8-K
WSFS FINANCIAL CORP (WSFS)
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
January 25, 2021
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<br>of incorporation) | (SEC Commission<br>File Number) | (IRS Employer<br>Identification Number) |
500 Delaware Ave,
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 communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
| Securities registered pursuant to Section 12(b) of the Act: | ||
| --- | --- | --- |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, par value $0.01 per share | WSFS | Nasdaq Global Select Market |
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. ☐
Item 2.02 Results of Operation and Financial Condition
On January 25, 2021, the Registrant issued a press release to report earnings for the quarter ended December 31, 2020. Copies of the press release and 4Q 2020 Earnings Release Supplement are furnished with this Form 8-K as exhibits.
Item 9.01 Financial Statements and Other Exhibits
(d) Exhibits.
99.1 Press Release, datedJanuary25, 2021
99.24Q 2020 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: | January 25, 2021 | By: | /s/ Dominic C. Canuso |
| Dominic C. Canuso<br>Executive Vice President and<br>Chief Financial Officer |
Document
| WSFS Bank Center | 1 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 | ||
| EXHIBIT 99.1 | ||
| --- | --- | |
| FOR IMMEDIATE RELEASE | Investor Relations Contact: Dominic C. Canuso | |
| (302) 571-6833; dcanuso@wsfsbank.com | ||
| January 25, 2021 | Media Contact: Rebecca Acevedo | |
| (215) 253-5566; racevedo@wsfsbank.com |
WSFS REPORTS 4Q 2020 EPS OF $1.20 AND ROA OF 1.73%
RESULTS DRIVEN BY 3.93% NIM AND DIVERSIFIED FEE INCOME
REPURCHASED 6% OF SHARES IN 4Q 2020; STRONG ACL AND CAPITAL LEVELS
FOR ADDITIONAL FINANCIAL INFORMATION AND OUTLOOK, PLEASE REFER TO THE 4Q 2020 EARNINGS RELEASE SUPPLEMENT AVAILABLE IN THE INVESTOR RELATIONS SECTION OF WSFS' WEBSITE (www.wsfsbank.com).
WILMINGTON, Del. — WSFS Financial Corporation (Nasdaq: WSFS), the parent company of WSFS Bank, today announced its financial results for the fourth quarter of 2020.
Selected quarterly financial results and metrics are as follows:
| (Dollars in millions, except per share data) | 4Q 2020 | 3Q 2020 | 4Q 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net interest income | $ | 123.0 | $ | 113.0 | $ | 117.6 | |||
| Fee income | 46.6 | 49.2 | 41.8 | ||||||
| Total net revenue | 169.6 | 162.2 | 159.3 | ||||||
| (Recovery of) provision for credit losses | (0.9) | 2.7 | 1.6 | ||||||
| Noninterest expense | 93.4 | 93.5 | 98.1 | ||||||
| Net income attributable to WSFS | 59.8 | 51.1 | 45.7 | ||||||
| Pre-provision net revenue (PPNR)(1) | 76.3 | 68.7 | 61.2 | ||||||
| Earnings per share (diluted) | 1.20 | 1.01 | 0.88 | ||||||
| Return on average assets (ROA) | 1.73 | % | 1.49 | % | 1.48 | % | |||
| Return on average equity (ROE) | 13.0 | 11.1 | 9.8 | ||||||
| Efficiency ratio | 55.0 | 57.6 | 61.5 |
GAAP results for the quarterly periods shown below included the following notable items that are excluded from our core results.
| 4Q 2020 | 3Q 2020 | 4Q 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions, except per share data) | Total<br>(pre-tax) | Per share<br>(after-tax) | Total<br>(pre-tax) | Per share<br>(after-tax) | Total<br>(pre-tax) | Per share<br>(after-tax) | ||||||
| Securities gains | $ | 3.2 | $ | 0.05 | $ | 3.3 | $ | 0.05 | $ | 0.3 | $ | — |
| Unrealized gain on equity investments, net | — | — | 0.1 | — | — | — | ||||||
| Recovery of fraud loss | — | — | — | — | 0.5 | — | ||||||
| Corporate development and restructuring expense | 0.3 | 0.01 | 0.4 | 0.01 | 6.1 | 0.09 | ||||||
| Realized loss on termination of FHLB advances | — | — | 2.3 | 0.03 | — | — |
(1) As used in this press release, PPNR is a non-GAAP financial measure calculated as net revenue before provision for credit losses and net of noninterest expense. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
| WSFS Bank Center | 2 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
CEO Commentary
Rodger Levenson, Chairman, President and CEO, said, “We are pleased to end 2020 with strong 4Q results including core ROA(2) of 1.67% and core pre-provision net revenue (PPNR)(2) of $73.4 million, or 2.12% of average assets. Our performance reflects the diversification of our franchise and positive momentum as we enter 2021. During the quarter, we resumed our share repurchase program and returned $122.4 million of capital to our shareholders through share repurchases and our cash dividend, while maintaining a strong Bank Common Equity Tier 1 Ratio of 12.50% at December 31st. The quarter also included continued reduction in short-term loan modifications and an ACL coverage ratio of 2.73% (excluding PPP loans) at December 31st. In addition, we completed the issuance of $150 million of Senior Notes in December 2020 at a very low initial fixed interest rate of 2.75% demonstrating the strength of our franchise, market position and strategic direction.
“During an ongoing difficult operating environment, we continue to make significant franchise, talent and technology investments to capture significant organic growth opportunities resulting from our market position as the largest locally headquartered community bank in the Greater Philadelphia and Delaware region.
“In the quarter, we were honored to be ranked the 4th Best Overall Bank in Bank Director’s 2021 RankingBanking study, while placing first in the Best Board and Best Technology Strategy categories. This recognition reflects our commitment to sustainable long-term high performance driven by our talented and engaged Associates.
“As we turn the page from 2020, I want to once again say thank you to our entire organization for their dedication and support of each other, our customers, and the community during a very challenging year.”
(2) As used in this press release, core ROA and core PPNR are non-GAAP financial measures. Core PPNR is calculated as core net revenue before provision for credit losses and net of core noninterest expense and certain pre-tax adjustments, and core ROA is calculated as GAAP ROA less certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
| WSFS Bank Center | 3 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Highlights for 4Q 2020:
•Core ROA was 1.67% in 4Q 2020 compared to 1.63% for 4Q 2019.
•Core EPS(3) was $1.16 in 4Q 2020 compared to $0.96 for 4Q 2019.
•Core PPNR was $73.4 million, or 2.12% of average assets, an increase of $5.4 million, or 8%, from 3Q 2020 and an increase of $6.7 million, or 10%, from 4Q 2019. Excluding the impact of PPP, core PPNR was $63.8 million in 4Q 2020, or 1.97% of average assets, compared to $62.0 million, or 1.94%, in 3Q 2020 and $66.6 million, or 2.16% in 4Q 2019.
•WSFS repurchased 2,946,507 shares, or 6% of our outstanding common stock, totaling $116.3 million in 4Q 2020, and the Board approved a quarterly cash dividend of $0.12 per share of common stock. WSFS maintained significant capital levels with a Bank Common Equity Tier 1 Ratio of 12.50%.
•Total net credit (recoveries) costs were $(0.5) million and net charge-offs were $3.0 million, or 0.13% of average gross loans during the quarter, while credit quality remained relatively stable quarter-over-quarter. Short-term loan modifications declined to less than 2% of the total loan portfolio, excluding PPP loans, at December 31, 2020. Our ACL coverage ratio was 2.73%, excluding PPP loans, at December 31, 2020.
•WSFS issued $150 million of Fixed-to-Floating Rate Senior Notes due 2030 with a fixed interest rate of 2.75% for the first five years, the lowest ever coupon obtained by a Kroll only rated senior debt issuance.
(3) As used in this press release, core EPS is a non-GAAP financial measure. This non-GAAP financial measure excludes certain pre-tax adjustments and the tax impact of such adjustments. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
| WSFS Bank Center | 4 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Fourth Quarter 2020 Discussion of Financial Results
Balance Sheet
The following tables summarize loan and customer funding balances and composition at December 31, 2020 compared to September 30, 2020 and December 31, 2019:
| Loans | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||
| Commercial & industrial | $ | 3,299,118 | 37 | % | $ | 3,299,704 | 36 | % | $ | 3,341,136 | 39 | % |
| Commercial real estate (CRE) | 2,086,062 | 23 | 2,167,508 | 23 | 2,212,026 | 26 | ||||||
| PPP | 751,199 | 8 | 954,179 | 10 | — | — | ||||||
| Construction | 716,275 | 8 | 666,317 | 7 | 578,713 | 7 | ||||||
| Commercial small business leases | 248,885 | 3 | 227,539 | 3 | 190,592 | 2 | ||||||
| Total commercial loans | 7,101,539 | 79 | 7,315,247 | 79 | 6,322,467 | 74 | ||||||
| Residential mortgage | 954,824 | 11 | 1,003,373 | 11 | 1,099,744 | 13 | ||||||
| Consumer | 1,165,917 | 13 | 1,168,891 | 13 | 1,133,701 | 14 | ||||||
| Allowance for credit losses (ACL) | (228,804) | (3) | (232,726) | (3) | (47,576) | (1) | ||||||
| Net loans | $ | 8,993,476 | 100 | % | $ | 9,254,785 | 100 | % | $ | 8,508,336 | 100 | % |
| Customer Funding | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in thousands) | December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||
| Noninterest demand | $ | 3,415,021 | 29 | % | $ | 3,196,967 | 29 | % | $ | 2,189,573 | 23 | % |
| Interest-bearing demand | 2,635,740 | 23 | 2,521,030 | 23 | 2,129,725 | 23 | ||||||
| Savings | 1,774,332 | 15 | 1,717,952 | 15 | 1,563,000 | 17 | ||||||
| Money market | 2,654,439 | 23 | 2,488,794 | 22 | 2,100,188 | 22 | ||||||
| Total core deposits | 10,479,532 | 90 | 9,924,743 | 89 | 7,982,486 | 85 | ||||||
| Customer time deposits | 1,158,845 | 10 | 1,223,843 | 11 | 1,356,610 | 15 | ||||||
| Total customer deposits | $ | 11,638,377 | 100 | % | $ | 11,148,586 | 100 | % | $ | 9,339,096 | 100 | % |
At December 31, 2020, WSFS’ net loan portfolio decreased $261.3 million when compared with September 30, 2020 primarily due to a $203.0 million decrease in PPP loans due to loan forgiveness during the quarter. Excluding PPP loans, run-off portfolios, and the allowance for credit losses, loans increased $74.1 million, or 1% (not annualized), during the quarter.
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Net loans at December 31, 2020 increased $485.1 million when compared with December 31, 2019, primarily due to $751.2 million of PPP loans as of December 31, 2020. The year-over-year PPP loan increase was partially offset by a $423.5 million decline in non-relationship run-off portfolios and a $181.2 million increase in the allowance for credit losses year-over-year. Excluding PPP loans, run-off portfolios, and the allowance for credit losses, loans increased $338.7 million, or 5%, year-over-year, including growth across construction, commercial small business leases, and home equity installment loans originated through our partnership with Spring EQ.
Total customer funding was $11.6 billion at December 31, 2020, a $489.8 million increase from September 30, 2020 and a $2.3 billion increase from December 31, 2019, reflecting elevated deposits from customers who received PPP loans, government stimulus impact, and lower customer spending. Core deposits were $10.5 billion at December 31, 2020, an increase of $554.8 million over the prior quarter due primarily to $425.9 million of short-term customer deposits expected to exit during 1Q 2021 and elevated customer liquidity. Core deposits were a strong 90% of total customer deposits and no- and low-cost checking accounts represented a robust 52% of total customer deposits at December 31, 2020. These core deposits predominantly represent longer-term, less price-sensitive customer relationships. The ratio of loans to customer deposits was 77% at December 31, 2020 reflecting significant liquidity capacity.
Net Interest Income
| Three Months Ending | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||
| Net interest income before purchase accretion and PPP | $ | 97,741 | $ | 95,618 | $ | 103,696 | ||||
| Purchase accounting accretion | 14,754 | 11,057 | 13,873 | |||||||
| Net interest income before PPP | 112,495 | 106,675 | 117,569 | |||||||
| PPP | 10,506 | 6,373 | — | |||||||
| Net interest income | $ | 123,001 | $ | 113,048 | $ | 117,569 | ||||
| Net interest margin before purchase accretion and PPP | 3.36 | % | 3.35 | % | 3.84 | % | ||||
| Purchase accounting accretion | 0.51 | 0.39 | 0.51 | |||||||
| Net interest margin before PPP | 3.87 | 3.74 | 4.35 | |||||||
| PPP (excluding income and interest-earning assets) | 0.06 | (0.08) | — | |||||||
| Net interest margin | 3.93 | % | 3.66 | % | 4.35 | % | ||||
| WSFS Bank Center | 6 | |||||||||
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| 500 Delaware Avenue, | ||||||||||
| Wilmington, Delaware 19801 |
Net interest income increased $5.4 million, or 5%, compared to 4Q 2019, primarily due to $10.5 million of PPP income in 4Q 2020 including $8.4 million of fee accretion, partially offset by a $6.0 million reduction due to the lower rate environment. Net interest margin decreased 42 bps from 4Q 2019 due to a 31 bps net decline from the lower rate environment and balance sheet mix and 17 bps from the significant short-term liquidity increase in customer deposits, partially offset by a 6 bps increase from PPP.
Net interest income increased $10.0 million, or 9% (not annualized), from 3Q 2020 primarily due to a $4.1 million increase in PPP income, a $3.7 million increase in purchase accounting accretion and $2.1 million primarily from lower funding costs due to deposit repricing. Net interest margin increased 27 bps including 14 bps from PPP, 12 bps from higher purchase accounting accretion, and 7 bps from lower funding costs partially offset by asset mix change resulting from the significant short-term liquidity increase in customer deposits.
Credit Quality
Credit quality at December 31, 2020 remained stable with total problem assets of $766.0 million flat when compared to $769.7 million as of September 30, 2020. Total problem assets includes all criticized, classified, and nonperforming loans as well as other real estate owned (OREO).
Delinquencies increased to $78.9 million at December 31, 2020, or 0.88% of gross loans, and nonperforming assets increased to $60.5 million as of December 31, 2020 primarily due to one $15 million multi-family commercial relationship. Customer loans receiving short-term loan modifications as of December 31, 2020 decreased to $114.8 million, or less than 2% of the loan portfolio excluding PPP. Net charge-offs for 4Q 2020 were a low $3.0 million, or 0.13% (annualized), of average gross loans.
Total net credit (recoveries) costs were $(0.5) million in the quarter compared to $4.1 million in 3Q 2020 and the ACL decreased slightly to $228.8 million as economic forecasts were largely consistent with the prior quarter with modest decreases in the ACL due primarily to normal portfolio run-off.
| WSFS Bank Center | 7 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
The following table summarizes credit quality metrics as of and for the period ended December 31, 2020 compared to September 30, 2020 and December 31, 2019.
| (Dollars in millions) | December 31, 2020 | September 30, 2020 | December 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Problem assets | $ | 766.0 | $ | 769.7 | $ | 238.6 | |||
| Nonperforming assets | 60.5 | 44.5 | 39.8 | ||||||
| Delinquencies | 78.9 | 76.8 | 61.1 | ||||||
| Net charge-offs | 3.0 | 2.2 | 1.7 | ||||||
| Total net credit (recoveries) costs (r) | (0.5) | 4.1 | 2.7 | ||||||
| Problem assets to total Tier 1 capital plus ACL | 50.67 | % | 48.78 | % | 16.89 | % | |||
| Classified assets to total Tier 1 capital plus ACL | 35.02 | 32.34 | 13.15 | ||||||
| Ratio of nonperforming assets to total assets | 0.42 | 0.32 | 0.32 | ||||||
| Ratio of nonperforming assets (excluding accruing TDRs) to total assets | 0.31 | 0.21 | 0.21 | ||||||
| Delinquencies to gross loans | 0.88 | 0.82 | 0.72 | ||||||
| Ratio of quarterly net charge-offs to average gross loans | 0.13 | 0.09 | 0.08 | ||||||
| Ratio of allowance for credit losses to total loans and leases (q) | 2.51 | 2.47 | 0.56 | ||||||
| Ratio of allowance for credit losses to nonaccruing loans | 546 | 901 | 208 |
See “Notes”
Core Fee Income(4)
Core fee income (noninterest income) was $43.5 million, an increase of $2.0 million, or 5%, compared to 4Q 2019, despite a $3.3 million decrease in interchange fees resulting from the Durbin Amendment effective at the beginning of 3Q 2020. The year-over-year increase was primarily due to a $3.8 million increase from our mortgage banking business driven by increased volume resulting from the lower interest rate environment and improved secondary market conditions. Additionally, trust services revenue increased $2.6 million, or 36%, year-over-year. Partially offsetting these increases was a $2.3 million decrease in Cash Connect® primarily driven by the significant decline in interest rates compared to last year and fully offset by lower funding costs.
Core fee income decreased $2.3 million, or 5%, compared to 3Q 2020, primarily due to a $4.8 million decrease from our mortgage banking business, resulting from an expected seasonal decline in volume and less favorable secondary market conditions. Partially offsetting the decrease in mortgage fees was a $1.1 million increase in core banking fees, $0.9 million of higher gains on sale of SBA loans, and a $0.6 million increase in our trust and wealth businesses.
(4) As used in this press release, core fee income is a non-GAAP financial measures. This non-GAAP financial measures excludes securities gains unrealized/realized gains on equity investments, net. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
| WSFS Bank Center | 8 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
For 4Q 2020, core fee income was 26.1% of core net revenue, or flat compared to 4Q 2019, 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 comparison includes the impact of lower net interest income due to the lower rate environment offset by the adverse impacts of the Durbin Amendment.
Core Noninterest Expense(5)
Core noninterest expense of $93.1 million for 4Q 2020 increased slightly compared to $92.5 million in 4Q 2019. The year-over-year change includes higher compensation costs from overall franchise growth and talent investments, continued investment in delivery transformation across multiple projects, and PPP loan processing costs. These year-over-year increases were partially offset by continued integration cost synergies from our combination with Beneficial in 2019.
When compared to 3Q 2020, core noninterest expense increased $2.3 million primarily due to higher incentive compensation costs related to our strong operating performance, continued delivery transformation investment, and PPP processing costs. These increases were partially offset by lower unfunded commitment reserve expense, which is recorded under loan workout and other credit costs, and lower other operating expenses.
Our core efficiency ratio(5) was 55.8% in 4Q 2020, compared to 57.1% in 3Q 2020 and 58.0% in 4Q 2019.
Income Taxes
We recorded a $17.5 million income tax provision in 4Q 2020, compared to $15.1 million in 3Q 2020 and $14.2 million in 4Q 2019.
The effective tax rate was 22.6% in 4Q 2020, 23.0% in 3Q 2020, and 23.8% in 4Q 2019. The year-over-year decline primarily reflects higher nondeductible expenses in 4Q 2019.
(5) As used in this press release, core noninterest expense and core efficiency ratio are non-GAAP financial measures. These non-GAAP financial measures exclude corporate development and restructuring expense and the contribution to the WSFS Community Fund. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release
| WSFS Bank Center | 9 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Capital Management
During 4Q 2020, WSFS resumed share repurchases and repurchased 2,946,507 shares, or 6% of our outstanding common stock, at an average price of $39.45, totaling $116.3 million. WSFS has 4,648,470 shares, or approximately 10% of outstanding shares, remaining to repurchase under our current authorization. We continue to execute the Board-approved share repurchase plan, including opportunistically repurchasing shares, based on current valuation levels, above our stated practice of returning a minimum of 25% of annual net income to stockholders through dividends and share repurchases.
WSFS’ total stockholders’ equity decreased $71.8 million, or 4% (not annualized), during 4Q 2020, primarily due to $116.3 million of share repurchases, market-value changes on available-for-sale securities and the dividend on common stock paid during the quarter, partially offset by quarterly earnings.
WSFS’ tangible common equity(6) decreased $69.4 million, or 5% (not annualized) compared to September 30, 2020 for the reasons described above. WSFS’ common equity to assets ratio was 12.50% at December 31, 2020, and our tangible common equity to tangible assets ratio(5) decreased by 86 bps during the quarter to 8.96%.
At December 31, 2020, book value per share was $37.52, an increase of $0.75, or 2%, from September 30, 2020, and tangible common book value per share(5) was $25.85, an increase of $0.12 from September 30, 2020.
At December 31, 2020, WSFS Bank’s Tier 1 leverage ratio of 9.74%, Common Equity Tier 1 capital ratio and Tier 1 capital ratio of 12.50%, and Total Capital ratio of 13.76% 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. This dividend will be paid on February 25, 2021 to stockholders of record as of February 11, 2021.
(6) As used in this release, tangible common equity, tangible common equity to tangible assets and tangible common book value per share are non-GAAP financial measures. These non-GAAP financial measures exclude goodwill and intangible assets and the related tax-effected amortization. For a reconciliation of these and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
| WSFS Bank Center | 10 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Selected Business Segments (included in previous results):
Wealth Management
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 $24.2 billion in assets under management (AUM) and assets under administration (AUA) as of December 31, 2020.
Wealth Management reported pre-tax income of $9.2 million in 4Q 2020 compared to $5.2 million in 4Q 2019, and $6.0 million in 3Q 2020.
For 4Q 2020, total revenue (net interest income and fee income) was $19.0 million, an increase of $3.7 million, or 24%, compared to 4Q 2019 and an increase of $1.5 million, or 9% (non-annualized) compared to 3Q 2020. The increase was due to strong results across all Wealth Management lines of business.
Institutional trust total revenue of $7.5 million in 4Q 2020 was up 35% from 4Q 2019 and down 1% from 3Q 2020. WSFS Institutional Services® ended 2020 as the securitization industry's sixth most active trustee for U.S. ABS and MBS according to Asset-Backed Alert’s ABS Database. New personal trust account activity was robust with total personal trust accounts on December 31, 2020 increasing 13% from year-end 2019.
Total revenue from our advisory businesses totaled $3.5 million in 4Q 2020 compared to $3.3 million in 4Q 2019, and $3.3 million in 3Q 2020 as AUM at the end of 4Q 2020 grew 7% (non-annualized) from 3Q 2020 and 6% from 4Q 2019. AUM growth resulted primarily from equity market performance and also included positive net client cash inflows.
Total noninterest expense (including intercompany allocations and excluding provision for credit losses) was $10.0 million in 4Q 2020, flat when compared to 4Q 2019 and 3Q 2020. Wealth Management efficiency ratio was 47% in 4Q 2020, compared to 52% in 3Q 2020 and 57% in 4Q 2019.
For the full-year 2020, pre-tax income was $22.8 million compared to $26.1 million in 2019. Results in 2020 were impacted by the CECL implementation in 1Q 2020 and lower interest rate environment throughout 2020. Wealth Management's 2019 results also included $1.7 million of net interest income from a large short-term noninterest bearing trust deposit.
| WSFS Bank Center | 11 | |
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| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Cash Connect®
Cash Connect® is a premier provider of ATM vault cash, smart safe and cash logistics services in the United States. Cash Connect® services over 32,000 non-bank ATMs and retail deposit safes nationwide supplying or servicing approximately $1.6 billion in cash at December 31, 2020. Cash Connect® also supports over 600 ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.
Cash Connect® reported pre-tax income of $2.2 million for 4Q 2020, which was an increase of $1.1 million, or 95%, compared to 4Q 2019 primarily due to higher cash volumes, a low interest rate environment, and continued growth of higher margin products and services. Net income in 4Q 2020 was $0.9 million lower than 3Q 2020, as activity and margins pulled back from a summer surge. ROA of 1.74% in 4Q 2020 increased 68 bps from 4Q 2019 and decreased 72 bps from 3Q 2020.
Net revenue of $10.3 million in 4Q 2020 was down $0.9 million from 4Q 2019, driven by the lower interest rate environment, fully offset by lower cost of funds (including lower third party funding fees in noninterest expense) and higher cash volume. Compared to 3Q 2020, net revenue decreased $0.1 million.
Noninterest expense (including intercompany allocations of expense) was $8.2 million in 4Q 2020, a decrease of $2.0 million compared to 4Q 2019 driven by lower funding fees as noted above, and $0.8 million higher compared to 3Q 2020, driven by incentive expense, courier costs partially offset in courier revenue, and allocated overhead.
During 2020, Cash Connect® focused on expanding smart safe and ATM managed services to increase fee incomes and margins, resulting in a full-year 2020 ROA of 1.97%, an increase of 68 bps in comparison with full-year 2019. The division also saw a 35% increase in retail deposit safe units over the period and 14% increase in total cash supported to an all-time high of $1.6 billion at year-end 2020.
| WSFS Bank Center | 12 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
Fourth Quarter 2020 Earnings Release Conference Call and Supplemental Materials
Management will conduct a conference call to review 4Q 2020 results at 1:00 p.m. Eastern Time (ET) on Tuesday, January 26, 2021. Interested parties may listen to this call by dialing 1-877-312-5857 and using Conference ID #7570483. A rebroadcast of the conference call will be available beginning at 4:00 p.m. ET on January 26, 2021 until February 6, 2021 by dialing 1-855-859-2056 and using Conference ID #7570483.
We have provided additional information in the 4Q 2020 Earnings Release Supplement, which is available in 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 Greater Philadelphia region. As of December 31, 2020, WSFS Financial Corporation had $14.3 billion in assets on its balance sheet and $24.2 billion in assets under management and administration. WSFS operates from 112 offices, 89 of which are banking offices, located in Pennsylvania (52), Delaware (42), New Jersey (16), 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 Arrow Land Transfer, Cash Connect®, Cypress Capital Management, LLC, Christiana Trust Company of Delaware®, NewLane Finance®, Powdermill® Financial Solutions, West Capital Management®, WSFS Institutional Services®, WSFS Mortgage®, and WSFS Wealth® Investments. 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.
| WSFS Bank Center | 13 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
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, 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 possible declines in housing markets, an increase in unemployment levels and slowdowns in economic growth, including as a result of the COVID-19 pandemic; possible additional loan losses and impairment of the collectability of loans, particularly as a result of the COVID-19 pandemic and the policies and programs implemented by the Coronavirus Aid, Relief, and Economic Security Act, including its automatic loan forbearance provisions and our PPP lending activities; additional credit, fraud and litigation risks associated with our PPP lending activities; economic and financial impact of federal, state and local emergency orders and other actions taken in response to the COVID-19 pandemic; the Company's level of nonperforming assets and the costs associated with resolving problem loans including litigation and other costs and complying with government-imposed foreclosure moratoriums; 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 the Company's loan portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of the Company's operations and potential expenses associated with complying with such regulations; the Company's ability to comply with applicable capital and liquidity requirements (including the effect of the transition to the Current Expected Credit Losses (CECL) methodology for allowances and related adjustments), including its ability to generate liquidity internally or raise capital on favorable terms; possible changes in trade, monetary and fiscal policies and stimulus programs, laws and regulations and other activities of governments, agencies, and similar organizations, and the uncertainty of the short- and long-term impacts of such changes; any impairments of the Company's goodwill or other intangible assets; conditions in the financial markets, including the destabilized economic environment caused by the COVID-19 pandemic, that may limit the Company's access to additional funding to meet its liquidity needs; the intention of the United Kingdom's Financial Conduct Authority (FCA) to cease support of London Inter-Bank Offered Rate (LIBOR) and the transition to an alternative reference interest rate, such as the Secured Overnight Funding Rate (SOFR), including methodologies for calculating the rate that are different from the LIBOR methodology and changed language for existing and new floating or adjustable rate contracts; the success of the Company's growth plans, including its plans to grow the commercial small business leasing portfolio and residential mortgage small business and SBA portfolios; the successful integration of acquisitions; 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 generally and, in particular, the Company's trust and wealth management business; failure of the financial and operational controls of the Company's Cash Connect® division; adverse judgments or other resolution of pending and future legal proceedings, and cost incurred in defending such proceedings; the Company's reliance on third parties for certain important functions, including the operation of its core systems, and any failures by such third parties; system failures or cybersecurity incidents or other breaches of the Company's network security, particularly given widespread remote working arrangements; 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, public health crises and man-made disasters including terrorist attacks; the effects of regional or national civil unrest (including any resulting branch or ATM closures or damage); 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, particularly as a result of the COVID-19 pandemic, 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; any reputation, credit, interest rate, market, operational, litigation, legal, liquidity, regulatory and compliance risk resulting from developments related to any of the risks discussed above; and other risks and uncertainties, including those discussed in the Company's Form 10-K for the year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, Form 10-Q for the quarter ended June 30, 2020, Form 10-Q for the quarter ended September 30, 2020 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.
| WSFS Bank Center | 14 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited)
| Three months ended | Twelve months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||
| Interest income: | ||||||||||
| Interest and fees on loans | $ | 118,737 | $ | 110,195 | $ | 122,302 | $ | 460,394 | $ | 463,220 |
| Interest on mortgage-backed securities | 10,923 | 11,686 | 13,270 | 48,377 | 48,954 | |||||
| Interest and dividends on investment securities | 1,419 | 1,265 | 973 | 4,619 | 4,015 | |||||
| Other interest income | 218 | 224 | 805 | 1,015 | 4,903 | |||||
| 131,297 | 123,370 | 137,350 | 514,405 | 521,092 | ||||||
| Interest expense: | ||||||||||
| Interest on deposits | 6,447 | 8,346 | 16,159 | 39,262 | 60,075 | |||||
| Interest on Federal Home Loan Bank advances | 50 | 445 | 1,025 | 1,950 | 5,520 | |||||
| Interest on senior debt | 1,460 | 1,179 | 1,179 | 4,998 | 4,717 | |||||
| Interest on trust preferred borrowings | 334 | 347 | 636 | 1,751 | 2,772 | |||||
| Interest on other borrowings | 5 | 5 | 782 | 489 | 3,060 | |||||
| 8,296 | 10,322 | 19,781 | 48,450 | 76,144 | ||||||
| Net interest income | 123,001 | 113,048 | 117,569 | 465,955 | 444,948 | |||||
| (Recovery of) provision for credit losses | (936) | 2,716 | 1,590 | 153,180 | 25,560 | |||||
| Net interest income after provision for credit losses | 123,937 | 110,332 | 115,979 | 312,775 | 419,388 | |||||
| Noninterest income: | ||||||||||
| Credit/debit card and ATM income | 7,098 | 7,251 | 12,076 | 35,014 | 50,383 | |||||
| Investment management and fiduciary revenue | 13,822 | 13,266 | 11,462 | 48,979 | 42,450 | |||||
| Deposit service charges | 5,405 | 4,772 | 5,984 | 19,999 | 22,972 | |||||
| Mortgage banking activities, net | 6,729 | 11,507 | 2,963 | 30,201 | 11,053 | |||||
| Loan and lease fee income | 1,137 | 1,165 | 1,219 | 4,518 | 3,577 | |||||
| Securities gains, net | 3,153 | 3,322 | 255 | 9,076 | 333 | |||||
| Unrealized gain on equity investment, net | — | 104 | — | 761 | 26,175 | |||||
| Realized gain on sale of equity investment, net | — | — | — | 22,052 | — | |||||
| Bank-owned life insurance income | 269 | 591 | 370 | 1,280 | 1,247 | |||||
| Other income | 9,019 | 7,193 | 7,441 | 29,145 | 29,919 | |||||
| 46,632 | 49,171 | 41,770 | 201,025 | 188,109 | ||||||
| Noninterest expense: | ||||||||||
| Salaries, benefits and other compensation | 51,442 | 48,772 | 48,895 | 194,317 | 182,564 | |||||
| Occupancy expense | 7,991 | 8,152 | 8,806 | 32,105 | 33,068 | |||||
| Equipment expense | 7,392 | 5,678 | 5,882 | 23,793 | 20,879 | |||||
| Data processing and operations expense | 3,263 | 3,198 | 3,193 | 12,600 | 13,373 | |||||
| Professional fees | 5,123 | 4,611 | 3,200 | 18,757 | 11,167 | |||||
| Marketing expense | 2,060 | 1,451 | 1,804 | 5,677 | 6,714 | |||||
| FDIC expenses | 1,068 | 829 | 48 | 2,148 | 1,483 | |||||
| Loss on early extinguishment of debt | — | 2,280 | — | 2,280 | — | |||||
| Loan workout and other credit costs | 437 | 1,422 | 1,079 | 6,899 | 3,616 | |||||
| Corporate development expense | (242) | 428 | 4,607 | 4,328 | 55,697 | |||||
| Restructuring expense | 510 | — | 1,530 | 510 | 16,133 | |||||
| Recovery of fraud loss | — | — | (463) | — | (463) | |||||
| Other operating expenses | 14,329 | 16,719 | 19,545 | 65,430 | 68,896 | |||||
| 93,373 | 93,540 | 98,126 | 368,844 | 413,127 | ||||||
| Income before taxes | 77,196 | 65,963 | 59,623 | 144,956 | 194,370 | |||||
| Income tax provision | 17,455 | 15,140 | 14,199 | 31,636 | 46,452 | |||||
| Net income | $ | 59,741 | $ | 50,823 | $ | 45,424 | $ | 113,320 | $ | 147,918 |
| Less: Net loss attributable to noncontrolling interest | (72) | (322) | (280) | (1,454) | (891) | |||||
| Net income attributable to WSFS | $ | 59,813 | $ | 51,145 | $ | 45,704 | $ | 114,774 | $ | 148,809 |
| Diluted earnings per share of common stock: | $ | 1.20 | $ | 1.01 | $ | 0.88 | $ | 2.27 | $ | 3.00 |
| Weighted average shares of common stock outstanding for fully diluted EPS | 49,707,973 | 50,684,493 | 52,164,692 | 50,546,497 | 49,554,058 |
See “Notes”
| WSFS Bank Center | 15 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS
SUMMARY STATEMENTS OF INCOME (Unaudited) - continued
| Three months ended | Twelve months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | ||||||
| Performance Ratios: | ||||||||||
| Return on average assets (a) | 1.73 | % | 1.49 | % | 1.48 | % | 0.87 | % | 1.30 | % |
| Return on average equity (a) | 13.00 | 11.08 | 9.77 | 6.25 | 8.91 | |||||
| Return on average tangible common equity (a)(o) | 19.37 | 16.61 | 14.76 | 9.68 | 13.48 | |||||
| Net interest margin (a)(b) | 3.93 | 3.66 | 4.35 | 3.96 | 4.44 | |||||
| Efficiency ratio (c) | 54.95 | 57.57 | 61.47 | 55.21 | 65.13 | |||||
| Noninterest income as a percentage of total net revenue (b) | 27.45 | 30.26 | 26.17 | 30.09 | 29.66 |
See “Notes”
| WSFS Bank Center | 16 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
SUMMARY STATEMENTS OF FINANCIAL CONDITION (Unaudited)
| (Dollars in thousands) | December 31, 2020 | September 30, 2020 | December 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Assets: | |||||||||
| Cash and due from banks | $ | 1,244,705 | $ | 714,062 | $ | 164,021 | |||
| Cash in non-owned ATMs | 402,339 | 347,462 | 407,524 | ||||||
| Investment securities, available-for-sale (d) | 2,529,057 | 2,334,922 | 1,944,914 | ||||||
| Investment securities, held-to-maturity | 111,741 | 113,609 | 133,601 | ||||||
| Other investments | 23,003 | 28,329 | 91,350 | ||||||
| Net loans (e)(f)(l) | 8,993,476 | 9,254,785 | 8,508,336 | ||||||
| Bank owned life insurance | 32,051 | 31,717 | 30,294 | ||||||
| Goodwill and intangibles | 557,386 | 559,806 | 568,745 | ||||||
| Other assets | 440,156 | 445,416 | 407,517 | ||||||
| Total assets | $ | 14,333,914 | $ | 13,830,108 | $ | 12,256,302 | |||
| Liabilities and Stockholders’ Equity: | |||||||||
| Noninterest-bearing deposits | $ | 3,415,021 | $ | 3,196,967 | $ | 2,189,573 | |||
| Interest-bearing deposits | 8,223,356 | 7,951,619 | 7,149,523 | ||||||
| Total customer deposits | 11,638,377 | 11,148,586 | 9,339,096 | ||||||
| Brokered deposits | 218,287 | 242,759 | 247,761 | ||||||
| Total deposits | 11,856,664 | 11,391,345 | 9,586,857 | ||||||
| Federal Home Loan Bank advances | 6,623 | 16,751 | 112,675 | ||||||
| Other borrowings | 334,018 | 187,543 | 376,613 | ||||||
| Other liabilities | 347,129 | 373,167 | 330,666 | ||||||
| Total liabilities | 12,544,434 | 11,968,806 | 10,406,811 | ||||||
| Stockholders’ equity of WSFS | 1,791,726 | 1,863,499 | 1,850,306 | ||||||
| Noncontrolling interest | (2,246) | (2,197) | (815) | ||||||
| Total stockholders' equity | 1,789,480 | 1,861,302 | 1,849,491 | ||||||
| Total liabilities and stockholders' equity | $ | 14,333,914 | $ | 13,830,108 | $ | 12,256,302 | |||
| Capital Ratios: | |||||||||
| Equity to asset ratio | 12.50 | % | 13.47 | % | 15.10 | % | |||
| Tangible common equity to tangible asset ratio (o) | 8.96 | 9.82 | 10.97 | ||||||
| Common equity Tier 1 capital (required: 4.5%; well capitalized: 6.5%) (g) | 12.50 | 13.24 | 13.52 | ||||||
| Tier 1 leverage (required: 4.00%; well-capitalized: 5.00%) (g) | 9.74 | 10.31 | 11.72 | ||||||
| Tier 1 risk-based capital (required: 6.00%; well-capitalized: 8.00%) (g) | 12.50 | 13.24 | 13.52 | ||||||
| Total Risk-based capital (required: 8.00%; well-capitalized: 10.00%) (g) | 13.76 | 14.50 | 14.01 | ||||||
| Asset Quality Indicators: | |||||||||
| Nonperforming assets: | |||||||||
| Nonaccruing loans | $ | 41,908 | $ | 25,835 | $ | 22,922 | |||
| Troubled debt restructuring (accruing) | 15,539 | 15,670 | 14,281 | ||||||
| Assets acquired through foreclosure | 3,061 | 3,000 | 2,605 | ||||||
| Total nonperforming assets | $ | 60,508 | $ | 44,505 | $ | 39,808 | |||
| Past due loans (h) | $ | 16,694 | $ | 11,886 | $ | 16,150 | |||
| Allowance for credit losses | 228,810 | 232,733 | 47,576 | ||||||
| Ratio of nonperforming assets to total assets | 0.42 | % | 0.32 | % | 0.32 | % | |||
| Ratio of nonperforming assets (excluding accruing TDRs) to total assets | 0.31 | 0.21 | 0.21 | ||||||
| Ratio of allowance for credit losses to total loans and leases (q) | 2.51 | 2.47 | 0.56 | ||||||
| Ratio of allowance for credit losses to nonaccruing loans | 546 | 901 | 208 | ||||||
| Ratio of quarterly net charge-offs to average gross loans (a)(e)(i)(n) | 0.13 | 0.09 | 0.08 | ||||||
| Ratio of year-to-date net charge-offs to average gross loans (a)(e)(i)(n) | 0.09 | 0.07 | 0.22 |
See “Notes”
| WSFS Bank Center | 17 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
AVERAGE BALANCE SHEET (Unaudited)
| (Dollars in thousands) | Three months ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | December 31, 2019 | ||||||||||||||||
| Average<br>Balance | Interest &<br>Dividends | Yield/<br>Rate<br>(a)(b) | Average<br>Balance | Interest &<br>Dividends | Yield/<br>Rate<br>(a)(b) | Average<br>Balance | Interest &<br>Dividends | Yield/<br>Rate<br>(a)(b) | ||||||||||
| Assets: | ||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||
| Loans: (e) (j) | ||||||||||||||||||
| Commercial loans and leases (p) | $ | 4,394,992 | $ | 59,758 | 5.42 | % | $ | 4,472,190 | $ | 52,753 | 4.70 | % | $ | 3,549,692 | $ | 55,725 | 6.24 | % |
| Commercial real estate loans (s) | 2,812,685 | 30,071 | 4.25 | 2,848,655 | 30,218 | 4.22 | 2,768,893 | 36,016 | 5.16 | |||||||||
| Residential mortgage | 823,305 | 14,049 | 6.83 | 892,634 | 12,512 | 5.61 | 1,029,469 | 14,344 | 5.57 | |||||||||
| Consumer | 1,169,238 | 13,578 | 4.62 | 1,153,168 | 13,726 | 4.74 | 1,141,969 | 15,532 | 5.40 | |||||||||
| Loans held for sale | 152,138 | 1,281 | 3.35 | 110,768 | 986 | 3.54 | 69,204 | 685 | 3.93 | |||||||||
| Total loans and leases | 9,352,358 | 118,737 | 5.05 | 9,477,415 | 110,195 | 4.63 | 8,559,227 | 122,302 | 5.67 | |||||||||
| Mortgage-backed securities (d) | 2,167,521 | 10,923 | 2.02 | 2,062,459 | 11,686 | 2.27 | 1,934,750 | 13,270 | 2.74 | |||||||||
| Investment securities (d) | 324,679 | 1,419 | 1.98 | 261,670 | 1,265 | 2.22 | 134,494 | 973 | 3.41 | |||||||||
| Other interest-earning assets | 644,785 | 218 | 0.13 | 530,178 | 224 | 0.17 | 111,276 | 805 | 2.87 | |||||||||
| Total interest-earning assets | 12,489,343 | $ | 131,297 | 4.19 | % | 12,331,722 | $ | 123,370 | 3.99 | % | 10,739,747 | $ | 137,350 | 5.08 | % | |||
| Allowance for credit losses | (232,053) | (233,301) | (47,136) | |||||||||||||||
| Cash and due from banks | 93,968 | 135,198 | 110,997 | |||||||||||||||
| Cash in non-owned ATMs | 365,738 | 370,912 | 357,869 | |||||||||||||||
| Bank owned life insurance | 31,829 | 30,956 | 30,838 | |||||||||||||||
| Other noninterest-earning assets | 1,004,075 | 1,012,506 | 1,033,847 | |||||||||||||||
| Total assets | $ | 13,752,900 | $ | 13,647,993 | $ | 12,226,162 | ||||||||||||
| Liabilities and stockholders’ equity: | ||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||
| Interest-bearing demand | $ | 2,543,711 | $ | 660 | 0.10 | % | $ | 2,372,547 | $ | 790 | 0.13 | % | $ | 2,134,950 | $ | 2,405 | 0.45 | % |
| Savings | 1,750,313 | 275 | 0.06 | 1,753,489 | 621 | 0.14 | 1,556,488 | 2,104 | 0.54 | |||||||||
| Money market | 2,474,582 | 1,218 | 0.20 | 2,404,202 | 1,805 | 0.30 | 2,005,696 | 4,363 | 0.86 | |||||||||
| Customer time deposits | 1,206,576 | 3,688 | 1.22 | 1,234,637 | 4,402 | 1.42 | 1,337,387 | 5,827 | 1.73 | |||||||||
| Total interest-bearing customer deposits | 7,975,182 | 5,841 | 0.29 | 7,764,875 | 7,618 | 0.39 | 7,034,521 | 14,699 | 0.83 | |||||||||
| Brokered deposits | 226,028 | 606 | 1.07 | 243,728 | 728 | 1.19 | 248,824 | 1,460 | 2.33 | |||||||||
| Total interest-bearing deposits | 8,201,210 | 6,447 | 0.31 | 8,008,603 | 8,346 | 0.41 | 7,283,345 | 16,159 | 0.88 | |||||||||
| Federal Home Loan Bank advances | 7,944 | 50 | 2.50 | 68,442 | 445 | 2.59 | 183,925 | 1,025 | 2.21 | |||||||||
| Trust preferred borrowings | 67,011 | 334 | 1.98 | 67,011 | 347 | 2.06 | 67,011 | 636 | 3.77 | |||||||||
| Senior debt | 137,428 | 1,460 | 4.25 | 98,733 | 1,179 | 4.78 | 98,573 | 1,179 | 4.78 | |||||||||
| Other borrowed funds | 22,133 | 5 | 0.09 | 20,062 | 5 | 0.10 | 199,145 | 782 | 1.56 | |||||||||
| Total interest-bearing liabilities | 8,435,726 | $ | 8,296 | 0.39 | % | 8,262,851 | $ | 10,322 | 0.50 | % | 7,831,999 | $ | 19,781 | 1.00 | % | |||
| Noninterest-bearing demand deposits | 3,159,783 | 3,176,647 | 2,217,023 | |||||||||||||||
| Other noninterest-bearing liabilities | 329,373 | 374,206 | 321,432 | |||||||||||||||
| Stockholders’ equity of WSFS | 1,830,244 | 1,836,256 | 1,856,311 | |||||||||||||||
| Noncontrolling interest | (2,226) | (1,967) | (603) | |||||||||||||||
| Total liabilities and equity | $ | 13,752,900 | $ | 13,647,993 | $ | 12,226,162 | ||||||||||||
| Excess of interest-earning assets over interest-bearing liabilities | $ | 4,053,617 | $ | 4,068,871 | $ | 2,907,748 | ||||||||||||
| Net interest and dividend income | $ | 123,001 | $ | 113,048 | $ | 117,569 | ||||||||||||
| Interest rate spread | 3.80 | % | 3.49 | % | 4.08 | % | ||||||||||||
| Net interest margin | 3.93 | % | 3.66 | % | 4.35 | % |
See “Notes”
| WSFS Bank Center | 18 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Unaudited)
| (Dollars in thousands, except per share data) | Three months ended | |||
|---|---|---|---|---|
| Stock Information: | December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2019 |
| Market price of common stock: | ||||
| High | $45.48 | $32.83 | 45.93 | $46.05 |
| Low | 26.48 | 24.59 | 41.68 | 37.19 |
| Close | 44.88 | 26.97 | 43.99 | 43.99 |
| Book value per share of common stock | 37.52 | 36.77 | 35.88 | |
| Tangible common book value per share of common stock (o) | 25.85 | 25.73 | 24.85 | |
| Number of shares of common stock outstanding (000s) | 47,756 | 50,673 | 51,567 | |
| Other Financial Data: | ||||
| One-year repricing gap to total assets (k) | 13.07% | 7.58% | (2.06)% | |
| Weighted average duration of the MBS portfolio | 2.7 years | 2.1 years | 3.7 years | |
| Unrealized gains on securities available for sale, net of taxes | $59,882 | $68,690 | 26,927 | |
| Number of Associates (FTEs) (m) | 1,838 | 1,827 | 1,782 | |
| Number of offices (branches, LPO’s, operations centers, etc.) | 112 | 115 | 118 | |
| Number of WSFS owned and branded ATMs | 626 | 635 | 473 |
All values are in US Dollars.
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 credit 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. 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 (United States Generally Accepted Accounting Principles) financial information in its analysis of the Company’s performance. The Company’s management believes that these non-GAAP financial 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 financial 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 financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.
(p)Includes commercial & industrial loans, PPP loans and commercial small business leases.
(q)Represents amortized cost basis for loans, leases and held-to-maturity securities.
(r)Includes (recovery of) provision for credit losses, loan workout expenses, OREO expenses and other credit costs.
(s)Includes commercial mortgage and commercial construction loans.
| WSFS Bank Center | 19 | |
|---|---|---|
| 500 Delaware Avenue, | ||
| Wilmington, Delaware 19801 |
WSFS FINANCIAL CORPORATION
FINANCIAL HIGHLIGHTS (Continued)
(Dollars in thousands, except per share data)
(Unaudited)
| Non-GAAP Reconciliation (o): | Three months ended | Twelve months ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||||
| Net interest income (GAAP) | $ | 123,001 | $ | 113,048 | $ | 117,569 | $ | 465,955 | $ | 444,948 | |||||||||
| Core net interest income (non-GAAP) | $ | 123,001 | $ | 113,048 | $ | 117,569 | $ | 465,955 | $ | 444,948 | |||||||||
| Noninterest income (GAAP) | $ | 46,632 | $ | 49,171 | $ | 41,770 | $ | 201,025 | $ | 188,109 | |||||||||
| Less: Securities gains | 3,153 | 3,322 | 255 | 9,076 | 333 | ||||||||||||||
| Less: Unrealized gains on equity investments, net | — | 104 | — | 761 | 26,175 | ||||||||||||||
| Less: Realized gain on sale of equity investment, net | — | — | — | 22,052 | — | ||||||||||||||
| Core fee income (non-GAAP) | $ | 43,479 | $ | 45,745 | $ | 41,515 | $ | 169,136 | $ | 161,601 | |||||||||
| Core net revenue (non-GAAP) | $ | 166,480 | $ | 158,793 | $ | 159,084 | $ | 635,091 | $ | 606,549 | |||||||||
| Core net revenue (non-GAAP)(tax-equivalent) | $ | 166,756 | $ | 159,068 | $ | 159,365 | $ | 636,242 | $ | 607,764 | |||||||||
| Noninterest expense (GAAP) | $ | 93,373 | $ | 93,540 | $ | 98,126 | $ | 368,844 | $ | 413,127 | |||||||||
| Plus: Recovery of fraud loss | — | — | (463) | — | (463) | ||||||||||||||
| (Plus)/less: Corporate development expense | (242) | 428 | 4,607 | 4,328 | 55,697 | ||||||||||||||
| Less: Restructuring expense | 510 | — | 1,530 | 510 | 16,133 | ||||||||||||||
| Less: Loss on early extinguishment of debt | — | 2,280 | — | 2,280 | — | ||||||||||||||
| Less: Contribution to WSFS Community Foundation | — | — | — | 3,000 | — | ||||||||||||||
| Core noninterest expense (non-GAAP) | $ | 93,105 | $ | 90,832 | $ | 92,452 | $ | 358,726 | $ | 341,760 | |||||||||
| Core efficiency ratio (c) | 55.8 | % | 57.1 | % | 58.0 | % | 56.4 | % | 56.2 | % | |||||||||
| End of period | |||||||||||||||||||
| December 31, 2020 | September 30, 2020 | December 31, 2019 | |||||||||||||||||
| Total assets | $ | 14,333,914 | $ | 13,830,108 | $ | 12,256,302 | |||||||||||||
| Less: Goodwill and other intangible assets | 557,386 | 559,806 | 568,745 | ||||||||||||||||
| Total tangible assets | $ | 13,776,528 | $ | 13,270,302 | $ | 11,687,557 | |||||||||||||
| Total stockholders’ equity of WSFS | $ | 1,791,726 | $ | 1,863,499 | $ | 1,850,306 | |||||||||||||
| Less: Goodwill and other intangible assets | 557,386 | 559,806 | 568,745 | ||||||||||||||||
| Total tangible common equity (non-GAAP) | $ | 1,234,340 | $ | 1,303,693 | $ | 1,281,561 | |||||||||||||
| Calculation of tangible common book value per share: | |||||||||||||||||||
| Book value per share (GAAP) | $ | 37.52 | $ | 36.77 | $ | 35.88 | |||||||||||||
| Tangible common book value per share (non-GAAP) | 25.85 | 25.73 | 24.85 | ||||||||||||||||
| Calculation of tangible common equity to tangible assets: | |||||||||||||||||||
| Equity to asset ratio (GAAP) | 12.50 | % | 13.47 | % | 15.10 | % | |||||||||||||
| Tangible common equity to tangible assets ratio (non-GAAP) | 8.96 | 9.82 | 10.97 | ||||||||||||||||
| WSFS Bank Center | 20 | ||||||||||||||||||
| --- | --- | --- | |||||||||||||||||
| 500 Delaware Avenue, | |||||||||||||||||||
| Wilmington, Delaware 19801 | |||||||||||||||||||
| Non-GAAP Reconciliation - continued (o): | Three months ended | Twelve months ended | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||||
| GAAP net income attributable to WSFS | $ | 59,813 | $ | 51,145 | $ | 45,704 | $ | 114,774 | $ | 148,809 | |||||||||
| Plus/(less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investments, recovery of fraud loss, corporate development and restructuring expense, loss on early extinguishment of debt, and contribution to WSFS Community Foundation | (2,885) | (718) | 5,419 | (21,771) | 44,859 | ||||||||||||||
| (Plus)/less: Tax impact of pre-tax adjustments | 687 | 264 | (1,023) | 3,645 | (8,564) | ||||||||||||||
| Adjusted net income (non-GAAP) attributable to WSFS | $ | 57,615 | $ | 50,691 | $ | 50,100 | $ | 96,648 | $ | 185,104 | |||||||||
| GAAP return on average assets (ROA) | 1.73 | % | 1.49 | % | 1.48 | % | 0.87 | % | 1.30 | % | |||||||||
| Plus/(less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investments, recovery of fraud loss, corporate development and restructuring expense, loss on early extinguishment of debt, and contribution to WSFS Community Foundation | (0.08) | (0.02) | 0.18 | (0.17) | 0.39 | ||||||||||||||
| (Plus)/less: Tax impact of pre-tax adjustments | 0.02 | 0.01 | (0.03) | 0.04 | (0.08) | ||||||||||||||
| Core ROA (non-GAAP) | 1.67 | % | 1.48 | % | 1.63 | % | 0.74 | % | 1.61 | % | |||||||||
| Earnings per share (GAAP) | $ | 1.20 | $ | 1.01 | $ | 0.88 | $ | 2.27 | $ | 3.00 | |||||||||
| Plus/(less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investments, recovery of fraud loss, corporate development and restructuring expense, loss on early extinguishment of debt, and contribution to WSFS Community Foundation | (0.06) | (0.01) | 0.10 | (0.43) | 0.91 | ||||||||||||||
| (Plus)/less: Tax impact of pre-tax adjustments | 0.02 | — | (0.02) | 0.07 | (0.17) | ||||||||||||||
| Core earnings per share (non-GAAP) | $ | 1.16 | $ | 1.00 | $ | 0.96 | $ | 1.91 | $ | 3.74 | |||||||||
| Calculation of return on average tangible common equity: | |||||||||||||||||||
| GAAP net income attributable to WSFS | $ | 59,813 | $ | 51,145 | $ | 45,704 | $ | 114,774 | $ | 148,809 | |||||||||
| Plus: Tax effected amortization of intangible assets | 2,090 | 2,090 | 2,121 | 8,481 | 7,373 | ||||||||||||||
| Net tangible income (non-GAAP) | $ | 61,903 | $ | 53,235 | $ | 47,825 | $ | 123,255 | $ | 156,182 | |||||||||
| Average stockholders’ equity of WSFS | $ | 1,830,244 | $ | 1,836,256 | $ | 1,856,311 | $ | 1,836,115 | $ | 1,670,869 | |||||||||
| Less: average goodwill and intangible assets | 558,750 | 561,505 | 570,685 | 563,126 | 512,187 | ||||||||||||||
| Net average tangible common equity | $ | 1,271,494 | $ | 1,274,751 | $ | 1,285,626 | $ | 1,272,989 | $ | 1,158,682 | |||||||||
| Return on average tangible common equity (non-GAAP) | 19.37 | % | 16.61 | % | 14.76 | % | 9.68 | % | 13.48 | % | |||||||||
| Calculation of core return on average tangible common equity: | |||||||||||||||||||
| Adjusted net income (non-GAAP) attributable to WSFS | $ | 57,615 | $ | 50,691 | $ | 50,100 | $ | 96,648 | $ | 185,104 | |||||||||
| Plus: Tax effected amortization of intangible assets | 2,090 | 2,090 | 2,121 | 8,481 | 7,373 | ||||||||||||||
| Core net tangible income (non-GAAP) | $ | 59,705 | $ | 52,781 | $ | 52,221 | $ | 105,129 | $ | 192,477 | |||||||||
| Net average tangible common equity | $ | 1,271,494 | $ | 1,274,751 | $ | 1,285,626 | $ | 1,272,989 | $ | 1,158,682 | |||||||||
| Core return on average tangible common equity (non-GAAP) | 18.68 | % | 16.47 | % | 16.12 | % | 8.26 | % | 16.61 | % | |||||||||
| WSFS Bank Center | 21 | ||||||||||||||||||
| --- | --- | --- | |||||||||||||||||
| 500 Delaware Avenue, | |||||||||||||||||||
| Wilmington, Delaware 19801 | Non-GAAP Reconciliation - continued (o): | Three months ended | Twelve months ended | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||
| December 31, 2020 | September 30, 2020 | December 31, 2019 | December 31, 2020 | December 31, 2019 | |||||||||||||||
| Calculation of PPNR and core PPNR: | |||||||||||||||||||
| Net income (GAAP) | $ | 59,741 | $ | 50,823 | $ | 45,424 | $ | 113,320 | $ | 147,918 | |||||||||
| Plus: Income tax provision | 17,455 | 15,140 | 14,199 | 31,636 | 46,452 | ||||||||||||||
| Plus/(less): (Recovery of) provision for credit losses | (936) | 2,716 | 1,590 | 153,180 | 25,560 | ||||||||||||||
| PPNR (Non-GAAP) | 76,260 | 68,679 | 61,213 | 298,136 | 219,930 | ||||||||||||||
| Plus/(less): Pre-tax adjustments: Securities gains, realized/unrealized gains on equity investments, recovery of fraud loss, corporate development and restructuring expense, loss on early extinguishment of debt, and contribution to WSFS Community Foundation | (2,885) | (718) | 5,419 | (21,771) | 44,859 | ||||||||||||||
| Core PPNR (Non-GAAP) | $ | 73,375 | $ | 67,961 | $ | 66,632 | $ | 276,365 | $ | 264,789 | |||||||||
| Calculation of core PPNR to average assets, less PPP: | |||||||||||||||||||
| PPP income | $ | 10,506 | $ | 6,373 | $ | — | $ | 21,715 | $ | — | |||||||||
| PPP expense | 915 | 442 | — | 3,280 | — | ||||||||||||||
| PPP net income | $ | 9,591 | $ | 5,931 | $ | — | $ | 18,435 | $ | — | |||||||||
| Core PPNR (Non-GAAP), less PPP | $ | 63,784 | $ | 62,030 | $ | 66,632 | $ | 257,930 | $ | 264,789 | |||||||||
| Total average assets | 13,752,900 | 13,647,993 | 12,226,162 | 13,148,317 | 11,477,856 | ||||||||||||||
| Average assets (PPP) | 876,490 | 952,640 | — | 640,387 | — | ||||||||||||||
| Average assets, less PPP | $ | 12,876,410 | $ | 12,695,353 | $ | 12,226,162 | $ | 12,507,930 | $ | 11,477,856 | |||||||||
| Core PPNR to average assets | 2.12 | % | 1.98 | % | 2.16 | % | 2.10 | % | 2.31 | % | |||||||||
| Core PPNR to average assets, less PPP | 1.97 | % | 1.94 | % | 2.16 | % | 2.06 | % | 2.31 | % |
exhibit9924q20supplement
1 WSFS Financial Corporation 4Q 2020 Earnings Supplement1 January 25, 2021 1 4Q 2020 Earnings Release Supplement is for the purpose and use in conjunction with our Earnings Release furnished as Exhibit 99.1 to our Form 8-K on January 25, 2021 Exhibit 99.2
2 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 significant risks and uncertainties (which change over time) and other factors, including the uncertain effects of the COVID-19 pandemic and actions taken in response thereto on our business, results of operations, capital and liquidity, which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties are discussed in detail in the Company's Form 10-K for the year ended December 31, 2019, Form 10-Q for the quarter ended March 31, 2020, Form 10-Q for the quarter ended June 30, 2020, Form 10-Q for the quarter ended September 30, 2020, 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. Non-GAAP Financial Measures: This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (“GAAP”). These non-GAAP measures include core earnings per share (“EPS”), core net income, core return on equity (“ROE”), core efficiency ratio, pre-provision net revenue (“PPNR”), core PPNR, PPNR to average assets ratio, core PPNR to average assets ratio, core return on assets (“ROA”), core Net Interest Margin (“NIM”), return on tangible common equity (“ROTCE”), core ROTCE, core fee income and core fee income as a percentage of total core net revenue. 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 to their comparable GAAP measures, see the Appendix. Forward Looking Statements & Non-GAAP
3 Table of Contents Financial Highlights Page 4 2021 Core Outlook Page 5 Net Interest Margin Trends and 2021 Outlook Page 6 Loan & Deposit Growth Page 7 Credit Risk Management ACL Page 8 Selected Portfolios Page 9 Appendix: Reconciliation of Non-GAAP Financial Information Page 10
4 1 These are non-GAAP financial measures and should be considered along with results prepared in accordance with GAAP, and not as a substitute for GAAP results. See Appendix for reconciliation to GAAP financial information. 2 Attributable to WSFS 3 Tax-equivalent Financial Highlights 4Q 2020 FY 2020 $ in millions (expect per share amounts) Reported Core1 Reported Core1 EPS $1.20 $1.16 $2.27 $1.91 ROA 1.73% 1.67% 0.87% 0.74% Net Income2 $59.8 $57.6 $114.8 $96.6 PPNR1 $76.3 $73.4 $298.1 $276.4 PPNR %1 2.21% 2.12% 2.27% 2.10% ROE 13.00% 12.52% 6.25% 5.26% ROTCE1 19.37% 18.68% 9.68% 8.26% NIM 3.93% 3.93% 3.96% 3.96% Fee Income $46.6 $43.5 $201.0 $169.1 Fee Income %3 27.5% 26.1% 30.1% 26.6% Efficiency Ratio 55.0% 55.8% 55.2% 56.4% ACL Ratio ex PPP 2.73% 2.73% 2.73% 2.73% Loan-to-Deposit % 77% 77% 77% 77% Bank CET1 12.50% 12.50% 12.50% 12.50% 4Q and Full-Year operating results reflect healthy NIM, diversified fee income, and strong ACL and Capital levels 4Q Highlights: • Core ROA1 of 1.67% improved from 1.48% in 3Q 2020 • Core PPNR1 was a strong 2.12% of average assets • Repurchased 2.9 million shares, or 6% of outstanding common stock, totaling $116.3 million, and the Board approved a quarterly cash dividend of $0.12 per share of common stock • Maintained strong capital levels including a Bank Common Equity Tier 1 Ratio of 12.50% • ACL coverage ratio was 2.73%, excluding PPP loans at December 31, 2020 • Net credit costs (recoveries) were ($0.5) million and net charge- offs were $3.0 million, or 0.13% of average gross loans • WSFS issued $150 million of Fixed-to-Floating Rate Senior Notes due 2030 with a fixed interest rate of 2.75% for the first five years, the lowest ever coupon obtained by a Kroll only rated senior debt issuance
5 3 2021 Core Outlook Loan Growth Mid single digit growth excluding PPP and non-relationship run-off portfolios primarily driven by C&I, leasing and consumer; 90% of PPP loans assumed forgiven by 4Q 2021 and approximate $200M decline from run-off portfolios Deposit Growth Mid single digit core deposit growth offset by purposeful reduction of time deposits, excluding the impact of elevated customer liquidity Net Interest Margin Range of 3.65% - 3.80%; assumes no short-term interest rate changes; approximately 24-28 bps of purchased loan accretion; approximately 6-10 bps positive PPP impact; assumes 11 bps negative impact from elevated customer liquidity Fee Income Growth1 Mid single digit growth excluding Durbin (effective July 2020) and lower Mortgage compared to outsized 2020; double digit Wealth and mid-high single digit core banking growth; flat including Durbin and Mortgage Provision Costs $20-25 million reflecting new loan growth; opportunity for reserve release if economic recovery accelerates Efficiency Ratio1 Low 60s driven by items described above combined with franchise growth and continued talent and Delivery Transformation investments Tax Rate Approximately 24% 2021 Core Outlook Outlook assumes a gradual and uneven economic recovery, franchise growth, and continued investments in our talent and technology 1 The Company is not able to reconcile the forward-looking non-GAAP estimates set forth above to their most directly comparable GAAP estimates without unreasonable efforts because it is unable to predict, forecast or determine the probable significance of the items impacting these estimates with a reasonable degree of accuracy
6 3.85% 3.58% 3.35% 3.36% 3.35% - 3.42% 0.31% 0.30% 0.28% 0.26% 0.24% - 0.28% 0.22% 0.25% 2.50% 2.75% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 1Q 2020 2Q 2020 3Q 2020 4Q 2020 FY 2021 Outlook NIM Ex PAA/PPP Modeled PAA Incremental PAA PPP 0.1 4.38% 3.93% 3.66% Negative 8 bps PPP impact Net Interest Margin Trends and 2021 Outlook NIM impacted by purchase accretion variability, PPP forgiveness, customer liquidity, and strong deposit betas 3.65% - 3.80% 3.93% • NIM excluding purchase accretion and PPP is stabilized with slight increase from 4Q 2020 levels assumed in full-year 2021 Outlook • Purchase accretion of 24-28 bps in FY 2021 Outlook compared to 51 bps in 4Q 2020 from significant payoff activity • PPP impact of 6 bps in 4Q 2020 due to 22% of loans forgiven. 2021 Outlook assumes additional 68% of the portfolio is forgiven primarily in 1Q and 2Q with a full-year margin impact of approximately 6 to 10 bps • Excess customer liquidity negative impact of 17 bps in 4Q 2020 compared to negative 14 bps impact in 3Q 2020; • Full-year 2021 Outlook assumes 11 bps negative impact • Customer funding cost (total weighted average) of 21 bps in 4Q 2020 compared to 28 bps in 3Q 2020 • Full-year 2021 Outlook assumes approximately 14 bps
7 Loan and Deposit Growth Positive loan growth excluding purposeful run-off portfolios and PPP; Significant excess customer liquidity continues • Continued focus on strategy to optimize our balance sheet mix towards relationship-based commercial loans and deposits • Customer funding levels remain elevated and increased $490 million during 4Q 2020 primarily due to short-term customer deposits expected to exit during 1Q 2021. ($ in millions) Dec 2020 Sep 2020 Dec 2019 4Q20 $ Growth Annualized % Growth YOY $ Growth YOY % Growth C & I Loans $3,299 $3,300 $3,341 ($1) (0%) ($42) (1%) PPP Loans $751 $954 $0 ($203) (85%) $751 100% Commercial Mortgages $2,086 $2,167 $2,212 ($81) (15%) ($126) (6%) Construction Loans $716 $666 $579 $50 30% $137 24% Commercial Leases $249 $228 $190 $21 37% $59 31% Total Commercial Loans $7,101 $7,315 $6,322 ($214) (12%) $779 12% Residential Mortgage (HFS/HFI/Rev Mgt) $955 $1,003 $1,100 ($48) (19%) ($145) (13%) Consumer Loans $1,166 $1,169 $1,134 ($3) (1%) $32 3% Total Gross Loans $9,222 $9,487 $8,556 ($265) (11%) $666 8% Residential Mortgage (HFI) $764 $845 $1,001 ($81) (38%) ($237) (24%) Student Loans Acquired from BNCL $117 $118 $128 ($1) (3%) ($11) (9%) Auto Loans Acquired From BNCL $22 $27 $49 ($5) (74%) ($27) (55%) Participation portfolios (CRE) from BNCL $98 $147 $233 ($49) (133%) ($135) (58%) Leveraged Loans (C&I) from BNCL $12 $12 $26 $0 0% ($14) (54%) Total Run-Off Portfolios $1,013 $1,149 $1,437 ($136) (47%) ($424) (30%) Gross Loans ex Run-Off Portfolios $8,209 $8,338 $7,119 ($129) (6%) $1,090 15% PPP Loans $751 $954 $0 ($203) (85%) $751 100% Gross Loans ex Run-Off & PPP Portfolios $7,458 $7,384 $7,119 $74 4% $339 5% Loans - 4Q 2020 vs 3Q 2020 and 4Q 2019 ($ in millions) Dec 2020 Sep 2020 Dec 2019 4Q20 $ Growth Annualized % Growth YOY $ Growth YOY % Growth Noninterest Demand $3,415 $3,197 $2,189 $219 27% $1,226 56% Interest Demand Deposits $2,636 $2,521 $2,130 $115 18% $506 24% Savings $1,774 $1,718 $1,563 $56 13% $211 14% Money Market $2,654 $2,489 $2,100 $165 26% $554 26% Total Core Deposits $10,479 $9,925 $7,982 $555 22% $2,497 31% Customer Time Deposits $1,159 $1,224 $1,357 ($65) (21%) ($198) (15%) Total Customer Deposits $11,638 $11,149 $9,339 $490 17% $2,299 25% Deposits - 4Q 2020 vs 3Q 2020 and 4Q 2019
8 -45% -35% -25% -15% -5% 5% 15% 25% 35% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 3Q Forecast 4Q Forecast Coverage Ratio (ex PPP) 1 Source: Oxford Economics as of December 2020 2 Hotel loan balances are included in the C&I and Construction segments Credit Risk Management - ACL ACL by Segment (ex. PPP) Full-Year GDP forecast of (3.4%) in 2020 and 4.3% in 20211 Year-End Unemployment forecast of 8.1% in 2020 and 6.3% in 20211 4Q 2020 ACL Commentary • Coverage ratio of 2.73% excluding PPP loans and 3.13% including estimated remaining credit mark on the acquired loan portfolio • ACL declined $3.9 million in 4Q 2020 driven by: • Net migration and purposeful portfolio run-off offset by net charge offs • No significant economic forecast changes 2.74% 2.73% GDP Growth by Quarter Unemployment by Quarter 4Q 2020 ACL (in millions) Economic Forecast Impact 3% 5% 7% 9% 11% 13% 15% 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 3Q Forecast 4Q Forecast ($ millions) $ % $ % $ % C&I2 $40.3 1.99% $137.8 7.24% $142.4 7.32% Construction2 $4.6 0.78% $10.2 1.54% $12.2 1.70% CRE Investor $9.1 0.41% $34.3 1.58% $31.1 1.49% Owner Occupied $3.2 0.24% $10.4 0.77% $9.6 0.72% Leases $2.0 0.77% $10.7 4.70% $8.5 3.41% Mortgage $8.9 0.90% $8.4 1.00% $6.9 0.90% HELOC & HEIL $9.4 1.27% $11.2 1.41% $11.0 1.35% Installment - Other $3.8 3.82% $5.6 5.55% $3.8 4.64% Other $1.9 0.33% $4.1 1.04% $3.3 0.87% TOTAL $83.2 0.96% $232.7 2.74% $228.8 2.73% 1/1/2020 9/30/2020 12/31/2020 $0 $50 $100 $150 $200 $250 9/30/2020 Net Migration Net Growth / Other NCO 12/31/2020 -$3 $233 $229 -$4 $3
9 3 Credit Risk Management – Select Portfolios • Almost all loan modifications are making some form of payment as of December 31, 2020 • $524.6 million or 6.2% of loan portfolio1 • 49% Criticized; ~85% of loans include recourse; 100% secured by real estate • 65% business and 35% leisure • $667.6 million or 7.9% of loan portfolio1 • 6.5% Criticized; ~70% of loans include recourse • 44% of portfolio consists of businesses deemed essential3 • $182.8 million or 2.2% of loan portfolio1 • 33% Criticized; ~90% of loans include recourse; ~47% secured by real estate • $369 thousand average loan size • $521.0 million or 6.2% of loan portfolio1 • 9.5% Criticized; ~93% of loans include recourse • $1.6 million average loan size Hotel Portfolio Retail CRE Portfolio Office CRE Portfolio4 Food Services Portfolio Retail Trade Portfolio • $260.9 million or 3.1% of loan portfolio1 • 12% Criticized; ~95% of loans include recourse • 79% of portfolio consists of businesses deemed essential3 Loan Modifications1 1 Portfolio values are gross loans excluding PPP as of December 31, 2020 2 Approximately 75% of the loan balances include U.S. government-guaranteed student loans that carry little risk of credit loss 3 Essential includes grocery, pharmacy, liquor, general merchandise, bank branch, gas/vehicle/convenience, home improvement, and government 4 Office CRE portfolio includes $52.3 million in Medical Office CRE ($ in millions) $ % of Portfolio C&I 49$ 2.5% CRE 16$ 0.5% Construction 9$ 1.3% Total Commercial 74$ 1.2% Residential Mortgage 14$ 1.7% Education2 17$ 7.2% Consumer 10$ 1.1% Total Consumer 41$ 1.9% Total Loan Modifications 115$ 1.4%
10 Appendix: Non-GAAP Financial Information
11 Non-GAAP Information This presentation contains financial measures determined by methods other than in accordance with accounting principles generally accepted in the United States (GAAP). The following are the non-GAAP measures used in this presentation: • Adjusted net income (non-GAAP) is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the impact of securities gains, unrealized gains and corporate development costs; • Core noninterest income, also called core fee income, is a non-GAAP measure that adjusts noninterest income as determined in accordance with GAAP to exclude the impact of securities gains and realized/unrealized gains on equity investments; • Core earnings (loss) per share is a non-GAAP measure that divides (i) adjusted net income (non-GAAP) by (ii) weighted average shares of common stock outstanding for the applicable period; • Core net revenue is a non-GAAP measure that is determined by adding core net interest income plus core fee income; • Core noninterest expense is a non-GAAP measure that adjusts noninterest expense as determined in accordance with GAAP to exclude corporate development and restructuring expenses, loss on early extinguishment of debt and contribution to WSFS Community Foundation; • Core efficiency ratio is a non-GAAP measure that is determined by dividing core noninterest expense by the sum of core interest income and core fee income; • Core return on average assets (ROA) is a non-GAAP measure that divides (i) adjusted net income (non-GAAP) by (ii) average assets for the applicable period; • Core operating leverage is a non-GAAP measure that subtracts (i) periodic change in core noninterest expense growth from (ii) periodic change in core net revenue growth; • Tangible common equity is a non-GAAP measure and is defined as total average stockholders’ equity less goodwill, other intangible assets. Return on average tangible common equity (ROTCE) is a non-GAAP measure and is defined as net income allocable to common stockholders divided by tangible common equity; and • Tangible common book value per share is a non-GAAP measure that is equal to common equity less goodwill and intangible assets, divided by total shares outstanding. • Pre-provision net revenue (PPNR) is a non-GAAP measure that adjusts net income determined in accordance with GAAP to exclude the impact of income tax provision (credit) and provision for credit losses.
12 Appendix: Non-GAAP Financial Information (dollars in thousands, except per share data) Net interest income (GAAP) $ 123,001 $ 113,048 $ 117,569 $ 465,955 Core net interest income (non-GAAP) $ 123,001 $ 113,048 $ 117,569 $ 465,955 Noninterest income (GAAP) $ 46,632 $ 49,171 $ 41,770 $ 201,025 Less: Securities gains Less: Unrealized gains on equity investments, net Less: Realized gain on sale of equity investment, net Core fee income (non-GAAP) $ 43,479 $ 45,745 $ 41,515 $ 169,136 Core net revenue (non-GAAP) $ 166,480 $ 158,793 $ 159,084 $ 635,091 Core net revenue (non-GAAP) (tax-equivalent) $ 166,756 $ 159,068 $ 159,365 $ 636,242 Noninterest expense (GAAP) $ 93,373 $ 93,540 $ 98,126 $ 368,844 Plus/(less): Recovery of fraud loss (463) Less/(plus): Corporate developement expense Less: Restructuring expense Less: Loss on early extinguishment of debt Less: Contribution to WSFS Community Foundation Core noninterest expense (non-GAAP) $ 93,105 $ 90,832 $ 92,452 $ 358,726 Core efficiency ratio Core fee income as a percentage of total core net revenue (tax- equivalent) PPP income $ 10,506 $ 6,373 — $ 21,715 Core fee income as a percentage of total core net revenue excl. PPP income(tax-equivalent) Three Months Ended 27.83% 29.96% 26.05% 27.52% 55.8% 57.1% 58.0% 56.4% 26.07% 28.76% 26.05% 26.58% — 2,280 — 2,280 — — — 3,000 510 — 1,530 510 — — — (242) 428 4,607 4,328 — 104 — 761 — — — 22,052 3,153 3,322 255 9,076 Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020
13 Appendix: Non-GAAP Financial Information 1 Pre-tax adjustments include securities gains, net realized/unrealized gains on equity investments, recovery of fraud loss, corporate development and restructuring expense, loss on early extinguishment of debt, and a contribution to the WSFS Community Foundation. (dollars in thousands, except per share data) GAAP net income attributable to WSFS $ 59,813 $ 51,145 $ 45,704 $ 114,774 Plus/(less): Pre-tax adjustments1 (Plus)/less: Tax impact of pre-tax adjustments Adjusted net income (non-GAAP) attributable to WSFS $ 57,615 $ 50,691 $ 50,100 $ 96,648 Net income (GAAP) $ 59,741 $ 50,823 $ 45,424 $ 113,320 Plus: Income tax provision Plus/(less): (Recovery of) provision for credit losses PPNR (Non-GAAP) Plus/(less): Pre-tax adjustments1 Core PPNR (Non-GAAP) $ 73,375 $ 67,961 $ 66,632 $ 276,365 Average Assets PPNR % (Non-GAAP) 2.21% 2.00% 1.99% 2.27% Core PPNR % (Non-GAAP) 2.12% 1.98% 2.16% 2.10% GAAP return on average assets (ROA) Plus/(less): Pre-tax adjustments1 (Plus)/less: Tax impact of pre-tax adjustments Core ROA (non-GAAP) Earnings per share (GAAP) $ 1.20 $ 1.01 $ 0.88 $ 2.27 Plus/(less): Pre-tax adjustments1 (Plus)/less: Tax impact of pre-tax adjustments Core earnings per share (non-GAAP) $ 1.16 $ 1.00 $ 0.96 $ 1.91 Three Months Ended (0.06) (0.01) 0.10 (0.43) 0.02 — (0.02) 0.07 0.02 0.01 (0.03) 0.04 1.67% 1.48% 1.63% 0.74% 1.73% 1.49% 1.48% 0.87% (0.08) (0.02) 0.18 (0.17) (2,885) (718) 5,419 (21,771) 13,752,900$ 13,647,993$ 12,226,162$ 13,148,317$ (936) 2,716 1,590 153,180 76,260 68,679 61,213 298,136 687 264 (1,023) 3,645 17,455 15,140 14,199 31,636 (2,885) (718) 5,419 (21,771) Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020
14 Appendix: Non-GAAP Financial Information (dollars in thousands, except per share data) Calculation of return on average tangible common equity: GAAP net income attributable to WSFS $ 59,813 $ 51,145 $ 45,704 $ 114,774 Plus: Tax effected amortization of intangible assets Net tangible income (non-GAAP) $ 61,903 $ 53,235 $ 47,825 $ 123,255 Average stockholders' equity of WSFS Less: average goodwill and intangible assets 558,750 561,505 570,685 563,126 Net average tangible common equity Return on average tangible common equity (non-GAAP) 19.37% 16.61% 14.76% 9.68% Calculation of core return on average tangible common equity: Adjusted net income (non-GAAP) attributable to WSFS $ 57,615 $ 50,691 $ 50,100 $ 96,648 Plus: Tax effected amortization of intangible assets Core net tangible income (non-GAAP) Net average tangible common equity Core return on average tangible common equity (non-GAAP) 18.68% 16.47% 16.12% 8.26% 1,271,494$ 1,274,751$ 1,285,626$ 1,272,989$ Three Months Ended 2,090 2,090 2,121 8,481 59,705$ 52,781$ 52,221$ 105,129$ 1,830,244$ 1,836,256$ 1,856,311$ 1,836,115$ 1,271,494$ 1,274,751$ 1,285,626$ 1,272,989$ 2,090 2,090 2,121 8,481 Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020