WSFS Financial Corporation
Oct 23, 2017

WSFS Reports 3Q 2017 EPS of $0.64 and ROA of 1.20%; Net Revenue Improves 16% Over 3Q 2016, Driven by Strong Growth Across Loans, Deposits, Net Interest Margin and Fee Income; Quarterly Cash Dividend Increases 29% to $0.09 Per Share

WILMINGTON, Del., Oct. 23, 2017 (GLOBE NEWSWIRE) -- WSFS Financial Corporation (NASDAQ:WSFS), the parent company of WSFS Bank, reported net income of $20.6 million, or $0.64 per diluted common share for 3Q 2017 compared to net income of $12.7 million, or $0.41 per share for 3Q 2016 and net income of $20.6 million, or $0.64 per share for 2Q 2017.

Net revenue (which includes net interest income and noninterest income) was $88.6 million for 3Q 2017, an increase of $12.0 million, or 16% from 3Q 2016. The strong increase in net revenue includes balanced growth in both net interest income and noninterest income. Net interest income was $56.1 million, an increase of $7.1 million, or 14% from 3Q 2016; and noninterest income was $32.4 million, an increase of $4.9 million, or 18% from 3Q 2016. Noninterest expenses were $54.2 million in 3Q 2017, an increase of $2.9 million, or 6% from 3Q 2016. The efficiency ratio for 3Q 2017 was 60.6%, as compared to 66.2% for 3Q 2016. The third quarter of 2016 included $5.9 million of corporate development costs from acquisitions, as compared with $0.2 million for 3Q 2017.

Return on average assets (ROA) was 1.20% compared to 0.82% for 3Q 2016. Return on average equity was 11.06% for 3Q 2017 compared to 7.66% for 3Q 2016.

Highlights for 3Q 2017:

Notable items in the quarter:

(1) As used in this release, core earnings per share (EPS), core return on average assets (ROA), core net revenue, core net interest income, and core fee income 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. 

CEO outlook and commentary

Mark A. Turner, President and CEO, said, "Our positive third quarter results keep us on track to deliver on our Strategic Plan goals. Core EPS of $0.64 represents an impressive 25% increase from core EPS in 3Q 2016. Earnings included a healthy blend of both fee income and net interest income growth, and also included both strong organic performance as well as positive contributions from our recent business combinations. Net interest margin was 3.95% and improved from 2Q 2017 and 3Q 2016, demonstrating our growth in and disciplined pricing of both loans and deposits. We also reported a core efficiency ratio(2) of 60.2%, an anticipated improvement over 60.9% in 2Q 2017 and 62.7% in 1Q 2017. Our credit quality metrics remained strong and improved across several key ratios. These metrics combined to drive a core ROA of 1.21%, an 18 bps improvement from core ROA in 3Q 2016. This keeps us well on pace to meet or exceed our Strategic Plan goals, including our core and sustainable ROA goal of 1.30%, by the fourth quarter of 2018.

"As a result of our continued strong earnings performance, the Board of Directors announced a $0.02, or 29%, per share increase in our quarterly cash dividend to $0.09 per share, consistent with our policy of returning a minimum of 25% of our earnings to our stockholders through a combination of cash dividends and routine repurchases of our common stock.

"Further, during the quarter we were named a top workplace in Delaware for the twelfth consecutive year in The Wilmington News Journal's ‘Top Workplaces' survey, ranking second in the large company category. We were also named the ‘Top Bank' in Delaware for the seventh year in a row by the readers of The Wilmington News Journal. These accolades, along with similar recognitions we recently received in the southeastern Pennsylvania market, demonstrate our ability to successfully grow our business while providing Customers with responsive and personalized service and to cultivate strong relationships with our Associates. These recognitions, along with our financial results evidence the success of our strategy, ‘Engaged Associates delivering stellar experiences growing Customer Advocates and value for our Owners'."

(2) As used in this release, core efficiency ratio 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.

Third Quarter 2017 Discussion of Financial Results

Net interest income and margin reflects disciplined pricing and redemption of senior notes

Net interest income for 3Q 2017 was $56.1 million, an increase of $7.1 million, or 14% compared to 3Q 2016. The net interest margin for 3Q 2017 was 3.95%, an increase of 11 bps from 3.84% for 3Q 2016. The year-over-year increase in the net interest margin includes an estimated 9 bps resulting from the overall higher short-term interest rate environment, an estimated 5 bps resulting from the positive effects of our acquisition of Penn Liberty and 3 bps from the redemption of $55.0 million of our senior notes in late 3Q 2017, offset somewhat by 6 bps attributable to lower purchased loan accretion from previous acquisitions (excluding Penn Liberty).

Compared with 2Q 2017, net interest income increased $1.8 million or 3% (not annualized) and net interest margin increased 2 bps from 3.93%. The increase in the net interest margin from 2Q 2017 includes an estimated 4 bps resulting from the overall higher short-term interest rate environment and 3 bps from the redemption of $55.0 million of our senior notes in 3Q 2017.  These increases were offset partially by 2 bps of decreased benefit from reverse mortgage income, and 2 bps from higher wholesale funding volume. 

Stable and consistent loan portfolio growth continues

At September 30, 2017, WSFS' net loan portfolio was $4.69 billion, an increase of $74.4 million, or 6% (annualized), from June 30, 2017. The increase included a $73.0 million, or 8% (annualized) increase in total commercial loans and a $28.4 million, or a 23% (annualized) increase in consumer loans. These increases were partially offset by a $26.9 million decline in residential mortgages, reflecting our ongoing strategy of selling most newly-originated residential mortgages in the secondary market. Net loan growth for the first nine months of 2017 was $190.4 million, or also 6% (annualized).

Compared to September 30, 2016, net loans increased $258.2 million, or again 6%. The year-over-year growth included an increase of $158.2 million, or 7% in commercial and industrial (C&I) loans, an increase of $84.1 million, or 41% in construction loans and an increase of $84.1 million, or 19% in consumer loans. These increases were partially offset by a decline in residential mortgages of $70.1 million, or 20%, consistent with our ongoing strategy for these loans described above.

The following table summarizes loan balances and composition at September 30, 2017 compared to June 30, 2017 and September 30, 2016:

(Dollars in thousands) September 30, 2017 June 30, 2017 September 30, 2016
Commercial & industrial $2,483,193  53% $2,433,256  52% $2,325,001  53%
Commercial real estate 1,149,664  25  1,139,840  25  1,146,589  26 
Construction 291,617  6  278,349  6  207,532  5 
Total commercial loans 3,924,474  84  3,851,445  83  3,679,122  84 
Residential mortgage 281,092  6  307,983  7  351,169  7 
Consumer 524,164  11  495,717  11  440,082  10 
Allowance for loan losses (40,201) (1) (40,005) (1) (39,028) (1)
Net Loans $4,689,529  100% $4,615,140  100% $4,431,345  100%

Credit quality trends remain stable and strong

Credit quality metrics during 3Q 2017 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), decreased to $147.7 million, or 20.63% of Tier 1 capital plus the allowance for loan losses (ALLL) at September 30, 2017, as compared to $161.7 million, or 23.20%, at June 30, 2017, primarily due to the positive resolution of a number of problem assets during the third quarter.

Total delinquencies, which include nonperforming delinquencies, were $27.0 million at September 30, 2017, or 0.57% of gross loans, and represent a modest increase from $23.9 million and 0.52% of gross loans at June 30, 2017. Excluding nonperforming delinquencies, performing loan delinquencies were only 0.19% of gross loans at September 30, 2017.

Total nonperforming assets declined $6.2 million or 11% to $52.4 million at September 30, 2017, as compared to $58.6 million at June 30, 2017, again primarily due to the positive resolution of a number of non-performing loans. The nonperforming assets to total assets ratio was 0.76% at September 30, 2017 compared to 0.86% at June 30, 2017.

Net charge-offs for 3Q 2017 were $2.7 million or 0.23% of total net loans on an annualized basis, an increase from $1.7 million, or  0.15% (annualized) in 2Q 2017, and a decrease from $4.5 million, or 0.44% (annualized) during 3Q 2016. Year to date, the ratio of net charge-offs to total gross loans was 19 bps in 2017, as compared with 20 bps for the same period in 2016, further demonstrating continued overall positive and stable credit quality trends.

Total credit costs (provision for loan losses, loan workout expenses, OREO expenses and other credit costs) were $3.5 million for 3Q 2017, an increase from $2.3 million during 2Q 2017 and a decrease from $6.3 million during 3Q 2016. Total credit costs year to date in 2017 were $8.6 million, as compared with $8.9 million for the same period in 2016, again demonstrating continued positive and stable credit quality and costs.

The ratio of the ALLL to total gross loans was 0.86% at September 30, 2017 compared to 0.87% at June 30, 2017. Excluding the balances for acquired loans (marked-to-market at acquisition), the ALLL to total gross loans ratio would have been 0.99% at September 30, 2017 and 1.02% at June 30, 2017. The ALLL was 120% of nonaccruing loans at September 30, 2017 compared to 104% at June 30, 2017 and 168% at September 30, 2016.

Customer funding reflects strength of core deposit relationships

Total customer funding was $4.88 billion at September 30, 2017, a $226.0 million, or 5% (not annualized) increase from June 30, 2017, which includes a $216.1 million normal seasonal increase in public funding account balances. The remaining increase of $9.9 million was due to an increase in other core deposit accounts of $15.3 million, partially offset by a $5.4 million decrease in CDs. Year to date, core deposits increased $314.2 million, or 10% (annualized), of which $155.7 million was related to public funding account balances.

Consistent with loan growth of 6%, customer funding increased $288.8 million, or 6% compared to September 30, 2016. This included a core deposit increase of $318.9 million, or 8% over the prior year, offset by purposeful run-off of higher-cost CDs.

Core deposits were a very strong 89% of total customer deposits, and no- and low-cost checking deposit accounts represent a robust 50% of total customer deposits at September 30, 2017. These core deposits predominantly represent longer-term, less price-sensitive customer relationships, which are very valuable in a rising-rate environment. The ratio of loans to customer deposits was 96% at September 30, 2017. 

The following table summarizes customer funding balances and composition at September 30, 2017 compared to June 30, 2017 and September 30, 2016:

(Dollars in thousands) September 30, 2017 June 30, 2017 September 30, 2016
Noninterest demand $1,357,597  28% $1,319,749  28% $1,245,127  27%
Interest-bearing demand 1,057,571  22  927,465  20  967,248  21 
Savings 557,914  11  572,476  12  538,093  12 
Money market 1,347,576  28  1,297,024  28  1,251,315  27 
Total core deposits 4,320,658  89  4,116,714  88  4,001,783  87 
Customer time deposits 557,129  11  535,115  12  587,217  13 
Total customer deposits $4,877,787  100% $4,651,829  100% $4,589,000  100%

Strong fee income growth continues

Core fee income (noninterest income) increased by $5.2 million, or 19%, to $31.7 million compared to 3Q 2016. This was the result of diversified growth across most of our businesses and included increases in investment management and fiduciary revenue of $2.7 million and credit/debit card and ATM income of $1.6 million, as well as $0.4 million from the gain on sale of Small Business Administration (SBA) loans. Excluding contributions from acquired businesses, organic fee income growth was a healthy 13%.

When compared to 2Q 2017, core fee income increased $0.7 million, or 2% (not annualized), including a $0.4 million increase in credit/debit card and ATM income from higher bailment fees in our Cash Connect® business.

For 3Q 2017, fee income was 36.3% of total revenue (computed on a fully tax-equivalent basis), when compared to 35.7% for 3Q 2016, and was well diversified among various sources, including traditional banking, mortgage banking, wealth management and ATM services (Cash Connect®).

Noninterest expense reflects recent acquisitions and franchise growth

Core noninterest expense(3) for 3Q 2017 was $53.3 million, an increase of $8.0 million or 18% from $45.3 million in 3Q 2016. Contributing to the year-over-year increase was $2.9 million of ongoing operating costs from our late 2016 acquisitions of Penn Liberty, Powdermill, and West Capital, and $1.1 million due to higher costs to support Cash Connect® revenue growth. The balance of the year-over-year increase was attributable to higher compensation and related costs due to adding staff to support overall franchise growth, higher professional fees, and higher costs related to earn-outs in connection with our recent acquisitions of fee-based businesses.

When compared to 2Q 2017, core noninterest expense increased $1.0 million, primarily due to higher compensation related costs due to franchise growth and higher costs related to earn-outs in connection with our recent acquisitions of fee-based businesses. These higher costs were partially offset by declines in equipment, professional fees, and marketing expenses.

Our core efficiency ratio was 60.2% in 3Q 2017, an improvement compared to 60.9% in 2Q 2017 and 62.7% in 1Q 2017.  This trend improvement reflects continued growth and scale economies as well as the typical seasonality of our business, where 1Q results are impacted by seasonally slow fee revenue and higher costs, with results typically improving throughout the year.

Income taxes

The Company recorded income tax provisions of $10.9 million in 3Q 2017 and 2Q 2017, compared to a provision of $6.8 million in 3Q 2016.

The effective tax rate was 34.7% in 3Q 2017, 34.5% in 2Q 2017, and 34.9% in 3Q 2016. The slight fluctuation in the effective tax rate is primarily the result of differences in tax benefits realized on stock-based compensation.

(3) As used in this release, core noninterest expense 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.

Selected Business Segments (included in previous results):

Wealth Management segment fee revenue grew 46% over the prior year 

The Wealth Management segment provides a broad array of fiduciary, investment management, credit and deposit products to clients through six businesses. WSFS Wealth Investments, with $177.2 million in assets under management (AUM), provides insurance, asset management, and brokerage products primarily to our retail banking clients. Cypress Capital Management, LLC is a registered investment adviser with $860.2 million(4) in AUM. Cypress is a fee-only wealth management firm offering a "balanced" investment style focused on preservation of capital and providing current income whose primary market segment is high-net-worth individuals. West Capital Management is a registered investment adviser with $839.6 million in AUM. West Capital is a fee-only wealth management firm which operates under a multi-family office philosophy and provides fully customized solutions tailored to the unique needs of institutions and high-net-worth individuals. Christiana Trust, with $16.31 billion(4) in AUM and assets under administration, provides fiduciary and investment services to personal trust clients; and trustee, agency, bankruptcy administration, custodial and commercial domicile services to corporate and institutional clients. Powdermill Financial Solutions, LLC is a multi-family office that specializes in providing unique, independent solutions to high-net-worth individuals, families and corporate executives. WSFS Private Banking serves high-net-worth clients by delivering credit and deposit products and partnering with other business units to deliver investment management and fiduciary products and services.

Total Wealth Management revenue (net interest income, fiduciary fees and other fee income) was $12.6 million for 3Q 2017. This was an increase of $3.4 million, or 36% compared to 3Q 2016 and essentially flat compared to 2Q 2017. Included in the year-over-year increase, fee revenue increased $2.9 million, or 46%, compared to 3Q 2016. The year-over-year increase reflects continued organic growth in several Wealth business lines in addition to the combinations with Powdermill Financial Solutions LLC, which occurred in August 2016, and West Capital Management, which occurred in mid-October 2016.

Total noninterest expense (including intercompany allocations and provision for loan losses and credit costs) was $8.6 million during 3Q 2017 compared to $6.1 million during 3Q 2016 and $9.1 million during 2Q 2017. The year-over-year increase in costs was due to increased compensation expense due to higher revenue, other infrastructure costs necessary to support the continuing growth of the business, higher legal and consulting costs on a few legacy trust disputes (events that occurred prior to WSFS' purchase of Christiana Trust), as well as the ongoing operational costs from the combinations with Powdermill and West Capital.

Pre-tax income in 3Q 2017 was $4.1 million, a meaningful increase from both $3.2 million in 3Q 2016 and $3.6 million in 2Q 2017, and was driven by the above-mentioned factors.

(4) AUM includes $122.9 million of Christiana Trust assets for which Cypress serves as sub-adviser.

Cash Connect® net revenue increases 9% over same quarter 2016

Cash Connect® is a premier provider of ATM vault cash and smart safe and cash logistics services in the United States. Cash Connect® services over 22,000 non-bank ATMs and retail safes nationwide with over $890 million in cash and other fee-based services. Cash Connect® also operates over 440 ATMs for WSFS Bank, which has the largest branded ATM network in Delaware.

Our Cash Connect® division recorded $9.6 million in net revenue (fee income less funding costs) in 3Q 2017, an increase of $0.8 million, or 9% from 3Q 2016 and an increase of $0.4 million from 2Q 2017, primarily due to continued growth in the bailment, cash management and smart safe lines of business, partially offset by higher funding costs due to the higher interest rate environment.

Noninterest expense (including intercompany allocations of expense) was $7.6 million during 3Q 2017, an increase of $1.1 million from 3Q 2016 and an increase of $0.4 million compared to 2Q 2017.  The year-over-year increase in expenses was primarily due to higher operating costs associated with higher fee income as well as increased investments for several new features and enhancements to our managed services and smart safe products. Cash Connect® reported pre-tax income of $2.0 million for 3Q 2017, which was a decrease of $0.4 million from 3Q 2016 as a result of margin compression from rising interest rates. Pre-tax net income was essentially flat in 3Q 2017 compared to 2Q 2017, due to competitive pricing pressure and higher funding costs.

Cash Connect® continues to focus on expanding both ATM and smart safe managed services to offset margin compression resulting from industry consolidation and increased expense pressure on our customers caused by the rising interest rate environment. Cash Connect® has over 1,200 safes as of September 30, 2017, up from just over 100 safes at the end of 2015, in addition to a growing smart safe pipeline generated by several smart safe channel partners actively marketing our program. Cash Connect® is also improving funding costs by optimizing cash usage throughout our network.

Capital management

WSFS' total stockholders' equity increased $18.2 million, or 3% (not annualized), to $740.9 million at September 30, 2017 from $722.6 million at June 30, 2017, primarily due to quarterly earnings, partially offset by stock buybacks and the payment of the common stock dividend during the quarter.

WSFS' tangible common equity(5) increased by 4% (not annualized) to $551.7 million at September 30, 2017 from $532.6 million at June 30, 2017 for the reasons described in the paragraph above. 

WSFS' common equity to assets ratio was 10.78% at September 30, 2017, and its tangible common equity to tangible assets ratio(5) increased by 22 bps during the quarter to 8.25%. At September 30, 2017, book value per share was $23.59, a $0.60 increase from June 30, 2017, and tangible common book value per share(5) was $17.57, a $0.63 increase from June 30, 2017.

At September 30, 2017, WSFS Bank's Tier 1 leverage ratio of 10.24%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 11.52%, and Total Capital ratio of 12.22%, were all substantially in excess of the "well-capitalized" regulatory benchmarks.

In 3Q 2017, WSFS repurchased 71,000 shares of common stock at an average price of $44.78 as part of our 5% buyback program approved by the Board of Directors in 4Q 2015. WSFS has 750,194 shares, or more than 2% of outstanding shares, remaining to repurchase under this current authorization. In addition, the Board of Directors approved a quarterly cash dividend increase of 29% to $0.09 per share of common stock, recognizing our continued strong core results of operations. This dividend will be paid on November 21, 2017 to stockholders of record as of November 7, 2017.

(5) As used in this release, tangible common equity, tangible common equity to 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. 

Third quarter 2017 earnings release conference call

Management will conduct a conference call to review 3Q 2017 results at 1:00 p.m. Eastern Time (ET) on Tuesday, October 24, 2017. Interested parties may listen to this call by dialing 1-877-312-5857. A rebroadcast of the conference call will be available two hours after the completion of the call until Tuesday, November 7, 2017, by dialing 1-855-859-2056 and using Conference ID 97634625.

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 September 30, 2017, WSFS Financial Corporation had $6.88 billion in assets on its balance sheet and $18.07 billion in assets under management and administration. WSFS operates from 77 offices located in Delaware (46), Pennsylvania (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 Christiana Trust, WSFS Wealth Investments, Cypress Capital Management, LLC, West Capital Management, Powdermill Financial Solutions, Cash Connect®, WSFS Mortgage and Arrow Land Transfer. Serving the 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 wsfsbank.com. 

Forward-Looking Statement Disclaimer

This press release contains estimates, predictions, opinions, projections and other "forward-looking statements" as that phrase is defined in the Private Securities Litigation Reform Act of 1995. Such statements include, without limitation, references to the Company's 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. 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 market areas 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 any problem loans including litigation and other costs; changes in market interest rates which may increase funding costs and reduce earning asset yields thus reducing 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 changes in regulations affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses associated with complying with such regulations; possible additional loan losses and impairment of the collectability of loans; 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; negative perceptions or publicity with respect to the Company's trust and wealth management business; system failure or cybersecurity 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 manmade disasters including terrorist attacks; possible changes in the speed of loan prepayments by the Company's customers and loan origination or sales volumes; possible acceleration of prepayments of mortgage-backed securities due to low interest rates, and the related acceleration of premium amortization on prepayments on mortgage-backed securities due to low interest rates; regulatory limits on the Company's ability to receive dividends from its subsidiaries and pay dividends to its stockholders; the effects of any reputational, 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, discussed in the Company's Form 10-K for the year ended December 31, 2016 and other documents filed by the Company with the Securities and Exchange Commission from time to time. Forward-looking statements are as of the date they are made, and the Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands, except per share data) Three months ended Nine months ended
  September 30,
2017
 June 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Interest income:
Interest and fees on loans $58,504  $56,073  $49,849  $169,258  $140,394 
Interest on mortgage-backed securities 4,955  4,782  3,854  14,132  11,658 
Interest and dividends on investment securities 1,139  1,136  1,214  3,524  3,660 
Other interest income 412  343  420  1,256  1,174 
  65,010  62,334  55,337  188,170  156,886 
Interest expense:          
Interest on deposits 3,862  3,341  2,412  10,278  6,734 
Interest on Federal Home Loan Bank advances 2,402  1,797  1,225  6,057  3,397 
Interest on senior debt 1,807  2,121  2,119  6,049  4,236 
Interest on trust preferred borrowings 500  472  415  1,418  1,183 
Interest on other borrowings 310  289  145  822  545 
  8,881  8,020  6,316  24,624  16,095 
Net interest income 56,129  54,314  49,021  163,546  140,791 
Provision for loan losses 2,896  1,843  5,828  6,901  7,862 
Net interest income after provision for loan losses 53,233  52,471  43,193  156,645  132,929 
           
Noninterest income:          
Credit/debit card and ATM income 9,350  8,925  7,776  26,406  21,930 
Investment management and fiduciary revenue 8,809  8,835  6,074  25,683  17,610 
Deposit service charges 4,695  4,560  4,482  13,652  13,100 
Mortgage banking activities, net 1,756  1,844  2,555  4,785  6,025 
Loan fee income 483  451  542  1,483  1,499 
Investment securities gains, net 736  708  1,040  1,764  1,890 
Bank-owned life insurance income 546  302  255  1,124  697 
Other income 6,066  6,051  4,862  17,312  14,011 
  32,441  31,676  27,586  92,209  76,762 
Noninterest expense:          
Salaries, benefits and other compensation 29,172  28,223  24,804  86,231  71,189 
Occupancy expense 4,756  4,684  4,335  14,602  12,560 
Equipment expense 2,922  3,498  2,653  9,544  7,642 
Professional fees 2,248  2,669  1,554  6,552  6,891 
Data processing and operations expense 1,817  1,750  1,500  5,185  4,564 
Marketing expense 712  932  712  2,268  2,177 
FDIC expenses 560  594  469  1,683  2,080 
Early extinguishment of debt 695      695   
Corporate development expense 153  366  5,885  857  7,003 
Loan workout and OREO expense 484  499  511  1,504  1,059 
Other operating expenses 10,644  9,512  8,811  29,275  24,552 
  54,163  52,727  51,234  158,396  139,717 
Income before taxes 31,511  31,420  19,545  90,458  69,974 
Income tax provision 10,942  10,850  6,823  30,382  24,004 
Net income $20,569  $20,570  $12,722  $60,076  $45,970 
           
Diluted earnings per share of common stock: $0.64  $0.64  $0.41  $1.86  $1.50 
Weighted average shares of common stock outstanding for fully diluted EPS 32,268,538  32,311,571  31,317,312  32,279,190  30,661,225 

See "Notes"


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENTS OF INCOME (Unaudited) - continued

  Three months ended Nine months ended
  September 30,
2017
 June 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Performance Ratios:          
Return on average assets (a) 1.20% 1.23% 0.82% 1.18% 1.05%
Return on average equity (a) 11.06  11.56  7.66  11.20  9.91 
Return on average tangible common equity (a)(o) 15.22  16.12  9.69  15.63  12.19 
Net interest margin (a)(b) 3.95  3.93  3.84  3.93  3.87 
Efficiency ratio (c) 60.61  60.81  66.24  61.39  63.56 
Noninterest income as a percentage of total net revenue (b) 36.30  36.53  35.66  35.74  34.92 

See "Notes"


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION  (Unaudited)

(Dollars in thousands) September 30,
2017
 June 30,
2017
 September 30,
2016
Assets:      
Cash and due from banks $117,343  $118,555  $119,159 
Cash in non-owned ATMs 612,443  623,232  694,022 
Investment securities (d) 162,345  166,211  200,642 
Other investments 36,856  39,356  37,003 
Mortgage-backed securities (d) 809,809  814,882  742,073 
Net loans (e)(f)(l) 4,689,529  4,615,140  4,431,345 
Bank owned life insurance 102,727  102,007  101,185 
Goodwill and intangibles 189,116  189,983  172,709 
Other assets 155,176  153,061  129,455 
Total assets $6,875,344  $6,822,427  $6,627,593 
Liabilities and Stockholders' Equity:      
Noninterest-bearing deposits $1,357,597  $1,319,749  $1,245,127 
Interest-bearing deposits 3,520,190  3,332,080  3,343,873 
Total customer deposits 4,877,787  4,651,829  4,589,000 
Brokered deposits 173,932  182,221  144,639 
Total deposits 5,051,719  4,834,050  4,733,639 
Federal Home Loan Bank advances 697,812  823,651  817,167 
Other borrowings 305,496  339,103  327,540 
Other liabilities 79,456  103,000  57,237 
Total liabilities 6,134,483  6,099,804  5,935,583 
Stockholders' equity 740,861  722,623  692,010 
Total liabilities and stockholders' equity $6,875,344  $6,822,427  $6,627,593 
Capital Ratios:      
Equity to asset ratio 10.78% 10.59% 10.44%
Tangible common equity to tangible asset ratio (o) 8.25  8.03  8.05 
Common equity Tier 1 capital (g) (required: 4.5%; well capitalized: 6.5%) (p) 11.52  11.42  11.14 
Tier 1 leverage (g) (required: 4.00%; well-capitalized: 5.00%) (p) 10.24  10.06  10.05 
Tier 1 risk-based capital (g) (required: 6.00%; well-capitalized: 8.00%) (p) 11.52  11.42  11.14 
Total Risk-based capital (g) (required: 8.00%; well-capitalized: 10.00%) (p) 12.22  12.14  11.88 
Asset Quality Indicators:      
Nonperforming Assets:      
Nonaccruing loans $33,536  $38,382  $23,172 
Troubled debt restructuring (accruing) 14,905  18,109  14,182 
Assets acquired through foreclosure 3,924  2,121  3,232 
Total nonperforming assets $52,365  $58,612  $40,586 
Past due loans (h) $1,338  $92  $271 
Allowance for loan losses 40,201  40,005  39,028 
Ratio of nonperforming assets to total assets 0.76% 0.86% 0.61%
Ratio of nonperforming assets (excluding accruing TDRs) to total assets 0.54  0.59  0.40 
Ratio of allowance for loan losses to total gross loans (i)(n) 0.86  0.87  0.89 
Ratio of allowance for loan losses to nonaccruing loans 120  104  168 
Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) 0.23  0.15  0.44 
Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) 0.19  0.17  0.20 


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited)

(Dollars in thousands) Three months ended
  September 30, 2017 June 30, 2017 September 30, 2016
  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 $1,422,306  $18,186  5.07% $1,418,957  $17,725  5.01% $1,264,882  $15,470  4.87%
Residential real estate loans 269,134  3,747  5.57  274,114  3,980  5.81  283,818  4,490  6.33 
Commercial loans 2,471,382  30,013  4.85  2,434,437  28,455  4.72  2,187,214  25,050  4.59 
Consumer loans 509,750  6,329  4.93  478,326  5,589  4.69  414,653  4,485  4.30 
Loans held for sale 22,734  229  4.03  32,339  324  4.01  40,615  354  3.49 
Total loans 4,695,306  58,504  4.96  4,638,173  56,073  4.86  4,191,182  49,849  4.75 
Mortgage-backed securities (d) 809,655  4,955  2.45  783,007  4,782  2.44  736,100  3,854  2.09 
Investment securities (d) 168,526  1,139  4.08  166,536  1,136  4.05  201,264  1,214  3.54 
Other interest-earning assets 36,992  412  4.46  33,155  343  4.14  35,033  420  4.80 
Total interest-earning assets 5,710,479  65,010  4.57% 5,620,871  62,334  4.50% 5,163,579  55,337  4.32%
Allowance for loan losses (40,831)     (40,546)     (39,053)    
Cash and due from banks 118,056      127,848      122,561     
Cash in non-owned ATMs 558,855      574,348      600,821     
Bank owned life insurance 102,513      101,809      100,989     
Other noninterest-earning assets 344,783      343,216      241,370     
Total assets $6,793,855      $6,727,546      $6,190,267     
Liabilities and Stockholders' Equity:                  
Interest-bearing liabilities:                  
Interest-bearing deposits:                  
Interest-bearing demand $939,239  $606  0.26% $914,915  $453  0.20% $855,052  $295  0.14%
Money market 1,324,946  1,227  0.37  1,286,977  1,061  0.33  1,162,986  850  0.29 
Savings 564,275  264  0.19  588,610  276  0.19  494,482  180  0.14 
Customer time deposits 555,668  1,188  0.85  550,373  1,060  0.77  567,600  874  0.61 
Total interest-bearing customer deposits 3,384,128  3,285  0.39  3,340,875  2,850  0.34  3,080,120  2,199  0.28 
Brokered deposits 195,073  577  1.17  211,751  491  0.93  142,133  213  0.60 
Total interest-bearing deposits 3,579,201  3,862  0.43  3,552,626  3,341  0.38  3,222,253  2,412  0.30 
FHLB of Pittsburgh advances 730,390  2,402  1.30  639,147  1,797  1.13  768,305  1,225  0.63 
Trust preferred borrowings 67,011  500  2.96  67,011  472  2.83  67,011  415  2.46 
Senior Debt 134,658  1,807  5.37  152,231  2,121  5.57  151,875  2,119  5.58 
Other borrowed funds 132,030  310  0.93  127,381  289  0.91  114,312  145  0.50 
Total interest-bearing liabilities 4,643,290  8,881  0.76% 4,538,396  8,020  0.71% 4,323,756  6,316  0.58%
Noninterest-bearing demand deposits 1,333,266      1,404,186      1,151,240     
Other noninterest-bearing liabilities 79,176      71,183      54,686     
Stockholders' equity 738,123      713,781      660,585     
Total liabilities and stockholders' equity $6,793,855      $6,727,546      $6,190,267     
Excess of interest-earning assets over interest-bearing liabilities $1,067,189      $1,082,475      $839,823     
Net interest and dividend income   $56,129      $54,314      $49,021   
                   
Interest rate spread     3.81%     3.79%     3.74%
                   
Net interest margin     3.95%     3.93%     3.84%

See "Notes"


WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)

(Dollars in thousands, except per share data) Three months ended Nine months ended
Stock Information: September 30,
2017
 June 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Market price of common stock:          
High $49.45  $50.55  $39.31  $50.55 $39.31
Low  42.45   42.90   31.47   42.45  26.40
Close  48.75   45.35   36.49   48.75  36.49
Book value per share of common stock  23.59   22.99   22.08     
Tangible common book value per share of common stock (o)  17.57   16.94   16.57     
Number of shares of common stock outstanding (000s)  31,410   31,435   31,334     
Other Financial Data:          
One-year repricing gap to total assets (k)  (1.70)%  (2.66)%  (2.34)%    
Weighted average duration of the MBS portfolio 5.1 years 5.0 years 4.2 years    
Unrealized (losses) gains on securities available-for-sale, net of taxes $(3,528) $(4,342) $11,084     
Number of Associates (FTEs) (m)  1,121   1,216   1,082     
Number of offices (branches, LPO's, operations centers, etc.)  77   76   77     
Number of WSFS owned ATMs  447   445   447     
                 

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)Calculated for Wilmington Savings Fund Society, FSB.


WSFS FINANCIAL CORPORATION

FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data) 
(Unaudited)

Non-GAAP Reconciliation (o): Three months ended Nine months ended
  September 30,
2017
 June 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
Net interest income (GAAP) $56,129  $54,314  $49,021  $163,546  $140,791 
Core net interest income (non-GAAP) 56,129  54,314  49,021  163,546  140,791 
Noninterest Income (GAAP) 32,441  31,676  27,586  92,209  76,762 
Less: Securities gains 736  708  1,040  1,764  1,890 
Core fee income (non-GAAP) 31,705  30,968  26,546  90,445  74,872 
Core net revenue (non-GAAP) $87,834  $85,282  $75,567  $253,991  $215,663 
Core net revenue (non-GAAP)(tax-equivalent) $88,627  $86,000  $76,310  $256,234  $217,913 
Noninterest expense (GAAP) 54,163  52,727  51,234  158,396  139,717 
Less: Corporate development costs 153  366  5,885  857  7,003 
Less: Debt extinguishment costs  695         695    
Core noninterest expense (non-GAAP) $53,315  $52,361  $45,349  $156,844  $132,714 
Core efficiency ratio (c) 60.2% 60.9% 59.4% 61.2% 60.9%
           
  End of period    
  September 30,
2017
 June 30,
2017
 September 30,
2016
    
Total assets $6,875,344  $6,822,427  $6,627,593     
Less: Goodwill and other intangible assets 189,116  189,983  172,709     
Total tangible assets $6,686,228  $6,632,444  $6,454,884     
Total stockholders' equity $740,861  $722,623  $692,010     
Less: Goodwill and other intangible assets 189,116  189,983  172,709     
Total tangible common equity (non-GAAP) $551,745  $532,640  $519,301     
Calculation of tangible common book value per share:        
Book value per share (GAAP) $23.59  $22.99  $22.08     
Tangible common book value per share  (non-GAAP) 17.57  16.94  16.57     
Calculation of tangible common equity to tangible assets:        
Equity to asset ratio (GAAP) 10.78% 10.59% 10.44%    
Tangible common equity to tangible assets ratio (non-GAAP) 8.25  8.03  8.05     


  Three months ended Nine months ended
  September 30,
2017
 June 30,
2017
 September 30,
2016
 September 30,
2017
 September 30,
2016
GAAP net income $20,569  $20,570  $12,722  $60,076  $45,970 
Pre-tax adjustments: Sec. gains, corp. dev. costs, debt extinguishment costs 112  (342) 4,845  (212) 5,113 
Tax impact of adjustments (43) 120  (1,551) 70  (1,574)
Non-GAAP net income $20,638  $20,348  $16,016  $59,934  $49,509 
           
GAAP return on average assets (ROA) 1.20% 1.23% 0.82% 1.18% 1.05%
Pre-tax adjustments: Sec. gains, corp. dev. costs, debt extinguishment costs
 0.01  (0.02) 0.31  (0.01) 0.12 
Tax impact of adjustments   0.01  (0.10) 0.01  (0.04)
Core ROA (non-GAAP) 1.21% 1.22% 1.03% 1.18% 1.13%
           
GAAP EPS $0.64  $0.64  $0.41  $1.86  $1.50 
Pre-tax adjustments: Sec. gains, corp. dev. costs, debt extinguishment costs   (0.01) 0.15  (0.01) 0.16 
Tax impact of adjustments     (0.05)   (0.05)
Core EPS (non-GAAP) $0.64  $0.63  $0.51  $1.85  $1.61 
           
Calculation of return on average tangible common equity:        
GAAP net income $20,569  $20,570  $12,722  $60,076  $45,970 
Plus: Tax effected amortization of intangible assets 468  474  158  1,531  813 
Net tangible income (non-GAAP) $21,037  $21,044  $12,880  $61,607  $46,783 
Average shareholders' equity $738,123  $713,781  $660,585  $716,938  $619,766 
Less: average goodwill and intangible assets 189,599  190,125  131,569  190,105  107,115 
Net average tangible common equity $548,524  $523,656  $529,016  $526,833  $512,651 
Return on average tangible common equity (non-GAAP) 15.22% 16.12% 9.69% 15.63% 12.19%
           
Calculation of core return on average tangible common equity:          
Non-GAAP net income $20,638  $20,348  $16,016  $59,934  $49,509 
Plus: Tax effected amortization of intangible assets 468  474  158  1,531  813 
Core net tangible income (non-GAAP) $21,106  $20,822  $16,174  $61,465  $50,322 
Net average tangible common equity $548,524  $523,656  $529,016  $526,833  $512,651 
Core return on average tangible common equity (non-GAAP) 15.27% 15.95% 12.16% 15.60% 13.11%


Investor Relations Contact:
Dominic Canuso 
(302) 571-6833 
dcanuso@wsfsbank.com

Media Contact:
Cortney Klein
(302) 571-5253
cklein@wsfsbank.com