WSFS Announces 1Q '06 EPS of $1.06, An 18% Increase Over 200528 April 2006
WSFS Financial Corporation (Nasdaq: WSFS), the parent company of Wilmington Savings Fund Society, FSB, reported quarterly net income of $7.3 million, or $1.06 per diluted share. This compares to net income of $6.8 million, or $0.90 per share for the first quarter of 2005. Net income per share for the first quarter of 2006 improved $0.16, or 18% over the same quarter last year.
Highlights for the first quarter of 2006 include: (i) growth in net loans of $102.9 million, or 6%, over balances at December 31, 2005; (ii) an increase in total retail deposits of $49.8 million, or 4%, over balances at December 31, 2005; and (iii) continued strong asset quality with annualized net recoveries of 2 basis points, and the ratio of nonperforming assets (NPA) to total assets of 10 basis points at March 31, 2006.
Marvin N. Schoenhals, Chairman and President of WSFS, said, "Our 17% loan growth and 12% core deposit growth since last year demonstrates the continued success of our focus on our core banking franchise. The success of our recently renovated Airport Plaza branch and early results from our newest West Dover branch are very encouraging. We look forward to opening our new Long Neck branch in Sussex County and completing the renovation of our Pike Creek branch office soon."
The following is a brief discussion of the first quarter 2006 results.
Net Interest Income
Net interest income for the first quarter of 2006 was $19.3 million. This compares to $18.1 million reported for the same quarter in 2005 and $18.5 million reported for the fourth quarter of 2005. During the fourth quarter of 2005 the Company recognized interest expense of $615,000 related to an interest rate cap associated with its trust preferred securities and a one- time $420,000 pre-tax charge related to a correction of interest rates on a certain class of savings accounts. Additionally, during the first quarter of 2006 WSFS recorded income on reverse mortgages of $158,000, which was $319,000 less than the amount recorded in the fourth quarter 2005. The net interest margin percentage of 3.04% for the first quarter of 2006 declined from 3.06% for the fourth quarter of 2005. Despite strong growth in retail deposits, the success in increasing the Company's loan portfolio in recent years has put pressure on funding costs, as higher-cost borrowings were required to fund incremental growth. Recognizing these pressures, the Company has continued to place greater emphasis and resources on deposit gathering including the opening of new branches, as mentioned earlier.
Overall portfolio yields on loans have continued to trend upward due to higher prevailing rates combined with the Company's continued focus on growth of variable rate loans. Additionally, the gross yield on the Company's mortgage-backed securities (MBS) portfolio was 4.70% in the first quarter of 2006 versus 4.63% in the fourth quarter of 2005. The weighted average duration of the MBS portfolio was 3.2 years at March 31, 2006 compared to 3.1 years at December 31, 2005.
Loans and Asset Quality
Net loans grew $102.9 million, or 6%, during the first quarter of 2006 to $1.9 billion at March 31, 2006. Net loans grew $272.5 million, or 17%, compared to balances at March 31, 2005. The following table summarizes the current loan balances and composition as well as recent changes in balances and composition.
(Dollars in At At At
thousands) Mar. 31, 2006 Dec. 31, 2005 Mar. 31, 2005
Amount % Amount % Amount %
Commercial
and CRE $1,170,919 62% $1,094,913 61% $980,437 61%
Residential 476,791 25 459,680 26 433,220 27
Consumer 256,203 14 245,646 14 216,283 14
Allowance
for loan
losses (26,143) (1) (25,381) (1) (24,647) (2)
Net Loans $1,877,770 100% $1,774,858 100% $1,605,293 100%
The Company recorded a provision for loan losses of $688,000 in the first quarter of 2006, compared to $579,000 in the same period last year. This provision is the result of more than $100 million in loan growth during the quarter, one of the strongest quarters of loan growth in the Company's history, despite continued positive trends in asset quality. The positive net interest income effect of this growth will not be fully realized until the second quarter of 2006. The ratio of allowance for loan losses to total loans is 1.37%, compared to 1.41% at December 31, 2005.
Asset quality statistics continued to improve from historically strong levels. Nonperforming assets totaled $2.9 million as of March 31, 2006, down from $3.5 million as of December 31, 2005 and $6.7 million as of March 31, 2005. NPA as a percentage of assets improved to 0.10% as of March 31, 2006 versus 0.12% as of December 31, 2005 and 0.26% as of March 31, 2005. Annualized net recoveries in the first quarter of 2006 were 0.02% of average loans compared to annualized net charge-offs of 0.13% for the fourth quarter of 2005 and 0.04% for the first quarter of 2005.
Deposits
Total retail deposits (core deposits and retail time deposits) increased $49.8 million, or 4%, during the first quarter to $1.2 billion at March 31, 2006 and increased $161.4 million, or 15% over March 31, 2005. Core deposit relationships (demand deposits, money market and savings accounts) increased $18.1 million, or 2% during the quarter and increased $96.6 million, or 12% over the same period last year. The following table summarizes the current retail deposit balances and composition as well as recent changes in balances and composition.
(Dollars in At At At
thousands) Mar. 31, 2006 Dec. 31, 2005 Mar. 31, 2005
Amount % Amount % Amount %
Non-interest
demand $274,983 22% $279,415 23% $256,926 24%
Interest bearing
demand 141,972 11 141,378 12 106,834 10
Savings 245,011 20 251,675 21 286,229 26
Money market 238,003 19 209,398 18 153,347 14
Total core
deposits 899,969 72 881,866 74 803,336 74
Retail time 343,762 28 312,065 26 278,986 26
Total retail
deposits $1,243,731 100% $1,193,931 100% $1,082,322 100%
Noninterest Income
During the first quarter of 2006, the Company recorded noninterest income of $9.0 million, which was $1.2 million, or 15% greater than the first quarter of 2005. Noninterest income declined by $461,000, or 5% when compared to the fourth quarter of 2005. The increase over the first quarter 2005 was mainly attributable to increases of $957,000 in card and ATM income during the quarter, mostly the result of underlying growth in volumes and $399,000 in increased deposit service charges. The decrease compared to the fourth quarter of 2005 was primarily due to a seasonal decrease of $173,000 in deposit service charges and a decrease of $114,000 in card and ATM income primarily at the CashConnect (ATM) business.
Noninterest Expenses
Noninterest expenses for the first quarter of 2006 totaled $16.2 million, which was $1.3 million, or 8% more than the same quarter last year. Noninterest expense for the first quarter of 2006 was $88,000 greater than the fourth quarter of 2005. The increase over both the prior quarter and the first quarter of 2005 was primarily due to increases in salaries, benefits and other compensation and other operating expenses, mainly the result of the Company's continued growth efforts. The increase in salaries, benefits and other compensation also includes $333,000 (pre-tax), or $0.04 (after-tax) per share, of expenses related to stock options due to the implementation of Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R), during this quarter. The Company adopted FAS 123R using the Modified Prospective Application Method which recognizes expenses related to stock options as compensation costs and does not require the restatement of prior periods. These increases were offset by a $322,000 reduction of a reserve related to reverse mortgages. This reserve is analyzed quarterly and is adjusted in accordance with a formulaic calculation.
Capital Management
During the first quarter of 2006, the Company repurchased 12,500 of its shares of common stock at an average price of $61.22 per share. At March 31, 2006, the Company had 637,500 shares remaining under its current share repurchase authorization, or approximately 10% of its 6.6 million outstanding shares.
The ratio of tangible equity to assets was 6.17% at March 31, 2006. The Tier 1 capital ratio was 12.18%, which is more than double the 6.00% level required to be considered "well-capitalized" under regulatory definitions. Tangible book value per share was $27.56 at March 31, 2006.
WSFS Financial Corporation is a $3.0 billion financial services company. At March 31, 2006, its principal subsidiary, Wilmington Savings Fund Society, FSB, operated 25 retail banking offices in all three counties in Delaware, as well as Chester and Delaware Counties in Pennsylvania. Other continuing operating subsidiaries include: WSFS Investment Group, Inc., Montchanin Capital Management, Inc. and WSFS Reit, Inc. For more information, please visit the Bank's website at http://www.wsfsbank.com.
Statements contained in this news release which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by WSFS Financial Corporation with the Securities and Exchange Commission from time to time. The Corporation 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 Corporation.
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
Mar 31, Dec 31, Mar 31,
2006 2005 2005
Interest income:
Interest and fees on loans $32,096 $29,616 $23,157
Interest on mortgage-backed
securities 7,332 6,924 5,874
Interest and dividends on
investment securities 635 943 755
Other interest income 414 352 379
40,477 37,835 30,165
Interest expense:
Interest on deposits 8,177 7,267 4,087
Interest on Federal Home Loan Bank
advances 10,743 9,254 6,187
Interest on trust preferred
borrowings 1,017 1,659 712
Interest on other borrowings 1,237 1,119 1,066
21,174 19,299 12,052
Net interest income 19,303 18,536 18,113
Provision for loan losses 688 1,006 579
Net interest income after provision
for loan losses 18,615 17,530 17,534
Noninterest income:
Credit/debit card and ATM income 4,160 4,274 3,203
Deposit service charges 2,577 2,750 2,178
Investment advisory income 630 641 608
Bank owned life insurance income 488 481 496
Loan fee income 421 488 426
Mortgage banking activities, net 22 104 144
Securities gains - 4 -
Other income 740 757 801
9,038 9,499 7,856
Noninterest expenses:
Salaries, benefits and other
compensation 9,192 8,795 8,822
Occupancy expense 1,300 1,339 1,276
Equipment expense 982 992 983
Data processing and operations
expense 857 795 911
Marketing expense 613 703 525
Professional fees 257 755 553
Other operating expenses 3,041 2,775 1,900
16,242 16,154 14,970
Income before minority
interest and taxes 11,411 10,875 10,420
Less minority interest 16 11 37
Income before taxes 11,395 10,864 10,383
Income tax provision 4,054 3,771 3,593
Net income $7,341 $7,093 $6,790
Diluted earnings per share:
Net income $1.06 $1.03 $0.90
Weighted average shares outstanding
for diluted EPS 6,904,774 6,870,836 7,508,827
Performance Ratios (continuing
operations only):
Return on average assets (a) 1.03 % 1.03 % 1.07 %
Return on average equity (a) 15.75 15.97 13.66
Net interest margin (a)(b) 3.04 3.06 3.23
Efficiency ratio (c) 56.75 57.04 57.04
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENT OF CONDITION:
(Dollars in thousands)
(Unaudited)
Mar 31, Dec 31, Mar 31,
2006 2005 2005
Summary Statement of Condition:
Assets:
Cash and due from banks $58,589 $59,251 $52,733
Cash in non-owned ATMs 159,042 174,527 129,688
Investment securities (d)(e) 58,694 57,489 96,706
Other investments 46,693 46,466 44,004
Mortgage-backed securities (d) 630,187 620,323 577,670
Net loans (f)(g) 1,877,770 1,774,858 1,605,293
Loans held for sale (f) 1,503 436 2,387
Bank owned life insurance 54,681 54,193 52,686
Other assets 65,702 59,209 60,910
Total assets $2,952,861 $2,846,752 $2,622,077
Liabilities and Stockholders'
Equity:
Noninterest-bearing deposits $274,983 $279,415 $256,926
Interest-bearing deposits 968,748 914,516 825,396
Total retail deposits 1,243,731 1,193,931 1,082,322
Jumbo CD's - non retail 79,122 40,567 45,511
Brokered CD's 244,301 211,738 170,921
Total deposits 1,567,154 1,446,236 1,298,754
Federal Home Loan Bank advances 998,533 1,008,721 868,004
Other borrowings 176,379 186,287 244,881
Other liabilities 26,374 23,327 19,208
Total liabilities 2,768,440 2,664,571 2,430,847
Minority interest 72 206 213
Stockholders' equity 184,349 181,975 191,017
Total liabilities, minority
interest and stockholders'
equity $2,952,861 $2,846,752 $2,622,077
Capital Ratios:
Equity to asset ratio 6.24 % 6.39 % 7.28 %
Tangible equity to asset ratio 6.17 6.33 7.23
Core capital (h) (required:
4.00%; well-capitalized: 5.00%) 8.51 8.56 9.12
Tier 1 Capital (h) (required:
4.00%; well-capitalized: 6.00%) 12.18 12.31 13.51
Risk-based capital (h)
(required: 8.00%; well-
capitalized: 10.00%) 13.18 13.38 14.36
Asset Quality Indicators
(continuing operations only):
Nonperforming Assets:
Nonaccruing loans $2,891 $3,410 $6,294
Assets acquired through
foreclosure 44 59 425
Total nonperforming assets $2,935 $3,469 $6,719
Past due loans (i) $277 $386 $349
Allowance for loan losses $26,143 $25,381 $24,647
Ratio of nonperforming assets to
total assets 0.10 % 0.12 % 0.26 %
Ratio of allowance for loan
losses to total gross
loans (j) 1.37 1.41 1.51
Ratio of allowance for loan
losses to nonaccruing
loans (k) 863 709 373
Ratio of quarterly net
(recoveries) charge-offs
to average gross loans (a)(f) (0.02) 0.13 0.04
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Three months ended
Mar 31, 2006
Average Yield/
Balance Interest Rate(a)(b)
Assets:
Interest-earning assets:
Loans: (f) (l)
Commercial real estate loans $605,189 $11,760 7.77 %
Residential real estate loans 466,329 6,279 5.39
Commercial loans 525,339 9,645 7.55
Consumer loans 250,856 4,406 7.12
Total loans 1,847,713 32,090 7.01
Mortgage-backed securities (d) 623,551 7,332 4.70
Loans held-for-sale (f) 594 6 4.04
Investment securities (d)(e) 58,060 635 4.37
Other interest-earning assets 48,690 414 3.45
Total interest-earning assets 2,578,608 40,477 6.32
Allowance for loan losses (25,515)
Cash and due from banks 51,364
Cash in non-owned ATMs 144,436
Bank owned life insurance 54,365
Other noninterest-earning assets 59,986
Total assets $2,863,244
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing demand $123,805 $140 0.46
Money market 226,229 1,714 3.07
Savings 247,152 511 0.84
Retail time deposits 322,184 2,688 3.38
Total interest-bearing retail
deposits 919,370 5,053 2.23
Jumbo certificates of deposit-
nonretail 60,081 663 4.48
Brokered certificates of deposit 226,022 2,461 4.42
Total interest-bearing deposits 1,205,473 8,177 2.75
FHLB of Pittsburgh advances 1,003,350 10,743 4.28
Trust preferred borrowings 67,011 1,017 6.07
Other borrowed funds 121,822 1,237 4.06
Total interest-bearing
liabilities 2,397,656 21,174 3.53
Noninterest-bearing demand deposits 257,963
Other noninterest-bearing liabilities 21,022
Minority interest 154
Stockholders' equity 186,449
Total liabilities and stockholders'
equity $2,863,244
Excess of interest-earning assets
over interest-bearing liabilities $180,952
Net interest and dividend income $19,303
Interest rate spread 2.79%
Net interest margin 3.04%
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Dec 31, 2005
Average Yield/
Balance Interest Rate(a)(b)
Assets:
Interest-earning assets:
Loans: (f) (l)
Commercial real estate loans $580,554 $10,951 7.55 %
Residential real estate loans 447,670 5,854 5.23
Commercial loans 485,242 8,632 7.19
Consumer loans 237,657 4,162 6.95
Total loans 1,751,123 29,599 6.83
Mortgage-backed securities (d) 598,171 6,924 4.63
Loans held-for-sale (f) 1,061 17 6.41
Investment securities (d)(e) 57,499 943 6.56
Other interest-earning assets 48,736 352 2.87
Total interest-earning assets 2,456,590 37,835 6.21
Allowance for loan losses (25,190)
Cash and due from banks 54,486
Cash in non-owned ATMs 143,226
Bank owned life insurance 53,894
Other noninterest-earning assets 59,249
Total assets $2,742,255
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing demand $119,390 $101 0.34
Money market 223,358 1,475 2.62
Savings 256,047 922 1.43
Retail time deposits 292,503 2,281 3.09
Total interest-bearing retail
deposits 891,298 4,779 2.13
Jumbo certificates of deposit-
nonretail 43,444 417 3.81
Brokered certificates of deposit 212,550 2,071 3.87
Total interest-bearing deposits 1,147,292 7,267 2.51
FHLB of Pittsburgh advances 946,375 9,254 3.83
Trust preferred borrowings 67,011 1,659 9.69
Other borrowed funds 124,810 1,119 3.59
Total interest-bearing
liabilities 2,285,488 19,299 3.38
Noninterest-bearing demand deposits 254,542
Other noninterest-bearing liabilities 24,372
Minority interest 216
Stockholders' equity 177,637
Total liabilities and stockholders'
equity $2,742,255
Excess of interest-earning assets
over interest-bearing liabilities $171,102
Net interest and dividend income $18,536
Interest rate spread 2.83%
Net interest margin 3.06%
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET
(Dollars in thousands)
(Unaudited)
Mar 31, 2005
Average Yield/
Balance Interest Rate(a)(b)
Assets:
Interest-earning assets:
Loans: (f) (l)
Commercial real estate loans $550,790 $8,584 6.23 %
Residential real estate loans 437,109 5,580 5.11
Commercial loans 385,439 5,489 5.98
Consumer loans 212,762 3,469 6.61
Total loans 1,586,100 23,122 5.90
Mortgage-backed securities (d) 542,965 5,874 4.33
Loans held-for-sale (f) 2,510 35 5.58
Investment securities (d)(e) 97,194 755 3.11
Other interest-earning assets 45,950 379 3.30
Total interest-earning assets 2,274,719 30,165 5.35
Allowance for loan losses (24,377)
Cash and due from banks 54,011
Cash in non-owned ATMs 123,306
Bank owned life insurance 52,367
Other noninterest-earning assets 54,310
Total assets $2,534,336
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Interest bearing deposits:
Interest-bearing demand $99,596 $59 0.24
Money market 141,107 590 1.70
Savings 285,462 271 0.39
Retail time deposits 286,722 1,851 2.62
Total interest-bearing retail
deposits 812,887 2,771 1.38
Jumbo certificates of deposit-
nonretail 45,250 294 2.63
Brokered certificates of deposit 156,471 1,022 2.65
Total interest-bearing deposits 1,014,608 4,087 1.63
FHLB of Pittsburgh advances 819,476 6,187 3.02
Trust preferred borrowings 51,547 712 5.53
Other borrowed funds 194,210 1,066 2.20
Total interest-bearing
liabilities 2,079,841 12,052 2.32
Noninterest-bearing demand deposits 239,590
Other noninterest-bearing liabilities 15,861
Minority interest 224
Stockholders' equity 198,820
Total liabilities and stockholders'
equity $2,534,336
Excess of interest-earning assets
over interest-bearing liabilities $194,878
Net interest and dividend income $18,113
Interest rate spread 3.03%
Net interest margin 3.23%
See "Notes"
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
Three months ended
Mar 31, Dec 31, Mar 31,
2006 2005 2005
Stock Information:
Market price of common stock:
High $64.50 $64.65 $59.91
Low 60.00 57.55 52.20
Close 62.83 61.25 52.56
Book value per share 27.91 27.59 27.29
Tangible book value per share 27.56 27.32 27.06
Number of shares outstanding
(000s) 6,606 6,596 6,998
Other Financial Data:
One-year repricing gap to total
assets (m) 0.04 % (0.57)% (1.22)%
Number of associates (FTEs) (n) 529 515 487
Number of branch offices 25 24 24
Notes:
(a) Annualized.
(b) Computed on a fully tax-equivalent basis.
(c) Noninterest expense divided by (tax-equivalent) net interest income
and other income.
(d) Includes securities available-for-sale.
(e) Includes reverse mortgages.
(f) Net of unearned income.
(g) Net of allowance for loan losses.
(h) Represents capital ratios of Wilmington Savings Fund Society, FSB and
subsidiaries.
(i) Accruing loans which are contractually past due 90 days or more as to
principal or interest.
(j) Excludes loans held-for-sale.
(k) Includes general reserves only.
(l) Nonperforming loans are included in average balance computations.
(m) 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.
(n) Includes the FTEs of WCC (discontinued operations) and Cypress Capital
Management (controlled, but not wholly owned subsidiary).
Source: prnewswire
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