Connect® division; conditions in the financial markets that may limit the Company's access to additional funding to meet its liquidity needs; the success of the Company's growth plans, including the successful integration of past and future acquisitions; including the acquisition of Beneficial Bancorp, Inc.; the Company's ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and post-acquisition customer acceptance of the Company's products and services and related Customer disintermediation; negative perceptions or publicity with respect to the Company's trust and wealth management business; adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings; system failure or cybersecurity incidents or other breaches of the Company's network security; the Company's ability to recruit and retain key employees; the effects of problems encountered by other financial institutions that adversely affect the Company or the banking industry generally; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability and man-made disasters including terrorist attacks; possible changes in the speed of loan prepayments by the Company's customers and loan origination or sales volumes; possible changes in the speed of prepayments of mortgage-backed securities due to changes in the interest rate environment, and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above; and the costs associated with resolving any problem loans, litigation, and other risks and uncertainties, including those discussed in the Company's Form 10-K for the year ended December 31, 2018 and other documents filed by the Company with the Securities and Exchange Commission from time to time.
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 WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise.




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
15


WSFS FINANCIAL CORPORATION     
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited)
 
 
Three months ended
(Dollars in thousands, except per share data)
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
Interest income:
Interest and fees on loans
 
$
87,117

 
$
68,435

 
$
60,465

Interest on mortgage-backed securities
 
10,466

 
7,814

 
5,399

Interest and dividends on investment securities
 
1,044

 
1,071

 
1,120

Other interest income
 
950

 
474

 
629

 
 
99,577

 
77,794

 
67,613

Interest expense:
 
 
 
 
 
 
Interest on deposits
 
10,942

 
9,483

 
5,240

Interest on Federal Home Loan Bank advances
 
2,590

 
1,299

 
2,463

Interest on senior debt
 
1,179

 
1,179

 
1,179

Interest on trust preferred borrowings
 
726

 
702

 
557

Interest on other borrowings
 
826

 
457

 
460

 
 
16,263

 
13,120

 
9,899

Net interest income
 
83,314

 
64,674

 
57,714

Provision for loan losses
 
7,654

 
3,306

 
3,650

Net interest income after provision for loan losses
 
75,660

 
61,368

 
54,064

Noninterest income:
 
 
 
 
 
 
Credit/debit card and ATM income
 
11,515

 
12,084

 
9,805

Investment management and fiduciary revenue
 
10,147

 
10,140

 
9,189

Deposit service charges
 
4,746

 
4,807

 
4,630

Mortgage banking activities, net
 
2,092

 
1,348

 
1,737

Loan fee income
 
885

 
633

 
599

Investment securities gains, net
 
15

 

 
21

Unrealized gain on equity investment
 
3,798

 
2,150

 
15,346

Bank-owned life insurance income
 
217

 
(153
)
 
232

Other income
 
7,707

 
7,177

 
5,908

 
 
41,122

 
38,186

 
47,467

Noninterest expense:
 
 
 
 
 
 
Salaries, benefits and other compensation
 
36,205

 
31,545

 
29,853

Occupancy expense
 
6,367

 
4,830

 
5,248

Equipment expense
 
3,989

 
3,086

 
3,089

Data processing and operations expense
 
 
2,588

 
1,992

 
1,907

Professional fees

 
1,872

 
2,330

 
1,725

Marketing expense
 
1,590

 
1,245

 
758

FDIC expenses
 
620

 
485

 
599

Loan workout and OREO expense
 
108

 
460

 
426

Corporate development expense
 
26,627

 
2,205

 

Restructuring expense
 
4,362

 

 

(Recovery of) provision for fraud loss
 

 

 
(1,665
)
Other operating expenses
 
13,264

 
13,172

 
11,472

 
 
97,592

 
61,350

 
53,412

Income before taxes
 
19,190

 
38,204

 
48,119

Income tax provision
 
6,260

 
8,486

 
10,769

Net income
 
$
12,930

 
$
29,718

 
$
37,350

Less: Net loss attributable to noncontrolling interest
 
(93
)
 

 

Net income attributable to WSFS
 
$
13,023

 
$
29,718

 
$
37,350

Diluted earnings (loss) per share of common stock:
 
$
0.33

 
$
0.93

 
$
1.16

Weighted average shares of common stock outstanding for fully diluted EPS
 
39,284,057

 
31,902,023

 
32,259,671

See “Notes”




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
16


WSFS FINANCIAL CORPORATION     
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued
 
 
Three months ended
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
Performance Ratios:
 
 
 
 
 
 
 
Return on average assets (a)
 
0.58
%
 
1.66
%
 
2.20
%
 
Return on average equity (a)
 
4.54

 
14.89

 
20.87

 
Return on average tangible common equity (a)(o)
 
6.77

 
19.83

 
28.59

 
Net interest margin (a)(b)
 
4.30

 
4.16

 
4.01

 
Efficiency ratio (c)
 
78.23

 
59.44

 
50.62

 
Noninterest income as a percentage of total net revenue (b)
 
32.96

 
37.00

 
44.98

 
See “Notes”





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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
17


WSFS FINANCIAL CORPORATION     
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(Dollars in thousands)
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
Assets:
 
 
 
 
 
 
Cash and due from banks
 
$
190,611

 
$
134,939

 
$
128,799

Cash in non-owned ATMs
 
457,046

 
484,648

 
577,561

Investment securities (d)
 
148,190

 
149,950

 
159,672

Other investments
 
61,034

 
57,662

 
66,946

Mortgage-backed securities (d)
 
1,523,196

 
1,205,079

 
907,818

Net loans (e)(f)(l)
 
8,689,497

 
4,889,237

 
4,821,695

Bank owned life insurance
 
89,449

 
6,687

 
5,746

Goodwill and intangibles
 
580,263

 
186,023

 
187,790

Other assets
 
445,131

 
134,645

 
131,904

Total assets
 
$
12,184,417

 
$
7,248,870

 
$
6,987,931

Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
2,191,321

 
$
1,626,252

 
$
1,372,271

Interest-bearing deposits
 
7,166,728

 
3,816,345

 
3,576,746

Total customer deposits
 
9,358,049

 
5,442,597

 
4,949,017

Brokered deposits
 
315,655

 
197,834

 
253,498

Total deposits
 
9,673,704

 
5,640,431

 
5,202,515

Federal Home Loan Bank advances
 
81,240

 
328,465

 
587,162

Other borrowings
 
325,128

 
371,323

 
345,035

Other liabilities
 
314,668

 
87,731

 
106,940

Total liabilities
 
10,394,740

 
6,427,950

 
6,241,652

Stockholders’ equity of WSFS
 
1,789,752

 
820,920

 
746,279

Noncontrolling interest
 
(75
)
 

 

Total stockholders' equity
 
1,789,677

 
820,920

 
746,279

Total liabilities and stockholders' equity
 
$
12,184,417

 
$
7,248,870

 
$
6,987,931

Capital Ratios:
 
 
 
 
 
 
Equity to asset ratio
 
14.69
%
 
11.32
%
 
10.68
%
Tangible common equity to tangible asset ratio (o)
 
10.42

 
8.99

 
8.21

Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g)
 
11.73

 
12.69

 
11.69

Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g)
 
14.00

 
10.82

 
10.08

Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g)
 
11.73

 
12.69

 
11.69

Total Risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g)
 
12.20

 
13.37

 
12.42

Asset Quality Indicators:
 
 
 
 
 
 
Nonperforming Assets:
 
 
 
 
 
 
Nonaccruing loans
 
$
32,038

 
$
30,054

 
$
34,060

Troubled debt restructuring (accruing)
 
14,995

 
14,953

 
20,248

Assets acquired through foreclosure
 
2,233

 
2,668

 
2,567

Total nonperforming assets
 
$
49,266

 
$
47,675

 
$
56,875

Past due loans (h)
 
$
11,752

 
$
835

 
$
555

Allowance for loan losses
 
46,321

 
39,539

 
40,810

Ratio of nonperforming assets to total assets
 
0.40
%
 
0.66
%
 
0.81
%
Ratio of nonperforming assets (excluding accruing TDRs) to total assets
 
0.28

 
0.45

 
0.52

Ratio of allowance for loan losses to total gross loans (i)(n)
 
0.53

 
0.81

 
0.84

Ratio of allowance for loan losses to total gross loans (excluding acquired loans) (i)(n)
 
1.05

 
0.89

 
0.96

Ratio of allowance for loan losses to nonaccruing loans
 
145

 
132

 
120

Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n)
 
0.06

 
0.46

 
0.29

Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n)
 
0.06

 
0.29

 
0.29

See “Notes”




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
18


WSFS FINANCIAL CORPORATION    
FINANCIAL HIGHLIGHTS (Continued) 
AVERAGE BALANCE SHEET (Unaudited)
(Dollars in thousands)
 
Three months ended
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
 
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
 
$
1,970,030

 
$
26,604

 
5.48
%
 
$
1,453,593

 
$
20,726

 
5.66
%
 
$
1,440,607

 
$
18,165

 
5.11
%
Residential real estate loans
 
528,686

 
7,601

 
5.75

 
223,564

 
3,525

 
6.31

 
247,975

 
3,832

 
6.18

Commercial loans (p)
 
2,854,458

 
41,146

 
5.86

 
2,546,071

 
34,737

 
5.43

 
2,562,207

 
31,209

 
4.96

Consumer loans
 
842,543

 
11,468

 
5.52

 
674,441

 
9,153

 
5.38

 
572,977

 
7,081

 
5.01

Loans held for sale
 
20,482

 
298

 
5.90

 
23,122

 
294

 
5.04

 
16,361

 
178

 
4.35

Total loans
 
6,216,199

 
87,117

 
5.69

 
4,920,791

 
68,435

 
5.53

 
4,840,127

 
60,465

 
5.07

Mortgage-backed securities (d)
 
1,437,159

 
10,466

 
2.91

 
1,070,865

 
7,814

 
2.92

 
841,880

 
5,399

 
2.57

Investment securities (d)
 
149,127

 
1,044

 
3.40

 
151,927

 
1,071

 
3.39

 
161,280

 
1,120

 
3.39

Other interest-earning assets
 
79,015

 
950

 
4.88

 
61,772

 
474

 
3.04

 
33,251

 
629

 
7.57

Total interest-earning assets
 
7,881,500

 
99,577

 
5.14
%
 
6,205,355

 
77,794

 
5.00
%
 
5,876,538

 
67,613

 
4.69
%
Allowance for loan losses
 
(40,433
)
 
 
 
 
 
(42,266
)
 
 
 
 
 
(41,464
)
 
 
 
 
Cash and due from banks
 
107,845

 
 
 
 
 
95,523

 
 
 
 
 
125,402

 
 
 
 
Cash in non-owned ATMs
 
427,890

 
 
 
 
 
487,542

 
 
 
 
 
516,259

 
 
 
 
Bank owned life insurance
 
35,058

 
 
 
 
 
6,738

 
 
 
 
 
87,058

 
 
 
 
Other noninterest-earning assets
 
687,316

 
 
 
 
 
349,396

 
 
 
 
 
336,051

 
 
 
 
Total assets
 
$
9,099,176

 
 
 
 
 
$
7,102,288

 
 
 
 
 
$
6,899,844

 
 
 
 
Liabilities and Stockholders’ Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand
 
$
1,383,088

 
$
1,736

 
0.51
%
 
$
1,053,891

 
$
1,660

 
0.62
%
 
$
995,667

 
$
815

 
0.33
%
Money market
 
1,647,032

 
3,840

 
0.95

 
1,618,594

 
3,775

 
0.93

 
1,386,836

 
1,589

 
0.46

Savings
 
947,170

 
871

 
0.37

 
537,715

 
259

 
0.19

 
553,461

 
253

 
0.19

Customer time deposits
 
972,458

 
3,264

 
1.36

 
685,960

 
2,520

 
1.46

 
622,544

 
1,686

 
1.10

Total interest-bearing customer deposits
 
4,949,748

 
9,711

 
0.80

 
3,896,160

 
8,214

 
0.84

 
3,558,508

 
4,343

 
0.49

Brokered deposits
 
213,675

 
1,231

 
2.34

 
244,509

 
1,269

 
2.06

 
254,307

 
897

 
1.43

Total interest-bearing deposits
 
5,163,423

 
10,942

 
0.86

 
4,140,669

 
9,483

 
0.91

 
3,812,815

 
5,240

 
0.56

FHLB of Pittsburgh advances
 
403,961

 
2,590

 
2.60

 
212,942

 
1,299

 
2.42

 
601,044

 
2,463

 
1.66

Trust preferred borrowings
 
67,011

 
726

 
4.39

 
67,011

 
702

 
4.16

 
67,011

 
557

 
3.37

Senior debt
 
98,410

 
1,179

 
4.79

 
98,356

 
1,179

 
4.79

 
98,193

 
1,179

 
4.80

Other borrowed funds
 
173,253

 
826

 
1.93

 
117,592

 
457

 
1.54

 
151,288

 
460

 
1.23

Total interest-bearing liabilities
 
5,906,058

 
16,263

 
1.12
%
 
4,636,570

 
13,120

 
1.12
%
 
4,730,351

 
9,899

 
0.85
%
Noninterest-bearing demand deposits
 
1,768,570

 
 
 
 
 
1,582,406

 
 
 
 
 
1,350,342

 
 
 
 
Other noninterest-bearing liabilities
 
262,004

 
 
 
 
 
91,503

 
 
 
 
 
93,437

 
 
 
 
Stockholders’ equity
 
1,162,591

 
 
 
 
 
791,809

 
 
 
 
 
725,714

 
 
 
 
Noncontrolling interest
 
(47
)
 
 
 
 
 

 
 
 
 
 

 
 
 
 
Total liabilities and equity
 
$
9,099,176

 
 
 
 
 
$
7,102,288

 
 
 
 
 
$
6,899,844

 
 
 
 
Excess of interest-earning assets over interest-bearing liabilities
 
$
1,975,442

 
 
 
 
 
$
1,568,785

 
 
 
 
 
$
1,146,187

 
 
 
 
Net interest and dividend income
 
 
 
$
83,314

 
 
 
 
 
$
64,674

 
 
 
 
 
$
57,714

 
 
Interest rate spread
 
 
 
 
 
4.02
%
 
 
 
 
 
3.88
%
 
 
 
 
 
3.84
%
Net interest margin
 
 
 
 
 
4.30
%
 
 
 
 
 
4.16
%
 
 
 
 
 
4.01
%
See “Notes”




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
19


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
 
(Dollars in thousands, except per share data)
 
Three months ended
 
Stock Information:
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
Market price of common stock:
 
 
 
 
 
 
 
High
 
$45.13
 
$49.40
 
$53.00
 
Low
 
37.19
 
33.75
 
45.71
 
Close
 
38.60
 
37.91
 
48.55
 
Book value per share of common stock
 
33.69
 
26.17
 
23.72
 
Tangible common book value per share of common stock (o)
 
22.77
 
20.24
 
17.75
 
Number of shares of common stock outstanding (000s)
 
53,128
 
31,374
 
31,463
 
Other Financial Data:
 
 
 
 
 
 
 
One-year repricing gap to total assets (k)
 
(4.28)%
 
(0.57)%
 
(0.86)%
 
Weighted average duration of the MBS portfolio
 
4.2 years
 
4.7 years
 
5.4 years
 
Unrealized gains (losses) on securities available for sale, net of taxes
 
$2,700
 
$(14,553)
 
$(19,685)
 
Number of Associates (FTEs) (m)
 
1,903
 
1,177
 
1,148
 
Number of offices (branches, LPO’s, operations centers, etc.)
 
152
 
76
 
77
 
Number of WSFS owned ATMs
 
507
 
441
 
441
 
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. In 1Q 2019, balance includes student loans acquired from Beneficial, which are U.S. government guaranteed with little risk of credit loss.
(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 and other non-GAAP measures to their comparable GAAP measures, see pages 20 and 21 of this press release.
(p)
Includes commercial small business leases.
         




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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
20


WSFS FINANCIAL CORPORATION    
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
 
Non-GAAP Reconciliation (o):
 
Three months ended
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
Net interest income (GAAP)
 
$
83,314

 
$
64,674

 
$
57,714

 
Core net interest income (non-GAAP)
 
$
83,314

 
$
64,674

 
$
57,714

 
Noninterest income (GAAP)
 
$
41,122

 
$
38,186

 
$
47,467

 
Less: Securities gains
 
15

 

 
21

 
Less: Unrealized gains on equity investment
 
3,798

 
2,150

 
15,346

 
Core fee income (non-GAAP)
 
$
37,309

 
$
36,036

 
$
32,100

 
Core net revenue (non-GAAP)
 
$
120,623

 
$
100,710

 
$
89,814

 
Core net revenue (non-GAAP)(tax-equivalent)
 
$
120,940

 
$
101,055

 
$
90,158

 
Noninterest expense (GAAP)
 
$
97,592

 
$
61,350

 
$
53,412

 
(Plus)/less: Recovery of fraud loss
 

 

 
(1,665
)
 
Less: Corporate development costs
 
26,627

 
2,205

 

 
Less: Restructuring expense
 
4,362

 

 

 
Core noninterest expense (non-GAAP)
 
$
66,603

 
$
59,145

 
$
55,077

 
Core efficiency ratio (c)
 
55.1
 %
 
58.5
%
 
61.1
%
 
 
 
 
 
 
 
 
 
 
 
End of period
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
Total assets
 
$
12,184,417

 
$
7,248,870

 
$
6,987,931

 
Less: Goodwill and other intangible assets
 
580,263

 
186,023

 
187,790

 
Total tangible assets
 
$
11,604,154

 
$
7,062,847

 
$
6,800,141

 
Total stockholders’ equity
 
$
1,789,752

 
$
820,920

 
$
746,279

 
Less: Goodwill and other intangible assets
 
580,263

 
186,023

 
187,790

 
Total tangible common equity (non-GAAP)
 
$
1,209,489

 
$
634,897

 
$
558,489

 
 
 
 
 
 
 
 
 
Calculation of tangible common book value per share:
 
 
 
 
 
Book value per share (GAAP)
 
$
33.69

 
$
26.17

 
$
23.72

 
Tangible common book value per share (non-GAAP)
 
22.77

 
20.24

 
17.75

 
Calculation of tangible common equity to tangible assets:
 
 
 
 
 
Equity to asset ratio (GAAP)
 
14.69
 %
 
11.32
%
 
10.68
%
 
Tangible common equity to tangible assets ratio (non-GAAP)
 
10.42

 
8.99

 
8.21

 
 
 
 
 
 
 
 
 
Reconciliation of core adjusted tax rate:
 
Three months ended
 
 
 
 
 
 
 
March 31, 2019
 
 
 
 
 
Effective tax rate (GAAP)
 
32.6
 %
 
 
 
 
 
Adjustments:
 
 
 
 
 
 
 
Nondeductible change in control
 
(6.9
)
 
 
 
 
 
Nondeductible acquisition costs
 
(2.3
)
 
 
 
 
 
Other
 
(0.1
)
 
 
 
 
 
Core adjusted tax rate (non-GAAP)
 
23.3
 %
 
 
 
 
 





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WSFS Bank Center
500 Delaware Avenue, Wilmington, Delaware 19801
  
21


 
 
Three months ended
 
 
 
March 31, 2019
 
December 31, 2018
 
March 31, 2018
 
GAAP net income attributable to WSFS
 
$
13,023

 
$
29,718

 
$
37,350

 
Plus (less): Pre-tax adjustments: Securities gains, unrealized gains on equity investment, recovery of fraud loss, corporate development and restructuring costs
 
27,176

 
55

 
(17,032
)
 
(Plus)/less: Tax impact of pre-tax adjustments
 
(4,552
)
 
141

 
4,071

 
Adjusted net income (non-GAAP) attributable to WSFS
 
$
35,647

 
$
29,914

 
$
24,389

 
 
 
 
 
 
 
 
 
GAAP return on average assets (ROA)
 
0.58
 %
 
1.66
%
 
2.20
 %
 
Plus (less): Pre-tax adjustments: Securities gains, unrealized gains on equity investment, recovery of fraud loss, corporate development and restructuring costs
 
1.21

 

 
(1.01
)
 
(Plus) less: Tax impact of pre-tax adjustments
 
(0.20
)
 
0.01

 
0.24

 
Core ROA (non-GAAP)
 
1.59
 %
 
1.67
%
 
1.43
 %
 
 
 
 
 
 
 
 
 
EPS (GAAP)
 
$
0.33

 
$
0.93

 
$
1.16

 
Plus (less): Pre-tax adjustments: Securities gains, unrealized gains on equity investment, recovery of fraud loss, corporate development and restructuring costs
 
0.70

 

 
(0.53
)
 
(Plus) less: Tax impact of pre-tax adjustments
 
(0.12
)
 
0.01

 
0.13

 
Core EPS (non-GAAP)
 
$
0.91

 
$
0.94

 
$
0.76

 
 
 
 
 
 
 
 
 
Calculation of return on average tangible common equity:
 
 
 
 
 
GAAP net income attributable to WSFS
 
$
13,023

 
$
29,718

 
$
37,350

 
Plus: Tax effected amortization of intangible assets
 
1,034

 
537

 
541

 
Net tangible income (non-GAAP)
 
$
14,057

 
$
30,255

 
$
37,891

 
Average shareholders’ equity
 
$
1,162,591

 
$
791,809

 
$
725,714

 
Less: average goodwill and intangible assets
 
321,102

 
186,418

 
188,209

 
Net average tangible common equity
 
$
841,489

 
$
605,391

 
$
537,505

 
Return on average tangible common equity (non-GAAP)
 
6.77
 %
 
19.83
%
 
28.59
 %
 
 
 
 
 
 
 
 
 
Calculation of core return on average tangible common equity:
Adjusted net income (non GAAP) attributable to WSFS
 
$
35,647

 
$
29,914

 
$
24,389

 
Plus: Tax effected amortization of intangible assets
 
1,034

 
537

 
541

 
Core net tangible income (non-GAAP)
 
$
36,681

 
$
30,451

 
$
24,930

 
Net average tangible common equity
 
$
841,489

 
$
605,391

 
$
537,505

 
Core return on average tangible common equity (non-GAAP)
 
17.68
 %
 
19.96
%
 
18.81
 %
 
 
 
 
 
 
 
 
 
Calculation of WSFS TBV:
 
End of period
 
 
 
 
 
 
 
February 28, 2019
 
 
 
 
 
Shareholders' equity
 
837,984

 
 
 
 
 
Less: goodwill and intangible assets
 
184,207

 
 
 
 
 
Tangible book value (non-GAAP)
 
653,777

 
 
 
 
 



a1q2019earningsreleasesu
EXHIBIT 99.2 WSFS Financial Corporation Q1 2019 Earnings Release Supplement Beneficial Combination April 25, 2019


 
Forward Looking Statements This presentation 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 the United States generally, and particularly in the markets in which the Company operates and in which its loans are concentrated, including the effects of declines in housing markets, an increase in unemployment levels and slowdowns in economic growth; the Company's level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs; possible additional loan losses and impairment of the collectability of loans; changes in market interest rates which may increase funding costs and reduce earning asset yields and thus reduce margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of the Company's investment securities portfolio; the credit risk associated with the substantial amount of commercial real estate, construction and land development, and commercial and industrial loans in our loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company's operations including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) the Economic Growth, Regulatory Relief, and Consumer Protection Act (which amended the Dodd-Frank Act), and the rules and regulations issued in accordance therewith and potential expenses associated with complying with such regulations; the Company's ability to comply with applicable capital and liquidity requirements (including the finalized Basel III capital standards), including its ability to generate liquidity internally or raise capital on favorable terms; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations; any impairment of the Company's goodwill or other intangible assets; failure of the financial and operational controls of the Company's Cash Connect® division; conditions in the financial markets that may limit the Company's access to additional funding to meet its liquidity needs; the success of the Company's growth plans, including the successful integration of past and future acquisitions; including the acquisition of Beneficial Bancorp, Inc. (“Beneficial”); the Company's ability to fully realize the cost savings and other benefits of its acquisitions, manage risks related to business disruption following those acquisitions, and post-acquisition customer acceptance of the Company's products and services and related Customer disintermediation; negative perceptions or publicity with respect to the Company's trust and wealth management business; adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings; system failure or cybersecurity incidents or other breaches of the Company's network security; the Company's ability to recruit and retain key employees; the effects of problems encountered by other financial institutions that adversely affect the Company or the banking industry generally; the effects of weather and natural disasters such as floods, droughts, wind, tornadoes and hurricanes as well as effects from geopolitical instability and man-made disasters including terrorist attacks; possible changes in the speed of loan prepayments by the Company's customers and loan origination or sales volumes; possible changes in the speed of prepayments of mortgage-backed securities due to changes in the interest rate environment, and the related acceleration of premium amortization on prepayments in the event that prepayments accelerate; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; the effects of any reputation, credit, interest rate, market, operational, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above; and the costs associated with resolving any problem loans, litigation, and other risks and uncertainties, including those discussed in the Company's Form 10-K for the year ended December 31, 2018 and other documents filed by the Company with the Securities and Exchange Commission from time to time. 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 presentation, the terms "WSFS", "the Company", "registrant", "we", "us", and "our" mean WSFS Financial Corporation and its subsidiaries, on a consolidated basis, unless the context indicates otherwise. 2


 
Day 1 Transaction Impact • Legal Close: March 1, 2019 • Transaction Value & Consideration: $15.97 per share plus cash out of options; Aggregate of $1.2 billion ($1.5 billion at announcement) • $2.93 in cash and 0.3013 WSFS shares of WSFS common stock • Price / Tangible Book Value: 130.6% (171.7% estimated at announcement) • Core Deposit Premium: 7.2% (15.4% estimated at announcement) • Fair Value of Assets: $5.1 billion • Fair Value of Liabilities: $4.2 billion • Total Loans: $3.5 billion(1) • Core Deposits: $3.0 billion; $85.1 million core deposit intangible • Total Goodwill: $309.0 million (see page 6 for details) (1) Includes an approximate fair value adjustment of ($161.6 million). See slide 5. 3


 
Transaction Metrics Original Model ($000’s except per share figures) Updated Estimate Aggregate Per Share Per Share • Pro forma TBV per share is 10% WSFS Standalone TBV (2/28/19)(1) $19.97 $653,777 20.84 higher than originally modeled Plus: Equity Consideration 949,968 Less: Total Intangibles Created 394,479 • Immediate TBV accretion of 1.2%, compared to 4.3% dilution Less: One-time costs (remaining)(2) 85,327 estimated at announcement Pro Forma TBV (3/1/2019) $1,123,939 $21.08 $19.12 TBV Accretion (Dilution) 1.2% (4.3%) Original Model Updated Estimate Pro Forma Pro Forma Impact Impact 2020 EPS Accretion 4.2% 4.2% 2021 EPS Accretion 8.0% 8.0% TBV Accretion (Dilution) 1.2% (4.3%) TBV Earnback (Years)(3) Immediate 3.7 (1) TBV is a non-GAAP financial measure and should be considered along with results presented with GAAP and is not a substitute for GAAP results. See reconciliation to GAAP information at the end of this presentation (2) Total modeled one-time costs less costs incurred through 2/28/19 4 (3) Calculated using the crossover method


 
Purchase Accounting Fair Value Adjustments Day 1 Fair Value Adjustments (3/1/2019) ($000’s) Recorded Mark Estimated Balance Sheet Amortization Mark Category % $ Life (Years) Size Method HTM Investments Fair Value $32,370 (4.61%) ($1,491) N/A N/A Core Deposit Intangible 3,027,066 2.81% 85,053 10.00 Straight Line Factors Impacting Fair Value Marks Loan Interest Fair Value 3,750,334 (2.38%) (89,542) 5.00+ Effective Interest Since Announcement Loan General Credit Fair Value 3,750,334 (1.40%) (52,343) 5.00+ Effective Interest • Higher Beneficial portfolio loan Loan Specific Credit Fair Value 3,750,334 (0.52%) (19,458) Various(1) Effective Interest Time Deposits Fair Value 805,933 0.52% 4,155 4.67 Effective Interest yields Borrowings Fair Value (Borrowings eliminated in Balance Sheet optimization strategy) • Lower Treasury yield curve • Balance sheet optimization and Original Assumptions (8/8/2018) repositioning strategy ($000’s) Projected Estimated Mark Estimated Balance Sheet Amortization Mark Category % $ Life (Years) Size Method The above drivers of reduced marks have offsetting favorable HTM Investments Fair Value $924,669 (1.19%) ($10,998) 3.10 Straight Line impacts to net interest income Core Deposit Intangible 3,513,231 1.75% 61,482 10.00 Straight Line Loan Interest Fair Value 4,235,837 (3.40%) (144,018) 4.50 Straight Line Loan General Credit Fair Value 4,235,837 (1.25%) (52,948) 3.50 Straight Line Loan Specific Credit Fair Value 4,235,837 (0.65%) (27,533) 0.00 Straight Line Time Deposits Fair Value (2) 4,358,018 (0.24%) (10,446) 1.80 Straight Line Borrowings Fair Value 625,634 (1.76%) (10,988) 2.10 Straight Line (1) Includes both PCI and non-PCI deposits (2) Reflects percentage of total deposits 5


 
Key Drivers of Goodwill ($ in millions) Actual to Date Original Model Variance Higher (Lower) Stock Consideration $950 $1,248 ($298) Cash Consideration 228 236 (8) Total Consideration Paid $1,179 $1,485 ($306) • Total consideration reduced due to WSFS common stock price Net Assets Acquired $951 $896 $55 ($55.35 at announcement versus $43.28 at closing) Purchase Accounting (80) (153) 73 Other (1) 27 (28) • Details on purchase accounting changes can be Total Purchase Accounting ($81) ($126) $45 found on page 5 Net Assets Acquired $870 $770 $100 (after Purchase Accounting) Goodwill $309 $715 ($406) 6


 
Non-GAAP Reconciliation Calculation of WSFS tangible book value: (Dollars in thousands) February 28, 2019 Shareholders' equity $ 837,984 Less: Goodwill and intangible assets 184,207 Tangible book value $ 653,777 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. 7


 
Stockholders or others seeking information regarding the Company may call or write: WSFS Financial Corporation Investor Relations WSFS Bank Center 500 Delaware Avenue Wilmington, DE 19801 302-792-6009 stockholderrelations@wsfsbank.com www.wsfsbank.com Rodger Levenson Dominic C. Canuso President and CEO Chief Financial Officer 302-571-7296 302-571-6833 rlevenson@wsfsbank.com dcanuso@wsfsbank.com 8